France and UK compete for Toyota investment

At a time when most car manufacturers are attempting to cut back in Europe because of overcapacity, both the UK and France are now in competition for the next wave of investment from the Japan ese firm, Toyota.

The UK has been the main recipient of Toyota's European investment so far, at its plant in Derby. If the UK were to lose the new investment to France, it would be a huge blow to the Government which recently had to "rebuild some fences" after the company announced in February 1997 that it might switch its investment elsewhere in Europe if the UK did not join the single European currency.

France, on the other hand, is busy trying to shrug off the image that it is hostile to big business and is going to great lengths to improve its share of foreign direct investment, with the aim of overtaking the UK as the number one destination in Europe. The man charged with this task is Jean-Daniel Tordjman who has now headed over 100 missions since 1990 in an attempt to attract some of the world's biggest businesses to France. France not only holds the trump card of already being committed to the single European currency, it is also trying to attract business on the grounds of good infrastructure, a well-educated workforce and high productivity. If it could clinch the Toyota deal, it may also go some way to softening the blow of job losses announced recently at Renault.

The challenge comes at a time when the motor industry in general is struggling to come to terms with overcapacity throughout Europe and, while Asian companies are thought by some commentators to be attracted to the UK by low labour costs and a lack of regulation, a move by Toyota may signal a change of strategy.

Toyota may also be attracted by the opportunity to break into the French market and become the first foreign car manufacturer on French soil. It would also place the firm in close proximity to the German market - the two countries together account for 46% of all cars sold in Europe.