Let Rover 'go to wall'
Apr 6 2005
By John Duckers And John Cranage
The Government should let MG Rover go to the wall instead of "pouring good money after bad", a West Midland business group has said.
The comment came as Harold Musgrove, a former chairman and chief executive of MG Rover predecessor Austin Rover, described the carmaker's situation as "very serious indeed".
According to Bob Michaelson, regional chairman of the Institute of Directors, the £100 million the Government is said to be prepared to contribute to a rescue package for the Longbridge manufacturer would be better spent on job creation and re-training the company's 6,100 employees.
"Spending £100 million in the West Midlands is a far wiser use of the money than sending £ 100 million to Shanghai to prop up what is clearly a struggling company with a bleak future," he said.
"The subject of MG Rover is naturally very emotive but as a taxpayer I want to see the best use made of our resources, not just for the next month but for the future and to support generations that are just coming into work."
Mr Michaelson was speaking as talks aimed at rescuing the floundering life-saving joint venture between MG Rover and Shanghai Automotive Industry Corporation continued yesterday in China after appearing to have stalled on Monday night.
He continued: "The collapse of MG Rover would be a disaster for the West Midlands, but it would be up to all the organisations and local authorities in the region to pull together to mitigate the effects and create something positive out of a negative.
"Many of us remember the day when Round Oak Steel Works closed and 2,000 people walked out for the final time.
"Now that area has been revitalised and the Merry Hill shopping centre, the Waterfront business park and associated hotels, restaurants and pubs have created more than 10,000 jobs.
"We need to rediscover that spirit and get behind the employees of MG Rover to support them and try and ensure that their transition from initial redundancy to gainful and sustainable employment is as smooth and painless as possible."
In the event that MG Rover collapsed, it would be important that fair value is realised for all the company's assets and that the Longbridge site be made available as soon as possible to facilitate both inward investment by companies moving in to the area and promote and support start-ups in the south west of Birmingham, Mr Michaelson added.
A second business organisation warned that the collapse of MG Rover would have a " profound" impact on smaller supply chain companies.
"Many of the manufacturers involved in supplying MG Rover will be pushed close to the brink if the rescue package fails to materialise," said Nick Goulding, chief executive of the Forum of Private Business.
"If firms involved in the supply chain are forced to close it will cause grave problems for the remaining car producers across the country.
"Many may be forced to look elsewhere, probably abroad, for new suppliers and the job losses that follow will have a grave impact on the region's and the UK economy."
Mr Musgrove, aged 74, who ran Austin Rover from 1980 to 1986, said he was unaware of the financial situation at MG Rover, but added: "It would be folly to think it is anything other than very serious indeed."
But he insisted the company did still have assets which others would want - the K-series engine is one of the best in the world; the ability to design and manufacture suspension units; the MG image and a Longbridge workforce who were among "the finest carmakers".
However he went on: "I am sad that it has been allowed to get into this appalling state."
Giving his support to the workforce and offering hopes that the Chinese would stay involved, he nevertheless warned: "We must not fool ourselves or anybody else. Whatever we decide to do, it must be profitable."
blueboy said:as a former employee , i feel im probably more qualified than most to comment, it is a sad day for brum but the fact is people are not going to buy models that are now effectivly 15 year old designs, mg have done the best they could tarting up the range, and the 75 remains one of the best cars in its class, but with out a new model as planned for last year, the company never had a chance, the deal with the chinese needed to happen 2 years ago really, whos to blame? well bmw really, they made a right **** up when in charge, bumping up the prices to make em more exclusive, stopping the metro with out a replacement, fuddy duddy styling and a bizarre fear of the 75 actually out doing its own models.
i cant help but think, if they'd done what mg did with the range they invested, and with the success of the mini, and new range rover models, and the new rover (bmw 1 series people!) the company would be in a very different situation now!
all i can say is good luck to those that are there now.
Uniformed hogwash.U475 Foxtrot said:I despise BMW and hold them responsible for this sorry state. I know it's business but they got the know how to build 4x4s, the rights to rape the Mini marque and the BMW 100 (incidently developed from 3 series parts). On top of this they destroyed Rover who were seen as a potential threat to BMWs core business as they were taking the brand down market and set thier biggest Japanese rival Honda back a few years in europe. What a bunch of wankers. :skull:[/url]
Partial bollocks. The bit about BAe is correct, but you credit BMW with too much. They provided the money to develop the R75 and Mini, but ignored the bread and butter mid-size cars (and took the Mini with them). BMW wanted Land Rover's technology, they had no real interest in Rover.MartinN said:Uniformed hogwash.
The Government sold Rover to BAE after years of no investment. Once BAE took over they forged an alliance with Honda, and as a consequence became wholly reliant oh Honda for design & RD. They closed down Canley (Coventry) and sold off land at Cowley, and did not invest in the factories or design.
In fact, when Rover turned a modest profit, BAE did not put profits back into the firm. This took place when there was a global upturn in sales.
BMW were looking to expand, and wanted outright ownership of Rover. Honda refused to buy the company from BAE (Who were in financial difficulty and selling off non-core business) and would rather have had a large stake in it. So BAE sold to BMW. By now the firm was producing cars that were virtually Hondas.
BMW inherited a company with huge problems - they poured over a billion into upgrading Cowley, Gaydon & Longbridge & designs for new vehicles. However, the lack of investment and currency fluctuations were too much for them.
They were so determined to not shut down Longbridge -despite the fact that they had overcapacity - and keep a promise they made to the UK government that they plugged away with new models & designs, but Longbridge continued to drain on their resources.
I'm sick of seeing BMW blamed for this - Rover wasn't a viable business in 1975, and Bae would rather build Honda vehicles than their own.
BMW may have made some marketing problems, but the crux of the problem was Longbridge. It was inevitable that Longbridge would go. As far back as the 80s Margaret Thatcher was persuaded to keep Rover nationalised - this was because the chap running it (Edwards) knew that the Longbridge plant was unviable and would be closed down.
They didn't "take" the mini with them - they owned it.MarcusValhalla said:Partial bollocks. The bit about BAe is correct, but you credit BMW with too much. They provided the money to develop the R75 and Mini, but ignored the bread and butter mid-size cars (and took the Mini with them). BMW wanted Land Rover's technology, they had no real interest in Rover.
Obviously this is written from an Austin Rover perspective but you may want to check this out this uninformed hogwash. http://www.austin-rover.co.uk/index.htm?whydbbrf.htmOriginally Posted by MartinN
Uniformed hogwash.
The Government sold Rover to BAE after years of no investment. Once BAE took over they forged an alliance with Honda, and as a consequence became wholly reliant oh Honda for design & RD. They closed down Canley (Coventry) and sold off land at Cowley, and did not invest in the factories or design.
In fact, when Rover turned a modest profit, BAE did not put profits back into the firm. This took place when there was a global upturn in sales.
BMW were looking to expand, and wanted outright ownership of Rover. Honda refused to buy the company from BAE (Who were in financial difficulty and selling off non-core business) and would rather have had a large stake in it. So BAE sold to BMW. By now the firm was producing cars that were virtually Hondas.
BMW inherited a company with huge problems - they poured over a billion into upgrading Cowley, Gaydon & Longbridge & designs for new vehicles. However, the lack of investment and currency fluctuations were too much for them.
They were so determined to not shut down Longbridge -despite the fact that they had overcapacity - and keep a promise they made to the UK government that they plugged away with new models & designs, but Longbridge continued to drain on their resources.
I'm sick of seeing BMW blamed for this - Rover wasn't a viable business in 1975, and Bae would rather build Honda vehicles than their own.
BMW may have made some marketing problems, but the crux of the problem was Longbridge. It was inevitable that Longbridge would go. As far back as the 80s Margaret Thatcher was persuaded to keep Rover nationalised - this was because the chap running it (Edwards) knew that the Longbridge plant was unviable and would be closed down.
A lot of these industries were reliant on the British Empire for exports - Britain actually stopped India from producing its own cloth just so it could the stuff it made in the Northern mill towns to them.WeasteDevil said:I feel that sometimes you just have to let go, reskill, and move on. It has happened with other sectors of the economy in the mid to recent past, textiles, coal, steel, etc. There is simply no sense in throwing good money after bad.
Sorry.
Interesting that Britian now produces more cars per annum than it has for a long while. Not British owned, but providing work non the less.
Totally biased and absolutely no evidence for the theory.U475 Foxtrot said:Obviously this is written from an Austin Rover perspective but you may want to check this out this uninformed hogwash. http://www.austin-rover.co.uk/index.htm?whydbbrf.htm
The only good thing I have to say about BMW is that they employ people at Cowley and the Hams Hall engine plant.
How can it be the government's fault? Is it the government's fault that a private business goes bust due to cashflow problems? There was no chance it would find a partner with that amount of debt - it's got virtually no assets left, and huge debts, and virtually no market. There was nothing the DTI could do - you want them to keep pumping 25 million a month into a business that's bust? They've been there before and it didn't help matters much then.liverpolitan said:What a disaster. In time it will be good to learn how the DTI could have acted more proactively and wisely to intervene and support the company through what should have been a transition rather than closure. I think the workers were let down by incompetent Whitehall civil servants, and their poodles in Advantage West Midlands. Others will want to try to blame the owners, and maybe they do share some of the blame.
It's such a pity, I really hoped that for once the company would be lucky, find a good partner, at the right time, and find a way back as part of a bigger grouping. The whole country seems a bit weaker and smaller without Rover.
Martin N, let me answer your points on behalf of the many workers at Longbridge (some of whom have been supporting the BRITISH car industry for decades whether good or bad)MartinN said:They're claiming that "Rover _is_ the West Midlands" - eh? "Rover is a bastion of Britishness"? - Ha!
Surely they must have seen this coming? I've worked in firms that are going down the pan and the signs = usually the fact you're not selling anything - are blatantly obvious! Were they so blinkered by the "Jobs for life" attitude that they failed to realise it?
Besides you're hardley a true rep for Cov are you...
