Group Lotus has missed out on a £27.5 million loan from the government it would have used to fund an expansion to its Hethel manufacturing facility.
Lotus had warned before the loan application to the Regional Growth Fund’s £450m funding pot that failure to secure the funds could see it shift production of its new models, including 2013’s Esprit, overseas.
Lotus would have used the loan to “expand and maintain its production at its Hethel site, creating 1200 new and sustainable, high-value jobs and safeguarding the existing 1200 jobs”.
The Norfolk firm is now poised to apply to round two of the Regional Growth Fund’s loan scheme. Planning permission for the Hethel expansion was approved by South Norfolk council last week.
“Despite the clear synergies between Lotus’s growth plans and the fund’s objectives to enable private sector organisations to invest in projects that would create jobs and secure long-term growth, the bid team decided that the money was better invested elsewhere,” said Lotus.
“Following this decision Group Lotus is currently exploring all available options, including the possibility of submitting an updated bid for round two of the funding, which is set to close on July 1.
“Lotus’s original bid application was for a £27.5m loan which would have been put to good use in research and development, crucially allowing Group Lotus to release capital previously allocated to R&D to build the new production plant therefore creating approximately 1200 additional jobs.”
Other manufacturers including Nissan, Jaguar Land Rover, Bentley and General Motors were all successful in their applications to the Regional Growth Fund.
Despite this blow to Hethel’s expansion, the current facilities are now in line for an upgrade, after Lotus’s parent firm Proton secured a £270m loan from six Malaysian banks.
Proton’s managing director Syed Zainal Abidin Syed Mohamed Tahir said: "The £270 million will primarily be used for product development,” adding “part of the loan will be used to upgrade the Lotus facilities in Norfolk".