Doubts over MG's future as supplier quits deal
Uncertainty once again surrounds the future of car production at Longbridge after a major supplier to Chinese firm Nanjing Automotive confirmed it was pulling out of its arrangement to build body panels for the MG TF sports car.
The move has caused consternation among other suppliers who have demanded answers about whether the sports car is now a viable project.
It is thought that if production of the car does begin in earnest then the majority, if not all, of the panels will be made in China.
Production of the MG TF had been expected to be in full swing by now, but the project has been subject to lengthy delays and there is still no clear indication as to when it might start.
It is thought the uncertainty has lead to fabricator Stadco pulling out of its deal with the Chinese 18 months after signing the initial contract.
The move places 30 jobs at risk and the company - one of around 150 firms supplying components to the car - has entered into statutory negotiations with its workforce to try and minimise losses.
The announcement of the withdrawal was made in a brief press statement, which read: "Stadco and NAC jointly confirm that for commercial reasons, production of bodyshells for the MG TF by Stadco will cease.
"Both parties are working to ensure minimum disruption to the workforce.
"Consultations with elected employee representatives will commence immediately and every effort will be made to assist those affected by this announcement.
"Stadco confirms that this will not have a material impact on its financial outlook."
It is thought the firm had invested heavily in the plant in the hope of seeing a return of around £2 million a year once production was running to full capacity.
An industry insider said the move raised serious questions about the future of the sports car.
"There have been so many delays that there are now major concerns about whether it will ever move into full production," said the source.
"The move by Stadco is a clear indication that things are not well and for the sake of everyone involved in the project, the Chinese should be telling us what their intentions are."
John Lamb, spokesman for Birmingham Chamber of Commerce and Industry, said there would be concern among all suppliers about what was happening.
"If Stadco has made a decision on commercial grounds then that's perfectly understandable. However, we would be very disappointed if this element of production was lost to China," he said.
The Department for Business Enterprise and Regulatory Reform said had not be made aware of the situation and was just as much in the dark about the Chinese company's intentions as anyone else.
"We are not necessarily privy to commercial negotiations of this kind and we are not aware of any developments in China," said a spokesman.
David Bailey, Professor of Economic Policy and International Business, at the University of Birmingham added his concerns.
Writing in his Birmingham Post blog, he said: "Until today, Stadco had been seen as a key partner for Nanjing in its efforts to restart MG TF production at Longbridge, and had shifted its body-shell production there from its site in Coventry (Stadco had always made the body shells for the MG TF, back under MG Rover).
"Quite where this leaves MG TF production is the big question."
He said the decision raised a number of issues.
"Is this part of Shanghai (which now owns Nanjing) asserting control and maybe bringing in complete knock-down kits from China including body-shells? If so there will be fewer jobs here than we thought.
"Some answers would be very welcome, especially when Nanjing's plant still forms such a large part of the old Longbridge site which needs to be developed to create much-needed jobs," he said.
The Chinese company has not been available for comment and those searching for clues to its plans are struggling to glean any information.
However, it issued its annual report last month but in it made no reference to any production at Longbridge.
It hinted later on in the report that there could be problems ahead during 2008 when it said "multiple uncertain factors exist", although it added it was still confident of heading off any challenges.
* Read David Bailey's Birmingham Post blog here.