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Monday, 18 February, 2002, 16:22 GMT
Land Rover saves Discovery
Land Rover Discovery
The Discovery: Production to continue as normal
A dispute between Land Rover and the accountancy firm acting as the receiver for UPF, the bankrupt sole supplier of the chassis for the Discovery model, has been resolved.

The breakthrough deal between Land Rover and KPMG, under which the car maker has agreed to take on some of UPF's debts, ensures that production of the Discovery will continue, safeguarding thousands of jobs.

UPF will remain a going concern, though KPMG will take a step back to let the company be run by new receivers, Grant Thornton.

Land Rover would not divulge how much debt it has taken on, though a spokeswoman said it was less than the 49m in debts UPF had racked up before it declared insolvency shortly before Christmas.

Ripple effect avoided

The dispute had threatened to force Land Rover to suspend its Discovery production.

That would have put up to 1,400 Land Rover jobs at risk, in addition to a further 10,000 jobs at the company's suppliers.

UPF itself employs 550 workers at its sites in Wolverhampton, Walsall and Congleton in Cheshire.

UPF is the only supplier of Discovery chassis.

Had the company been allowed to sink, it would have take nine months to find an alternative supplier, a Land Rover spokeswoman said.

High risk

Last month, KPMG tried to renegotiate UPF's supply terms on behalf of the company's creditors.

Fears that supplies would be cut spurred Land Rover's parent company Ford to take out an injunction forcing UPF to continue supplying the chassis while talks with KPMG continued.

KPMG's attempt to renegotiate terms with Land Rover was risky, senior UK industry sources said when the dispute started.

If the car maker had refused to compromise, there would have been no bailout for UPF.

The company would also have lost its all-important client, making it more difficult for UFP's creditors to recovery their money.

Sole supplier

The dispute is expected to affect large multinational companies' decisions on whether or not to use sole suppliers of for key components.

The lower costs involved in having just one supplier may not compensate for the risks of that supplier failing to deliver.

Some analysts believe the UPF bankruptcy could prompt a shift away from sole suppliers by car makers and other manufacturers.

See also:

14 Jan 02 | Business
Threat to Land Rover jobs
11 Jan 02 | Business
Ford takes job cuts to 35,000
11 Jan 02 | Business
Ford hit by 'perfect storm' of woes
25 Oct 01 | Business
Land Rover recalls Freelanders
02 Aug 01 | Business
Which? finds Land Rover 'hitch'
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