DeLorean cancels car plant in Puerto Rico despite loan |

DeLorean cancels car plant in Puerto Rico despite loan

August 2, 1978 | The Akron Beacon Journal

WASHINGTON (AP) — The Commerce Department confirmed Tuesday a proposed sports car plant in Puerto Rico will not receive $40 million in government-backed financing because its builder has cancelled the project.

Last Thursday, the department released a detailed announcement of the approval of federal loan guarantees totalling $40 million for the plant, to be built by former General Motors executive John Z. DeLorean.

DeLorean cancels car plant in Puerto Rico despite loan | DeLoreanDirectory.comUp the ladder

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The guarantees would have been among the largest ever granted for the start-up of a new business, although Lockheed Aircraft once received a $250 million loan guarantee to help stay in business.

DeLorean had planned to build about 30,000 models annually of the sports car known as the DMC-12, with a retail price of between $12,000 and $13,000, according to reports.

The plant was to be located at the site of the old Ramey Air Force Base near Aguadilla on Puerto Rico’s economically-depressed northeast coast, where unemployment is over 30 percent. The island government would train the 2,000 workers needed for the plant. But DeLorean apparently began to have second thoughts about the project.

ON MONDAY, Puerto Rico Gov. Carlos Romero-Barcelo said DeLorean had abandoned plans for the plant in Puerto Rico in favor of a site in Northern Ireland.

A statement issued Tuesday under the name of Assistant Commerce Secretary John T. Hall said, “The DeLorean Motor Co. decided not to establish an assembly plant in Puerto Rico because it was unable to raise the necessary equity.”

Hall is in charge of the Economic Development Administration (EDA), which was to guarantee half of the loan. The Agriculture Department’s Farmers Home Administration was to guarantee the other half. “EDA is, of course, disappointed for the people of Puerto Rico, who would have benefited from the 2,000 jobs and related expenditures
associated with the plant,” the statement said.

ROMERO-BARCELO has threatened legal action against DeLorean, calling his move “an open violation of good faith.” In addition to training the workers, the island government had also agreed to loan DeLorean $17.7 million for the project, the total cost of which was estimated at $85.6 million.

A spokesman for the EDA, Tom Register, said there was “no legal problem I’m aware of” as far as the EDA was concerned. But he did indicate the agency was embarrassed at the sudden turn of events. “We approved the project, and obviously any time we approve a project, we wouldn’t do so if we didn’t expect it to go into fruition,” he said.

DeLorean cancels car plant in Puerto Rico despite loan |