Rover chief warns against delaying entry into EMU
Wednesday 21 May 1997
Dr Hasselkus, who is also a main board director of Rover's parent company, the German car-maker BMW, said that if the pound failed to enter in the first wave then it could be trapped into going in at an unsustainably high level, causing huge damage to British exports and jobs.
The Rover chairman also warned that this could force BMW to shift some of the pounds 3.2bn that Rover spends each year with UK suppliers to overseas companies.
Criticising the way the previous government had dithered over its policy on Europe, Dr Hasselkus said: "If Britain waits another two or three years it may be in a situation where we have a major difficulty negotiating a lower entry figure for the pound."
He said that an appropriate level for the pound to enter would be between 2.20 and 2.40 German marks compared with its current level of DM2.80.
The fear among industrialists is that if Britain remains outside EMU then the pound will be kept artificially high by currency speculators. A Rover spokesman said that if this were the case then it would have to source more components outside the UK.
At present Rover spends pounds 4bn a year on components - 80 per cent of which are sourced from UK suppliers - and provides work directly and indirectly for 80,000 people.
Rover said that the other commitments it was looking for from the new Labour government were a consistent transport policy which encouraged more sensible use of cars but not at the expense of slashing the road building programme. The company also said it wanted to see more investment and support for training, particularly in engineering, where Britain was not as advanced as Germany.
Dr Hasselkus said Rover was negotiating an extension to the New Deal agreement with its workforce which would feature a three-year pay and productivity deal. Blue Circle Cement announced a similar agreement with its 2,200 production workers last year.
But Dr Hasselkus quashed rumours that BMW was unhappy with the performance of the Rover car business or that it was considering developing new models jointly with the US car maker Chrysler.
He said BMW was sticking by its forecast that Rover would make a profit under German accounting rules in 2000, by which time it would have invested pounds 3bn in the business.
"There are no plans to have co-operation, joint ventures or mergers with any other company," he said. BMW is building an engine plant in Brazil with Chrysler that will manufacture the engine for the new Mini. The plant will produce a total of 400,000 engines a year for Rover and Chrysler cars.
Rover is investing pounds 600m a year in new models. It will launch a new small Land Rover, the Freelander, this September at the Frankfurt Motor Show, and a new version of the Discovery next year along with the replacement for the Rover 600 and 800 series
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