Bentley is to cut a quarter of its workforce, capping a tumultuous period that has triggered the loss of 5,000 jobs across the UK car industry.
The luxury carmaker, based in Crewe, north-west England, will shed 1,000 of its 4,200 workers as it tries to rein in costs following a two-month closure of its facilities, it announced on Friday.
The blow to the auto manufacturer comes within days of Aston Martin, McLaren and dealer group Lookers shedding more than 3,000 jobs between them.
Last month Arlington Automotive, based in Coventry in the West Midlands, entered administration, placing 600 roles at risk, while smaller suppliers Sertec, Envision and Nifco shed almost 800 jobs between them, according to calculations from the Unite union.
The industry is braced for further losses among manufacturers and their retailers as the economic impact of the coronavirus shutdowns reverberates across the sector.
“We’ve literally done everything possible to compensate for a seven-week shutdown,” Bentley chief executive Adrian Hallmark told the Financial Times, adding that the company may well fall to a loss this year because of the crisis.
“We have had 25 per cent of our revenue gone already, and we only have half a year left to catch it back up, so it is going to be really tough to make any reasonable profit this year,” he said.
About half of the company’s staff have returned to work, with an estimated 1,500 working from home and a further 500 still on the government’s furlough scheme. The job cuts are likely to affect all parts of the business. “It’s not as binary as saying if you’re furloughed, you’re out,” Mr Hallmark said.
However, he also warned that a second wave of the virus later in the year would cause the business to make deeper cuts and said an “uncontrolled” exit from the EU at the end of the year risked “compounding the coronavirus disaster” for the company.
“My message to politicians is this: please don’t push us off a second cliff,” he added.
Carmakers have long warned about the impact of tariffs and border checks on their business if Britain leaves the EU without a trading deal.
Nissan last week reiterated earlier warnings that its business in Sunderland was not viable without a deal. “Imagine if Brexit goes for the worst case with a 10 per cent tariff, imagine what will happen to our business case,” the company’s chief operating officer Ashwani Gupta told the FT, on the day the business announced it would close its Spanish plant in Barcelona.
But Brexit is only one risk to UK carmakers as they struggle to come out of lockdown. Distancing rules that require workers to be 2m apart mean that many production lines are running at reduced capacity.
Bentley faced costs of close to £90m a month and was running at only 50 per cent capacity since reopening last month, Mr Hallmark said.
One carmaker had warned it would be unable to run higher than 50 per cent capacity unless rules were relaxed to allow workers to operate 1 metre from each other, industry body the Society of Motor Manufacturers and Traders told MPs this week.
Mike Hawes, the SMMT’s chief executive, told the House of Commons business select committee that a distancing policy was “not viable in the long term” for Britain’s car factories to remain competitive.
However, the largest problem facing carmakers is demand. Although plants have restarted, sales remain sluggish.
Bentley said the impact of the coronavirus crisis would be felt for two years, with 2021 likely to be “more like normal” and global demand unlikely to recover fully until 2022.
Since the luxury group restarted production on May 11, the business has enjoyed strong orders from China, which eased pandemic restrictions as Europe and the US were going into lockdown in March.
Orders from China were at twice the level of last year, while both April and May “had weeks that were bigger than any month in 2019”, Mr Hallmark said.
Jaguar Land Rover restarted its main Solihull factory in the West Midlands last month to supply the Chinese market but its other UK sites remain offline. Britain’s largest carmaker still has 15,000 staff on the government’s furlough scheme, out of the 18,000 workers it originally sent home.
The cuts come at a time when carmakers are also trying to develop technologies needed to hit emissions rules.
Bentley’s cuts, which will be made on a voluntary basis to staff, overshadowed the company’s new electric vehicle ambitions, which were also announced on Friday.
The company had planned to launch its strategy in March to coincide with its 101st anniversary in July but had delayed the release because of the coronavirus pandemic.
By 2023 all Bentley models will come with a hybrid option, an ambition that has become a commitment, while the company has promised to release a fully electric car by 2026, potentially using technology from its parent company Volkswagen.