Page last updated at 17:42 GMT, Sunday, 14 December 2008

Help urged for UK motor industry

Toyota's Burnaston Plant in Derbyshire

Union bosses have joined calls for the government to urgently give financial support to the UK's car industry.

With global sales tumbling, carmakers want a substantial financial package from the government to help them through the tough economic climate.

Senior motor industry figures met with ministers last month to appeal for assistance during the downturn.

But there is uncertainty over whether any substantial help will be offered, amid fears of major job losses.

About 850,000 people work in the manufacturing and supply sides of the UK auto sector.

And the Sunday Times quoted one unnamed senior car industry executive saying that he feared the worst if intervention did not come soon.


This is not like the US where drivers are in love with gas guzzlers and big vehicles

Tony Woodley
Unite

"There will have to be layoffs, and there is a real danger of a clearout among component makers, who are finding it more and more difficult to get funding," they said.

Among the requests put to government are a state-guaranteed credit facility, more credit for manufacturers and suppliers, easier access to cash for car finance firms and a delay in the rise in vehicle excise duty.

"There is no doubt in my mind that it was the banks and the bankers who created this problem but we must not allow UK manufacturing to be hit further by this," said Tony Woodley, joint leader of Unite.

"If it was right to bail out the banks, and it was, then it is right to aid manufacturing. This is not like the US where drivers are in love with gas guzzlers and big vehicles.

"UK manufacturing is productive and efficient but our market has collapsed. We need short-term financial support to keep companies alive until the market picks up again."

The Sunday Times reported that the government was now set to offer a string of measures to try and kick-start sales.

Loan guarantees for car firms' finance arms and low-cost loans are expected to be offered, the paper said.

However according to the Mail on Sunday, Treasury sources said there were no firm proposals for an urgent rescue package for the embattled sector.

There is a real danger of a clear-out among component makers, who are finding it more and more difficult to get funding
Senior car executive
Quoted in Sunday Times

This week car manufacturer Vauxhall has offered its workforce at one plant the chance to take a sabbatical on 30% pay.

General Motors approached unions at the plant in Ellesmere Port, Cheshire, with the plan.

Under the scheme, staff would stay away from work for up to nine months between January and September 2009 on less than a third of their basic salaries.

A spokesman said the company wanted to avoid making any compulsory redundancies.

In the US, the White House says it is considering using money earmarked to rescue the US banking industry to bail out the country's "Big Three" carmakers.

It followed a $14bn (9.4bn) bail-out deal for the US car industry which failed to get Senate support, raising fears of job cuts.

The White House said a disorderly bankruptcy in the motor industry would be a huge blow which the US economy could not withstand.

Meanwhile General Motors said it was temporarily stopping some production. And Honda is also to cut back output in North America.

Last month the European Commission proposed to give at least five billion euros to the car industry to help develop green technologies.

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SEE ALSO
White House considers auto rescue
13 Dec 08 |  Business
Car parts-makers fear for future
26 Nov 08 |  England
No agreement for US car bail-out
20 Nov 08 |  Business
EU warns against car subsidy race
21 Nov 08 |  Business

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