Minister in BAe salvage mission: Last-ditch effort made to keep Rover chief

BRITISH Aerospace has asked the Government to intervene in talks aimed at salvaging a critical joint venture deal with Taiwan that would safeguard up to 3,000 BAe jobs in Britain.

As the deal hangs in the balance, Richard Needham, minister for trade, is planning to fly to Taiwan later this month to lend support to BAe in protracted talks with Taiwan Aerospace Corporation and the Taiwanese government.

BAe says that without the Taiwan deal, which appeared to stall last week, it will have to close the regional aircraft business entirely at a cost of pounds 250m and with the loss of 3,000 jobs at plants in Manchester and Filton, near Bristol.

British Aerospace is also making a last-ditch attempt to prevent George Simpson, its deputy chief executive and one of the most respected figures in British industry, from being poached by Lucas, the car component maker.

Lucas had hoped to be able to announce a new chief executive to spearhead its revival with its full-year profit figures tomorrow, but the appointment is being delayed as Mr Simpson negotiates to be released from his contract. Friends say that BAe is anxious that he stay and might yet persuade him.

Other executives linked to the Lucas post include Bob Faircloth, BTR's chief operating officer, and Michael Hoffman, chief executive of Thames Water.

Mr Simpson is credited with turning round BAe's ailing car subsidiary, Rover. His reward was a place on the BAe board as deputy to the chief executive, Dick Evans.

However, widespread speculation that he was being lined up by John Cahill, the BAe chairman, to replace Mr Evans appears wide of the mark, and Mr Simpson is believed to take the view that he can go no higher within the company. At 51, he is ten years older than Mr Evans.

After a turbulent two years, BAe can ill afford further management instability, especially with the present uncertainty over the Taiwan deal. A source at Rover would only say that Mr Simpson had been asked to clarify his intentions.

BAe's talks with Taiwan Aerospace ran into trouble last week after a Taiwanese official said the government would no longer participate in negotiations between the two parties. The Taiwanese government is TAC's largest shareholder.

Financing for the deal was agreed and cleared last August but discussions have since foundered on other points of detail, among them technology transfer and BAe's refusal to finance development of a new generation of regional aircraft.

The Taiwanese opposition party is openly questioning the financial viability of the venture and has doubts about the amount of technology that would be transferred to Taiwan,, which is eager to enter the aerospace industry. It believes that, in addition to building the RJ series of regional jet, BAe should commit itself to developing the next generation of aircraft in Taiwan, at a cost of up to pounds 1 billion.

Taiwan has already walked away from talks with McDonnell Douglas, the US aircraft manufacturer. Rival plane- makers Fokker and Dassault have also been horse-trading in efforts to win a share of the fast-developing market in the Far East.

BAe remains confident that the deal will eventually go ahead. It believes too much is at stake on both sides for the talks to collapse. BAe is hoping that Mr Needham, who is visiting Taiwan on a trade mission later this month, will be able to bring further pressure to bear.

The Taiwan deal is an important plank in BAe's recovery plans and has received strong personal backing from Mr Cahill.

Mr Needham's tour, planned some months ago, will also take him to Hong Kong and China.

(Photograph omitted)

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