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Monday, February 8, 1999 Published at 18:35 GMT

Business: The Company File

Government backs Rover

A new medium-sized car could be built at Longbridge

Trade and Industry Secretary Stephen Byers has pledged to work hard to secure the jobs of Rover's UK workforce.

BBC Industry correspondent Stephen Evans: "Rover is safer than it seemed last week"
Mr Byers toured the UK carmaker's Longbridge plant in Birmingham on Monday after Friday's boardroom shake-up at the UK carmaker's owner, BMW, renewed fears of plant closures and large-scale job losses at Rover.

"We will be making the strongest possible recommendation to BMW about the importance of Longbridge in particular and of the Rover Group to the UK," Mr Byers said.

[ image: Stephen Byers: Talking up Rover to BMW]
Stephen Byers: Talking up Rover to BMW
He added that he was in close contact with BMW but said there had been no formal approach to the UK Government for investment subsidies to secure the production of new Rover models.

Mr Byers is expected to meet BMW's new chairman Joachim Milberg to discuss government aid to help modernise Longbridge.

BMW has said it would negotiate with London for some help, but did not say how much money was involved. Reports over the weekend suggested a sum between £150m to £300m would be requested.

Chairman ousted

In a surprise move last week, the Bavarian car company sacked its chairman, Bernd Pischetsrieder, and his deputy and rival Wolfgang Reitzle. They had to go because of the hefty losses incurred at Rover Group, bought by BMW in 1994.

Carl Ludwigsen: Rover now "in play"
The new board of BMW has given itself a fortnight to decide on the future of its British subsidiary.

The new management team under Mr Milberg is now reported to be meeting on Tuesday to discuss the long-term strategy for the company's operations in the UK.

Rover's plant at Longbridge will be at the centre of their deliberations. Despite BMW's multi-billion pound investment the factory still is among the least productive in Europe.

If BMW should decide to close Longbridge, it would have a dramatic economic impact on the whole region, with 14,000 jobs disappearing at Rover and some 50,000 at suppliers.

A lot will depend on whether the UK government is prepared to provide financial backing for Longbridge.

Meanwhile, BMW's share price rose 8% on Germany's stock exchange on Monday as the market reacted favourably to the leadership changes, and speculation that the company might be a takeover target, possibly for Volkswagen.

BMW 'should honour agreement'

Unions say they want a guarantee about the long-term future of Longbridge, describing the constant insecurity felt by the workforce as "intolerable".

[ image: Union officials fear the axe still hangs over workers at Longbridge]
Union officials fear the axe still hangs over workers at Longbridge
Union officials fear the axe still hangs over the 14,000 Longbridge workers.

Tony Woodley, from the Transport and General Workers Union, said he still expects a new small or medium-sized car to be built at Longbridge.

"Following the events of the last few days, the Longbridge workers must be dizzy with despondency and they deserve better than that. We have to be upbeat and not talk down the future of this vital plant."

Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said Rover workers had voted for a new package on productivity and flexibility and it was a "nonsense" that they were now rewarded with greater insecurity.

Unions are calling on BMW to honour the agreement - thrashed out at the end of last year - which will lead to 2,500 job losses as well as radical changes to working practices.

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