Jaguar considers UK engine factory

Jaguar Land Rover is considering building an engine factory that would most likely be based in the UK, its existing manufacturing base, as the Indian-owned carmaker prepares to expand production.

The company made no comment on reports that Wolverhampton and south Wales had been shortlisted as possible sites for a new engine plant that might employ 1,000 people.

It also declined to comment on suggestions that a site in India was being considered as a low-cost location in spite of the logistical challenges.

But the company had “ambitious plans for growth”, a representative confirmed on Sunday. Tata, its owner, could make a decision about whether to build a UK engine factory as soon as next month.

Jaguar Land Rover – bought by Tata Motors in 2008 from Ford’s luxury venture Premier Automotive Group – continues to source its engines from the US carmaker. But the company’s plan to expand production volumes as it develops new models independently of Ford could see it continue to buy engines from its previous owner while it also branches out into building its own engines, it is understood.

Production of Jaguars and Land Rovers, all of which are made in the UK, have recovered since the worst months of the 2009 recession. The company has also reversed cuts in its workforce prompted by the general collapse in car demand, expanding from about 14,500 two years ago to almost 18,000 today.

Talk of the possible addition of another major UK factory comes months after the company said it would maintain production at all three of its existing assembly plants. JLR announced in October last year that it was reversing a decision announced in September 2009 to shut one of its factories in Castle Bromwich in Birmingham or at Solihull within 10 years.

That decision effectively safeguarded jobs of 7,000 jobs in the Midlands and the survival of assembly at Solihull, Castle Bromwich and Halewood on Merseyside. Suggestions that a new plant may be built in the UK also comes after an apparent rapprochement between JLR and the British government.

Last month, Ralf Speth, chief executive, accompanied Vince Cable, UK business secretary, around the Halewood plant as the company outlined its commitment to support UK suppliers over the next five years.

Mr Cable praised JLR for awarding £2bn ($3.3bn) worth of contracts to UK businesses.