Wednesday 13th April 2011

Lotus Investment - Government Says No

Round 1 Regional Growth Fund cash denied to Lotus, but JLR, GM and Bentley all benefit

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Update: The winning bids for funding from the Regional Growth Fund have been announced, and Lotus appears to have been snubbed by ministers - at least in the first round - although Jaguar Land Rover, General Motors and Bentley have all been awarded cash to support planned investments.

Hopefully we'll have a comment from Lotus tomorrow (Weds), but meanwhile you can read the official announcement from the Department for Business and Skills here.

Update: We have Lotus's statement, hot off the PDF press...

"Yesterday (April 11th 2011) the Department for Business, Innovation and Skills' (BIS) confirmed that Group Lotus were unsuccessful in round one of the Regional Growth Fund (RGF) allocation. Despite the clear synergies between Lotus' growth plans and the Fund's objectives to enable private sector organisations to invest in projects that would create jobs and secure long-term growth, the bid team decided that the money was better invested elsewhere.

"Following this decision Group Lotus is currently exploring all available options including the possibility of submitting an updated bid for round two of the RGF, which is set to close on July 1st.

"Lotus' original bid application was for a £27.5 million loan which would have been put to good use in research and development crucially allowing Group Lotus to release capital previously allocated to R&D to build the new production plant therefore creating approximately 1200 additional jobs."

(Original article below - March 25th)

We'll find out early next month if Lotus is to keep all its production facilities in the UK, when the government will reveal whether or not it has approved Lotus's request for a cash injection to ensure the new Esprit is built in the UK.

Lotus applied for a chunk of cash from the Regional Growth fund back in January and, should it not get approval for it, could well move some future production out of Norfolk, starting in all likelihood with the forthcoming Esprit.

Government money, on the other hand, would make future Lotus production much more likely to remain in the UK, although even then word has it that Lotus won't rule out moving part of its production to the likes of Magna or Finnish firm Valmet.

One thing Lotus is firm on is that, whatever happens, Hethel will remain its HQ for engineering and R&D.But it seems that everything else is fluid, even though Lotus is avowedly keen to keep its manufacturing heart in the UK. And we won't know more for sure until the Regional Growth Fund makes its decision in the next week or so.

 

 

[thewheelman]

This is something the government should help fund, Lotus needs to stay here. Sorry if my argument is weak, & my knowledge of politics isn't good. But letting another brand go is not good news.

[k-ink]

[Rawwr]

thewheelman said:

letting another brand go is not good news.

Technically the brand has already gone but if the development of the new products can give new and sustained employment and growth to the region, that's the important bit.

[CypherP]

thewheelman said:

This is something the government should help fund, Lotus needs to stay here. Sorry if my argument is weak, & my knowledge of politics isn't good. But letting another brand go is not good news.

Not really weak, no. I agree with you. It was only this morning that the Chancellor of the Exchequer was trying to justify his decision to drop the fuel duty by 1p, stating that knock on effects would be more beneficial and that 2 large UK firms that had moved abroad are returning to the UK as their primary location.

Clearly it is very important to have that business here in the UK, and with a company like Lotus as such an important part of british car manufacture, they really should be behind this.

[Rawwr]

The Crack Fox said:

Businesses should sink or swim on their own, we don't have enough money in the (tax) pot for this nonsense.

Even if it makes economical sense? Not that I'm saying they should - I really don't have any time for Lotus - but if a £30M injection is a catalyst for decent economic growth then sure, go for it.

[GKP]

I've never understood why the Government doesn't get behind automotive industry in the UK anymore, especially one which has such an abundance of Green iniatives in their manufacturing methods and future products. It's almost as if they want the area's biggest employer and exporter to go elsewhere.

[JumpinJack]

Well this would be bad news for the country if they did go IMO. But I'm slightly biased as we do sub-contract machining for them. But still... if any more firms end up abroad, it'll just be more money we have to spend on importing, and the ongoing problem of people struggling to find jobs.

[kambites]

Rawwr said:

Even if it makes economical sense? Not that I'm saying they should - I really don't have any time for Lotus - but if a £30M injection is a catalyst for decent economic growth then sure, go for it.

I think it has to be a purely economic decision. If Lotus bring enough into the UK's economy to warrant the subsidy they should get it; otherwise they shouldn't.

[Dangermouse78]

It'd be nice if the government do put their hands in their pockets to keep Lotus British built... however they COULD alternativly put that £30mill towards lowering petrol prices! Lest we also forget last time the government gave a loan to ensure British built products that Lotus were involved with it was for John Z Delorean!

[oilit]

the government should only match proton pound for pound investment up to a capped amount in return for shares of proton / lotus that should be held by the pension protection fund to help those who have had companies plunge their pensions into the red..... and by the way - there should be a commercial person - from the VC community perhaps who ensures the money is used to ensure job creation and not just wasted on b/s

MTCW

Edited by oilit on Thursday 24th March 16:26

[GKP]

Dangermouse78 said:

It'd be nice if the government do put their hands in their pockets to keep Lotus British built... however they COULD alternativly put that £30mill towards lowering petrol prices!

Yep, I'd love my share of that. Would it be in the form of postage stamps or just a handful of loose change?

[marshalla]

Meanwhile Team Lotus (or whatever they will be called after the court case finishes) are planning to expand in Norfolk without begging for money from anyone

http://www.bbc.co.uk/news/uk-england-norfolk-12838...

[chickensoup]

At the same time that group are giving £20 million a year to Genii

Wonder if this one will end in heart attacks and Columbian bank accounts

Perhaps they could move to Dunmurray

[GKP]

oilit said:

the government should only match proton pound for pound investment up to a capped amount in return for shares of proton / lotus that should be held by the pension protection fund to help those who have had companies plunge their pensions into the red..... and by the way - there should be a commercial person - from the VC community perhaps who ensures the money is used to ensure job creation and not just wasted on b/s

MTCW

Good idea. Since aquiring Lotus, Proton have sunk £200m into Hethel. This is before the recent investments for the new cars.

[MrOrange]

Surely if Valmet can build a good Lotus (and they seemed to do a good job on the Cayman) then it makes sense for Lotus to head down that route and then they can focus on what they are good at which is engineering and consultancy. Saves a few quid for the British Tax payer to boot. Manufacturing has been a global business for 20 years or more.

[P9UNK]

MrOrange said:

Surely if Valmet can build a good Lotus (and they seemed to do a good job on the Cayman) then it makes sense for Lotus to head down that route and then they can focus on what they are good at which is engineering and consultancy. Saves a few quid for the British Tax payer to boot. Manufacturing has been a global business for 20 years or more.

yes good point, Audi make the TT in Hungary for example, and although it pains me it might work business wise, and keeping the most important bit here, it is difficult to see rationally when such an iconic brand is at stake....

[Veg]

Hate to say it but £30 million is about 3 weeks bombing the Libyans and if you want to be a world leader, play world politics and not be the new boy on the block, then who cares about the economy?

[skwdenyer]

Veg said:

Hate to say it but £30 million is about 3 weeks bombing the Libyans and if you want to be a world leader, play world politics and not be the new boy on the block, then who cares about the economy?

Agreed. Q: is it better for the economy to (a) fund local business, or (b) fund overseas aid contributions?

[andyps]

Provided it makes economic sense (i.e. the long term income for the country from Lotus versus the capital investment from the government) then the money should be provided. But I would also add that Lotus need to consider what the overall economic impact of moving from the UK would be. Lotus is British and that is part of the brand, given that with the proposed range of cars a lot of Lotus brand associations are going to be stretched somewhat, taking away the British element could be a stretch too far. I don't know what the impact would be, if anything, but it should be part of the equation.

[Wills2]

They have no right to put a gun to the governments head, They are a medium sized employer what would we do if every medium sized business turned round and started this nonsense?