UK car parts firm jobs threatened

by GD Sun 07 Dec 2008, 3:30 pm

UK car parts firm jobs threatened

Carmakers have cut back on production as sales have slumped

The UK arm of leading European car parts business, Wagon Automotive, looks likely to go into administration.
A last-minute bank refinancing deal to tide it over the next few months is understood to have fallen through.
Birmingham-based Wagon Automotive employs 500 workers in the West Midlands and supplies parts to Ford, Honda, General Motors and Nissan.
The company, which employs 4,500 people across Europe, has struggled because of the slump in the car market.
Several of its customers have cut back production or temporarily shut plants in order to reduce their own costs.
While Wagon Automotive's UK business is expected to go into administration this week, the future of its other factories is still to be worked out.
All Wagon Automotive's plants are expected to remain in operation while buyers are sought.
Funding problems
Shares in Wagon were suspended in October after it reported a "steep deterioration" in the European car market and said it was in talks with lenders about its funding situation.
The firm - which is controlled by the American billionaire Wilbur Ross - is facing administration because it has failed to persuade its banks to led it more money.
The banks, led by the Royal Bank of Scotland and also including Lloyds TSB, both of which are now largely controlled by the government, declined to contribute 12m euros (£10.3m; $15.2m) to a 50m-euro funding package.
Wagon's carmaking clients had put up 30m euros and Mr Ross was understood to have been prepared to contribute 10m euros through the purchase of one of its subsidiaries.
The funding package would have kept the firm running for another three months. The banks had already agreed loans totalling 155m euros during the summer.
The Chancellor, Alistair Darling, is set to chair the inaugural meeting of the Lending Panel later this week, which was set up in the pre-Budget report to monitor closely banks' lending practices to companies and individuals.
The company traces its roots back to Wagon Repairs, a business set up at the end of World War I to maintain railway rolling stock.
The BBC's business correspondent, Joe Lynam, said: "The British car industry faces its biggest challenge since the 1970s.
"Car sales and production are down 37% and 25% respectively in the past month as consumers postpone or cancel big ticket purchases," he said. (from BBC News)