Outlook: New master, but Rover's still a dog
Thursday 03 December 1998
In those days Rover answered to a different name, of course, but it was still a bit of a dog even then. Over the years the business has had many masters and many incarnations - BMC, British Leyland, BL, Austin Rover. With every change of owner comes a cosmetic facelift but the root problem is never tackled.
Since BMW snatched hold of the lead five years ago it has invested the thick end of pounds 2.5bn, only to be repaid with mounting losses. For the last three years, it has been hiding behind the excuse of an appreciating pound to explain Rover's stubborn refusal to come to heel and begin to turn a profit.
But now the gloves are off and the choke chain is on. Faced with the prospect of watching Longbridge close, the unions have agreed to 2,500 job losses, an effective pay freeze and the end of overtime payments.
The new Mini has been secured for Longbridge without government aid but if the plant wants to have a long-term future and build the replacement for the Rover 200-400 series, then the taxpayer will have to fork out at least pounds 200m all the same.
Even then, the BMW chairman, Bernd Pischetsrieder, doubts whether Rover can close the 30 per cent productivity gap with BMW's plants in Germany unless it switches yet more of its pounds 4bn component spend abroad.
Clearly this is not the sort of environment that appealed to Dr Walter Hasselkus, the urbane and rather charming outgoing Rover chairman. In his place, BMW has appointed Professor Werner Samann, who used to run the group's engines and chassis business. A professor he may be, but the word is that the new Rover chairman has been schooled at the rougher end of the car business.
Still, he has an uphill task, even after inheriting a dowry of cost savings worth pounds 150m a year. Mr Pischetsrieder talks enthusiastically about Rover making a 7 per cent return on sales one day but with exchange rates still against it, just break-even point looks a distant dream.
Rover's new professor probably has two years to produce results. If he fails, then next time it will surely be Mr Pischetsrieder's neck on the chopping block.
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