Tata Hispano to cease production at Zaragoza plant

Tata Hispano Motors Carrocera SA has announced plans to stop production at Zaragoza factory in Spain after it accumulated operating losses of €60 million (around Rs500 crore) in the last five years.

In 2012 the company made losses of more than €14 million.

The closure is also due to the falling demand as in the recent years the bus market has seen a 38-per cent decline in registrations.

The Spanish bus chasis manufacturer plans to cease production in October at its only plant in Spain, after meeting the existing delivery orders.

The company has also informed the workers' committee on the decision to cease production and expressed willingness to reach an agreement.

The Tata Group company, formerly Hispano Carrocera, would also discuss with the workers' representatives agreements on a social security plan for the 287 employees working in the factory.

The decision to cease production at Tata Hispano Motors has been forced on the manufacturer due to economic and business factors, as despite strong investments, it has not seen positive result "to reverse the challenging business situation and losses for the plant" the company said in a release.

The move is also due to the falling demand as in recent years as the bus market reported a 38-per cent decline in registrations.

The company said its market evaluations did not predict any positive change in the near future, and the growing accumulation of operating losses had made the plant unviable.

The company said it had also received an offer from the Benseny Group, which while not a purchase offer, is being pursued to explore the possibility of achieving continuity of the Zaragoza factory.

However, the company did not elaborate on the offer.

In 2005, Tata Motors acquired a 21-per cent stake in the company to become a minority stake holder subsequently.

In November 2009, Hispano Carrocera SA was renamed Tata Hispano Motors Carrocera SA following the acquisition of the entire stake in the company.