The bankrupt Korean automaker simply cannot afford the upkeep of its technical center in England. At least twice, Daewoo's cash-flow crisis has forced it to delay payment of wages to the center's staff.
Negotiating to buy the center at a bargain is Scotsman Tom Walkinshaw, the racing fan whose interests range from car dealerships to the Arrows Formula One team. Walkinshaw owns performance engineering specialist TWR Ltd., which has had a long relationship with Volvo Car Corp. TWR developed Volvo's race cars and has teamed with Volvo to produce the C70 coupe. An informed source says Daewoo may sell the center for as little as $3 million.
Walkinshaw is working with Renault SA on the RenaultSport program, which markets high-performance versions of the Clio and other Renault models. The Renault partnership is a key reason why Walkinshaw wants to buy Daewoo's well-equipped technical center in the southern coastal town of Worthing.
More job cuts
A new owner will not solve all of the technical center's problems. Further job cuts are likely as Walkinshaw hires his own managers and employees. Barely 150 employees will remain of the original 1,000. Most of those workers were laid off in the past year as Daewoo sank into financial crisis.
The Korean automaker acquired the renowned IAD technical center in 1994. Daewoo was expanding overseas, and the facility was to design Daewoo's European models. It expanded the operation between 1995 and 1997, installing full engineering and prototyping equipment. Its design studios employed designers, engineers and technicians from all over the world.
The Worthing center has helped design all current Daewoo models, especially the Matiz, which proved popular in Europe. The center also created the Mirae, Shiraz and Musiro concept cars. The center is working on the Matiz replacement, plus two light commercial trucks to be built at Daewoo's plants in Lublin, Poland, and Birmingham, England. If TWR buys the technical center, it will develop these vehicles under contract from Daewoo.
One of the commercial trucks under development is the LD 100. It was intended for Daewoo's other troubled British subsidiary, LDV. Formerly called Leyland Daf Vans Ltd., that business also is for sale, sources say. According to information received by Automotive News International, Volkswagen AG is discussing the purchase of the truckmaker.
Daewoo Motor Poland owns half of LDV and operates the Lublin plant. The remainder of the company is owned by 3i Investment, plus the management and employees.
The company confirmed that it seeks a new partner. 'We are on record as saying that LDV does not see Daewoo as part of its long-term strategy,' says company spokesman Ian Strachan. 'We are looking to establish new partnerships.'
Did Daewoo tell its truck operation to seek investment? 'I think most of Daewoo's overseas operations worked that out for themselves when the money started to dry up two years ago,' Strachan says.
Despite Daewoo's crisis, the truck operation has enough cash to survive. The Birmingham plant is spending $50 million to install a paint shop. The company paid for it with its own funds without help from Daewoo. Moreover, the company plans to introduce new models.
Meanwhile, the Lublin plant is trying to secure its future. Volkswagen wanted to buy Lublin, but talks broke down in February, says company spokeswoman Beata Stopyra. The plant now is talking with the Polish holding company Polmot, while VW still may buy LDV's British plant.
Lublin produces delivery vans and off-road vehicles for farm and military use. Sales have declined badly. The plant has the capacity to produce 20,000 vehicles annually. But with monthly production at just 300 vehicles, the factory shut down in January.
In October, the plant laid off 900 of its 3,000 workers. 'We have the factory, and we have the prototypes of our new vehicles,' Stopyra says. 'We need to end the uncertainty.'