LDV, the UK van-maker owned by Russian oligarch Oleg Deripaska, said today that it will go into administration on May 6, after failing miserably to attract new investment. It’s another big blow to the UK automotive industry – and to employment in the West Midlands, given that LDV employs 850 people at its factory in Birmingham, plus several thousand more at various stages of its supply chain. But after several years of consecutive losses, it doesn’t exactly come as a huge surprise…
LDV CEO Evgeniy Vereshchagin apparently announced the bad news to staff by letter, and sent them home to ‘await further information’ (apparently their chances of getting paid past the end of last week are slim). He’s spent the last few months desperately searching for new funds – but his plan to arrange a management buyout fell through, and the hoped-for interest from foreign trade buyers hasn’t materialised. Asian group Westar is apparently keen – but Vereshchagin seemed to suggest that they’re struggling to come up with the funds (presumably because the banks won’t touch the deal with a bargepole).
The other alternative, of course, was some kind of Government bail-out. LDV has been trying to persuade Lord Mandelson’s Business Department to stump up a bridging loan that would allow LDV to re-launch as an electric van specialist – but it sounds like the Government was distinctly unimpressed by the idea. And in truth, this was always unlikely: Deripaska is famously a big mate of Mandelson’s (hence the notorious yacht holiday last summer), so the Government would be desperate to avoid accusations of cronyism.
And to be fair to Mandy and co, many would argue that LDV isn’t worth saving. The van-maker has been unprofitable for several years, so it’s not just a blameless victim of the slump in demand for commercial vehicles (although obviously that didn’t help). Arguably, it lacks the scale to compete against the big boys of the market – bailing it out in the short term wouldn’t change that. But that won’t be much consolation to the hundreds, possibly thousands, of people whose jobs are now at risk.
You might think the obvious answer would be for zillionaire Deripaska to swoop to the rescue himself, being Russia’s richest man and all. But after losing $25bn this year (according to Forbes), maybe he’s decided to keep his money under the mattress for the time being.
N.B. For another view from the West Midlands automotive industry, check out our interview with Jaguar Land Rover boss David Smith, fresh from the latest issue of MT.
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Wheels about to fall off at LDV
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SMEs give big thumbs-down to Budget