500 staff face axe at Wagon

More than 500 West Midlands jobs were today in jeopardy after car parts firm Wagon fell into administration.

The company confirmed today that it planned to appoint administrators following the breakdown of talks with banks over a rescue package. The Birmingham-based firm employs 200 in Brownhills and also has a factory in Coventry.

It is now in the hands of restructuring firm Zolfo Cooper.

The Brownhills plant, in Pelsall Road, makes panels and door parts for Honda, Ford, General Motors, Land Rover and Nissan. It has already laid off 40 agency workers in recent weeks.

As well as its UK staff, the company employs 4,000 people in Europe.

Wagon said today that decisions on whether to put the overseas companies into administration had not been taken, although it added that some may be able to trade without needing insolvency protection.

The company's fate was sealed when banks, led by government-backed Royal Bank of Scotland, apparently refused to contribute £10.4million to a £43.3mill-ion rescue package. Wagon – controlled by US billionaire Wilbur Ross – failed to persuade banks to contribute to the measure which would have kept it running for another three months.

This was despite its car-making clients putting up £26 million and Mr Ross was understood to have been prepared to contribute £8.7million through the purchase of one of Wagon's subsidiaries. But the banks, which had agreed loans of £134.2million in the summer, decided against giving more.

Shares in Wagon were suspended in October after it reported a "steep deterioration" in the European car market and said it was in talks with lenders about its funding situation.

It has come under further pressure as car makers continue to cut production.

Wagon has its roots in Wagon Repairs, a business set up at the end of the First World War to maintain railway rolling stock.