Siemens to expand its UK business

Siemens, the German engineering and electronics giant, will today reveal a further expansion of its UK activities with a deal to buy out its joint venture partner, Ford, in their car components business.

Ford of the US is selling its 49 per cent stake in the company, Siemens Automotive Systems. The value of the deal is not yet known. The site, which employs some 200 staff at a factory in Telford, assembles fuel systems for manufacturers which include Ford and Jaguar. It will bring Siemens' car components sales from its British plants to around pounds 70m a year.

Sources close to Siemens said the deal would enable the company to accelerate the growth in orders from new sources. Siemens has already invested millions in re-equipping the plant since it bought a 51 per cent shareholding in the venture from BTR, the industrial conglomerate, in July 1994.

The factory uses a plastic moulding process developed by Dunlop to make inlet manifolds, which suck air into car engines. Siemens has previously described the plant as a key element in the move towards greater integration in the industry, with packages of components increasingly assembled by suppliers, ready for final installation by manufacturers.

Siemens is one of the leading European car components makers in activities such as electronics systems, with sales surging by 25 per cent last year to DM4bn. Over the past three years the automotive division has set up 15 manufacturing plants outside Germany, continuing Siemens' strategy of shifting production from its high-cost home base.

Jurgen Gehrels, chief executive of Siemens' UK operations, is expected to hail today's news as the latest indication of the company's commitment to its UK manufacturing base. It is the first acquisition since Siemens bought the historic Parsons steam turbine company from Rolls-Royce this year for pounds 30m.

The investment will dispel some doubts about Siemens' commitment to further UK expansion, following concern expressed by Mr Gehrels last year over the former Conservative government's approach to the single European currency.