28 June 2002

MFs Coventry plant to close

By Simon Wragg

MASSEY Fergusons tractor manufacturing plant at Banner Lane, Coventry, is to close from the end of this year with the loss of 1000 jobs, parent company AGCO announced this week.

The manufacturing conglomerate blamed the decision on the strong £ that has wreaked havoc with currency exchange rates. Currently, 85% of the high specification tractors produced at Banner Lane are exported.

AGCO chief Bob Ratliff formally announced the companys decision at a media briefing in Birmingham on Tuesday. However, as far back as 2000, Mr Ratliff indicated that Banner Lanes future would be in jeopardy if the £ maintained its strength. Ironically, the announcement comes as the £ continued its recent dip in the currency markets.

The manufacturer intends to switch production of complete tractors from Banner Lane to its facility at Beauvais, France, while kit versions exported outside the EU will transfer to Canoas, Brazil. Production of transaxles at Coventry will also transfer to the continent, but not until June 2003.

Reorganisation of manufacturing will generate cost savings of $20-25m (£13-17m) by 2004, estimates AGCO, by increasing output and lowering operating costs at key plants.

Relocation of capacity is expected to cost between $35-40m (£23-27m), although AGCO expects to recover this from the eventual sale of the Coventry site.

A spokesman for the company confirmed that the UK parts business based at Desford, Leics, will be "totally unaffected" by the reorganisation. Few changes are also expected to the Massey Ferguson network of dealerships.

Although a major blow to the West Midlands economy, suppliers of parts to Banner Lane are expected to retain their contracts. Many parts are already sourced from overseas companies.

Banner Lane reached its peak in 1996 producing 28,000 units and forms the largest manufacturing facility at 1.8m sq ft in the AGCO group. The company expects to retain its Europe, Africa and Middle East regional office at the site for the foreseeable future.

Jake Vowles, director general of the Agricultural Engineers Association, blamed the strong £ and governments failure to react to the crisis in the manufacturing sector.

"We have been telling government since September 1997 that the £ is too strong for exporters, making us less competitive in markets around the world. &#42

particularly compared with our European competitors."