Leyland Australia seeking state aid

BY Clifford Webb

British Leyland's loss making subsidiary has asked the Australian Government for financial assistance to protect the jobs of its 5,000-strong labour force. It is the largest private employer in the Sydney area. The approach follows a top management shakeup.

Less than three months ago Mr David Abell, BL's treasurer and a key figure in its finance staff, was appointed managing director of the Leyland Motor Corporation of Australia. He replaced Mr Peter North, who had held the post for less than two years. It is understood that Mr Abell began talks with Australian Government ministers about the need for urgent financial assistance more than a month ago.

Leyland Australia is reliably reported to have lost between $A11m (£6.18m) and $A13m in the past four years. Mr Jim Cairns, the Australian Deputy Prime Minister, disclosed the request for assistance yesterday. He said: "Certain proposals have been put by Leyland to the Government and we are giving consideration to them."

Last night British Leyland issued a statement which was interpreted in some quarters as hinting at a total pullout. It said:  "While commercial vehicle and luxury car sales have been doing reasonably well in Australia, volume car sales have been experiencing difficulties due to a change in circumstances arising from the Australian Government's re-view of its attitude to indigenous car manufacturing. As a result of this, we are reviewing our situation in this market."

The changing circumstances are a sharp increase in the local content needed in cars manufactured in Australia. This means that the Australian subsidiary is now almost cut off from the low-cost high volume production in its United Kingdom factories.