The recent cyber attack on Jaguar Land Rover (JLR) and its ongoing closure has triggered a wave of disruption across the entire supply chain which could have catastrophic implications, according to national audit, tax, advisory and consulting firm Crowe.
Johnathan Dudley, Crowe’s head of manufacturing and SME corporate business, said: “Unlike the COVID-19 pandemic where production resumed relatively quickly, the uncertainty surrounding JLR’s reopening – and the return to normal operation – has left businesses throughout the supply chain in limbo.
“Direct suppliers of components and raw materials are facing critical impacts, but so too are other car manufacturers, which are suffering from reduced production in their supply chains.
“Additionally, transport firms, caterers, maintenance providers, plant hire companies, and automotive repair businesses that are unable to source parts, are feeling the effects.”
He said payment delays are becoming common, and traditional credit control measures are deemed ineffective when customers no longer require supply.
“Many businesses across the Midlands and South West region and beyond are implementing emergency cost-saving measures, but the majority of these will be short-term fixes. With some businesses already losing significant sums in revenues and profits, the situation may not be sustainable – even in the short term for many.
“The human impact is also mounting. Individuals facing reduced hours or redundancy are tightening their belts, which in turn affects other sectors – such as retail and leisure – which are already under pressure.”
During COVID-19, Government support schemes like furlough and CBILS helped buffer the blow. Today, there are calls for a safety net for many supply chain businesses.
Dudley said this could arguably come in the form of a Government-backed fund, managed by an independent task force, that can validate supply chain hardship and quickly provide interim cash flow loans.
These loans could be converted into grants if businesses remain open and jobs are safeguarded. This would, however, need to go beyond furlough support, which only covers wages. Businesses are facing machinery finance, rent, and other overheads and financial pressures beyond payroll.
For many SMEs with rent, salaries, VAT, and PAYE payments looming, the urgency is likely to be growing.
Dudley added: “While efforts to restore JLR’s operations are commendable, the Government may need to act swiftly to support the broader supply chain.
“Without it, there is a real risk to businesses which support not only automotive manufacturing, but also other strategic sectors outlined in the government’s Industrial Strategy – ranging from advanced manufacturing and clean energy to defence and life sciences.”
