Workers surprised as JCB announces profit after mass job losses

DIGGER-MAKER JCB has seen profits drop by £148 million as it continues to be hit by a massive downturn in the construction market.

The Rocester-based firm has announced pre-tax profits of £39 million for 2008, down from a record £187 million the year before.

The company sold 57,000 machines last year, 15,000 fewer than 2007, which accounted for a drop in revenue from £2.25 billion to £2 billion.

JCB has axed around 1,600 jobs in the last 18 months and bosses say such "tough decisions" have allowed it to stay afloat.

However, the firm has retained its position as the world's third-biggest construction equipment brand with a 10.8 per cent market share.

And it has also announced a £3 million investment to build a new factory in Sorocaba, in Brazil.

JCB chairman Sir Anthony Bamford said: "After several years of growth, 2008 was very challenging for the construction equipment industry.

"JCB responded quickly to the downturn by taking difficult decisions to ensure production remained aligned to demand.

"These actions ensured we remained profitable and the ongoing cost reduction programme at JCB means the company is set to emerge from the downturn stronger, leaner, fitter and more successful.

"This will mean JCB can continue to invest in its products and factories, which is vital to meet the demanding requirements of our customer base."

GMB union representative Gordon Richardson admitted some members were surprised to see a "reasonable" profit.

He said: "I can understand why the men on the shop floor feel a little perturbed that JCB has still made a profit – £39 million can't be sniffed at. It's certainly not nice for those who have been made redundant.

"But the way I look at it is, if JCB can increase its margins, it will be able to re-employ those workers who want to come back.

"The threat of lay-off is never far away and we hope this profit will mean jobs are safe for now."

The new Brazilian factory, which covers 14,000sq metres, has been built to meet demand on the other side of the Atlantic. Chief executive Matthew Taylor said: "Since JCB began manufacturing in Brazil nearly a decade ago, we have made significant strides in growing our market share in the Latin American region.

"The volume of excavators JCB sells in the region justifies this investment and local assembly will put us in a much more competitive position."

However, the company reiterated Staffordshire remained at the heart of its operations by pointing out production at the new £40 million Heavy Products plant, in Beamhurst, began this year.