Pressure was building on Gordon Brown to make an immediate decision over the future of Jaguar Land Rover after another supplier announced it was closing one of its factories.
Stokes Group Ltd, which was established 101 years ago and supplies parts to Jaguar, Land Rover and Ford, will close its Walsall plant in April with the loss of 137 jobs but will keep operations running in Dudley and Brierley Hill.
The latest victim of the downturn in the automotive sector was announced amid rumours that Jaguar Land Rover owner Tata is becoming increasingly frustrated with the government as it decides whether to offer financial assistance by way of guaranteeing credit lines for the Warwickshire-based company to help it through the current credit crunch.
The Indian conglomerate - which bought JLR last year for more the $2bn - is believed to be unhappy that the government of every other major car producing country has come up with a rescue package for the car industry except in the UK and feels that the longer the talks between the two parties go on, the more jobs from across the sector will be at risk.
This week the Birmingham Post launched a campaign alongside four other leading regional titles urging the government to back JLR which employs 16,000 people at sites in Birmingham, Coventry and Liverpool and supports a further 100,000 workers in the supply chain. An online petition on the Downing Street website has already received 5,000 names since Monday.
The Prime Minister and other members of the government have repeatedly voiced their support for the automotive industry and today Mr Brown will discuss the campaign with Birmingham Post editor Marc Reeves during a visit to the city.
Business Secretary Lord Mandelson said he believed the UK automotive industry had a bright future and should not be allowed to go out of business because of issues with the credit market.
He said: “Where an important regional employer with a real contribution to make to Britain’s future economic success is threatened because normal lines of credit are being shortened the government may have to intervene, but we are not at that stage yet. We are in close contact with the industry all parts of it, I am not going to single out any particular companies.
“Ministers are also discussing the matter amongst themselves. I see a sector that is modernised designing products for a low carbon future and it’s very important for Britain to retain it’s capacity and it’s share of world markets.”
This week the challenges facing the car industry were brought into sharp focus with car registrations in the UK down 10 per cent on last year. However, Jaguar was one of the few manufacturers to buck the trend with year on year sales up by almost 10 per cent, selling more than 65,000 units globally in 2008. Land Rover did not fare as well over the 12 months but still enjoyed its third best year ever in its 60 year history.