JCB warned that its sales could fall a further 25 per cent this year, on top of a decline of about 20 per cent in 2008, while also announcing a further 684 redundancies in its UK workforce.

The extent of the slide in demand affecting Britain’s biggest construction equipment-maker is another reminder that the pace of the downturn in manufacturing shows no signs of slackening.

Matthew Taylor, JCB’s chief executive, said the reason behind the need to cut nearly 700 more jobs – on top of the 1,000 redundancies announced since July – was that borrowing conditions remained “extremely difficult” both for builders and also for companies that rent out equipment.

Mr Taylor said the UK “was no better and no worse” than many other countries in terms of the availability of credit.

“We had thought that because of the moves taken by governments to pump money into banks, then by now more of the money would be finding its way to businesses. But there has been no sign of an improvement,” Mr Taylor said.

In 2007 JCB – which is owned by the family of Sir Anthony Bamford, its chairman – had sales of £2.2bn, with about 20 per cent coming from the UK. India is the company’s biggest market, accounting for about a quarter of revenues, with the US responsible for 10 per cent. In 2007 pre-tax profits were £187m. The company has yet to give a guide to its earnings last year.

JCB is among the eight largest construction machinery makers worldwide, with its main competitors being Caterpillar and CNH of the US, Japan’s Komatsu and Volvo of Sweden. All these companies have also been hard hit by the credit squeeze affecting the building industry.

Mr Taylor said that if JCB could restrict the fall in sales this year to a year-on-year 25 per cent “this would be a fairly good result”. In the first three months of 2009, production in the UK – where the company does most of its manufacturing – is likely to be 75 per cent lower than the same period in 2008.

He said he was “hopeful” of a global upturn in the second half of 2009. “The underlying requirement for construction projects is extremely strong.”

The JCB plants affected by the latest redundancies are mainly in the Midlands and Wrexham, north Wales.

JCB employs 7,900 globally, with 4,800 in the UK. The company has expanded rapidly since 2002, with global employment almost doubling while the UK workforce has risen by a third.

Financial Times

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