JCB, the digger maker, has announced 500 redundancies in response to the downturn in the building industry. It is one of the first big slugs of job cuts in manufacturing in the UK, where damage from the economic slowdown has until now been concentrated in financial services, real estate and construction.

Matthew Taylor, chief executive, said: “Many JCB dealers around the world are experiencing lower sales rates because of reduced customer activity, mainly in the housebuilding and commercial property sectors.”

The company, owned by the Bamford family, said there had been a “rapid decline” in orders, resulting in a 20 per cent reduction in scheduled production.

Some manufacturers say their exposure to fast-growing emerging markets will protect them from the worst of the downturn. However, JCB is relatively under-represented in these markets compared with some competitors, even though it operates factories in India, China and Brazil. Mr Taylor said: “We do not expect to see a recovery until late 2009 at the earliest.”

JCB said it would spread the redundancies across its UK factories, which are mostly in the Midlands. There will also be proportionate job losses among administrative staff. JCB’s headquarters are at Rocester in Staffordshire, where it makes two of its most successful products, the backhoe loader and the telescopic handler. It also has a diesel engine plant, opened at a cost of £80m, at Foston, Derbyshire.

The job cuts follow a period of rapid expansion that has made JCB the world’s third-largest manufacturer of construction equipment. Last year, it sold more than 72,000 machines, a record, with turnover reaching £2.25bn for the first time. JCB’s share of the world construction equipment market rose from 10.4 per cent to 12 per cent. During 2006 and 2007, JCB increased its headcount from 6,300 to 9,000. Employment at its Staffordshire factories climbed 44 per cent to 5,700.

In 2001, JCB cut its UK workforce by 350 in the aftermath of the foot and mouth epidemic. This time, however, demand for its machines from farmers has remained steady, the company said. JCB is chaired by Sir Anthony Bamford, son of founder Joseph Cyril Bamford.

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