Longbridge hopes dashed as BMW rejects UK aid offer

HOPES OF saving Rover's car factory at Longbridge were dealt a severe blow last night after its German owner BMW rejected a British aid package.

BMW said it did not agree with UK officials on details of the subsidy offer to help build a new medium-sized car at Rover's West Midlands plant.

"The offer is on the table, but the Government's and BMW's ideas are not congruent. We're negotiating further," a BMW spokesman said.

BMW executives were said to be shocked that the Government had offered less than pounds 120m. The Department of Trade and Industry had been expected to offer around pounds 180m in return for more than pounds 1.7bn of investment by BMW to build a new medium-size car at Longbridge. "They did not think they were in a poker game and that is what caused the surprise," said one source.

Stephen Byers, Trade and Industry Secretary, said he was still that optimistic a deal could be struck. Speaking during a visit to the LDV specialist car firm in Birmingham, he said: "The Government has made a formal offer to BMW to provide assistance to secure a modern and productive plant at Longbridge.

"We are confident that we will be able to arrive at a successful conclusion to the negotiations."

Bill Morris, general secretary of the Transport and General Workers' Union, called for a swift resolution of the talks. He said the jobs of the 12,000 Longbridge employees as well as those of other workers in the regions depended on saving the plant.

"The urgency of the situation demands quick and constructive decisions, not brinkmanship," he said. "It's not a game of poker. There are too many jobs on the line."

Roger Lyons, general secretary of the Manufacturing, Science and Finance union, said: "We are disappointed with the delay."

Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said: "It is essential that while discussions are ongoing, we remain calm and confident."

BMW is now believed to be looking more seriously at siting the plant in Hungary, where it has identified a green-field site near a successful Audi factory.

The company established the viability of locating in Hungary in order to meet European Union rules on grant aid. Governments can only subsidise investments where it can be proved that the company could have saved money by going outside the EU.

Sources within BMW said it was impossible to discount the possibility of looking at eastern Europe more seriously "if things went horribly wrong".

BMW has vowed to turn Rover around by 2000 after financial figures published on Thursday showed that the British outfit had plunged pounds 650m into the red last year compared with a loss of pounds 91m in 1997.

Meanwhile, Ford Motor Company has hired Wolfgang Reitzle, the charismatic former BMW product development chief, as head of a newly created luxury car division, Premier Automotive Group.

Mr Reitzle will become chairman of Jaguar Cars and Volvo Cars. As head of the Premier Automotive Group, he will also be responsible for Aston Martin and Lincoln vehicles.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent