LDV: Late-Delivery Victory? Almost, but the deal has yet to be delivered...

The deal offers hope to around 6000 British workers; LDV employs 850 workers directly at Washwood Heath, and supports another 1200 at dealers and 3000+ in the supply chain.

The cash has run out at LDV after a catastrophic fall in van sales in the UK. Workers have been on part-time wages and have been in limbo as the uncertainty has dragged on.

A management buyout led by Erik Eberhardson, the outgoing GAZ chairman, didn't take off and despite most suppliers sticking with the firm, it seems that a few were willing to push the firm into administration.

The latter could be catastrophic for LDV as once administrators are appointed, their duty is to deliver the maximum return to creditors, irrespective of the economic development and public interest aspect of a takeover.

We saw this four years ago when Nanjing bought the assets to MG Rover. That led to a lift-and-shift out to China and a stalling of efforts to restart small scale production at Longbridge until Shanghai re-appeared on the scene after acquiring Nanjing.

Westar is a credible buyer. LDV's links with Westar go back to 2007, when it set up a partnership through which Weststar assembles and then markets LDV's award winning MAXUS vans in around twenty countries in Asia and the Middle East.

The earlier planned management buyout had planned to relaunch LDV as a green van maker. Let's hope that both the deal goes through and that the van maker continues the investment in new green technologies.

It should be stressed that everyone at LDV has quite literally pulled out all the stops to keep the firm afloat. A management buyout (MBO) team worked frantically to try to save the firm before looking for an investor to come in. Workers voted for a pay-cut and have toured the country in LDV vans looking for sales. The firm now has a bulging order book to the tune of £11 million.

Whilst LDv hasn't made a profit in several years, some £700m has been invested in the award winning Maxus van range (a healthy asset and not a toxic one) which could provide the platform for the proposed switch into environmentally friendly green electric vans.

The latter is a rapidly growing market especially in the depot-to-depot market in urban areas. Overseas this has been supported by tax breaks - something the government here could do to help LDV and Modec in Coventry.

As battery life improves and the recharging infrastructure in urban areas develops, this market will undoubtedly grow. LDV could be at the forefront of that green new deal if the takeover can be agreed. Put simply, there is a new market unfolding here, and LDV effectively said to the government: "put your money where your mouth is" when you talk about a low carbon future. With Westar waiting in the wings, the government has finally stepped up to offer hope to LDV and workers dependent on the firm.

Two final points in support of BERR's intervention. As noted in previous blogs, LDV contributed around £7 million in 2008 in PAYE and National Insurance to the government's coffers.

You can easily treble that by adding in the supply chain and dealer network. OK, some of those firms and people might get other jobs and hence still pay NI and PAYE if LDV does close, but even a conservative estimate suggests that the government picks up a very useful £15-20 million a year from LDV's operations. Add in some £50 million in purchasing and £50 million in exports and you can see the value of LDV to the economy and the government.

We also know from our research on the collapse of MG Rover that quality jobs matter and that three years on workers were earning £5600 a year less in real terms than when they were at MG Rover. The Rover Task Force cost the government £150 million in picking up the pieces. And in this case, the LDV plant is in one of the most deprived areas of Birmingham. Many workers would struggle to move on, hence the huge significance of today's news.

LDV isn't out of the woods yet, but as we've repeatedly made clear in these blogs, there is a deal to be done here, a potential future for a green van maker.

PS This isn't the same Westar company that featured in the TV series Dallas...

LDV's Long and Winding Road

1993 LDV's parent, Leyland DAF goes bust. Managers buy out LDV for £8m with backing from venture capitalists 3i.

2000 Daewoo, LDV's South Korean partner, goes bankrupt, delaying launch of its new van range, the Maxus.

2001 Volkswagen in discussion on a 50 per cent stake, but talks stall.

2004 Maxus van launched to critical acclaim, winning the Professional Van and Light Truck Magazine "Van of the Year 2005" and awards since, including "Van of the Year", "Minibus of the Year" and "Combi of the Year".

2005 Sun Capital Partners, a US investor, buys LDV out of a pre-pack administration. 3i sell out their stake.

2006 GAZ, the Russian automotive group, buys LDV from Sun Capital
December 2008 LDV suspends production as the double whammy of recession and credit crunch bite

February 2009 MBO team asks the government for a loan of £20m to £30m to restart production.

March 2009 Loan request cut to 4-5 million as GAZ say there is no more cash but LDV talks to possible foreign investors.

April 2009 LDV applies for administration. A last-ditch deal is reached with Malaysian firm Westar, with a government bridging loan. Due diligence continues.

Professor David Bailey works at Coventry University Business School and is Chair of the Regional Studies Association.