Black cab manufacturer Manganese Bronze revealed plans to axe 60 jobs by shipping chassis production to China – and is poised to be under the control of a Far Eastern car-maker.
The Coventry-based firm – which already largely manufactures in China, served another blow to the Midlands automotive sector by announcing it will cease production of TX4 bodies and chassis in the region later this year.
The company will make 60 redundancies as a result, which means its headcount in the city will have been cut from 500 before the recession to just 300.
It also revealed that the Geely Group, the Chinese company which already owns a 23 per cent stake, was poised to take control of the firm through a 70p-per-share placing to fund vehicle assembly, development and distribution.
The move, which came as the company announced losses had risen to £7 million last year, followed a study which revealed the losses of Rover and LDV had left the region’s car-making sector too reliant on Jaguar Land Rover.
Manganese saw UK vehicle sales fall from 1,951 to 1,724 in 2009, and the firm said the UK market continued to be challenging.
The company also took a £3.8 million hit after it had to recall some TX4 cabs after a spate of engine fires.
Chief executive John Russell said: “2009 was a difficult year for our UK taxi manufacturing operation with significant discount and sales incentives to stimulate the market combined with price pressure and restricted terms from fragile UK suppliers.
“Our UK consultation process is almost complete which will lead to a smaller lower cost UK operation with a much greater level of supply from China.”
He added: “The consideration of an equity placing to Geely will fully cement our relationship, would enhance the group’s capital base, and see the potential for the group to expand into the assembly and distribution of Geely vehicles.”
Manganese’s Coventry operation, LTI, will now assemble the black cabs after parts are made in Shanghai.
The company, which issued a profits warning seven weeks ago, has been hit by the loss of e-coating supplier Stadco from the city.
It is already a 48 per cent shareholder in a joint venture with Geely in China called Shanghai LTI, which makes cabs for the international market.
The latest move is another blow to the firm’s Coventry operation, and came after the company saw losses rise almost 30 per cent.
It said the lack of availability of finance remained “a major issue”, and also revealed international sales of just 212.
Manganese’s net debt had been reduced from £7.2 million to £5.1 million on December 31 last year.
As part of plans to link with Geely, the company will transfer to the alternative investment market.
Geely, which is China’s largest independent carmaker, agreed a deal in December to buy Volvo from Ford, which was thought to be worth more than £1 billion.
Dianne Williams, operations director at the Coventry and Warwickshire Chamber of Commerce, said it was important to retain the city’s production heritage.
She said: “It is always disappointing to hear of job losses in the city particularly from a company with such an iconic brand that has a long and proud history in Coventry.
“Whilst it is a blow which highlights the ongoing pressures faced by businesses, it is critical that we do everything possible to retain our skilled people and not lose sight of the importance of manufacturing in contributing to the area’s economic recovery."