Hethel-based Lotus lays off contractors

Dozens of contractors at Norfolk car maker Group Lotus are to be laid off in what appears to be the first sign of belt-tightening by its new Malaysian owners following the sacking of former chief executive Dany Bahar.

Yesterday it emerged that more than 50 contractors currently working at the firm have been given a couple of weeks notice after Lotus said that their contracts would not be renewed.

The job losses are not believed to be related to current car production, but are instead linked to future projects in the five-year business plan which has been put on hold.

The �200m turnaround plan announced in 2010 to create five new models at the Hethel-based car maker, leading to the creation of more than 1,000 new jobs, was backed by a syndicate of Malaysian banks.

It had also helped secure a �10m pledge from the government's regional growth fund, and the move is sure to raise questions about whether DRB is set to scale back the turnaround plan, which in turn is likely to spark further speculation about the fate of the government's pledge.

Last night there was no official word from the car maker or its new chief operating officer Alsam Farikullah, about the move.

However with Mr Farikullah brought in this month after new owners DRB-Hicom sacked previous chief executive Dany Bahar, many are sure to see the move as the first signs that the Malaysians are looking to cut costs at the loss-making firm.

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And it comes as DRB revealed in an interview with the Malaysian press that Group Lotus must urgently meet certain conditions in its loan agreements with its Malaysian backers.

Group Lotus declined to comment last night, but in an interview this week Sulaiman Yahya, head of corporate communications at DRB-HICOM, revealed the firm had been given until this month to meet certain conditions on its loan agreements with its banks.

Mr Sulaiman said: 'As early as July last year, the signs of trouble emerged when it failed to meet certain conditions in its loan agreement with Malaysian banks. But after seeking a second extension in November last year, the banks stopped further drawdowns and gave an extension till this month.'

Reports in Malaysia stated that the immediate plan was to get bankers to support Lotus again after a consortium of banks pulled the plug on loans to the British sportscar maker and Mr Sulaiman said a team led by Lotus chairman Datuk Mohd Khamil was now working on a plan to help stabilise the car maker.

Meanwhile he also denied that Mr Bahar was suing DRB-Hicom, but that they were fully prepared if he did.

Mr Bahar was sacked by DRB-Hicom earlier this month following an audit into the running of the company and an unspecified complaint against him by the conglomerate.

The internet has been awash with rumours that Mr Bahar was planning to sue the firm for wrongful dismissal.

But Sulaiman said he was not aware of any suit being filed by Mr Bahar against DRB-HICOM, and there has been word from the former Lotus boss on his next move.

'Nevertheless, we are fully prepared should Bahar wish to take action against Lotus plc or DRB-HICOM,' Mr Sulaiman said. 'We had anticipated this when Lotus dismissed him.'

He added: 'Bahar was dismissed based on the results of Lotus' investigations into his conduct. We shall rely on this evidence should he wish to take legal action.'

South Norfolk MP Richard Bacon, who has been leading a campaign to ensure the future of the car maker in Norfolk said he was not surprised by the news of the lay-offs.

Mr Bacon said: 'It is widely recognised in the automotive industry and by DRB Hicom itself that the five year plan and five models is not going to happen.

'I want to know the extent it relates to that. If it does relate to that then it is not a surprise, but it is not comforting news. I will be trying to find out myself what it is about.'