AN American firm which employs 200 people on Wearside has slashed its manufacturing target for the year by almost half.
Smith Electric Vehicles, which has a factory in Washington, has cut this year’s target from 620 trucks to 380, a reduction of 40 per cent.
The firm, which is 24 per cent-owned by Washington-based access platform manufacturer Tanfield, announced the reduction in a company filing last week with the U.S. Securities and Exchange Commission, which also revealed it had pledged company assets to obtain an $11.5million loan to guarantee operations through September.
The company has blamed supply problems on both sides of the Atlantic for the decision to cut production.
“Our reduced expectation for 2012 vehicle production is primarily the result of current cash constraints impacting our ability to expand our supply chain,” it said.
Smith announced it would locate its headquarters and open a factory in Kansas in 2009 and has received $32million (about £20million) in U.S. government grants. President Obama visited the plant two years ago and praised the company as an example or the success of the green economy.
Smith has attracted well-known customers, such as Fed-EX, but has struggled to translate its high profile into profit, recording a $27.4million loss in the first six months of 2012, up from $21.3million for the same period last year.
The SEC filings shows some of Smith’s smaller suppliers are themselves struggling and the firm has identified a need to switch to larger companies that can supply parts more reliably and at a lower cost.
One option for the firm to raise cash would be a stock issue.
If successful, it would fund operations for another year and allow the firm to reduce costs and to open a new factory in New York.
It is also in talks with Chinese parts giant Wanxiang Group Corp, which owns one of its battery suppliers.
Earlier this year, the two companies announced plans to form a joint venture to make electric school buses for China, which would see Wanxiang make a $25million investment in Smith.