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Thursday, October 1, 1998 Published at 13:28 GMT 14:28 UK

Business: The Company File

Rover confirms shutdown

Demand for Rover cars has been hit by the strong pound

UK car manufacturer Rover says it will halt production at its Longbridge plant in Birmingham on December 14.

The move raises fears of further job losses at the group but unions said they would take "pragmatic approach" to the crisis.

Rover Chairman, Walter Hasselkus, said in a statement: "The continued deterioration in some international markets, together with the challenges imposed by an over-valued currency, particularly on UK competitiveness, have caused us to take these actions."

However, a spokesman for the company insisted that there were no plans for redundancies or plant closures.

Production of Rover 200 and 400 series cars at Longbridge in Birmingham would be suspended until the New Year as part of a "business realignment process."

[ image: Rover workers fear more job losses at the troubled group]
Rover workers fear more job losses at the troubled group
The stoppage would "balance supply and demand levels for these two particular models following a reduction in demand due to the strong pound."

Rover is owned by the German car manufacturer BMW.

The decision will mean that around 12,000 cars will not be produced at the Longbridge factory in the run-up to Christmas.

The decision had been expected but will be a further blow to Rover's workforce, which has already had to cope with 1,500 job losses announced earlier this year.

Union support

After meeting with Rover management on Friday, Transport and General Workers Union negotiator Tony Woodley said his members understood the difficult circumstances which had led to the lay-off at Rover's Longbridge plant.

"We have to be pragmatic. There are genuine difficulties and trying circumstances," he said.

"We have got to give assistance, as every responsible trade union would. But at the end of the day our people need to know there is a genuine long-term future for them and their families."

[ image: More job losses were hinted at this week]
More job losses were hinted at this week
However, he stressed that workers needed assurances that jobs would be protected.

BMW chief Bernd Pischetsrieder said at the Paris Motor Show this week that planned job cuts at Rover could exceed the 1,500 the group had already announced.

Rover is one of Britain's largest manufacturing exports, selling to 130 countries worldwide. Its range includes some of the most famous British motoring marques, including the MG sports car, the Land Rover four wheel drive and the Mini.

Downsizing and decline

The suspension by Rover comes in the wake of US motor giant Ford, putting its biggest British factory in Dagenham on a four day working week for seven weeks.

UK manufacturers have been hit by the rise in the value of the pound which has had the effect of making exports more expensive overseas and stimulated an influx of cheap imports.

Ken Gregory, West Midlands regional secretary of the GMB general union, said: "This proves again that the recession has already started in manufacturing, whatever else is happening in the rest of the economy.

"This bitter blow for the West Midlands car industry clearly vindicates our call for an immediate reduction in interest rates."

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