British industry took a big knock from the global economic crisis yesterday as Corus, the steelmaker, announced sweeping production cuts and Jaguar Land Rover announced job losses.

Corus, the Anglo-Dutch steelmaker, is cutting production by 20 per cent across all its operations in response to drops in demand from its main customers in the automotive, construction and engineering sectors.

Concerns about the European car industry prompted President Sarkozy of France to ask the European Union to consider a US-style cash injection for carmakers after appeals from the industry for €40 billion (£31 billion).

Corus will reduce output at its main sites of Port Talbot, Scunthorpe, Teesside and Rotherham in the UK and IJmuiden in the Netherlands until the end of the year, when it will review output. The company, which is owned by the Tata conglomerate of India, said: “The decision is aimed at aligning steel production with demand, which is now affected by the consequences of the global financial crisis.”

The production cuts mark the first significant scaleback by Britain's main steelmaker for several years. No job cuts or layoffs are planned among Corus's 24,400 British workforce, nor among its 11,700 workers in the Netherlands. Tata Steel said that it did not plan to make cuts outside its European operations.

Jaguar Land Rover, the premium carmaker owned by Tata, is to cut 200 jobs from its 16,000 workforce. The company said that the move was an efficiency drive rather than a response to the poor car market. Although Jaguar has experienced a slight sales bounce with its new XF model, the Land Rover division has suffered a significant slide in sales. Last month sales fell 49 per cent compared with September last year.

Jaguar Land Rover's factories are working only four days a week or are facing production cuts. This month the Halewood plant on Merseyside, which makes the X-type Jaguar and the Land Rover Freelander, will not operate for a week. The Vauxhall plant near by at Ellesmere Port is closed to reduce output.

President Sarkozy backed the call by ACEA, the European car industry trade body, for a large cash injection for green car development. ACEA wants more than twice the $25 billion (£14.5 billion) given to the US industry because it says there are more car-makers in Europe. Silvio Berlusconi, the Italian Prime Minister, said that he supported the initiative.

Britain's biggest union also called on ministers to support a bailout and provide cash for manufacturing. Tony Woodley, joint general secretary of Unite, said: “The British Government has led Europe on a financial fire-fighting strategy but it is time for us to follow France and Italy in acting to stop the crisis sweeping away our remaining industrial base. If there is aid at the EU level to support manufacturing, then our Government should be fighting to ensure British manufacturing gets its fair slice of it.”

Corus's production cuts come after a series of output reductions by the world's biggest steelmakers, including SeverStal and Magnitogorsk, of Russia, ArcelorMittal and several of the largest Chinese producers. Steel prices on the London Metal Exchange hit record lows this week on weakening demand. Yesterday Far East steel closed at $335 a tonne, compared with highs of more than $940 in July.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive