Outlook: Longbridge aid
Tuesday 09 February 1999
If there was one fact Mr Byers must already have known it is the statistic showing that Longbridge produces 33 cars per man each year compared with 98 at Nissan's Sunderland factory. Even with their better paid workers and expensive labour laws BMW's German plants are 30 per cent more efficient.
The new man in the BMW hot seat, Joachim Milberg, has given himself a fortnight to digest the information and decide whether to throw good money after bad and invest another pounds 1bn in a replacement for the Rover 200/400 series.
Mr Byers has pounds 300m of taxpayers money in his pocket to help Mr Milberg make up its mind. In a sane world, all state aid for car plants would be outlawed on the grounds that it distorts competition and encourages uneconomic production.
But sanity is not always the strong suit of governments. There are plenty of other countries that would be a good deal more generous than Mr Byers in attempting to attract the investment for the 200/400 series.
Moreover, state aid can sometimes be a necessary pump primer. Nissan's Sunderland plant was a big recipient while the renaissance at Jaguar would not have been possible had central government not oiled the wheels. The clincher for both Nissan and Jaguar, however, is that they both had new models that people were eager to buy. Whether the same can be said about Rover is less certain. Given its track record with passenger cars and its surplus of capacity to output, the omens do not look good for Longbridge, no matter how much state aid is waved in BMW's direction.
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