JCB, the fourth-largest maker of diggers and other earth-moving equipment in the world, announced that it would be cutting 400 jobs, accounting for around six per cent of its 6,500-strong UK workforce, in response to a slowdown in demand in particular in emerging markets.
"These staff job losses are the first ripple from the downturn in world markets, including China, impacting on the UK economy," Gordon Richardson, of the GMB union, told the BBC.
Richardson warned a "huge wave of uncertainty is likely to lead to further job losses in the sectors that trade with the rest of the world".
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Graeme Macdonald, JCB's chief executive, announced the cutbacks as he detailed what he described as a "perfect storm" in the equipment market, with sales in Russia down 70 per cent, China 47 per cent and Russia 36 per cent. Hitherto strong sales in developed markets are also softening, the company added. A spokesman told the Financial Times growth in the UK had fallen from 30 per cent a year ago to nine per cent.
Caterpillar, the world's biggest maker of earthmoving equipment, this year cut its full-year profit forecast in part because of the slowdown in China and Brazil. Infrastructure consultancy Off Highway Research noted the market for global equipment sales has fallen from $102bn in 2011 to an estimated $84bn this year. "Until China can get back to normality… most economies will be under pressure," it said.
JCB currently has eight factories in Staffordshire, one in Derbyshire and two in Wrexham. Richardson said the GMB union would "do everything we can to avoid compulsory redundancies and to mitigate the impact on the workforce."
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