Receiver threatens to close down Land Rover line

Land Rover's production line for the Discovery model could be shut down at a moment's notice, receivers at a West Midlands supplier to the car manufacturer warned last night.

Such a move would threaten 1,400 jobs directly at Land Rover's Solihull plant and thousands more jobs among component companies.

Mark Orton of KPMG, joint administrative receiver at UPF-Thompson, sole supplier of the Discovery's chassis, said he could decide the company was no longer capable of trading tomorrow and cut off all supplies.

KPMG is demanding £35m from Land Rover to keep the company going, claiming that car manufacturers had reduced the prices they were prepared to pay to the point where UPFwas no longer profitable.

Mr Orton said that he was merely fulfilling his legal obligations by treating Land Rover's reliance on its supply contract with the insolvent company as a "valuable asset". He denied that KPMG was "blackmailing" Land Rover or its owner, Ford.

Mr Orton said that a legal precedent had been set when a judge ruled that Arthur Andersen, the receivers to the failed engineering company TransTec, had an obligation to maximise its assets by asking for a 60 per cent price rise and a five-year contract. Land Rover said it had offered to absorb the increased cost of the chassis and pay a £4m goodwill charge, but KPMG rejected this. "If we were to pay the whole sum, we would have to put up some form of security that could endanger the rest of the company," it added.

Land Rover said an injunction granted last week meant that supplies were guaranteed until 25 January. But Mr Orton said they would only continue as long as UPFwas a trading concern.