UK gives Ford £500m in loan guarantees to support exports

Aid comes as UK automotive industry faces major challenges in wake of pandemic

Workers wearing masks and separated by a screen at Ford's Dagenham Engine Plant in Essex (PA)

Ford in Britain has received £500 million in loan guarantees by the UK government to boost the carmaker’s export activities, the international trade secretary Liz Truss announced on Tuesday.

In a visit to the Ford engine production centre in Dagenham, Ms Truss announced the government’s trade finance department, UK Export Finance (UKEF), gave the guarantee to support a £625 million loan facility by commercial banks to the company.

The loan comes as Britain’s car industry faces a serious period of uncertainty, with the coronavirus pandemic dealing blow after blow that have led to the loss of 6,000 jobs in the automotive sector in June, and put one in six jobs at risk of redundancy as sales nosedived and factories forced to close.

The loan guarantee would support Ford exports, as well as investments into the manufacturing of electric cars. It also aims to increase the carmarker’s capacity to “upskill its UK workforce to safeguard thousands of highly-skilled jobs” at Ford’s factories.

Ms Truss said: “A thriving automotive industry is vital to the success of the UK economy. It brings prosperity and security to manufacturers across the country. That’s why we are putting its needs at the heart of our strategy to remove barriers to trade when negotiating free trade deals.”

But the automotive industry as a whole feels alone in its struggle to keep its head above water amid the pandemic. Earlier this month, chancellor Rishi Sunak delivered his summer economic statement which failed to give the car industry more support.

Mike Hawes, chief executive of the industry’s trade body, The Society of Motor Manufacturers and Traders (SMMT), said the chancellor’s plan was “bitterly disappointing” as it “stopped short of supporting the restart of one of the UK’s most important employers”.

“The automotive sector has been particularly hard hit, with thousands of job losses already announced and many more at risk,” he said in a statement.

“We urgently need government to expand its strategy and introduce sector-specific measures for UK auto to support cash flow such as business rate holidays, tax cuts, and policies that provide broader support for consumer confidence and boost the big ticket spending that drives manufacturing.

“Until critical industries such as automotive recover, the UK economic recovery will be stuck in low gear.”

Previously, support from UKEF had to be tied to an individual export contract, but a change in the rules now allows the department to support a company’s “general export activities” through a new facility called the Export Development Guarantee.

Last year, a £500 million guarantee was given to Jaguar Land Rover to help develop electric cars.

Graham Hoare, chairman of Ford, said: “Ford’s manufacturing operations are already an export success story, with around 85 per cent of engines and 100 per cent of transmissions built in the UK exported. This financing will help to maintain Ford as a key UK exporter.”