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8-04-2005 The Scotsman MG Rover arrives in last chance saloon By Gethin Chamberlain Chief News Correspondent THE troubled British car manufacturer MG Rover last night warned it was teetering on the brink of closure as nervous suppliers worried about the company's financial plight forced the suspension of production at its Longbridge factory. The threat placed more pressure on the government to come up with a GBP 100 million bridging loan, which the company claims is vital to its survival, or face the unedifying prospect of massive job losses in the key election battleground of the English West Midlands. MG Rover, which has lurched from crisis to crisis in recent years, employs about 6,000 workers at the plant while tens of thousands of others among component manufacturers depend on its survival. The company is in negotiations with the Shanghai Automotive Industry Corporation (SAIC) over a merger which it believes is the only way it can stay in business, but the deal has faltered because of Chinese concerns over the parlous state of MG Rover's finances. Yesterday, MG Rover warned that time was running out on reaching a deal and blamed the bad publicity that had surrounded negotiations for scaring off its suppliers. Its parent company said that MG Rover was facing the "tragic closure of Longbridge" if the loan did not go ahead. The government insists the loan is still available but, despite that assurance, some local suppliers appear to have decided to suspend deliveries of parts to Rover until the crisis is resolved. Wagon, which makes door frames for the Longbridge plant, yesterday revealed it was owed almost GBP 1 million. Pierre Vareille, Wagon's chief executive, said: "For the sake of MG Rover and all its stakeholders, we sincerely hope that a positive route forward can be found for the business. "However, our first duty is to protect our own business and the interests of Wagon's shareholders, leaving us with no alternative but to pursue this course of action." Union representatives said they remained optimistic that the Chinese deal could still be struck. Tony Murphy, Amicus' national officer for the automotive industry, said: "The problem is that some in the supply chain are panicking and this is having an effect on the delivery of parts. We would urge MG Rover's supply companies to hold their nerve." For its part, MG Rover pleaded with the government to make a quick decision on the bridging loan. In a statement it said the loan would open the way to completing complex negotiations with the Chinese company: "The loan is crucial if the partnership is to be established," it said. Peter Beale, vice-chairman of Phoenix Venture Holdings (PVH), MG Rover's parent company, said: "We requested the bridging loan from the government to provide the additional time needed to complete our partnership with SAIC. "The PVH directors will provide GBP 10 million of personal money to convince the government of our commitment. What we need now is the government to decide. "Speculation about the ability of MG Rover to survive will continue to mount as long as the decision on the loan is delayed. The speculation has affected the confidence of our suppliers and dealers and time is clearly running out." The Department of Trade and Industry said the loan was available, "provided there was still a deal to be done". Many of the threatened jobs are in Labour heartlands and with party strategists warning that turnout among supporters is the key to election victory, ministers are keen to avoid a closure of the plant before the 5 May poll, but not at any cost. Patricia Hewitt, the Industry Secretary, yesterday told MPs that "the Prime Minister, the Chancellor, other ministers and I are doing everything possible to bring this to a successful conclusion". She added: "We have been giving Rover every possible support." Scottish suppliers are monitoring the situation. Ken Mann, a spokesman for the Bridge of Weir Leather company, which provides leather for top-of-the-range models, said: "Our supply agreements with individual customers are always confidential and can vary on an ongoing basis, but I am not aware of any significant alteration in relation to this. Naturally, we continually monitor all of our business supply relationships." At the Longbridge plant yesterday, workers were pessimistic. 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. "People are just sitting around, standing around. All the lads on the lines, who work on the tracks, they are just doing nothing. "I don't know why they haven't just sent them home. They've been doing nothing all week." He blamed senior management for not investing in the plant. "There's no future for Rover. It just seems to be one five-year deal after another. They've not invested anything. The equipment is here, they should have invested the money in prototypes."
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................................................................................................................. Copyright ©2004 Gethin Chamberlain. All rights reserved. |
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