Rover cash `not fair'

German rival condemns proposed pounds 200m of state aid for BMW's ailing UK subsidiary

THE chairman of Porsche, Wendelin Wiedeking, is protesting to Brussels about the British Government's proposed pounds 200m subsidy for Rover.

Mr Wiedeking is writing to Karel van Miert, the EU Competition Commissioner, to complain about government subsidies for car production - whether in Britain or Germany - which he believes fly in the face of fair competition.

"The car industry should not receive one penny more," said Mr Wiedeking. "If Opel gets DM87m (pounds 30m) for its Kaiserslautern plant, if Daimler-Chrysler gets DM218m for its Ludwigsfelde plant and BMW receives more than DM500m for Longbridge, I ask myself where this is all leading."

Mr Wiedeking is one of Germany's most respected business leaders. He was widely tipped to become the new head of BMW earlier this year, until he insisted he had no intention of leaving Porsche. Porsche, still controlled by the Porsche family, is the largest independent car manufacturer in Europe.

"Porsche has a clear competitive disadvantage compared with the giants of the industry, who claim to have the advantages of scale needed to survive in global markets. But they get subsidies and we do not," Mr Wiedeking said.

Under Mr Wiedeking, Porsche recovered from losses during the early 1990s thanks to the introduction of just-in-time production methods. He then masterminded the launch of the phenomenally successful Boxster roadster. But despite this success, Porsche remains a tiny niche producer.

Mr Wiedeking pointed out: "Jaguar, our direct competitor, received DM220m in subsidies, although it is owned by Ford, possibly the world's richest company, with a cash mountain of $24bn [pounds 15bn].

"We want to ask Mr van Miert to guarantee that we are allowed to compete fairly with the automotive giants."

Mr Wiedeking's criticism comes at a crucial time. BMW's expected application for pounds 200m in grant aid for Longbridge is likely to be supported both by Brussels and London. Government money will be matched by EU funds. The size of the subsidy reflects British concerns about the importance of Longbridge for jobs in the British motor industry.

Stephen Byers, the Secretary of State for Trade and Industry, last Thursday reaffirmed that the Government will do "all it can to financially assist" Rover's Longbridge plant, which currently employs 14,000. Mr Byers said: "Provided we have improved productivity and we can raise skills and also that BMW itself is prepared to make a substantial investment in Longbridge, then the Government will do all that it can."

BMW itself expects to announce a pounds 1.7bn investment in a replacement for the Rover 200 and 400 at the Geneva Motor Show. While Longbridge is the preferred site for the investment, it depends on the subsidy being forthcoming. Otherwise, BMW could produce the new car in Hungary.

Even if Longbridge is saved, the workforce looks set to fall sharply. Both the new Mini and the new Rover will be easier to produce and far less labour-intensive.

To save the plant, union leaders are thought to have accepted that the workforce will shrink to around 7,000 by 2004. Some 1,500 employees will move to a new motor factory at Hamms Hall, Birmingham, next year. Currently Longbridge employs 4,000 on engines, but Hamms Hall is more efficient.

After diving sales at the beginning of the year, Rover has some cause for cheer. The motoring press in Britain and Germany has, by and large, acclaimed the new Rover 75.

The Frankfurter Allgemeine Zeitung newspaper said: "The Rover is the right car for Europeans who always wanted a Jaguar, but never dared. It is the product on which the brand will have to be built if it is to have any future at all."

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

Recruitment Genius: DBA Developer - SQL Server

£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Customer Service Administrator

£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

Recruitment Genius: Dialler Administrator

£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

Ashdown Group: Contracts Manager - City of London

£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

Day In a Page

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
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen