BMW wants state aid to save Rover plant

BMW DISCLOSED last night that it is seeking a Government aid package coupled with severe cuts in labour costs to safeguard the future of Rover's giant Longbridge car plant in Birmingham.

Production of the new Mini could be switched to the Cowley plant in Oxford and as many as 7,500 jobs threatened across the group unless cost savings can be achieved.

Confirming that talks with the Government had started, Bernd Pischetsrieder, chairman of the German car maker, also said a sweeping review of Rover's cost structure was under way.

"Options under investigation include further job cuts, the reduction of employment costs and increased working flexibility," he said on the opening day of the British International Motor Show in Birmingham. "Short- term actions are required for the long-term future for Rover Group."

Rover's management is understood to be pressing unions for a 20 per cent cut in the labour bill - running at pounds 800m a year - allied to an overhaul of working practices across the board.

A cut of one-fifth in Rover's employment costs would be equivalent to 7,500 job losses among the 38,000-strong workforce. The Longbridge plant, which employs 18,000, is in the most direct firing line.

Walter Hasselkus, chairman of Rover, said it wanted to retain production at Longbridge but that it needed to have financially viable products. "If we don't find those products there will be no plant. It is as simple as that."

The renewed fears over the future of the plant, which produces the 200 and 400 series and the Mini, overshadowed the launch of the executive Rover 75 - the first all-British saloon produced by the company since the late 1970s. Rover has invested pounds 400m at its Cowley plant in Oxford to produce the new model and hopes to sell at least 100,000 a year - double the sales of the 600-800 series which the R75 replaces.

While the future of Rover is reviewed, all non-essential spending has been suspended for the remainder of the year. A decision on further job cuts in addition to the 1,500 redundancies Rover implemented in July is expected in the next fortnight.

BMW bought Rover for pounds 800m in 1994 with a pledge to invest pounds 3bn and turn it into profit by 2000, but the strength of the pound and poor productivity mean break-even will not be achieved without radical action.

BMW is aiming to replace Rover's "New Deal" agreement guaranteeing jobs for life with flexible working arrangements modelled on the agreement struck with unions at its new pounds 400m engine plant at Hams Hall in Warwickshire. This allows much greater flexibility in manning, pay and shift patterns. There is no overtime pay, instead employees "bank" any extra hours worked and redeem them later.

Rover is also shifting 25 per cent of its pounds 4bn component spend overseas in a bid to save pounds 200m-pounds 300m a year. UK suppliers account for 85-90 per cent of the components on Rover cars but, starting with the R75, this will fall to 75 per cent and possibly lower.

Peugeot lifted the jobs gloom descending on the West Midlands by indicating that it might create 800 jobs by introducing another shift and weekend working at its Ryton plant in Coventry.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore