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EU commissioner Mario Monti
I promise a quick and thorough investigation of Rover's aid package
 real 28k

Friday, 3 March, 2000, 10:28 GMT
Gloom hangs over Rover
Montage of BMW and Rover car badges with Longbridge and BMW HQ
Rover's fate is now in the hands of BMW
by BBC Midlands business correspondent Mark Foster

The UK's Trade and Industry Secretary Stephen Byers meet the European Union Competition Commissioner, Mario Monti, on Thursday to try speed up the investigation into the planned government grant of 151m to BMW towards the development of Rover's Longbridge site in Birmingham.

For Longbridge's 9,000 remaining workers the occasion was another milestone on the pot-holed road down which Rover has been driving for the past two years.

German inspiration

Outside Longbridge the company flags flutter against a sky of white clouds and brilliant blue - a sky they say is typical of Bavaria, home of Rover's owners, BMW. It's the inspiration for the BMW symbol - a propeller blade precisely slicing the air into equal quarters of blue and white.

The BMW influence on Longbridge is immediately apparent from the recently re-painted exterior. Rover's cream and claret has been replaced by the black and white of BMW, and the Germans have re-classified the factory as BMW Group Plant Birmingham No. 32.

Cost cutting

BMW Chairman Joachim Milberg talking to reporters
BMW's Joachim Milberg is "committed" to Longbridge
The influence is more than cosmetic, though.

Inside the ageing, sprawling plant a 'turnaround' team has been hard at work for over a year, since it was acknowledged that allowing Rover Cars to run as an operation separate from BMW had failed.

The drive has been to cut costs in the face of a relentless strong pound and improve productivity.

It has been a painful process, with employment numbers at Longbridge falling from 14,500 to around 9,000. All the while there has been the prospect of total closure hanging over the workforce, as sales of Rover Cars continued to fall. They declined by 30 per cent last year, and the group is thought to have racked up losses of 700m.

Vital role

The Longbridge factory supports around 40,000 jobs outside, in supply and service industries - and it is vital to the region's economy. Longbridge is, however, woefully outdated and in desperate need of the 1.7bn investment BMW is planning to make.

Rover car badge
Confidence in Rover's cars is being undermined
The German carmaker's chairman, Professor Joachim Milberg, told a news conference at the Geneva Motor Show on Monday that BMW remained committed to Longbridge and was confident the 151m UK government grant would be approved by the EU. He also thinks state aid should be stopped - but only after BMW gets its cash.

Workers' gloom

The new plant director, Carl Peter Forster, has gone further, saying the investment would go ahead even if the EU failed to approve the grant.

But his comments about doubts over further investments in the UK while Sterling remains so strong have led observers to question Longbridge's long term future.

These up and downs have been typical of the Rover saga and do little for the motivation of employees who have adopted flexible working practices and are being asked to improve productivity.

They also undermine confidence in the product.

UK Trade and Industry Secretary Stephen Byers now tries to speed up the investigation into the proposed grant.

Mr Byers says he has a cast iron case, saying he is not writing a blank cheque but is linking the funds to productivity gains and will pay the money in stages.

The Longbridge workers will hope his assurances bring a swift resolution - lest those company flags be lowered to half-mast over the beleaguered plant.

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See also:

31 Jan 00 | Business
BMW dragged down by Rover
14 Jan 00 | Business
BMW denies Rover closure plan
07 Jan 00 | Business
Rover sales slide downhill
22 Dec 99 | Business
EU questions Rover aid
17 Dec 99 | AudioVideo
EU investigates Rover deal
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