In Focus: Electrical fault
The news that Coventry-based electric van maker Modec has entered administration, making about half of its workforce redundant, has sent shockwaves through the Midlands business community.
There had been rumours for a while that its deal with US truck maker Navistar to make electric vans on its behalf wasn’t all that it was cracked up to be - that's despite President Obama’s ringing endorsement for the deal the number of orders secured was significantly lower than expected - but its demise has caught everyone on the hop. It is thought that the company fell into administration after experiencing cashflow problems.
For my part I feel very sad about the news but this is mixed with a wider concern that companies like this are being allowed to fail.
Modec has been something of a poster boy for the green automotive movement. We are told that innovative products of this kind are the future of manufacturing in general and the saviour of Midlands manufacturing in particular.
Where does that future lie now?
I agree with regional business leaders who reacted to the Modec news by calling for the government to come forward with a strategy for the automotive sector as soon as possible. If there is one at the moment I’d like to know what it is.
It’s all well and good to take a free market/survival of the fittest approach to business but these are exceptional times and companies such as Modec - full of innovation and future potential - need help. We’ve got enough of a problem with unemployment in this region without allowing go-ahead companies such as this to go under.
Surely it makes more sense to help firms that have reached this stage of development to prosper. David Cameron said this week that we need to back entrepreneurs and tackle the problems that stop them from growing a business. In the case of Modec fine words butter no parsnips.
Lord Kumar Bhattacharyya, head of the Warwick Manufacturing Group, said the government now needed to act on its pledge to support green technology.
“The government has said it will support green technology and will come forward with a strategy for the automotive sector. I would urge them to do that as soon as possible and so put the car industry on the same footing as aerospace,” he said.
I couldn’t agree more.
And Rachel Eade, from the Manufacturing Advisory Service-WM’s auto division also spoke sense when she said the news demonstrates the continued vulnerability of automotive companies in the West Midlands, especially those investing in new technologies and driving what can often be new global concepts.
It is to be hoped in the first instance that administrator Zolfo Cooper can find a buyer for Modec quickly and that the expertise and intellectual property rights built up by the firm can be retained in the region.
But the larger question of how to support businesses of this kind remains unanswered. These companies need help and they are simply not getting it from banks or the government.
We are promised a Budget for growth and enterprise on 23 March. We desperately need it.
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