Wheels finally come off for Wagon
There is an unfortunate irony about the collapse into administration of West Midlands-based car components supplier Wagon Automotive’s UK operations.
For Wagon was the company that in 2005 dislodged the stones that created the rockslide that sent MG Rover into oblivion.
Faced with rising steel prices and pressure from its customers not to increase its prices, Wagon decided enough was enough when MGR ran out of cash and stopped paying its bills.
Other suppliers had reached the conclusion that Longbridge had become a terminal case but Wagon was the first to break cover with a stock market announcement that it had pulled the plug on a carmaker who had previously accounted for some £14 million of annual turnover.
Chief executive Pierre Vareille said at the time: “For the sake of MG Rover and all its stakeholders, we sincerely hope that a positive route forward can be taken for the business.”
The only “route forward” for MGR was a swift descent into insolvency amid a welter of recriminations and claims that its bosses, the much-vilified “Phoenix Four”, had lined their own pockets while driving the business into the ground.
Wagon and its workforce paid the price by taking a £2 million charge to cover the loss of the MGR business and the scrapping of 100 jobs.
Nearly four years later, and with about 500 jobs on the block, we should echo Mr Vareille’s sentiments by saying: for the sake of Wagon and all its stakeholders, we sincerely hope that a positive route forward can be found for the business.
It has to be said, sadly, that the signs are not good. Previously, whenever a major components supplier got into trouble its customers would find the cash to put a floor under the business - if only to prevent disruptions to their own activities.
But these are not normal times - it’s not even a normal recession that the car industry faces.
Carmakers throughout the world are reeling under the hammerblows of spending by consumers and a credit drought.
Much depends on the willingness of governments that have already been forced to rescue some of the world’s biggest banks to do the same for the likes of General Motors and Chrysler in the US and Jaguar Land Rover and Vauxhall in the UK.
As one of the administrators brought in to try to salvage Wagon’s UK business said yesterday: “The global automotive sector is battled unprecedented market conditions...”
Wagon’s collapse, sad to say, is just another symptom of a worldwide economic epidemic.
