Blog: Dave LeggettWhich UK plant?

Dave Leggett | 20 February 2009

There's a limit to how much time you can spend trying to get to the bottom of something like the new Unite union challenge to journalists and analysts: name that plant! I've had enough and am beginning to wonder if it's a trick question.

Let me explain. The Unite labour union here has been in to see the British Chancellor in a bid to get more support for the UK auto industry. I'm sure many are right behind him in that. 

But the respected joint leader of the union, Tony Woodley, went for a tactic that has perhaps backfired. In order to reinforce the gravity of the situation he told Alistair Darling that there is a UK car plant employing 6,000 that is so financially distressed that it will close within days unless aid is forthcoming. He then said the same thing to the BBC while refusing to name the plant.

What that has done is prompt much speculation concerning which plant he's talking about. From the calls I have made, it's definitely not (unless the PR person I spoke to is less in the know than Tony Woodley) GM's Ellesmere Port plant, the analysts' perennial favourite for the chop. Marginal though it may be, having narrowly escaped a GM Europe culling a few years ago, Ellesmere Port's workers raised their productivity as part of a deal to get the next generation Astra. And it's been getting investment ahead of that. And it's not the van plant at Luton either.

Okay, what's left? A JLR plant? No, it would appear not from what I have heard from some good sources.

Ford Southampton? Endangered though it is, it makes vans not cars and Woodley appears to have said 'car plant'. Also, it's probably not a direct employer of 6,000 (another of Mr Woodley's clues). 

Bentley? It only employs 4,000 and I cannot imagine that VW would go as far as axing the UK base of a British brand (you can maybe do a few in Germany, but not all of them, surely?). Things are very bad at Bentley though...

Mini Oxford? That would be plain absurd.

Honda, Toyota or Nissan? The UK plants are vital European bridgeheads for their Japanese owners that represent huge cumulative investments. It would surely run counter to their long game strategies. I would bet against it being a Japanese firm. They are probably already planning ahead to next year when the European market starts to recover and they can enjoy the benfits of cheap sterling. But, that said, I am learning to not discount anything in these strange times.

If things are as serious as Unite says, I guess we will know soon enough. I just wish Mr Woodley had been a little more careful with his language. Apart from anything else, people at Ellesmere Port - and its suppliers - may have been caused unnecessary stress. I have seen several reports naming it as the likely plant to go. 

Tony Woodley has certainly succeeded in raising the issue of the state of the UK's auto industry in the national media, but he has also encouraged speculation that will be well wide of the mark. If things really are that serious, isn't it time to name names? If he's concerned about the sensitivity of things with the company concerned, that's a bit misplaced. The truth will be out soon anyway. And car companies may feel a little less like confiding in him in the future.

Anyway, the big picture is that more grief is coming this year - UK and elsewhere - as car companies destock in response to lower orders and market projections. But by the time we get to the final quarter of this year things should be stabilising, painful though things are at the mo.

And yes, some companies will need help to ride this year's storm and the UK government hasn't exactly been quick out of the starter blocks. But I actually have some sympathy with the government that this rather bizarre guessing game isn't helping one jot.

Post-script: It would appear that Tony Woodley was in fact talking about GAZ-owned light commercial vehicle maker LDV, which is attempting an MBO with the help of European Investment Bank (EIB) cash to reportedly reinvent itself as a maker of electric vans. Reports this morning suggest that the company has an urgent liquidity problem and desperately needs bridging finance and is therefore appealing to the UK government. The 6,000 jobs? Direct = 850. There are another 1,200 in the dealer network. And there are approximately 4,000 jobs dependent on LDV in its supplier network. They have been through a lot over the years at LDV and have shown tremendous resilience to simply stay in business. If the EIB thinks it's a goer, then hopefully the current MBO plan won't collapse purely on short-term credit grounds. (DL - 23/02/09 08:25)  

The BBC report


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