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.

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
voicesIs a huge gamble on oil keeping the First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmWhat makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes hobby look 'dysfunctional'
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
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

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week