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Last Updated: Friday, 29 April, 2005, 17:04 GMT 18:04 UK
Fresh job cuts at collapsed Rover
MG Rover cars
Independent dealerships are facing the greatest hardships
Administrators for MG Rover have announced 421 more job cuts as hopes of restarting engine production at the collapsed UK car maker faded.

More than 5,000 workers at MG Rover's Longbridge plant in Birmingham have already been made redundant.

Most of the fresh job cuts are at the company's Powertrain engine unit.

News of the job losses came as CBI director general Sir Digby Jones warned MG Rover's 260 dealerships, employing 8,500 people, were facing insolvency.

End of the road

Administrators PricewaterhouseCoopers (PwC) had hoped to keep Powertrain as a going concern for at least four months.

But they needed the support of Rover's suppliers. Most agreed to PwC's proposals but a significant number did not.

Despite the announcement of redundancies today our efforts to find a buyer for Powertrain are continuing
Rob Hunt, PricewaterhouseCoopers

"In the absence of an agreed plan which would have secured supplies and funding we have no alternative other than to cease production and make these redundancies," said Rob Hunt, joint administrator.

"Despite the announcement of redundancies today our efforts to find a buyer for Powertrain are continuing."

A total of 363 positions will be lost at Powertrain.

The other 58 job cuts are to fall at MG Rover and MG Sport and Racing.

Union Amicus said: "This is devastating news. We had hoped that if engine production could be restarted at Powertrain a buyer might have been found but this now looks like a receding hope."

Meanwhile, the National Franchise Dealers Association estimates that 150 to 200 companies are owed up to 25m ($47.8m) in sales bonuses from cars they took from Rover, as well as warranty payments.

Up to 4,000 cars were dumped on dealers in the months running up to MG Rover's collapse in order to boost the ailing car maker's profits, it has emerged.

Some dealers now reportedly face having to pay interest on cars they never ordered.

'Loads of liabilities'

According to the Independent newspaper, Shanghai Automotive has approached MG Rover's administrators with a view to buying parts of the stricken business, having previously said they it had no interest in buying any of it.

Sir Digby suggested there was a likely strategy behind this.

Digby Jones
Sir Digby is leading a task force to ease the plight of Rover dealers

"Why would you try to get into a joint venture with a company that's got loads of liabilities that you didn't know when you can wait until an administrator could sell you the bits you do want at a price you can afford," he said in a BBC Radio 4 interview on Friday.

Sir Digby said the Rover Task Force was being assisted by Revenue and Customs, who have offered to delay PAYE and VAT payments due to them from suppliers to MG Rover.

He predicted that many of the MG Rover workers made redundant would get a new job quickly because Britain was crying out for skilled workers.

But Sir Digby did not believe it was right for the dealers to be assisted financially by the government.

"Government money going in to prop up a dealership when the business model is wrong is not on," he said.

It is thought larger multiple dealerships such as Pendragons, who also sell other car brands, will be less affected.

Nevertheless, at present around 130 independent dealers have a serious problem, Sir Digby said.

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