Ford Motor subsidiary Land Rover said today production of its Discovery model could be suspended next month and hundreds of workers laid off in a legal dispute with the receivers of one of its main suppliers.
Land Rover has received a demand for £45 million sterling from receivers KPMG to secure the future of engineering firm UPF-Thompson - the sole supplier of chassis for the Discovery - which recently went into liquidation.
While KPMG insisted its legal requirement as receiver was to achieve the maximum value for UPF's assets, Land Rover Chief Executive and Chairman Mr Bob Dover said "there was a good chance that production of the Discovery would be suspended unless we can find a sensible way out of this dilemma."
"Hundreds of workers face losing their jobs until the company can resource and retool the chassis, which is a huge component and can take several months to do," Mr Dover said.
Land Rover had offered to absorb the increased cost of the chassis and pay a £4 million goodwill charge, but KPMG rejected this, the Land Rover spokesman said.
"As a result we have 1,400 workers who will potentially be laid off, although some will be absorbed elsewhere," he added.
A court injunction at the end of last week meant that supply of the chassis was guaranteed until January 25, the spokesman said.
In response, KPMG pushed for new talks with Land Rover to break the deadlock.
"As receiver to UPF, I have a duty to obtain the best price for the assets of the business, including treating Land Rover's reliance on UPF as a valuable asset," said Mr Mark Orton, of KPMG.