Rover's Walter Hasselkus: "We got it wrong"

The news came at a London news conference to confirm a radical restructuring deal with unions that will see 2,500 jobs to go from the troubled carmaker's UK operations to save its Midlands Longbridge plant.

Mr Hasselkus headed talks with union leaders that produced the rescue package.

Hasselkus: 'Got it wrong'

After announcing his resignation, he said: "Obviously you can't always blame external factors. It has to be admitted we have got it simply wrong in not anticipating the fierceness of competition in the British market."

He added that "someone has to be prepared to stand up and be counted", referring to the company's string of losses which has forced parent BMW to consider closure of Longbridge if a 30% 'productivity gap' couldn't be closed.

BBC Industry Correspondent Stephen Evan reports

An international survey of carmakers earlier this year put Rover at the bottom of the league while some UK carmakers were up with the world's best.

Rescue plan confirmed

The restructuring plan offers £2bn for investment in new car models in return for workers accepting radical new practices and job cuts through voluntary redundancies.

£2bn for new Rover models

The deal will be voted on by Rover's 39,000 workers later this week after already being sanctioned by senior union officials following more than a month of negotiations.

"This is a good deal that secures Longbridge - the workforce cannot afford to reject it," said Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union.

In the House of Commons, Prime Minister Tony Blair welcomed the agreement as a "tribute to the type of partnership which offers the right way forward for industrial relations in this country".

If accepted by the workforce the plan will then go to the BMW board for approval.

BMW chairman Bernd Pischetsrieder said the agreement will lead to cost savings of £150m a year from 2000.

There was no word on any government aid which the company was thought to be seeking, however Mr Pischetsrieder reiterated he thought it unfair that competitors received grants while Rover didn't.

New models

The infusion of new investment would see a new plant and equipment installed for the production of another mini model and a new medium size car at Longbridge in Birmingham.

Rover spokesman David Bower said that under the new arrangements up to 200 hours would be saved up by workers during times of high production to be taken as time off during quieter times.

New shift patterns will be introduced, with production running up to 100 hours a week at each plant in five day and night shifts including a Saturday morning if necessary, at standard rates of pay.

He said more than 3,000 workers had already asked about voluntary redundancy.

Mr Hasselkus will be replaced by Werner Saemann, a former professor at Berlin Technical University, who joined BMW in 1976 and rose to its board of management earlier this year.