Britain's ailing car industry gets production boost

The investments of more than 2 billion British pounds (US$3.2 billion), including a new electric car, a high-end sports car and environmentally friendly engines, will safeguard thousands of British jobs and create hundreds more.

Financial support from the British government was a critical factor in the green investment pledges from Nissan and Ford, a likely vote winner in a looming national election that is expected to be a close-run affair.

The developments won immediate support from union leaders who have been warning the government for months that Britain's manufacturing sector — particularly car making — would not survive the recent recession without help.

Total car production slumped 31 percent last year to just under a million — less than half the output of the industry's heyday in the 1970s. Many of Britain's remaining car plants lay idle as manufacturers took the opportunity to cut their costs by extending the Christmas shutdowns well into the new year. “This is a huge vote of confidence for British manufacturing,” said Derek Simpson, joint leader of the Unite union, on Thursday.

Formula One car maker McLaren unveiled plans to build a range of commercial sports cars in Britain, using race technology to take on other high-end European manufacturers such as Ferrari and Porsche on the highways.

McLaren is banking on renewed spending after the global economic downturn to bolster demand for its first offering, the MP4-12C, which will go on sale in late 2011 with a hefty price tag of between 125,000 (US$191,127) and 150,000 British pounds.

The company's leap into the commercial market is part of its long-running strategy to build revenues by moving away from a single-minded focus on the financially fickle world of Formula One racing.

“At a time when the U.K. is rebalancing the economy away from the past two decades' over-concentration on financial services, we stand alongside other high-tech manufacturing and engineering companies, committed to securing Britain's global leadership, and securing a sustainable economic future,” said McLaren Automotive Chairman Ron Dennis said at the company's headquarter — and new factory site — in Woking.

Among the flurry of announcements, Nissan confirmed it would manufacturer its new Leaf electric car at its plant in Sunderland, northeast England, making Britain its third global manufacturing location after Japan and the United States.

Plans to produce around 50,000 Leafs a year beginning in 2013 and 60,000 lithium-ion batteries are expected to safeguard more than 2,000 jobs across the supply chain.

Ford is investing 1.5 billion British pounds over the next five years into the research and development of a new generation of environmentally friendly engines and vehicle technologies at four of British sites — protecting 2,800 jobs.

The Nissan project is receiving 20.7 million British pounds from the British government and another 197 million British pounds from the European Investment Bank. Ford is benefiting from 360 million British pounds in government loan guarantees, while a proposed 450-million-British-pound loan is being considered by the EIB.

“The automotive sector is of key importance to the UK,” said Business Secretary Lord Mandelson.

At the luxury end of the car market, Spyker Cars N.V., the specialist Dutch automaker which recently bought Saab, said it was switching production of its Aileron model to Coventry in the English Midlands.

There was also good news in statistics from the Society of Motor Manufacturers and Traders, showing a 65 percent rise in car production last month, compared to a year ago.

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