Truck collapse threatens 5,500 jobs

THOUSANDS of jobs were under threat last night at Leyland DAF, the British truck and van manufacturer, after talks to rescue its Dutch parent collapsed.

The failure of the negotiations sparked angry exchanges in the Commons and placed an immediate question mark over DAF's UK plants which employ 5,500 directly and provide thousands more jobs in the component industry.

DAF, the Dutch parent company, announced yesterday morning that it had been forced to go into administration and seek protection from creditors owed an estimated 1.5bn guilders (pounds 575m).

The move came after the refusal of its banks, three of them British, to back a rescue deal put together with the Dutch and Belgian governments. Last night the appointment of administrative receivers to Leyland DAF, its UK division, was imminent.

Leyland DAF employs 2,200 at Leyland, Lancashire, producing trucks and 2,000 in Birmingham manufacturing vans. A further 550 are employed at the Albion axle works near Glasgow, 400 at a parts depot in Chorley and 350 at DAF's marketing and sales division at Thame, Oxfordshire.

Those jobs are now at risk. The failure of the rescue package could also affect British Aerospace, DAF's biggest shareholder with an 11 per cent stake.

Michael Heseltine, President of the Board of Trade, yesterday pledged that his department would work with the company, the receivers and the bankers to mitigate the effect on UK jobs.

During heated exchanges in the Commons, Mr Heseltine said he hoped it would be possible to create a business with a 'long-term commercial future' from some of DAF's UK operations, adding: 'There is every reason to hope that at least some of these jobs can be saved.' However, he appeared to rule out direct government aid.

Robin Cook, Labour's trade and industry spokesman, attacked the Government for refusing, unlike its Dutch and Belgian counterparts, to underwrite loans to secure DAF's future. 'Today 5,500 people face the prospect of redundancy,' he said. 'When they hear this Government talk about recovery, it must sound like a government that does not know what is happening in the real world.'

Mr Cook alleged that the minority of banks that had wrecked the rescue deal were National Westminster, Barclays and Lloyds. Mr Heseltine retorted that as far as he was aware there was not 'one shred of evidence to substantiate that charge'.

The UK banks also reacted angrily to the charge, with both NatWest and Barclays insisting they continued to be supportive. One banker said last night that the British banks had been set up as 'fall guys' and added: 'We were being asked to lend blind which was not acceptable.'

DAF's unions, meanwhile, were seeking an urgent meeting with the management to discuss a rescue plan for the UK operations. John Allen, chief negotiator of the Amalgamated Engineering and Electrical Union, said: 'This could be a disaster of mammoth nature.'

DAF has suffered losses of 800m guilders (pounds 306m) in the past three years as the collapse in the West European truck market has caused sales to fall by a fifth. With a further decline expected this year, DAF was estimated to need an injection of at least 500m guilders to survive.

The company has been particularly hard hit by the savage recession in the UK, its biggest market, where sales have nearly halved since the late 1980s to just over 31,000.

Leyland DAF was formed in 1987 through a merger of the state-owned Leyland Trucks and DAF. It was floated on the stock market two years later.