JLR cyber incident: ongoing impact on the supply chain

The cyber incident that led to the temporary closure of Jaguar Land Rover (JLR) has caused significant disruption across its entire supply chain. Although production at JLR is reportedly restarting, businesses within the supply chain are still grappling with the loss in work and cashflow over several weeks. 

The impact is widespread. Many direct suppliers of components and raw materials and other car manufacturers are still 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 continue to be impacted.

Despite announcements of funding and support measures, there remains a real concern that cash may not be making its way to businesses in the supply chain quickly enough. Many businesses at the top of the supply chain have yet to receive funding or see their cashflow resume and there remains uncertainty around how long will it take for support to reach those further down the chain.

Even when cashflow stabilises, the income and profit losses accumulated during JLR’s closure are set to leave a hole to be plugged. This raises pressing questions: What will be done to help businesses recover the six weeks of lost sales and profits? What measures are being taken to fill the financial gaps now embedded in supply chain businesses?

For some, the lack of immediate funding may also be preventing them from bringing their employees back to work and buying the materials they need to restart production.

Timely and accessible support continues to be critical. While schemes like the Growth Guarantee Scheme (GGS) may suit some businesses, they typically require borrowers to provide personal security more than they can reasonably afford or are prepared to risk in what continue to be uncertain business conditions.

One solution, proactively proposed by Crowe and shared with relevant parties, could be a government-backed fund, managed by an independent task force, designed to validate supply chain hardship and quickly issue interim cashflow loans. These loans could be converted into grants if businesses remain operational and jobs are protected. However, this support must go beyond furlough schemes, which only cover wages. Businesses also face costs related to machinery finance, rent, and other overheads.

What’s needed is a targeted, relatively modest injection of cash to plug the gap. Such support could be the difference between survival and collapse for countless businesses across the supply chain.
Another major concern is the potential deterioration of credit ratings due to weakened performance. Businesses may need support with credit agencies to seek leniency and avoid long-term financial damage.

The resilience shown by supply chain businesses has been commendable. Yet, even when funding begins to flow, businesses will not be out of the woods. With the Christmas holiday period approaching – bringing inevitable closures and production pauses – businesses must plan their finances carefully.

If the supply chain fails to recover, the consequences could hamper the UK’s Industrial Strategy. There is a real risk to businesses which support not only automotive manufacturing, but also other strategic sectors outlined in the Strategy – from advanced manufacturing and clean energy to defence and life sciences.