Press Report : Loans ‘failure’ blamed for JLR research axe

Jonathan Walker, Birmingham Post, 11th June, 2009

Jaguar Land Rover is set to axe vital research and development projects because the Government’s heavily-hyped scheme to help car makers get loans has failed to provide a penny to any manufacturer, six months after it was launched.

Union leaders told the a Commons inquiry that JLR was planning to cut back on research because it didn’t have the money while, when asked how many loans or loan guarantees had been issued, the civil servant overseeing the programme told a Commons inquiry: “It’s a round number – it’s none.”

Business Secretary Lord Mandelson announced plans for a £2.3 billion support scheme, called the Automotive Assistance Programme, in January. However, speaking to the Commons Business and Enterprise Committee, the civil servant in charge of the scheme, Ian Gregory, said he was “disappointed” that no money had been allocated. He said: “Nobody is more frustrated than me that we haven’t actually made any guarantees or loans under the schemes. That’s what I’m here to do.”

With the lack of progress on this, JLR are now in a position where some of their investments, because of the lack of cash, are in serious jeopardy.” Dave Osborne, Unite

Dave Osborne, Unite union’s national officer for the automotive sector, said: “With the lack of progress on this, JLR are now in a position where some of their investments, because of the lack of cash, are in serious jeopardy.”

The Committee’s Chairman, Peter Luff MP (Con, Mid Worcestershire), asked why it had taken so long to come to an agreement with JLR. Business Minister Ian Lucas, who was also giving evidence to the inquiry, said: “It is hugely important, and clearly it is of great concern to everyone who works there. I am saddened that there are issues that are commercially confidential relating to that individual company that are being discussed at the moment.”

Speaking to The Birmingham Post after the hearing, Jaguar spokesman Don Hume said: “I think these are potential actions that would have to be taken if things didn’t go well. But as of now, we are managing to keep on track because research and development progress is important.”

I think these are potential actions that would have to be taken if things didn’t go well. But, as of now, we are managing to keep on track because research and development progress is important.” Don Hume, Jaguar Land Rover

Under the Automotive Assistance Programme, vehicle manufacturers were invited to apply for loans of up to £1.3 billion from the European Investment Bank, guaranteed by the Treasury. The Government would also lend up to £1 billion itself, Lord Mandelson said.

The pledge followed warnings from the Society of Motor Manufacturers and Traders, which represents the vehicle industry, that firms such as Jaguar were in dire trouble because the banking crisis had cut off their supply of credit.

In April, there appeared to be a breakthrough when the Government announced it had agreed guarantees allowing JLR to borrow £340 million from the European bank but it emerged that Ministers had imposed conditions that Jaguar’s Indian owners Tata could not accept, such as the right to choose JLR’s chairman and have a seat on the board.

[Source: Birmingham Post]

Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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