British tycoon and Brexiter Jim Ratcliffe’s Ineos is to produce its first flagship car in France in a blow to the UK car industry.
The company on Tuesday signed a deal to buy a Mercedes plant in Hambach near the German border for an undisclosed amount, and will manufacture its Grenadier off-roader there from late next year.
Ineos had planned to build the vehicle in Bridgend, South Wales, and create 500 jobs in the area. However, it has been in talks since the summer to use the French plant instead.
The reversal will come as a disappointment to the local community in Bridgend, which was already reeling from the closure of Ford’s engine factory in September with the loss of more than 1,600 jobs.
The 4x4, which is billed as a “spiritual successor” to the Land Rover Defender, is one of a family of vehicles the industrial group intends to build as it attempts to gain a foothold in the car industry.
Daimler, the German group that owns Mercedes, said Ineos would take over the factory, which produces Smart cars, in the coming weeks, and that all parties had agreed to safeguard about 1,300 jobs at the site.
UK prime minister Boris Johnson had hailed plans to build the car in Wales as “a vote of confidence in UK expertise”.
Ed Miliband, the UK’s shadow business secretary, blamed Tuesday’s “crushing news” on Mr Johnson’s failure to support Ineos.
“Boris Johnson’s dithering, delay and failure to deliver appears to have led to the loss of two major employers in the area — and it’s devastating that communities in Wales will pay the price of his incompetence,” he said.
Chris Elmore, Labour MP for the Welsh seat of Ogmore, described the news as a “hammer blow” and a “crushing disappointment” for workers in the region.
“Ineos owner Sir Jim Ratcliffe was a vocal Brexiter, loudly proclaiming the benefits of leaving the EU,” he said. “Today, we can see his claims are as hollow as his promise.”
Sir Jim, chairman of Ineos and one of Britain’s richest men, said: “Hambach presented us with a unique opportunity that we simply could not ignore.”
In a tweet, Ineos’ car unit said it had always intended to build its first vehicle in Britain, and the plan to do so “was fully costed and deliverable”.
“Of course, we understand there will be disappointment in the UK,” the company added, emphasising the decision was “not related to Brexit”.
But Ineos said Hambach’s location, roughly four miles from the German border, and close to one of the country’s carmaking heartlands in the state of Baden-Württemberg, would give it access to “supply chains, automotive talent and target markets”.
Daimler, which is undergoing a painful restructuring as it pivots to electric vehicles, has promised to cut a fifth of its fixed costs over the next four years.
The Stuttgart-based company said it had booked impairments from the sale of Hambach, amounting to several hundred million euros in its second and third quarters and expected “no significant negative effects” in the coming months.
Its management hailed the deal as a “viable solution” and a step towards slimming down the group, as it focuses on fewer, more profitable models.
“We are in the midst of a major transformation of our company,” said Daimler board member Markus Schäfer.
“In doing so, we must make the company even more efficient and, in this respect, the optimisation of our global production network is a very decisive lever.”
Opened by then French president Jacques Chirac and German chancellor Helmut Kohl in 1997, the Hambach plant has produced more than 2m Smart vehicles in the decades since, and builds the EQ fortwo electric model, which Ineos will continue to manufacture on a contract basis.
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