UK: Daewoo plant deal to give van maker new lease of life - paper
UK van manufacturer LDV is poised for a new lease of life after completing negotiations to ship a factory from Poland to Coventry to produce a new range of vehicles, the Daily Telegraph reported.
The newspaper said LDV's 1,000-strong workforce could double over the next three to four years and production quadruple to 50,000 if the overhaul to its product line makes an impact in the international market.
The Telegraph also noted that the recruitment drive could provide a lifeline for employees at the nearby Alstom train-making plant, now scheduled for closure by its struggling French parent. "We are starting to recruit skilled engineers," chief executive Allan Amey reportedly said.
The newspaper said LDV is seeking to raise a further £100 million to complete the investment programme at Coventry which would represent a recovery from the setback it suffered when its joint venture partner, South Korean motor manufacturer Daewoo, collapsed three years ago.
Amey is in talks with shareholders, including [investment capital company] 3i and banks, but could face problems if he approaches the government for help, the Telegraph said, noting that the Trade Department provided LDV with £25 million towards the cost of modernising Coventry as part of the original Daewoo deal.
The newspaper said LDV and Daewoo planned investment of about £400 million to produce a new range of light commercial vehicles in Coventry and Poland, only for the programme to be frozen by the Daewoo crisis. Amey tried to find a new partner to replace Daewoo but negotiations to bring in Volkswagen, the leading German vehicle manufacturer, ended in failure last year, the report added.
The Daily Telegraph said Amey has now hammered out a deal with Daewoo receivers in Seoul and Poland to help re-equip Coventry for the new range, buying £125 million of tooling from the Polish plant and South Korean factories and shipping the plant to Britain.
He resisted pressure to complete the project in Poland and ended up striking a tough bargain for 6,250 tonnes of equipment, the paper noted.
Amey told the newspaper: "We have been negotiating for 10 months. It has been exhausting and complex but I feel we have secured a good deal."
The Telegraph said the logistics of using 245 trucks and 18 low loaders over a two month period to move the tools are proving difficult, with three 27-tonne presses posing the biggest problems.
The report said LDV is negotiating with Polish authorities to remove overhead tram lines and track to avoid damage as the heavy presses pass through towns, and is talking with officials in Germany, Holland, Belgium and France about reducing the risk to roads.
Ironically, the Daily Telegraph noted the presses will have a police escort on their continental journey but UK police have refused to accompany them and are insisting the low loaders will have to travel separately on the last stage of the journey to reduce the risk of traffic disruption - it will take 33 days to unload all the trucks.
The newspaper said LDV hopes to start production of the new range of light vehicles next year and is negotiating with distribution partners to create a stronger export network.
According to the Telegraph, Amey said: "I estimate we have lost 18 months as a result of the Daewoo problems but I'm confident now we can get back on track."
Turnover is running at around £200 million a year against a hoped-for £250 million and the business has slipped into the red, the Daily Telegraph said, noting that LDV has had a chequered history having risen from the ashes a decade ago after Leyland DAF went under.