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8-04-2005 The Scotsman 6,000 jobs face axe as Rover rescue fails By Fraser Nelson & Gethin Chamberlain MG ROVER, the last surviving great name in British carmaking, was declared bankrupt by the government last night amid chaotic scenes in London where the company itself claimed it is still fighting to survive. Patricia Hewitt, the Trade & Industry Secretary, announced that the Chinese company proposing to rescue the Birmingham car marker had walked away and that the receivers had been called in last night. But the company rejected Mrs Hewitt's account, said it had not yet reached the point of collapse - and effectively accused her of trying to pull the plug on its Longbridge plant by refusing its request for an GBP 100 million emergency loan. Just after 10pm last night, Mrs Hewitt announced that she and Tony Blair, the Prime Minister, had "done everything possible to try and ensure the success" of the deal with the Shanghai Automotive Industry Corporation (SAIC). But their efforts failed, she said, and Rover "has decided to call in the receivers." She said she is nonetheless "in these difficult circumstances trying to secure a future for car manufacturing at Longbridge". As she was speaking, the company said PriceWaterhouseCoopers had been called in not as receivers, but only "to advise the board on the current position". This claim was duly backed up by PwC in a statement last night. Yet Mrs Hewitt will today press ahead with plans to help Rover's 6,000 workforce retrain and find new jobs. Government sources said the request for GBP 100 million loan could not be granted if SAIC had walked away. Ministers are keen to move quickly on the affair as it is an electoral bombshell for Tony Blair - threatening as many as 20,000 jobs in the West Midlands just as the Prime Minister fights an general election on Britain's economic record. Mrs Hewitt's robust stance is certain to destroy any remaining confidence in MG Rover - and force the company into receivership. Its suppliers had already stopped selling components to Longbridge in fear they would not be paid. This had closed production anyway. It now looks certain that it will not reopen at the weekend - and that Phoenix, the management team which bought MG Rover five years ago, will have to face its collapse today. The Conservatives said last night they would not make political capital out of the event. "This is a deeply depressing day," said Stephen O'Brien, the Tory industry spokesman. "We know very little about the details of the negotiations, so it is impossible for us to say anything." The Scotsman understands SAIC did not see the full company accounts until last month. Gordon Brown, the Chancellor, went to visit officials in Beijing in February - and had no good news to return with. Once SAIC understood the extent of Rover's financial trouble, it pulled out of the GBP 1 billion merger deal being muted, mainly through fear it would be left with responsibility for Rover's pension payments. A last-minute delegation of Department of Trade & Industry ministers last week failed to sooth SAIC's concerns. SAIC has broken off direct contact with Rover and is in contact only through their London broker, NM Rothschild. The event will focus attention on the four men who bought Rover for GBP 10 five years ago and formed Phoenix Ventures. While the company was on its way to collapse, they profited by GBP 40 million between them. Peter Beale, one of the four, had earlier put pressure on the government to make the GBP 100 million loan available so Rover could pay its suppliers. "If the bridging loan is not offered to us by the government we are facing now the tragic closure of Longbridge," he said. But government sources said "a bridging loan is only made if there is something to bridge to," - and, without a Chinese deal, there was no bridging point. The government made clear that the days of nationalisation are over, and it has no duty to bail out failing companies. In addition to the 6,000 employed at Longbridge, some 20,000 jobs are affected by the plant - which had acquired a reputation of being one of the oldest and least efficient in Western Europe, producing unpopular models. MG Rover no longer owns the Rover brand, which was bought by BMW. SAIC last year agreed a GBP 67 million deal for the rights to build the Rover 75, a large saloon, and has building work going on now in China. Ms Hewitt was last night in talks with the Transport & General Workers Union about what there is to salvage in Longbridge - taking as granted that the company has collapsed. But neither side is thought to be optimistic about the chances of survival. "This is a devastating blow to all those involved- the workers and their families, the company's suppliers and the wider community," Mrs Hewitt said. "Our thoughts are with them." The TGWU did not dispute Mrs Hewitt's version of events - saying that the Chinese "have made it clear that they were not confident about the future solvency of MG Rover and therefore there was no reasonable prospect of a deal." At the Longbridge plant yesterday workers said they had no illusions about a rescue. Dave Wilkins, 44, said production had been faltering at the site for a while. "There's been a shortage of parts happening for the last two months. They haven't been paying their bills. It started with fascias, then wheels," he said." The collapse of Rover would bring to an end a 101-year history of the plant, which has spent much of the last three decades in financial peril. In the 1970s, called British Leyland, it required several rescue packages to stay afloat. But the nature of its collapse - with the government and the company openly quarrelling over whether it was in receivership - is unprecedented. It is unclear why Mrs Hewitt made a 10pm announcement, rather than wait until today.
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................................................................................................................. Copyright ©2004 Gethin Chamberlain. All rights reserved. |
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