Commentary: Hard task at Leyland DAF

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The Independent Online
For the sake of the 1,400 workers still employed at Leyland DAF's Birmingham van plant it would be nice to believe that the proposed management buyout will succeed. Realistically, however, the odds must be stacked against Allan Amey and his fellow managers, who yesterday appointed Coopers & Lybrand as their financial advisers.

We are told that the plant is a profit- maker and that last year it actually succeeded in increasing its share of the UK panel van market. But that market has shrunk by more than 50 per cent in the past four years and shows few signs of recovery this year.

In addition, Leyland DAF's existing 200/400 series of vans needs updating, which will not come cheap. DAF had intended to develop a new range of van, the Excel, in partnership with Renault at a cost of pounds 450m. That plan may now be dead but even a more modest product development programme would cost any new financial backers dear.

Finally, the task of drawing up a robust buyout proposition and putting it to City institutions will take some time - a commodity in short supply at Leyland DAF.

One could be harsh and ask why, if the plant has a dedicated workforce, loyal customers and a good product it has not attracted any outside bidders.

There are various reasons for this - rival European van makers are either tied into their own joint production plans or suffering excess capacity themselves, while the Japanese are notoriously suspicious of anything other than greenfield sites. Unfortunately, they only serve to emphasise further how challenging is the task facing the buyout team.

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