The EMU factor: Toyota rules out second UK car plant as Vauxhall says sites are safe

Toyota has ruled out building its second European car plant in Britain, partly because the pound is unlikely to be in the first wave of monetary union. But Vauxhall denied it would shift production abroad if the UK failed to enter a single currency. Michael Harrison assesses the mood in industry towards EMU.

The Japanese car giant, Toyota, has abandoned the option of building another assembly line at its Burnaston plant in Derbyshire to manufacture a third model. An announcement on where the pounds 600m investment will be located is due to be made in the new year with France now the clear frontrunner.

The decision to locate the plant on the Continent is based partly on the near certainty that Britain will not be in the first wave of EMU. But it is also linked to Toyota's production schedules. The new model, a small Starlet-sized car, is due to go on sale in two years and its biggest markets will be France and Italy.

A Toyota executive said: "It is very unlikely to be Burnaston. The car in question has to be on sale in 1999 and manufacturing it in Britain would not help our European supply strategy. But inevitably EMU is one of the other factors."

Toyota is among a number of large inward investors to have warned that investment decisions could be affected if Britain stays outside the "euro- zone". BMW, which now owns Rover, has said that exports and component orders worth billions of pounds will be hit if EMU goes ahead without Britain.

Siemens of Germany, which has invested more than pounds 1bn in a semiconductor plant in the North-east, is preparing to tell component suppliers that they will have to bill it and be paid in euros.

The company is one of the most vocal supporters of monetary union and its chief executive, Jurgen Gehrels, is on record as saying it might have made a different investment decision had it known Britain would be so cautious towards EMU.

Nick Reilly, Vauxhall's chairman, said yesterday that joining EMU would provide assurance to its parent company, General Motors, that Britain would pursue sound economic policies.

But he refuted reports, based on comments by GM's chief economist, Mustafa Mohatarem, that it would shut its Ellesmere Port and Luton car plants and shift production to the Continent if the Government failed to enter the single currency.

In a radio interview with the BBC's Financial World Tonight, Mr Mohatarem said: "A lot of manufacturing jobs that are tied to sales in Europe are tied to Britain joining EMU."

Asked if Vauxhall would produce vehicles elsewhere in Europe if Britain failed to enter he said: "For the European market, yes, given the choice."

Yesterday Vauxhall and GM were furiously back-pedalling. Mr Reilly said: "A statement by a GM representative which indicated conceptual support for the UK entering into the EMU was misinterpreted to imply that GM would withdraw from the UK if the UK did not go into EMU."

On the contrary, he said GM had been a significant investor here since 1925 and had just completed a pounds 300m investment in the new Astra at its Ellesmere Port plant on Merseyside. "That is evidence that GM intends to remain a significant producer in the years to come," he said.

There is no doubt, however, that the vast majority of big businesses favour early entry into a single currency and are building up pressure on the Government to make such a commitment, encouraged by signs that the Cabinet is shifting to a pro-EMU position.

After a four-month consultation with members, the Confederation of British Industry announced in July that it supported EMU membership when the conditions were right. Last month, the CBI's director general, Adair Turner, reinforced this, saying that it would favour a clear statement from the Government in favour of the principle of joining EMU.

The Government is expected to set out its position on EMU by the end of the year but has always said a decision on whether to enter and when would be based on the economic merits, not political considerations.

Suggested Topics
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
Morrissey pictured in 2013
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Robyn Lawley
i100  ... he was into holy war way before it was on trend
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Life and Style
lifeDon't get caught up on climaxing
Life and Style
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star