Yesterday was a grim day for the World and a grim day for the UK Automotive industry. On the same day as terrorists were running rampant in Mumbai, contractors of the Midlands were waiting in trepidation for the news whether they still will have jobs in the New Year.The news when it came for 850 Midlands based men and women in engineering, IT and manufacturing in Jaguar Land Rover will doubtless have come as a shock to some.

Tough financial times have required clear and decisive action by leaders of our automotive industry. Car sales in August were for Jaguar Land Rover back to 1966 levels. Their product line is all targeted at premium and luxury vehicles typically the first to take a hit in sales during a recession. Purple Squirrel has the inside story that they are in development of a number of hybrid drive, fuel economy and downsized derivatives - but these simply can’t come quickly enough. What will be going on now behind the scenes is a prioritization of resources to advance these projects as quickly as possible.

It is the same story in Ford if not worse. They have recently cut 150 UK contractors based in Essex, are moving work from UK to North America. I also read there are discussions about selling Mazda, currently the centre of engineering for small and medium vehicles, presumably so those jobs can go back to America too?  When I worked at Ford back in 2000 they used to tell us the share price was under-valued at $14 per share. Today the share price is Ford share price is on the floor at $2.40. This crisis all started with the run on fuel prices and the banks falling earlier this year.

All of the car manufacturers are taking a hatchet to their production volumes cutting output, extended holiday shutdowns. The automotive industry leaders that I talk have already cut their contractors and cut back on plans for expansions. For now they are trying to hold the ship together and reduce the fixed and variable cost base as much as possible.

A recession such as which we are now seeing will soon have the “Ripple Effect” not just through the logistics and supply chain but also beyond.  Obviously families now facing the prospect of reduced or no income, will not be hitting the shops no matter how tempting the sales, but it goes much further. Leisure sector, housing, holiday sector, even into nursery schools who will see a drop in demand if now one parent will be home to take care of children. One wonders how deep it will go and when the turnaround can come?