Deja vu, sadly. LDV goes east as Chinese firm buys its assets
Here we go again. The assets of Birmingham van maker LDV have been bought by the firm Eco Concepts Ltd. This is owned by Dr Qu Li, who has close links with Shanghai Auto, the owner of MG Cars.
Let's be clear. In effect, this is a sad day for the region. Jobs, capacity and potentially R&D will be lost forever. Yet again a major local producer has gone under and will be shifted east.
It wouldn't have happened in France or Germany, of course, where the government stance towards industry is more supportive. And we need to look again at how the administration process works in the UK.
Eco Concept said today that it plans to start a new business in the West Midlands producing and assembling low volume specialist light commercial vehicles. But it could take up to 18 months before vehicle trials begin.
And any new venture is likely to be on a very small scale, employing around 200 people assembling some 2000 vehicles a year. It is clear that the existing LDV sites will not be used. Eco plans to set up a new site somewhere in the West Midlands, with Longbridge in the frame given the Shanghai link.
The Chief Exec of Eco, Clive Griffiths, said: "We will utilise our special overseas connections to help develop fuel-efficient power trains as well as securing certain low cost components.
Dr Li said: "I am very pleased that negotiations with the administrators have reached such a successful conclusion, and furthermore I can confirm that we have secured co-operation and ongoing support from a number of international automotive manufacturers and distributors."
To me this all seems pretty much like code for a lift-and-shift of production and sourcing out to China, with at best a token screwdriver operation here in the West Midlands.
DÃÂ©jÃÂ vu? Yes - think MG.
One wonders whether this is the beginning of the end for the production of light commercial vehicles in the UK - which have been made here in quite significant numbers. Mass van demand would then have to be met by imports.
Until last year there were three main producers in the UK: Ford at Southampton, a GM/Renault joint venture at Luton, and LDV here in Birmingham. The latter stopped production back in December when the double whammy of credit crunch and recession impacted.
With LDV effectively now gone, questions now centre on Ford and GM. The tentative deal between Unite and the likely new GM Europe owner Magna safeguards van production at Luton until 2013 but there are no guarantees beyond then.
Meanwhile, Ford - which assembles vans at its Southampton transit plant - has laid off staff and has stated that it only plans to continue making the Transit panel van at the plant until 2011; after that the site will make only the chassis cab version of the model.
By 2011, production will be halved to 35,000 units a year. Volumes beyond 2011 are uncertain and are likely to be limited. Meanwhile, Ford has invested heavily in Transit van production abroad; the firm is shifting mass production of the Transit to Turkey.
So, the question for the UK government is whether it actually wants van production in the UK. If it does, it needs to step in with a financial package to support Vauxhall operations in the UK and it needs to get behind green van producers like Coventry-based Modec.
And let's not forget that over the last few years some ÃÂ£600m has been invested in the award winning Maxus van range which could still provide an ideal platform for the proposed switch into environmentally friendly green electric vans.
This electric can market is growing rapidly, 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 firms like Modec in Coventry.
In LDV's case the electric Maxus was well developed and ready to roll, and LDV's new owner Eco now owns the intellectual property rights to the electric version.
As battery life improves and the recharging infrastructure in urban areas develops, this market will grow. Eco could be at the forefront of the proposed 'green new deal'.
Despite all the efforts of its management and wonderful workforce, LDV has gone. We now need to get behind van producers - especially the new green van producers - here in the UK, and think creatively about how we can stimulate what will be an important industry in the future. Tax breaks, public procurement, government loans, R&D support and much more needs to be part of the policy mix.
Professor David Bailey works at Coventry University Business School.