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by Guy Jones; 8 June 2009 11:05:12Firstly the management team want to thank our employees, dealers, suppliers, business partners and Liam Byrne MP for their support, enabling us to try to secure a future for this important British business. Over the past year, the new management team at LDV have restructured the business for profitability, creating an exciting future with the potential to be the first manufacturer able to offer both electric and diesel light commercial vehicles. This is a plan that clearly supports the vision of the British government for the industry. The management team have worked exceptionally hard to deliver this plan, but despite every effort made around the globe, have been unable to obtain the required funding from the banking system. Like much of industry, it is access to working capital that remains an issue which will go on to cause further job losses if not addressed. We now hope that any possible buyers recognise the potential of the investment already made at LDV and what has been achieved in the last year to transform the future profitability of the business. There is still the opportunity of a bright future for LDV, however now the management team must now hand control of the business over to the administrators and hope this can be achieved in this process. All further communication about LDV will now come from the administrators. by Guy Jones; 5 June 2009 09:12:22 LDV Management Team Press Release
LDV – the end of UK van production or the future? On Monday, LDV faces administration and this could presage the end of all van production in the UK. Industry experts state that there is uncertainty surrounding the future of Ford at Southampton and the future of Vauxhall at Luton now hangs in the balance following the restructure of GM Europe. The New LDV Management Team (nearly all appointed in the last 12 months) is making a final call to the government to back its own policy commitment to advanced engineering and to retain production of vans and LCVs in the UK. The cost of supporting LDV is small compared with standing back and letting it fail. The cost to the Treasury alone will be up to £53m in unemployment benefits and lost taxes in the first year, with the certainty in this environment of long-term unemployment to follow. 4,000 British jobs are at risk with over 1,000 in the Midlands region and many around Washwood Heath, which is already one of the highest unemployment areas in the country. In addition to the losses to the government, the economy loses over £200m of wages, purchases and export revenue. Alternatively for a loan of just £60m, LDV could be refinanced to create a profitable new business playing a leading role in the UK governments drive to transform the industry into a high-tech business reducing carbon emissions. Guy Jones, LDV Marketing Director states “the two key drivers in the current light commercial vehicle market are to reduce cost and to reduce CO 2. The MAXUS product is better suited than many of its major competitors to take advantage of these trends. There has been over £600m invested in the past few years in lightweight, fuel-efficient products with a low cost of ownership and the Electric MAXUS is now ready for production. It would be a tragedy if the UK threw away the opportunity of the return on this investment”. The New Management Team have restructured the business for profitability, eliminating the major loss making areas of the business in previous years. Reductions in fixed overheads and labour costs combined with the benefits of the Sterling/Euro exchange rate have increased both the profitability and market potential of exports. There is clearly interest to expand sales globally, so with limited investment, LDV has a bright future based in the UK. We have one final chance to secure this vital piece of industry in the UK and thousands of jobs which otherwise will be lost forever. The New LDV Management Team calls the Government to action, and challenges them to join the Banks to meet this refinancing request, to underpin a vital part of the UK economy. The New LDV Management Team
Supporting information for the press release
The cost of losing LDV
Effect on UK economy - Up to 4,000 jobs lost in manufacturing, engineering and sales forever
- £60m p.a. in parts purchased in the UK would be purchased abroad
- £50m p.a. export revenue lost and replaced by imports
- £100m in wages spent in the UK lost
- Investment in major manufacturing infrastructure lost forever
- Investment in UK engineering, research and development lost
Effect on Birmingham and the West Midlands - Up to 1,000 jobs lost at manufacturer, suppliers and dealers in the area
- Jobs lost in high unemployment area increasing social issues
- Jobs lost are skilled in technology, manufacturing, sales and marketing
- Up to £25m p.a. wages spent in the local community lost
Effect on the UK government - Over £40m p.a. in PAYE, NI and VAT lost from LDV, suppliers and dealers
- Replacement sales are from products made in foreign countries and UK government income lost
- Up to £13m p.a. in unemployment and associated benefit payments required
The investment required to finance a new LDV - £60m total
- Assumes no investment from other parties which is clearly possible with support
- The £2.3 bn government Automotive Assistance Programme is not able to be accessed for these funds as this is for future R&D and not working capital to relaunch the business
- LDV would be eligible for the Automotive Assistance Programme and EIB loans if it can secure the funding to refinance the business first
The new management team A highly experienced new executive team has been appointed over the last 12 months to deliver the change required in the business, with key appointments in the following areas:- - Engineering
- Manufacturing
- Purchasing
- UK sales
- Export sales
- Marketing and PR
- Finance
Light commercial vehicle production in the UK status Production of heavy trucks has all but disappeared from the UK, apart from niche specialists, with vans and light commercial vehicles about to follow which will impact car production. Vans and light commercial vehicles are currently built by Ford in Southampton, Vauxhall (GM) in Luton and LDV in Birmingham. Ford production is declining in Southampton and has been replaced by vehicles built overseas. The Ford decision looks irreversible, due to the investment made in other overseas plants. The future of Luton is complex and deeply uncertain until the GM Europe position is clarified. The vehicle produced there is a joint programme between GM Europe and Renault. This only leaves LDV. LDV is a stand-alone business that holds its own intellectual property rights, with design and manufacturing capability for MAXUS products in both diesel and electric form. LDV is therefore a simple business model to make work to secure design, production and jobs in the UK. In recent years over £600m has been spent in the design and launch of the MAXUS product range and a state of the art, lean, flexible manufacturing facility. The business is now in a position to see a return on this significant investment – it should be unthinkable that this investment in the UK now goes to waste.
The building blocks to profitability for LDV The biggest issues behind LDV losses in recent years have already been addressed by the new management team. The remaining items have been identified and will be quickly addressed and the current economic climate favours the MAXUS product range. Firstly the financial performance of the business. LDV lost £44m (EBITDA) in 2008 but well over half of this (£23m) was an exceptional one off loss on the sale of used vehicles. This was due to a high level of used vehicle buybacks committed by the previous company, exacerbated by the collapse in used vehicle prices in 2008 which is well documented by CAP and BCA. This business has been eliminated in 2009. The build quality of MAXUS has been continually improved since launch resulting in a reduction in warranty costs of over £1m p.a. from 2009. Until 2009, LDV was structured to deliver high volumes to support major expansion into growth markets such as Russia with the associated costs. In the first half of 2009 the business has been restructured by the new management team, to meet the needs of trading in the current global market. Cost savings in fixed overheads and labour of £5-7m have already been delivered and a further £3-5m will be delivered from the restart of production. The break even volume will then be brought down to 10,000 units from 17,000 making this an extremely viable, flexible, modern production plant. After this business restructure, LDVs success now depends upon its ability to respond to the market and sell the required number of products at a competitive price. LDV now only produces the modern range of MAXUS light commercial vehicles from state of the art production lines only installed in 2005 and 2007. MAXUS is a lightweight, fuel efficient product that can carry nearly a quarter of a tonne more payload than key European competitors such as Mercedes, VW and Ford. It was designed to be extremely reliable (using one of the worlds most proven diesel engines), to have a low cost of ownership, backed by a long warranty with dedicated commercial vehicle dealers to support customers. At the launch of MAXUS, bigger, heavier, more expensive vehicles were seen as more attractive, however the market has now changed in favour of MAXUS. LDV is also ready to be the first major brand and volume manufacturer to be able to offer customers the choice of both electric and diesel LCVs with the launch of the Electric MAXUS. These vehicles have been designed in conjunction with major fleets and the DfT to provide the ideal solution for businesses, councils and local authorities. They have already been tested in advance prototype form with key customers and feedback is that Electric MAXUS is the best product of its type in the market. Given customer, press and dealer feedback, LDV expects to take a leading position in the rapidly expanding and profitable electric LCV market from 2009. It also expects to play a leading role in the supply of vehicles to the British public sector as one of a small number of suppliers to the DfT Low Carbon Procurement Programme. With a UK manufacturing plant, LDV can attack Europe with the benefit 40% positive swing in the Euro/Sterling exchange rate during the last two years. This will give additional profit of up to £5m (dependant upon forward exchange rates) and allow LDV to expand and compete in new markets which were cost prohibitive two years ago. With global partners LDV can expand into new international markets such as Asia and other Euro territories conservatively increasing profits from £3-5m p.a. from 2010 and reducing the cost base of the vehicle with this additional volume by £3-5m. The expansion into those new profitable markets allows LDV to withdraw from unprofitable market territories saving up to £2m p.a. Market prices have increased by an average 9% since MAXUS last took pricing action. In addition to pricing action, LDV will increase the average profit per unit with the continued expansion of specialist vehicles and the addition of electric vehicles to the mix. The net effect of these actions above material cost increases will be an increase in profits of £4-5m. The profits generated from this investment into product, lean manufacturing and new markets will fund the necessary product development and improvements in the core product to maintain competitiveness over the coming years.
by Guy Jones; 4 June 2009 12:38:58The hearing to process the application for administration of LDV Group and Birmingham Pressings will take place on Monday 8 June at 10.15am at Birmingham County Court. The LDV management team will continue to work up to this deadline to find a solution to secure the future of the business and production and jobs for LDV employees, suppliers, dealers and business partners. by Guy Jones; 2 June 2009 18:00:48Please see below a copy of a press release that will shortly be issued to the media from Weststar. Weststar confirms that it has now completed the legal, financial and engineering due diligence on LDV. However, despite substantial efforts and a significant plannedinvestment of its own funds, it has been unable to secure the remaining investment required to refinance the business due to the global financial crisis, compounded by the recent adverse developments in the UK motor manufacturing industry.
The Weststar plan would transform LDV into an exciting global business, keeping manufacturing for Europe in the UK, securing thousands of British jobs and expanding into other markets, notably the ASEAN region. The launch of the Electric MAXUS would also support the UK governments vision for the industry and allow UK businesses and local authorities to locally source a low carbon vehicle.
Weststar has already invested significant resources to deliver this vision for LDV in Europe and Asia, but cannot continue to do this without confirmed access to the finance to secure the purchase. Weststar has explored all known avenues to access this funding, including assistance from the UK government, but without this in place, it is not be possible to deliver the plan to secure jobs in the UK.
by LDV; 2 June 2009 10:36:05The Directors of LDV Group have been forced to reapply for administration to protect the assets of the business. This is due to the fact that essential funds required to maintain the business and workforce as a going concern are not being made available. The application for administration will be in court this morning and further information will be made available as soon as the facts behind this are clear. by Guy Jones; 2 June 2009 10:02:23In response to comments * on the blog, please be aware that since the launch of the Employee Bulletin Board there have been no official announcements from LDV or Weststar. All future statements relevant to all parties associated with LDV will be posted on the Blog and the Employee Bulletin Board. Only statements unique to employees such as payment details and information for employees only will be posted on the Employee Bulletin Board. * NB: not all of these comments were published as many of them were posted anonymously and/or without a valid email address, in contravention of our comments policy. by Guy Jones; 20 May 2009 18:14:47The management team have been contacted by employees, dealers and suppliers requesting the separation of internal communications to employees from external statements about the business on the blog. We consulted the unions about this earlier today and jointly agree that this will be beneficial to all parties. Therefore with immediate effect, we have developed the blog to be split into two areas. The LDV blog will remain the place for external announcements and comments about the business to be posted. Internal communication to employees will now be posted on a specific Employee Bulletin Board. This will function in exactly the same way as the blog with statements being posted by the company with comments added in response, but these are now specifically aimed at employees. This split will allow better communication with the employees and for more detailed discussions to be held between employees and the company. We hope this will encourage more people to participate in discussions. Please see the link below to the new Employee Bulletin board with the latest message to the employees. You will be required to enter a username, which can be anything, and use your clock number as your password to ensure this area is for employees only. You can now also access the Employee Bulletin Board direct from the home page of the website by clicking the link in the Toolbox in the bottom left hand corner. Link: Employee Bulletin Board (New users, please click "register" at the top, right of the login screen at the bulletin board.) by Guy Jones; 18 May 2009 16:00:28LDV Press Release 18 May 2009
Application for Administration Withdrawn LDV is pleased confirm that the application for administration for LDV Group and Birmingham Pressings was withdrawn this afternoon in Birmingham County Court. This is due to the facts that Weststar have publicly confirmed their intention to acquire LDV (see press Weststar press release dated 16 May) and a loan process has been put in place with government assistance to enable the sale process to be completed. The bridging loan enables LDV to pay the minimum amount of forward overheads, including employee payments, to maintain the business as a going concern with the workforce intact. As has been stated previously, the sale of the business as a going concern to Weststar is in the best interests of LDV employees, suppliers, dealers, business partners and the UK economy. Today was an essential step towards the completion of a deal to secure an exciting future for LDV, as part of a new global business as outlined in the press release by Weststar. This sends a positive message about the potential future available to LDV and its business partners. This is not however, the completion of the process and whilst a sale agreement has been signed, due diligence has to be completed before the sale can be finalised. LDV requires the full support of all its creditors and employees to complete the sale process, restart production and launch exciting new products such as the Electric MAXUS into the market as soon as possible. We appreciate that the last few months have been exceptionally difficult for many of our employees and valued business partners, however we are now more confident than ever that supporting this process will ensure the best outcome in the long term for everyone associated with LDV. Further information will be issued on the completion the sale as soon as it is available. Evgeniy Vereshchagin CEO, LDV Group Limited by Guy Jones; 13 May 2009 14:54:15There was another hearing this morning in Birmingham to review the application for administration by LDV. It was not possible to complete all the actions required for today, due to the timing of events last week and it was agreed that this will be further adjourned until Monday next week when a decision is expected to be made. The deal with Weststar can now progress, so long as LDV is supported by all its creditors (dealers suppliers and other business partners), which is in their interests, to keep the business out of administration and allow the deal to be completed. by Guy Jones; 6 May 2009 11:10:32Please be aware that the following statement will be given to the press shortly. Following yesterdays important announcement by the government, the management team at LDV have released the following statement to clarify the position of the business today and the key next steps.
Firstly we want to thank the government, Liam Byrne, MP for Hodge Hill, in particular and all the key parties who have been involved in helping secure a future for LDV in Birmingham and British jobs. We appreciate that this is a difficult time for the government, but this support allows time for negotiations to be concluded to secure thousands of British jobs, when the alternative would almost certainly have been the loss of them all.
Last week the directors of LDV were forced to apply for administration to protect the assets of the business and a court hearing was processed this morning. Following the confirmation of Weststar as the investor and the support of the government last night , the decision was taken to delay this hearing until Wednesday 13 May, when the case to continue the business will be presented.
It must be clarified at this point that whilst a sale has been agreed, it will take another few weeks to be completed and the loan from the government is to enable the business to continue operating whilst this process takes place. We need continued support from our employees, dealers and suppliers over this period to finalise this process and restart production and sales of MAXUS commercial vehicles.
This is clearly a significant development for LDV and a major step towards an exciting new future but there are still major steps to be competed over the next few weeks. We will issue further communications as soon as they are available.
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