Wednesday, June 23, 1999 Published at 09:06 GMT 10:06 UK
Business: The Company File
Rover rescue deal secured
Trade Secretary Stephen Byers celebrates with BMW Chairman Joachim Milberg
The future of the UK's biggest car factory has been secured with the announcement that Rover's parent company BMW is investing £2.5bn in its Longbridge plant.
The huge investment will help to secure 9,500 jobs at the Birmingham plant, which was threatened with closure earlier this year.
Mr Byers said: "This is great news for Longbridge, the West Midlands and the country as a whole.
"That is why I sought guarantees on productivity targets, raising skills and substantial investment from the company itself. Guarantees have been given in all these key areas."
If strict targets are not met, BMW will have to pay back the money.
The 100-year-old factory will be virtually rebuilt so that car production can be doubled.
In total, BMW plans to invest in the region of 10bn Deutschmarks (£3.4bn) in its UK operations over the next five years.
Professor Milberg told a news conference he expects Rover to break even by 2002.
But he warned: "If the pound is as high as it is now it will have a significant negative impact for the whole of the British export industry."
'A brighter future'
However workers at Rover's Birmingham factory, who have faced the prospect of losing their jobs in recent months, are looking forward to a brighter future.
Rover has already announced that a new Mini is to be built at Longbridge from the end of next year.
The deal on Wednesday secures agreement to build a new medium sized family range of cars from the end of year 2002.
Total production at the plant will double from the present capacity of 250,000 cars a year to half a million.
Tony Woodley, national officer of the Transport and General Workers Union, said he was delighted that the deal was being finalised.
"Whilst the difficulties for our members and Rover have not completely gone away, bearing in mind that we still have to restore customer confidence and sell many more vehicles, the fact is that Rover Cars will now survive."
Mr Byers said he was confident that the deal would now be approved by the European Union.
BMW has already invested £2.5bn in Rover, but considered closing its subsidiary after losses of £640m were recorded last year.
Rover has been making losses since it was bought by BMW in 1994. When the Bavarian maker of luxury cars announced its group results, the extent of Rover's problems was more than obvious.
The slide in sales was mostly due to the phasing out of the 100, 600 and 800 series before the new Rover 75 model went on sale earlier this month. In its first week, sales of the Rover 75 were over 10,000, well above expectations.
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