JCB is to cut several hundred jobs in Britain after a rapid decline in orders for its construction equipment.

The heavey engineering group that has factories in 18 countries, is cutting 500 manufacturing jobs and expects to make a further “proportional” number of positions redundant. It employs 5,700 in the UK and 9,000 in the rest of the world.

The company, which is the world's third-biggest construction machinery maker, is cutting its production schedule by 20 per cent for the rest of 2008.

JCB, owned by the Bamford family, has been one of the big success stories in British engineering. However, with equipment ranging from small excavators to giant machinery, it is heavily dependent on the construction industry. In the past few weeks there has been a swath of job losses among housebuilders as the credit crunch has bitten.

Matthew Taylor, chief executive, said: “JCB dealers around the world are experiencing lower sales rates because of reduced customer activity, mainly in the housebuilding and commercial property sectors, and this has a direct impact on our machine build programmes.”

The company said it was beginning talks with the GMB general union, which represents workers at the British plants, over the job cuts.

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