Pressure is already building on business secretary Lord Mandelson to rubber-stamp a £270?million European loan to help safeguard the future of Jaguar Land Rover after months of delays.
The region’s biggest manufacturer today looks set to be told it has qualified for a 300?million euro loan from the European Investment Bank (EIB) to help finance its long-term investments in new materials, technologies and the development of more eco-friendly cars.
Although the company will still need to boost its day-to-day cash flow needs through further cash aid from the UK Government, the EIB decision raises hopes of a more secure future for 13,000 West Midland workers and their families after months of uncertainty in which the company has been forced to cut jobs and production volumes at its three assembly plants.
The EIB loan, however, will hinge on the UK Government’s willingness to offer guarantees under the £2.3?billion aid package drawn up to help the country’s automotive industry survive one of the worst recessions ever known.
The imminent breakthrough for JLR was welcomed by MPs who had called for urgent action to save the Tata-owned group from continuing cutbacks and further lay-offs.
Solihull Liberal Democrat MP Lorely Burt, whose constituency covers Land Rover’s Lode Lane plant, said: “I am absolutely delighted, but my immediate response is, ‘About time too!’.
“The company is not asking for anything other than a Government-backed loan here. They are not asking for a bailout – they have done everything they can to retain as many employees as possible. This is the most welcome news that I could possibly imagine.
“The Government now needs to act as speedily as possible to endorse this decision.
“I will be knocking on Lord Mandelson’s door today to make sure that this loan is now guaranteed.”
Northfield Labour MP Richard Burden, chairman of the Parliamentary All-Party Motor Group, said: “I had heard that talks were going well and that JLR had met the European Investment Bank’s criteria, which is only right given that this company has a great business model for the future.
“It is now important that the Government does stand behind the loan because the future of JLR is very important to the future of West Midlands manufacturing,” he added.
JLR spokesman Mark Foster said: “We are making progress and we are pleased that the Government has recognised the need for financial support for what is a strategically important industry for the UK.”
He declined to make any official comment on the European Investment Bank announcement.
JLR insiders said the company would continue to press for a further £500?million in Government loan guarantees to help free up its cash flow and kick-start showroom sales.
The Government has declined to comment ahead of today’s announcement.
Separately yesterday, Aston Villa football club offered four free tickets per employee of ailing Washwood Heath vanmaker LDV for the Premier League match against Everton at Villa Park on Sunday.
LDV is currently negotiating a bridging loan from the Government to help keep operations ticking over while discussions with a potential buyer take place.