Leyland DAF gets good prognosis

THE RECEIVERS appointed to Leyland DAF, the UK truck and van manufacturer, have told the Government that more than half the company can be salvaged and kept commercially viable without state intervention.

This emerged yesterday as fears continued to mount for the future of the business, its 5,500 workers and the thousands of jobs in supplier companies dependent on Leyland DAF.

There are further indications that the parent company, DAF, and the Dutch and Belgian governments are to set up and fund a new company, separate from Leyland DAF, that will manufacture heavy trucks only at the existing Continental plants.

The plan, which in effect would leave Leyland DAF out in the cold, is understood to have been the subject of intensive discussions yesterday between DAF and the Dutch government.

John Talbot and Murdoch McKillop of Arthur Andersen, joint administrative receivers of Leyland DAF, will today meet the administrator appointed to run the Dutch parent company in the Netherlands.

The growing prospect of the group being split up, with the UK operations that concentrate on lighter truck and van production being left on their own, is likely to be top of the agenda.

Mr Talbot is understood to have received several expressions of interest in Leyland DAF already from potential buyers. He has also secured separate short- term funding from the 60m guilder ( pounds 22m) bridging loan granted to DAF by its bank consortium.

Although Mr Talbot would not say how much funding he had secured or how long it would last, a spokesman for the receivers said it was 'satisfactory' to enable him to secure the business and continue trading.

The receivers' views about the proportion of the business that could be saved were disclosed in the Commons by John Major as he ruled out any state aid for Leyland DAF, saying: 'We are not prepared to spend taxpayers' money to provide working capital to companies in difficulty.'

Rejecting a call from John Smith, the Labour leader, for government intervention, the Prime Minister said that approach was tried in the 1960s and 1970s and it failed.

'Many private companies need more working capital from time to time. It is simply not realistic to expect the Government to provide it.'

Mr Major said the receivers believed at least half the business could be saved 'as a commercially viable business without unnecessary state hand-outs. I believe this is the way to proceed.'

Mr Smith said it was vital for British manufacturing industry that Leyland DAF should not be allowed to collapse and demanded an undertaking that if the Dutch and Belgian governments rescued their part of the company, the British government would do 'at least the same' for Leyland DAF.

Production at Leyland DAF's three main production sites - the Leyland truck plant in Lancashire, the Birmingham van plant and the Albion axle works in Glasgow - was almost back to normal by yesterday evening.

David Gill, the joint managing director, said last night that the company had been 'inundated' with messages of support from customers and dealers and pledges of new orders.