Mercedes looks at British site for car plant

EXECUTIVES from Mercedes-Benz visited Durham yesterday to decide whether to build the planned A-class baby car in the North-east.

Mercedes says it is considering four sites - in Germany, the UK, France and the Czech Republic - and wants to make a decision before the end of the year. Overseas sites are being investigated by the London office of Arthur D Little, the management consultant.

The German delegation was given a presentation by the Northern Development Company, which tries to attract inward investment into the region, and was also briefed by Ian Gibson, chief executive of Nissan's Sunderland factory.

The factory will build about 200,000 cars a year, making it of similar size to Nissan in Sunderland now or Toyota in Derbyshire at full production. High wage costs and the strength of the mark have already forced Mercedes to buy more components from abroad. It has also announced it is building factories in Alabama and Spain.

A move outside Germany for its first venture into small cars would, however, be regarded as a turning point for the company, whose image is heavily based on 'Germanness'. The futuristic vehicle is based on the Vision concept car displayed at the Frankfurt Motor Show.

The North-east believes it has an edge over other regions because of the success of Nissan which, though now affected by tumbling continental demand, is viewed as a model for inward investment. There are now 27 automotive component makers in the region.

However, some commentators believe Mercedes' high-profile search for a foreign site could be no more than a device to persuade the German unions to be more flexible.