Brits' billion-dollar bankroll to secure auto sector

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UK government provides $1 billion in green loan guarantees for Ford, Nissan and GM

23 March 2010

By TERRY MARTIN

THE British government has handed out more than £650 million ($A1.07 billion) in loan guarantees in the past week to Ford, Nissan and General Motors in an attempt to shore-up the manufacturing industry in the UK.

After securing a £360 million ($A592m) loan guarantee under the UK government’s automotive assistance program, the Ford Motor Co announced last week it would invest £1.5 billion ($A2.5b) in its UK manufacturing plants and R&D facilities over the next five years.

The British backing comes after Ford applied to the European Investment Bank (EIB) for a £450 million ($A740m) loan covering research, development and manufacture of low-CO2 technology for cars and light commercial vehicles.

Nissan, meanwhile, announced it would include its Sunderland plant in the UK as one of its three global manufacturing locations – the others are Japan and the US – for its Leaf electric vehicle, which is due to enter production in 2013.

The Japanese manufacturer’s decision represents a total investment of more than £420 million ($A690m) and includes support from the British government of £20.7 million ($A34m).

Left: Nissan Leaf. Below: Vauxhall Ampera.

Nissan has also received support from UK taxpayers for its proposed finance package from the EIB of up to €220m ($A326m).

Last Friday, business secretary Peter Mandelson revealed that the government had provided a £270 million ($A444m) loan guarantee to General Motors Europe – Opel and Vauxhall – to help secure the company’s operations in Britain and the remainder of Europe.

“I always said the government would stand foursquare behind Vauxhall and with this announcement today we have kept our word,” said Lord Mandelson. “These are excellent plants employing a first-rate workforce.

“We need Vauxhall to thrive as part of Britain’s automotive manufacturing base and following our negotiations with GM Europe I am confident it will do so.”

Ford of Britain chairman Joe Greenwell said the UK government’s financial assistance would greatly assist in delivering Ford's commitment to invest £1.5 billion in “new, affordable, volume-produced low-CO2 technologies”.

"Our customers will benefit from this extensive investment and so too will the 100,000 people in the UK whose jobs are directly or indirectly dependent on Ford,” said Mr Greenwell.

“The loan also encourages the growth of high-technology, CO2-reducing research and development in the country. But perhaps most importantly the overall environment will benefit thanks to the mass-deployment, volume-produced emission-reducing technologies from Ford.

"The government's support of Ford's EIB loan application demonstrates its commitment to addressing the strategic needs of the UK automotive industry when it comes to supporting affordable CO2-reducing technologies.”

Ford facilities at Dagenham, Dunton and Bridgend will all benefit from the investment, with the latter now gearing up for production of the company’s new EcoBoost engine.

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£1.5 billion ($A2.5b), now that's commitment...