Jaguar Land Rover claimed the security of its computer systems was ‘transformed’ and on a ‘positive trajectory’ just months before a devastating cyberattack crippled Britain’s biggest carmaker, The Mail on Sunday can reveal.
The firm is on the hook for billions of pounds of losses after hackers broke into its IT network at the end of August, forcing it to shut its three factories in Solihull and Wolverhampton, in the West Midlands, and Halewood, in Merseyside.
The sites will remain closed until at least Wednesday, but it is feared that the production shutdown could last a lot longer, piling pressure on Jaguar Land Rover’s network of suppliers.
Ministers were this weekend scrambling to pull together a rescue package that stopped short of a Covid-style furlough scheme to pay workers to stay at home.
Jaguar Land Rover’s three factories produce about 1,000 cars a day and employ 30,000 people directly. Another 200,000 workers in the just-in-time supply chain depend on it for work.
Jaguar Land Rover is burning through up to £1 billion of cash every month, experts say.
Sign of the times: Jaguar Land Rover claimed the security of its computer systems was ‘transformed’ and on a ‘positive trajectory’ just months before the devastating cyberattack
The stricken firm had not taken out cyber insurance to protect it from hackers, leaving it liable for all the losses and costs linked to the devastating hack.
The Indian-owned company seems to have been increasingly confident its computer systems could withstand a cyber attack.
Its latest accounts, signed off in May, paint an improving picture of its information security systems, which are described as being on a ‘positive trajectory’.
‘We are on the right path with the necessary momentum and investment to systematically reduce risks while enhancing cyber readiness and resilience,’ the principal risks section of the report stated.
‘IT operations are being transformed,’ the report added.
Jaguar Land Rover’s IT is outsourced under an £800 million, five-year deal to Tata Consultancy Services, which like Jaguar Land Rover is part of the Tata business empire.
Tata Consultancy Services also provided IT services to Marks & Spencer and the Co-op, two retailers hit by cyber attacks this year that cost them hundreds of millions of pounds each. Jaguar Land Rover is highly profitable and has deep pockets.
It made £2.5 billion in pre-tax profit last year and at the end of June had £5 billion of liquidity, made up of £3.3 billion in cash and a £1.7 billion loan facility.
‘This is a pretty solid liquidity position,’ said David Bailey, professor of business economics at Birmingham Business School. ‘JLR will get through this.’
But without Tata’s support, Jaguar Land Rover itself could have as little as three to four months left before it runs out of cash if the disruption continues, Bailey warned.
The company has manually paid £300 million to suppliers in recent days to keep them going. ‘JLR is facing its biggest crisis ever and is doing its bit to keep suppliers going,’ Bailey said.
Tata told MPs this week that it was ‘premature to provide a definitive’ assessment of the financial impact but added the company was in a ‘good position’ to secure extra borrowing if needed.
Hopes that the worst of the cyberattack may be over rose last week when Jaguar Land Rover said some of its systems were back online.
The company said it was ‘working to clear a backlog of payments’ to suppliers as it now had increased its processing capacity for invoicing them.
Bailey added: ‘Tata Consultancy Services clearly has some very big questions to answer as to how JLR was left so vulnerable.
‘This has become the biggest crisis in JLR’s history and has required a massive effort by all involved at the firm to get through this.
‘There needs to be a deep-dive, root-cause analysis of how this happened and how to avoid it in the future.’
Tata Consultancy Services was contacted for comment.
While car production remains on hold, a spokesperson for Jaguar Land Rover said: ‘Our teams are working around the clock, alongside cybersecurity specialists, the National Cyber Security Centre and law enforcement to investigate the cyber incident.
‘The foundational work of our recovery programme is firmly under way and we thank everyone connected with JLR for their continued support and patience.’
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