Rover Update

The last British-owned volume car manufacturer, MG Rover, has closed down, with the loss of 5,000 jobs.

International accounting firm PriceWaterhouseCooper was brought in last week to put the company into administration. Today PwC announced that MG Rover's only hope, the Chinese car company SAIC, had no interest in buying the ailing firm. With no further source of revenue, PwC has closed the company's factory in Longbridge, Birmingham and has laid off 5,000 workers.

Some 1,000 workers will continue for a while to complete the remaining cars left on the production line.

The BBC reported PwC joint administrator Tony Lomas as saying "We'll explore what we would describe as the break-up of the business, we will carry on with the interested parties who want to talk about pieces of the business.". PwC said around 70 offers for various parts of the company had been made but no serious offers of money made.

Recent efforts to save the company had been centered on convincing SAIC (Shanghai Automotive Industry Corp.) to buy the company as a going concern, but the Chinese company stated it would only buy the company if it's financial position could be guaranteed to be secure for at least two years. The British government could not make such a commitment due to European Union trade and competition rules.

The SAIC company did buy the designs for the 75 and 25 models and for the K-Series engines for £67m.

The Rover car company has a long but troubled history. It was formed in 1968 after a series of mergers of existing car manufacturers, and was nationalized in 1975 after it ran into financial difficulties. In 1979 a long-running deal to collaborate on developing new vehicles was established with the Japanese company Honda. In 1988 the company was privatized and was bought by British Aerospace. In 1994 British Aerospace sold the business to BMW, who then sold the Land Rover brand to Ford and finally sold the company in 2000 for just £10, retaining the well-known Mini brand for themselves. The MG Rover company was run by a private group until its collapse.

MG Rover has not launched a new model since the 75 was introduced in 1998 during the period of ownership by BMW. Their next newest model was the 25, originally launched as the 200 series some ten years ago. Rover also produced the 45, which dates from 1990, and the ZF sports car first launched in 1995. Sales of Rover cars accounted for just 3% of the UK car market in 2004.

From Wikinews, the free news source

Just at a time when the current management of Rover should have been seen supporting the company, chief executive Kevin Howe has legged it to Miami. Criticism in the press and comments from the TGWU have called this a gross dereliction of duty.

Yesterday Tony Blair and Gordon Brown visited Birmingham to show solidarity with Rover workers. Unlike their chief executive, they were on hand to promise support and assistance to the floundering company. A task force has been organised to help sort out the crisis and the government has confirmed that it is prepared to give more money to assist firms hit by the MG Rover collapse.

Rover bosses have been heavily criticised for making millions out of the company and there are rumours that this may be the subject of an investigation. John Towers who has returned last night from China has said that he believes there is every possibility of creating something out of the core of this business.

The Shanghai Automotive Company were concerned about a potential £400 million pensions liability but this is in fact covered by the new Pensions compensation scheme. Administrators appointed to manage MG Rover are spending the weekend going over the company acocunts in order to ascertain its future viability and sale as a going concern. MG sports cars are in demand and future production of this range would seem viable. With the collapse of the company there may be an opportunity to re negotiate the Chinese deal. A £40m support package has already been agreed for hard hit suppliers to the car maker.

Price Waterhouse Coopers have been quoted as being optimistic about the possibility of salvaging parts of the company and its assets and have commented that the company has a good workforce. Birmingham Chamber of Commerce has also expressed confidence that new jobs could be found for the 6000 strong workforce which will turn up for work at MG Rover on Monday as normal.

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