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Wednesday, June 23, 1999 Published at 10:46 GMT 11:46 UK

Business: The Economy

Rover boost for West Midlands

BMW says Longbridge "will become an outstanding plant"

The significance for the West Midlands economy of today's multi-billion-pound Rover investment package is enormous.

If the Longbridge plant had been closed, a region already badly hit by weak manufacturing demand would have been plunged into depression.

Longbridge - in Birmingham - is one of the UK's biggest factories and one of the main employers in the area, with a workforce of 14,000.

Another 50,000 people are employed across the region by its suppliers.

[ image: Rover jobs vital to the region]
Rover jobs vital to the region
Had these workers lost their jobs, there would have been few opportunities for them to find new employment in the area - the UK's industrial heartland. Manufacturing industry has been struggling because of a slump in world demand and the strength of sterling.

Under BMW's redevelopment plan, Longbridge will be transformed from one of Europe's least productive factories into a state-of-the-art modern plant.

Rover's other factories, at Cowley, Swindon and Solihull, are already roughly in line with industry productivity averages.

Overhaul in methods of working

There is no doubt that the acceptance by Rover employees of radical changes in working practices was critical to the redevelopment plan.

A package of changes at Longbridge, including more than 2,000 voluntary redundancies, was agreed last December.

BMW had made it clear at the time that there would be no investment deal unless the changes were accepted.

The Mini, the Rover 200 and 400 and the MGF are produced at Longbridge, and BMW is thinking along the lines of a new car "similar to the BMW 3 Series" to replace the ageing 200 and 400 models.

But before the company can seriously contemplate competing with the world's best it must rebuild the factory, which has languished after decades of under-investment.

Productivity is the key

Currently, Longbridge produces only 33 cars per worker per year. This compares with a figure of 98 at Nissan's top-flight plant in Sunderland.

BMW says it wants to see productivity improve by 10% a year, and the UK government aid package is dependent on the company achieving productivity targets.

Rover chairman Werner Samann said he was also considering sourcing car parts outside the UK as another measure aimed at improving competitiveness.

Rover has been losing money since it was bought by BMW in 1994, dragging down its highly successful parent. BMW faced tough decisions if Rover was to have a future.

The confirmation that BMW is to invest £2.5bn, with another £152m in UK government and regional aid, gives Rover a huge boost. It is now down to the workforce to restore the once-proud company's fortunes.

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