Smolensky to Close Car Factory

TVR, the British sports carmaker owned by Nikolai Smolensky, has announced that it will close its factory in Blackpool, northwest England, in the next six months.

The closure comes two years after Smolensky, 25, son of Russian banking magnate Alexander Smolensky, bought the carmaker amid great fanfare. But after car production and sales slumped, critics questioned whether Smolensky could turn the company around, British media reported Wednesday.

TVR told the factory's labor union Monday that layoff notices had been sent to more than 70 of the 260 workers and that it would be relocating production from the Blackpool factory, which is still owned by TVR's former owner of more than two decades, British entrepreneur and car enthusiast Peter Wheeler.

TVR said it might move production outside Britain and could outsource some work to another company.

Industry sources have estimated that Smolensky paid £15 million ($27 million) for the firm when he bought it in 2004, but that figure has never been confirmed.

Soon after Smolensky bought the plant, the carmaker posted a 2003 pretax loss of £833,000 ($1.5 million), Britain's Daily Telegraph has reported. In 2005, TVR reported sales figures were "up significantly," but gave no further details.

Jason Oxley, a TVR spokesman, said Wednesday that the company was relocating because it wanted to own its own factory, and that TVR could start sub-assembling car parts outside of Britain, potentially in low-cost developing countries. "We want to be a global player," Oxley said by telephone.

The company made about 800 cars last year, and was planning to make a similar number this year, Oxley said.

Andy Robertson, a regional official with the TVR workers' labor union, the Transport and General Workers' Union, said Wednesday that the closure could negatively affect Blackpool, and that TVR was unlikely to pay the workers to relocate.

"There are 260 skilled jobs which are going to disappear from Blackpool's economy," Robertson said by telephone.

Smolensky's ability to turn the carmaker around was questioned in British media Wednesday, with the Daily Telegraph running a story under the headline: "Young Russian Tycoon Drives TVR to the Brink of Collapse."

The Independent commented that the purchase of TVR by the young and inexperienced Smolensky "was never terribly promising," and that "he also has the distraction of managing another dozen companies."

It was not clear Wednesday which other companies the newspaper was referring to.

Robertson said Smolensky had played the role of a financier, not a manager, at TVR, and estimated that he had invested an extra £10 million to £15 million into the carmaker.

Oxley would not confirm Robertson's figures, saying only that Smolensky had "invested heavily" in TVR.

fantasycars.com Smolensky bought TVR two years ago for a reported £15 million. The firm's factory will close in six months.

The introduction of new European Union environmental standards for exhaust emissions could have played a part in the decision to close the factory.

In 2005, TVR said it was planning a new factory "to cope with both the volumes and technology" needed to meet the EU carbon emission standards, known as Euro IV.

Also last year, Smolensky planned to buy renowned Italian motorcycle manufacturer Benelli, but the deal "fell through at the last minute" as the Benelli family pulled out, Oxley said.

British media reported last year that Smolensky had made a failed bid for struggling British carmaker MG Rover.

A spokeswoman for Smolensky in Moscow, Yelena Razumova, declined on Wednesday to comment on the factory closure.