Van maker LDV is on the brink of laying off 900 employees and going into administration after plans for a management buyout fell through.
The Birmingham-based group, which is owned by Russian engineering company Gaz, had hoped to stay afloat after it applied for loan of more than £20m from the UK government.
Refusal of the loan application has led the group to set a 6 May deadline to secure new funding before it goes into administration.
In a letter to employees, the company said: ‘During the past few weeks, the global economic crisis has forced us to operate in exceptional conditions and we cannot continue in this position without funding indefinitely.
‘We are still working with potential overseas investors who want to keep production in Birmingham, but they, like many people at this time, are finding it difficult to secure the necessary funds. We must now inform you that the deterioration in the position of the business has forced the directors to apply for administration.’
The company added that only senior management will report for work until further notice and all staff will be paid up until the end of the week.
In response to the announcement, Tony Woodley, joint general secretary of Unite, said: ‘Two months ago I warned that without rapid intervention to support LDV while it sought a new buyer, the company would collapse.
‘Unless the government acts to provide a small but vital aid package of just £4m, barely a year’s bonus for a bailed-out banker, then LDV will go into administration on 6 May – and take with it thousands of jobs in our manufacturing heartland. Once gone, these jobs will be gone forever.
‘This does not need to happen. There is a serious and interested buyer for this company, Westar, one who would keep these jobs in this country. This buyer is going through the process of due diligence presently, so all we ask is that the government supports this with £4m in financial assistance while the company completes due diligence.‘While the measure of assistance to LDV that the government has given so far has been fully appreciated, there must be no dithering, but instead immediate action to keep these jobs and skills alive.’