Lotus cuts jobs at Norfolk factory

Lotus is planning to axe up to 99 jobs at its Norfolk car plant in Hethel. The news comes less than two months after the sports car manufacturer failed to secure a government loan to expand the site.

The company, which is a subsidiary of Malaysia's Proton Holdings, said it was carrying out an efficiency review that entailed a "planned restructuring of back-office functions which regrettably will lead to the loss of some positions". It added that the cuts would precede a "recruitment programme in the near future".

"Going forward, we have the means to create new jobs as we move towards production in line with our business plan," Lotus said.

In a letter to staff, the company's chief executive, Dany Bahar, said the efficiency review had pointed to the "need for increased improvement in both cost savings and productivity".

He added: "It is with regret that we have to enter into a redundancy process. However, it is imperative that we realise cost savings and efficiency improvements this year to help ensure the success of Lotus in the future."

The back-office cuts follow news in April that Lotus had missed out on a £27.5m government loan to expand the Norfolk plant. At the time, the company said the money from the first round of funding from the Regional Growth Fund would have allowed it to create about 1,200 additional jobs at the site. The cuts are a fresh blow for the country's manufacturing sector, whose recovery has slowed sharply.

The Markit/Cips purchasing managers' index published earlier this week stood at 52.1 for May, well below the expected 54.1, and behind the downwardly revised figure of 54.4 for April.

Manufacturing accounts for around 12 per cent of the UK's economic output. New orders have dropped for the first time in two years, and the survey showed that the sector is growing more slowly than at any time in the past 20 months. The manufacturing output index was also lower, becoming negative for the first time since May 2009.