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Wednesday, October 21, 1998 Published at 08:41 GMT 09:41 UK

Business: The Company File

Rover: 2,400 jobs to go - and threat of closure

Rover workers are facing an uncertain future

Union officials at Britain's largest car plant have been told to accept 2,400 redundancies as part of a drive to cut costs or face the closure of the factory at Longbridge.

According to the unions, up to 14,000 jobs at Rover and 50,000 with suppliers would be jeopardised should Longbridge close.

The Rover group was bought four years ago by the German car manufacturer BMW. Despite a multi-billion pound investment the company is still making losses.

Rover's management is now demanding cost cuts and productivity gains to save the company.

Tony Woodley, chief negotiator for the unions, says BMW told them job cuts are imminent
The chief negotiator of the Transport & General Workers Union and chairman of the joint unions committee at Rover, Tony Woodley, said the unions had not accepted the job cuts yet, but stressed that nobody doubted the seriousness of Rover's situation.

He said Rover suffered not only under the high value of the pound, but from a "short-term cash and confidence problem" as well.

The union officials said they had told Bernd Pischetsrieder, BMW's chairman, that they were looking at ways to help and assist the company coping with the crisis.

However, Mr Pischetsrieder had warned the unions that Longbridge would have to close if the cost cutting measures "would not be achieved in a very short time."

Mr Woodley said the workforce was "in serious shock."

Political dispute

Rover's problems have meanwhile sparked off a political dispute, with the opposition accusing the government to have caused the car company's crisis.

The Trade and Industry Secretary, Peter Mandelson, replied that the UK motor industry as a whole was doing well. He said he was 'taking a close interest' in the problems at Longbridge and would be meeting the chairmen of the company and BMW on Thursday.


In the morning the company distributed a statement to all its 39,000 workers, warning them that Rover was in serious trouble.

The management believes that the low productivity of the workforce compared to other car factories is the main problem.

Rover's Bernard Carey says the company wants its workers to be more flexible
Before meeting the unions, Mr Pischetsrieder said : "The shareholders of BMW can't be prepared to spend money in a business that hasn't a viable output and therefore the productivity gap has to be closed."

Rover's management says that as well as job losses, it is pressing for other cost saving measures including a possible wage freeze and changes to working practices.

If the talks are successful, Rover may ask the UK government for a grant relating to new investments worth £1bn.

[ image: Last chance saloon? The new Rover 75.]
Last chance saloon? The new Rover 75.
National union leaders will now be considering the management's proposal, and there will also be a gathering of 180 union officials representing Rover workers.

No public money for Rover

Before the meeting of Rover's management and unions, the Trade and Industry Secretary Peter Mandelson said he believed Longbridge had a future but insisted Rover could not rely on public money to save it.

He told BBC Radio 4's Today programme: "I don't think that the salvation for Rover lies with the government.

"The salvation for Rover lies in its own hands - the hands of its management, executives and entire workforce,

Patrick Bartlett: Rover has to cut productivity gap
Mr Mandelson was visiting the Motor Show in Birmingham on Wednesday, where Rover unveiled a new model.

The Rover 75 is the first car to be released after Rover's take-over by BMW four years ago - the result of a £700m investment.

[ image: The strong pound and low productivity means that costs have to be cut at Rover]
The strong pound and low productivity means that costs have to be cut at Rover
Mr Pischetsrieder was also at the show and said the aim of intensive talks between unions and the company was "to secure a profitable future for Rover and all its plants".

Rover Chairman Dr Walter Hasselkus, said: "Longbridge is very important to us. We want to stay in Longbridge and we are committed to Longbridge.

"But that can only happen if there is a commercial and viable solution to our difficulties."

Rover has already started axing 1,500 jobs in recent months and announced production cutbacks at Longbridge in the run-up to Christmas.

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