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Friday, February 5, 1999 Published at 15:59 GMT

Business: The Company File

Threat to Rover jobs

Rover's future back in the balance

The UK Government has stepped up attempts to persuade BMW to keep Rover's Longbridge plant in Birmingham open.

Stephen Byers: Government looking to BMW to honour its commitments
Senior management at BMW are currently meeting in Munich amid growing speculation that chairman Bernd Pischetsrieder is about to be sacked for failing to revive loss-making Rover.

It is feared that if he goes, the board could impose savage cuts at Rover, and even close down Longbridge altogether.

[ image: Trade and Industry Secretary Stephen Byers]
Trade and Industry Secretary Stephen Byers
Trade Secretary Stephen Byers has said the government is prepared to offer financial assistance to BMW if the company kept the plant going.

"I'll be speaking to the chairman later today to show that this government is committed to Rover Longbridge and we hope it's a commitment shared by BMW," he told BBC Radio 4's World at One programme.

"We have been discussing possible support to help them improve productivity, to help them build some new facilities at Rover Longbridge.

Stephen Evans: Rover's future in doubt
"No application has been made for financial support but it is no secret that discussions have been going on for the last few months."

The UK Deputy Prime Minister has also joined unions in calling for BMW to honour its agreement to safeguard the future of Rover car plants in the UK.

John Prescott said he hoped last year's deal on radical new working practices and 2,500 redundancies would hold despite fears that a new chief executive at BMW would unravel the agreement.

Future in doubt

Mounting losses at the UK car group have put Mr Pischetsrieder's future in doubt. Latest figures show that Rover's UK sales almost halved last month compared with January 1998.

Motor industry consultant Jay Nagley looks at the options open to BMW
The Longbridge plant employs 14,000 workers and an estimated 50,000 people are employed in the West Midlands by companies supplying Rover.

BMW has already announced 2,500 Rover jobs are to go and unions expressed dismay and anger that more jobs are under threat.

Bill Morris, leader of the Transport and General Workers Union, said closing Rover down was simply "not acceptable".

Friend of Rover

Mr Pischetsrieder played a key role when he supported Longbridge as others in BMW were pushing for its closure, and he helped draw up a new workplace agreement with unions late last year which helped keep the plant open.

[ image: Walter Hasselkus: Accepted responsibility for Rover's problems]
Walter Hasselkus: Accepted responsibility for Rover's problems
However, Wolfgang Rietzle, a rival of the current chairman and a board member who pushed for Longbridge's closure, is now being tipped for promotion to the top job at BMW.

Mr Reitzle is on record as saying Rover's future lies at its Oxford and Solihull plants, not at Longbridge which employs 14,000 people.

BMW has dismissed as "speculation" reports that the chairman's future would be discussed.

Turmoil in the car industry

The vital board meeting may also clear the way for a takeover of BMW by another car maker. Both Volkswagen and General Motors, the world's biggest automobile manufacturer, have already expressed their interest. A merger would create fresh doubts about the long term future for Rover's major UK plants.

The car industry is currently in a state of turmoil, after a series of major mergers. After Ford's takeover of Volvo, the world's carmakers are showing intense interest in the remaining independent premium car brands.

Drag on profits

The problems at loss-making Rover have drained BMW's 1998 profits.

Rover trade unions and BMW agreed to a rescue package involving a £2bn ($3.3bn) cash injection, 2,500 redundancies, and new flexible working hours to try to return the company to making money.

Stephen Reitman assesses Pischetsrieder's chances
Doubts about Mr Pischetsrieder's future first surfaced last December when Rover's problems in the UK were brought to a head and BMW threatened the closure of Longbridge.

The rescue package struck with the unions led to the resignation of Rover's boss Walter Hasselkus, who accepted full responsibility for Rover's difficulties.

Rover is now negotiating with the UK Government for a £200m aid package for Longbridge.

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