By Beverly Rademacher

Copyright expressandstar

“This isn’t a November problem, it’s not an October problem, it’s a September problem,” Johnathan Dudley, head of manufacturing and SME corporate business at accounting and consultancy firm Crowe, told the Express & Star as he said immediate funding is needed to help small firms in the supply chain through the crisis that has shut down computer systems and brought production at JLR to a standstill for more than three weeks and counting.

He said he’s already been hearing of businesses desperate for help having been told firms they do business with cannot pay because they have instructed insolvency practitioners.

He warned the criticalness of the situation will not appear in official statistics for weeks but stressed the time for action is now – describing the situation as “pretty damn immediate”.

“Lots of people have shared experiences with me,” he said.

“There are businesses saying if there aren’t any changes we’re at least going to be shedding people and there’s clear evidence that businesses are not paying each other at the moment.

“I know there are businesses already saying to other businesses ‘I’m not paying you because I’ve appointed an insolvency practitioner’.

He said thousands of small to medium businesses are being impacted by the almost month-long production pause, which is expected to continue until at least October 1 and he said the situation is “way worse than Covid”.

Mr Dudley said: “Even when they get going again it will take them time to get back up to speed which is why most people are saying even if they can get going on October 1 they’ve still got the problem of getting back up to speed.”

And he warned: “There are already businesses factoring in that they won’t be back to normal at best until the new calendar year. That disruption is way worse than Covid because JLR and their supply chain during Covid actually got back making cars using social distancing about a month after lockdown.”

“Immediate action” is needed to help businesses in the JLR supply chain to make it through, he said, but no-one knows precisely how many firms are affected by the crisis.

He said JLR might know who all of their tier one suppliers are and “a few at tier two” but he added: “I promise you they don’t know who the tier threes and fours are.”

And he warned: “It’s not just in the West Midlands – it’s much further afield.”

Mr Dudley said he’s working with the local chambers of commerce and is urging businesses affected to complete a survey launched by the Greater Birmingham, Black Country, and Coventry and Warwickshire Chambers of Commerce to gather evidence needed to help businesses get the support to weather the storm.

He told the Express & Star: “There is an urgent need for short term funding available for SMEs in hardship through no fault of their own.

“It’s not just in the manufacturing supply chain because it’s wider than that. It impacts hospitality and leisure, it impacts professional services, it impacts all sorts.”

He said this could 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. Such loans could then be converted into grants if businesses remain open and jobs are safeguarded. Measures, however, would need to go beyond furlough support, which only covers wages, as businesses have machinery finance, rent and other overheads and financial pressures beyond payroll.

“I would urge SMEs that have been affected to complete the West Midlands chambers’ survey, he said – adding: “In conjunction with the chambers we will use that information on Friday when we close it to urgently lobby as necessary. At the moment we need the evidence. We want to use the evidence from that survey to drive immediate action.”

The Black Country Chamber of Commerce estimates around 100,000 people are working in the supply chain for Coventry-based JLR, which has huge manufacturing bases alongside the M54 near Wolverhampton and Telford, as well as in Solihull.

A spokesperson for the Chamber said: “We urgently need data from suppliers to understand the scale of the impact and to feed potential solutions into the national response being coordinated by JLR, government, and the SMMT.

“The attack has frozen parts orders and locked suppliers out of JLR’s digital ordering systems, preventing deliveries and fulfilment of contracts. This is affecting both the production of new vehicles and the maintenance of existing ones.

“This crisis is now affecting hundreds of local automotive businesses. While efforts are underway to restore systems, we want to ensure supply chain businesses across our region receive the support they need to weather this critical period.”

The anonymous survey can be completed online at https://lnkd.in/eNkHbmT8 and it will be open for responses until Friday September 26.

JLR has said its teams continue to work around the clock alongside cybersecurity specialists, the NCSC and law enforcement to ensure production can restart safely and securely – adding that its focus remains on supporting customers, suppliers, colleagues and retailers who remain open.

A statement issued by the company confirms production remains paused until October 1 and states: “We fully recognise this is a difficult time for all connected with JLR and we thank everyone for their continued support and patience.”