BMW promises on Rover capacity spelt out

BMW has promised that Rover's manufacturing plants and design and development capabilities will remain intact after its pounds 800m takeover. The assurances, in a letter to Michael Heseltine, President of the Board of Trade, also commit the German car maker to keeping the companies' distribution networks separate in the countries, including Britain, where they each have a strong presence.

BMW also undertakes not to merge purchasing functions and promises to seek to capitalise on the 'major improvements in competitiveness made by the UK supply base . . . and help suppliers build on them'. While not detailing investment plans, the letter says BMW will offer Rover 'very substantial funds' to develop a new small car and Land Rover's 4x4 vehicles.

The letter, sent on Monday and signed by BMW's chairman, Bernd Pischetsrieder, and its director of research and development, Wolfgang Reitzle, stops short of guaranteeing the jobs of Rover's 33,000 workers - all of whom had, in effect, a job for life under the company's New Deal employment policy.

However, it may help to reassure sceptics who fear the takeover will lead to the slow export of profits, jobs, investment and production from the West Midlands to Bavaria and loss of contracts worth pounds 1.8bn a year for UK component suppliers.

Meanwhile, unions representing 33,000 Rover employees were yesterday given most of the guarantees they sought on job security. Officials emerged smiling after meeting Mr Pischetsrieder for more than an hour in Coventry. The Transport and General Workers' Union national automotive officer, Tony Woodley, who is also chairman of the Rover joint negotiating committee, said: 'We have been given firm commitments on job security, plants and future model developments. In the short term, we feel relatively confident but we need to reserve judgement over the medium and long-term situation.'

Leading article; Letters, page 15

Honda understands, page 16

Soothing the Japanese, page 27