The West Midlands car industry faces an extremely bleak winter as another major component company teetered on the brink of administration.
Car parts group Wagon Automotive was reported to be on the brink of collapse threatening more than 600 jobs at its three sites across the region – two plants in Brownhills and Coventry and the UK head office at Birmingham Business Park, near Coleshill.
All the plants are expected to remain in operation while buyers are sought.
A report in the Sunday Times said that the international company, controlled by American billionaire Wilbur Ross, had failed to persuade banks to contribute to a funding package that would have kept it running for another three months.
The news follows a spate of closures, shutdowns and job losses, in the motor industry with more to come according to Jerry Blackett, chief executive of the Birmingham Chamber of Commerce and Industry.
He said: “The bad news is stacking up. And it is not just the manufacturers now, but the supply chain suffering the knock on effects.
“There is no slack in the system for suppliers. It is a very lean supply chain as companies do not carry much stock. Wagon will not be the last.”
He added that the Chamber is currently inundated with calls for help from motor industry suppliers.
“They are hoping to get through the next two or three months to see if things start picking up at the end of January. We have to keep jobs going for the future. It does not help anybody if people are put out of work and on benefit. Better to keep them in work, using their skills.”
At its factory in Pelsall Road, Brownhills, Wagon makes panels and door parts for Honda, Ford, General Motors, Land Rover and Nissan. The smaller site in Exhill, Coventry, makes shock absorbers for non-automotive clients, including liftmakers Otis and Schindler.
Wagon Automotive employs 4,500 people worldwide, but it is believed that only the UK arm is to go into administration. The fate of its continental plants, including factories in France, Germany and Italy is still to be settled.
Shares in Wagon were suspended in October after it reported a “steep deterioration” in the European car market and said it was in talks with lenders about its funding situation. It has come under further pressure as car makers continue to cut production.
The company, which was unavailable for comment on Sunday, traces its roots back to Wagon Repairs, a business set up at the end of the First World War to maintain railway rolling stock. It was chosen by Ross as the foundation for a European car parts empire.
But the company has struggled in the face of the global car market slump.
The Sunday Times said the company’s fate was sealed when banks, led by Government-backed Royal Bank of Scotland, declined to contribute £10.4 million to a £43.3 million funding package.
Its car making clients had put up £26m and Ross was understood to have been prepared to contribute £8.7m through the purchase of one of Wagon’s subsidiaries.
The rescue fell through when the banks, which had agreed loans of £134.2 million in the summer, decided against giving more.