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
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Account Manager / Membership Manager

£35 - 38k + Benefits & Bonus: Guru Careers: We are seeking an Account Manager ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

Guru Careers: Associate Director

£50 - 80k: Guru Careers: We are seeking an Associate Director for the Markets ...

Guru Careers: Associate Director / Director of Sound Practices

£60 - 100k: Guru Careers: Our client is looking for an Associate Director of S...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks