Production in the UK in the first three months of 2009 will be around 75% lower than at the same time last year and an anticipated upturn in the second quarter now shows no sign of materialising, JCB said.
JCB chief executive Matthew Taylor said:
"Back in November we forecast a moderate second quarter recovery in 2009 based on the fact that governments around the world had pumped a huge amount of money into recapitalising financial institutions and had committed to stimulus packages which included significant spending on public construction projects.
"Two months later, despite the recapitalisation, customers are still struggling to buy machines because of a lack of available credit. And with Government-funded construction projects not moving forward quickly enough, this means the anticipated second quarter recovery simply won't happen.
"The ongoing reluctance of the banks to provide credit is aggravating an economic downturn which is now becoming much steeper than we could have ever envisaged. This unprecedented situation needs to be addressed with some urgency so that confidence and stability can return; otherwise irreparable damage will be caused to the UK's manufacturing industry."
JCB's Staffordshire plants hit by the redundancies are: the World HQ, Rocester; JCB Heavy Products, Uttoxeter; JCB Compact Products, JCB Earthmovers and JCB Cecilly Mills Operations, Cheadle and JCB Cab Systems, Rugeley. JCB Transmissions,Wrexham and JCB Power Systems, The Derbyshire business has also been hit.
In October GMB members voted for a shorter, 34-hour working week, a move which continues to protect a further 332 shopfloor jobs, JCB said.
Last week - when there was no production at JCB - the company undertook its biggest-ever training initiative in its history, with more than 2,000 employees completing a programme which will result in achievement of NVQ and City and Guilds qualifications.
The latest job losses affect 593 shopfloor and 91 staff positions and are in addition to 1,000 redundancies announced since July.
JCB employs around 7,900 globally, with around 4,800 in the UK. JCB has more than 4,300 employees in Staffordshire.