The government is due to decide whether to award a �40m aid package to safeguard the future of Birmingham van-maker, LDV.

The Industrial Development Advisory Board will consider the company's plans to join forces with the Korean car maker, Daewoo, to produce a new range of vans.

The help has been requested by LDV and Daewoo. The latter is thought to be planning to take a 20% stake in the van maker.

The grant, together with Daewoo's 20% stake, would help LDV invest �180m in product development and extra capacity over the next 5 years.

The project could create 2,000 jobs

If the project is given the go ahead, it would quadruple production at the Birmingham plant and create 2,000 jobs.

LDV has done relatively well since it emerged from the collapse four years ago of the Leyland Daf group. It has secured a respectable 1.2% of the European market.

However, the company needs a new product and cannot afford to design one by itself, says Jay Nagley, consultant at Quadrangle Automotive.

He says: "LDF have to tie up with somebody. They have as much as they can with the product, but it does date back to 1974. And there is only so far you can take a product that is over 20 years old."

LDV is one of the last solo van makers. In Europe, Mercedes works with BMW; Peugot, Citroen and Fiat work together, and so do Renault and Vauxhall. Only Ford has the muscle to go it alone.

For LDV, going outside Europe for a partner has become almost inevitable - and may give it access to a global market.
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