UK's largest part supplier in danger of closing, putting 500 jobs at risk
8 December 2008

Wagon Automotive, one of the UK’s biggest car parts makers, has called in the administrators this morning, putting 500 UK jobs in jeopardy.

Talks to save the firm - which has an annual turnover of £860 million and makes panels for Honda, Ford, General Motors, Land Rover and Nissan – collapsed over the weekend after banks refused to lend it any more money.

The supplier employs around 4500 people across Europe.

Wagon needed a €50 million (£43m) funding package to stay afloat. It’s understood that €30 million (£25.9m) had been secured from the car makers it supplies, with a further €10 million (£8.6m) added by boss Wilbur Ross.

But crucial lender the Royal Bank of Scotland declined to offer the final €10 million (£8.6m) to keep the firm going.

Will Powell

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13

8 December 2008

this does not make that much sence to me

If they went to the bank for the whole ammount i can understand them saying NO

but they have secured funding from the people they supply, even the boss of the company has put up funds. And the final bit is being asked for by the bank. Y would they have said no, as surely if the company off its own back found the majority of funding surely they will have a decent business plan to back it up????

8 December 2008

At the moment, nothing much does make sense with banks, especially if one is attempting to run a business. We recently (July) sold 30% of our business to an equity provider for £8M (thereby cristalising the value at £25M), paid off an overdraft of £3M (so we now owe nothing) - and now - with a healthy WIP - they will not lend us £50.

Until the Banks get real, fortunate small businesses like ourselves which are looking at a bright future cannot invest to expand. Banks are simply not looking at funding at all, unless it is a cast iron certainty with appropriate corporate or personal guarantees.

8 December 2008

Wow, I thought they would have lent to you, we are a developing company; we are finding it okay but effectively we have corporate guarantees (which is lucky in this climate) covering lending.

Like Techno996 says, sounds like they want to see fully covered lending in this case; trouble is the credit ratings of Ford etc are not brilliant (Honda should be okay though); maybe the likely US backing for Ford it will ease things? maybe as you guys did look at equity based investment.......

Wonder if something like JCB i.e. I know not good, but maybe if the folks went to lower pay - problem is at £43m with 4500 its £9.5K each which is a lot........although it should lower the overall amount.......don't know

8 December 2008

[quote davidv11]they have secured funding from the people they supply, even the boss of the company has put up funds. And the final bit is being asked for by the bank. [/quote]

Some of the funding they have secured has been from its automotive customers. The bank have probably looked at this and potentially thought it too bigger risk considering three of them, Ford, GM and Land Rover, are also it a delicate position.

Also, when companies like Wagon can't get debt insurance against companies such as Ford, it doesn't make the future business risk look too good.

So, why doesn't the government get involved and back them (especially considering it is now has its own banking arm!), saving both jobs and production in the UK. If Wagon are allowed to go, I don't suppose the contract for supply will be placed in the UK again.

 

 

It's all about the twisties........

8 December 2008

[quote TegTypeR]So, why doesn't the government get involved and back them (especially considering it is now has its own banking arm!), saving both jobs and production in the UK. If Wagon are allowed to go, I don't suppose the contract for supply will be placed in the UK again[/quote]

Hold on. Before any UK representative starts splashing UK taxpayers' cash around or even acting as a loan guarantor, it's not been made clear to me from the journo's article - W.Powell? - if it's just the UK ops. of Wagon that's gone into admin. or the whole shebang.

If it's the whole, then why should the British bail it all out? Only one-tenth or so of the group workforce is British. Nearly half of Wagon's activities is French, supplying PSA and Renault.

Just because Wagon is registered in the UK and has its admin HQ by the NEC, near B'ham, does not mean we must knee-jerk bail them out. I'm sure the likes of PSA and VW are well capable of resourcing with other sources for their hinges and stamping bits.

8 December 2008

Don't worry Wagon. Those dastardly bankers will be falling over themselves to lend you money once Finance Boy, alias Gordon Brown, gets to hear of this. He'll sort them out once and for all.

8 December 2008

[quote noluddite]

Don't worry Wagon. Those dastardly bankers will be falling over themselves to lend you money once Finance Boy, alias Gordon Brown, gets to hear of this. He'll sort them out once and for all.[/quote]

The company's banker is RBS(Royal Bank of Scotland), which itself was bankrupt and is now part-owned by the UK taxpayer.

8 December 2008

[quote horseandcart]Just because Wagon is registered in the UK and has its admin HQ by the NEC, near B'ham, does not mean we must knee-jerk bail them out. I'm sure the likes of PSA and VW are well capable of resourcing with other sources for their hinges and stamping bits.[/quote]

The re-sourcing and the manufacurers issues with that is not the point I am making.

If the UK arm of the company is registered in the UK, then all taxes etc are paid in to the UK coffers. Couple that with UK employment, and the rest of the companies that supply Wagon in the UK, then it starts to add up to quite a large loss to the British economy.

Also, when it comes round to re-sourcing time, what is the likelyhood that a UK company will get the contract? With the motor industry being so global now, it can sometimes be just a cheap for the manufacturers to source their products from abroad and ship them to the UK instead of having them produced on the plants door step.

If the problem is with Wagon world wide, then no we shouldn't be supporting them but the government should at least aid a UK based company to either buy out or take over the British arm, securing jobs and our rapidly dwindling manufacturing base.

 

 

It's all about the twisties........

8 December 2008

The mornings on Radio 2 just won't be the same.

8 December 2008

I followed some of the links from car magazines "Crunch Watch"; this is the FT link http://www.ft.com/cms/s/0/4e4d5122-c501-11dd-b516-000077b07658.html

The investor is a billionaire; surely here can bail it out; if all staff (group wide) took pay cuts the amount needed reduces; the investor must be good for another £20m, maybe RBS's point? if he is not willing to risk his money, why risk theirs? (who knows); I think if RBS thought it was a runner they would put the money up......

As horseandcart says, I also think we should not bail out non-UK firms.........should we bail out all parts suppliers? the UK Gov have done excellent things for all firms i.e. lower VAT (initial outlay reduction), altered some export aspects etc.

The UK gov is putting up £1bn (ref. The Oberserver) for tech. firms (which is great for tech. firms) who have had it hard (even in the last few years).......I hope Wagon wins through, but you will always get casualities (in everything); not every company will survive and we will need new tech. firms and the new techologies......we are in transition

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