High-living De Lorean comes crashing down

Press, 25 November 1982, Page 23

High-living De Lorean comes crashing down

BEHIND the WHEEL with

Peter Greenslade

News that Ohio-based Consolidated International Inc., has paid a rumoured £4B million for a 45-day option to buy the De Lorean car plant at Dunmurray in Northern Ireland has not brought smiles to the faces of Ulstermen made jobless by the company’s collapse. Some of them may still be looking for miracles, but a spokesman for the De Lorean creditors, Mr Malcolm Stevens, has been reported as saying that the projected take-over would not save the 500 jobs in the Northern Ireland components industry that are now at risk. In Mr Stevens’ view, even if the plant was to reopen, the likely production levels would not be high enough to make it profitable for small suppliers to produce for De Lorean. Yet, since most of their products and tooling had been specially designed for work on the De Lorean project, they could not switch into other markets either. Also, it is believed that most of De Lorean’s smaller creditors have used up all their borrowing capacity in an attempt to survive the disaster and they are unlikely to be able to remain in business.

De Lorean production did reach 80 cars a day, but Consolidated International’s president has been talking about producing no more than five a day, if the deal does go ahead. As everyone capable of reading a newspaper or watching a television set now knows, John De Lorean was arrested in Los Angeles in October and subsequently charged with trafficking in cocaine. At present he is free on $lO million bail.

To most people, that will appear to be a lot of money, but John De Lorean’s lifestyle was of a nature that seems to indicate it is by no means out of the way.

It was in -1977 that De Lorean, acknowledged as being one of the great American salesmen, started talking with governments around the world with the idea of getting his gullwinged dream car on to the highways.

De Lorean had been one of the bright young men with General Motors. In 17. years he had worked his way up from being a trainee engineer with Pontiac to an office on the fourteenth floor at G.M.’s Detroit headquarters. The fourteenth floor is regarded as the launching pad for greater things at G.M. and De Lbrean was beingtipped as a man who could become president of the

world’s largest car-making firm. For starters, De Lorean peddled his scheme to the U.S. states of Maine and Ohio, and then to a couple of Canadian provinces. Next he went further afield, to Korea and the Philippines. On each occasion the reception was lukewarm and he found it no better in the old hometown of Detroit. For a time it looked as though Puerto Rico would come to the party, but when De Lorean was asked to put up $25 million he backed off. Then De Lorean set course for Europe. The Irish Republic was initially interested, but went cold on the project after carrying out an indepth feasibility study. It could well have been the initially promising Dublin track gallops that directed De Lorean to the doorstep of the then Northern Ireland Secretary, Roy Mason, of Mr Callaghan’s Labour Government.

For Mason, John De Lorean’s door knock was tantamount to the Second Coming. The Callaghan Government had reached the stage where it was about as popular as a pork pie in a synagogue and, what is more, its future hinged upon the support of Ulster’s members of Parliament. After the six weeks of talks, Mason was able to offer De Lorean £35 million in factory and employment grants. That was soon followed by £l7 million from the the Northern Ireland Development Agency. De Lorean was in business and for the first year or two this new industry looked as though it was going to do Northern Ireland some good. A 70-acre site had been developed from paddocks into an up-to-the-minute car

assembly plant, unskilled, labour had been trained and American dealers had been talked into forking out substantial deposits for cars that had not yet been built. The writing started to appear on the wall in March last year when De Lorean asked' the Tory Government to forego debt repayments and royalties on the £7O million loan for four years, in order that the price of the car could be lowered with a view to increasing sales. Predictably, in light of the universal downturn in the automotive industry, Britain’s Iron Woman and her Cabinet colleagues responded with a definite no. By then they might have become aware of the manner in which Mr De Lorean and his band of highly-paid executives were living. De Lorean was reportedly siphoning off a £245,000 a year salary, as well as an additional £50,000 a year in expenses. Commuting between his plush Park Avenue offices and Claridges, he found trans-Atlantic trips in anything but the £lOOO-a--ride Concorde, rather a chore.

Despite his involvement in Northern Ireland, De Lorean always regarded the United States as home and just to prove the point, he had a good stake in it. As well as his New York penthouse, reputedly worth £1 million, he owned a 35-room colonial mansion taking up 430 acres of New Jersey. The bricks and mortar and dirt upon which it stands are said to be worth £1.7 million. When the receivers moved in last February, it did not take them long to tot up the £ 77 million De Lorean owed the British Government for starters. There was £17.8 million in share capital, £2B million in grants, £lO million in guarantees and £ 21 million in loans.

On top of that the nationalised French firm of Renault is said to be owed £ 10 million for engines it has supplied and nearer to home the rot has already set in. A firm in Redditch, to which De Lorean owed £ 300,000, went into liquidation less than six months ago to put another 400 people in Britain’s ever-lengthening dole queues. Now the whole episode is a bad dream, but one that has been mothered by John De Lorean’s dream of a gullwinged sports car that would take America by storm. If Roy Mason had known anything about the motoring world, he, like all the others De Lorean had approached, would probably have turned

away the American. In his sales spiel, De Lorean had said his gull-winged car would initially achieve 20,000 sales a year in North America and would soon rise to 30,000 a year. If Mr Mason and his colleagues had spent a little less time trying to woo the Ulster M.P.s and a little more studying the U.S. car market they would have saved themselves a lot of embarrassment and the British taxpayers a lot of money.

Even a quick glance at the North American sales figures of such manufacturers as Daimler-Benz, Porsche, Ferrari and Lotus or, for that matter, Chevrolet with its Corvette, would have clearly indicated that there was as much a market for a highvolume ■ sports car with a price tag of about $25,000 as there was pie in the sky.

And, on top of all that, if Mason and his advisers had known anything about cars they should have realised that they would be acting as midwives at the birth of a lemon. A car with gull-wing doors with body clad in unpainted stainless steel and powered by a rear-mounted Renault-Volvo V 6 engine was obviously unlikely to kindle the flame of enthusiasm in any true-blue American sports car buff who, if he wished and had the resources, could buy just about any thoroughbred sports car the world had to offer.