Burnaston loses out as Toyota opts for France

The Government yesterday rejected claims that its decision to stay outside the single European currency had cost Britain 2,000 jobs as the Japanese car-maker Toyota confirmed that it is to build a second car plant at Valenciennes in northern France. Michael Harrison reports

Margaret Beckett, President of the Board of Trade, also described as "utterly far-fetched" suggestions that the strength of the pound had influenced Toyota's decision to locate the pounds 400m plant on the Continent, rather than at its existing site at Burnaston near Derby.

The Amalgamated Engineering and Electrical Union said the move to invest in France was a "clear result" of the decision to delay entry into economic and monetary union. Its general secretary Ken Jackson said: "The 2,000 jobs that have gone to France should and would have come to the UK if the Government had been more positive about the single currency."

However, Mrs Beckett disputed this, saying the decision had been based on Toyota's wider European sales strategy.

"They in general follow a policy of sourcing production nearest to the market they are trying to penetrate," she added.

Toyota said that factors such as the single currency, exchange rates and the Ffr400m (pounds 40.6m) grant it is understood to be receiving from the French government had not been main considerations.

The plant will produce a new small Starlet-size car with production starting in 2001 and rising to 150,000 a year.

This is the fastest-growing segment of the car market, expected to account for as many as 5 million sales or 35 per cent of total European demand by the turn of the century.

A Toyota spokesman said France, Italy and Spain were the biggest markets in Europe for small cars and if the company was to achieve its target of selling 600,000 cars a year in Europe by 2001 then the plant had to be built on the Continent.

He added that Toyota's commitment to Britain, where it has invested pounds 1.1bn, employs 3,000 and will next year produce 145,000 cars, was unaffected. The UK may also receive a consolation prize if Toyota decides to source engines for the Valenciennes plant from its plant on Deeside.