Group Lotus

Jim Shannon Excerpts

Tuesday 24th April 2012 Commons Chamber

[Mr Richard Bacon (South Norfolk) (Con)]

I am very grateful for the opportunity to draw the attention of the House to the situation currently facing Group Lotus, the largest employer in my South Norfolk constituency, and the potential threat to 1,200 local jobs. I am very pleased to see parliamentary colleagues here from Norfolk and I have received messages from my hon. Friends the Members for North West Norfolk (Mr Bellingham) and for North Norfolk (Norman Lamb), both of whom would have wanted be here in their capacity as local Norfolk MPs, but who are both sadly overseas on Government business.

Group Lotus is a local and a national icon. It is a famous sports car manufacturer with a very special heritage, and also an important global engineering consultancy. The central concern is that following the Malaysian Government’s recent sale of its stake in Proton Holdings—a Malaysian company that is the owner of Group Lotus—to another Malaysian company, DRB-HICOM, the new owner may respond to what are said to be a number of Chinese businesses that would like to buy Lotus and relocate the manufacturing to China.

The CEO, Dany Bahar, has stated publicly in a recent interview that it would “make no sense” to move manufacturing. However, he also stated the exact opposite at the Paris motor show in October 2010 and at the Los Angeles motor show in November 2010, when it was stated that production would shift abroad and that a new factory site would be decided on before Christmas. One Chinese business, China Youngman, has had a commercial relationship with Lotus for many years.  The great fear in South Norfolk is that there will be a repeat of the MG Rover saga when the remnants of a once great British car company were picked up from the scrap heap and put on a boat to China.

It is worth setting out why Lotus is so important and why its continued presence in the UK is so important. The company was founded in 1952 by Colin Chapman, a legendary designer and inventor who, it is probably no exaggeration to say, was an engineering genius. At the heart of Chapman’s philosophy for automotive design was his famous maxim, “Simplify, then add lightness.” His approach was driven by the belief that while adding power made a vehicle faster on the straights, subtracting  weight made it faster everywhere,  and so he focused on lightness and fine handling rather than on huge horsepower. To this day, Lotus is well known across the world for its unparalleled understanding of drive dynamics.

Lotus has made so many contributions to the history of automotive engineering which are still influential—and in many cases in use today in one form or another—that it is not possible to do justice to all of them in this short debate, although they include the first ever use in a Formula 1 car of a reclining driving position;  a monocoque chassis design; aerofoil wings; a wedge-shaped front; adjustable suspension; and many other important innovations. This approach was rewarded with seven Formula 1 constructors championships and six drivers championships, and Lotus’s cars have twice appeared in James Bond films, notably in “The Spy Who Loved Me”, when a Lotus Esprit memorably transformed into a submarine.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman says that there is a lot of Chinese interest. I also understand there is interest from the Formula 1 Lotus team in taking over the firm and protecting every one of those jobs. Does he agree that its bid should be the one that is chosen?

[Mr Bacon]

I certainly agree that it should be given the most serious consideration. I understand that the owners of Lotus F1, which by the way came second and third in the recent Bahrain grand prix, have expressed an interest and said that they would see no reason to move any of the business away from the UK. Their views should be treated with the greatest care and consideration.

The production side of the business has been doing very well and has built tens of thousands of relatively affordable and cutting-edge sports cars, employing many local people in the process. The consulting side has been so successful over the years that it is said that one in 10 cars in Europe has something in it that derives from Lotus’s intellectual property.

Lotus moved in 1966 to Hethel in South Norfolk to a purpose-built facility on the site of a former US air force airfield. The business now employs around 1,400 worldwide, some 1,200 of whom work at the Hethel headquarters.  In 1996, Lotus was bought by Proton Holdings, a Malaysian car manufacturer. Lotus has experienced financial difficulties at times, but it was profitable as recently as 2008-09, when the Group Lotus annual accounts show a profit before tax of £1.5 million.    It is important to emphasise this point as one will find many incorrect references in the automotive press to the “fact” that Group Lotus has never made a profit since it was bought by Proton, when the actual facts are that the company has been profitable quite recently. Lotus has a great story to tell and is at the heart of an innovation cluster. The recent and growing success of the Hethel engineering centre in nurturing a variety of high-tech small businesses has been due, in large measure, to the presence of Lotus nearby. There are also wider benefits along the A11 corridor that my hon. Friend the Member for Mid Norfolk (George Freeman) will address if he catches your eye, Mr Speaker.

If Lotus were removed, it would be a body blow to the growing success of a local economy that is succeeding precisely as part of the shift away from the overdependence on financial services that the Government wish to see.