Halewood secures baby Jaguar with pounds 50m DTI grant

The British motor industry received a huge boost yesterday as a pounds 50m government grant secured production of the new baby Jaguar for the Ford Halewood plant on Merseyside while Toyota prepared to announce a multi-million pound expansion of its Deesside engine factory. But the good news was tempered by a warning of a further shake-out from the Ford chairman Alex Trotman, who said the world's car-makers suffered 40 per cent excess capacity, most of it in Europe.

Michael Harrison in London and Gavin Green

in Detroit report.

Production of the new small executive class Jaguar, codenamed the X400, will begin in 2001 and rise to 100,000 cars a year, 60 per cent of which will be sold in Europe. The pounds 400m investment will safeguard 3,000 of the 4,500 jobs on the Halewood site. The new model will compete head on with the BMW 3-series, the Audi A4 and the Mercedes C-class and, at current prices, will sell at just under pounds 20,000.

Halewood was one of three sites studied to build X400. The other two were Ford factories in Germany and America. Announcing the go-ahead for the X400 at the Detroit Motor Show, Nick Scheele, Jaguar's chairman, revealed that the investment would probably have gone to the German factory in Cologne - the cheapest option - without the subsidy from the Department of Trade and Industry, Mr Scheele and certain Ford top executives, including the chairman Alex Trotman and the president of its automotive operations Jac Nasser and also favoured building the new Jaguar in England for traditional and emotional reasons.

Only a year ago the Halewood plant was under threat of complete closure following the decision not to build the new Escort on Merseyside. Confirmation that the plant had won the new Jaguar investment was greeted with jubilation. Tony Woodley, national secretary of the T&G trade union and chief Ford negotiator, described the decision as great news for the British motor industry and Merseyside. "It means that one of the most famous brand names in British manufacturing will continue to be built in its home country in large measure because of the work trade unions have put in to resolving this issue."

Chris Clifford, regional director of the North-west CBI, said the announcement was good news for Merseyside and the whole. "Any major investment like this always has a good impact on the local economy, not only in terms of wealth creation and increased spending power but also for suppliers."

Eddie O'Hara, the Labour MP whose Knowsley South constituency includes the 35-year-old body and assembly plant, said: "Workers and management at Halewood have made a tremendous effort to put the past behind them and make the plant cost effective and a plant, that in quality terms, could rival any other," he said.

Ian McCartney, the trade and industry minister, said Jaguar's decision "shows that the UK remains the most competitive location for automotive manufacture in Europe". Negotiations over the aid package are expected to be finalised within three weeks and then submitted to the European Commission for approval.

The go-ahead for the X400 follows the decision last year to build a new medium-sized Jaguar, the X200 at the company's main Coventry site to compete with the BMW 5-series. Mr Scheele said: "Jaguar will turn itself from a small car company into a major player on the international stage. By the time X400 comes on-stream we will be a four-model line company with total production of between 200-250,000 cars a year."

Mr Nasser added: "When Ford bought Jaguar in 1989 most people thought we paid too much and that we didn't look close enough at the soiled merchandise. Maybe we did pay too much at the time but I think history will view our purchase of Jaguar as a very wise move."

But Alex Trotman, commenting on world car industry's excess of manufacturing plants, said: "There is particular over-capacity in Europe which is why profit margins are getting smaller and smaller.'' Ford, he said, had trimmed $3bn from its costs in 1997 and would make further reductions this year though not on the same level.

Toyota's expansion in Deesside is expected to involve investment of pounds 170m and will increase engine production from 200,000 to 350,000 a year, enabling it to supply the new Starlet assembly plant being built in northern France. The announcement is expected on Friday to coincide with a visit to Japan by Prime Minister Tony Blair.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Business Development Executive - Affiliates & Partnerships

£20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor