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Rover says dispute is over

ROVER expects to end its dispute with car workers at its Longbridge plant this week in a deal that will mean more than 1,000 job losses, more flexible working practices and other cost-cutting measures.

A Rover spokesman claimed: "We are optimistic that we will have a positive outcome. The unions have accepted flexible working-time accounts and that jobs will be lost. We're still working on the nitty-gritty, but we're very close to a solution."

Despite the company's optimism, negotiations are tense. Last week, after union protests, Rover had to cancel a public briefing on working-time accounts and other flexible working practices. The company wishes to save pounds 150m annually at Longbridge, around 20 per cent of total labour costs, but insists that this figure will not be achieved solely by job cuts. Shedding 1,000 jobs would save pounds 30m annually.

The unions have suggested that, even with efficiency gains through flexible work, the company will have to sack 2,400 Longbridge employees. But Rover is understood to think this figure is exaggerated.

Based in south Birmingham, Longbridge is the city's largest employer and considered to be the largest factory in Britain.

The depth of Rover's problems are beyond doubt. Stock market analysts predict that Rover will lose pounds 150m this year, and some forecasts are significantly higher. Goldman Sachs is predicting a loss from Rover of pounds 500m this year.

Low productivity, the high pound and the loss of currency hedging have all been blamed for Rover's plight. However, it was revealed last week that Rover's sales in October fell 34 per cent compared with the same month last year and that Rover's market share had dropped to 6.6 per cent, a new low. These poor figures were blamed on the dispute, which has overshadowed the launch of the Rover 75, the first model entirely developed in BMW's ownership.

The near-disastrous performance on the car market underlines the fact that it is vital for the Rover 75 to succeed if the Rover marque is to have a future. The Rover 200, 400, 600 and 800 range has failed to impress car buyers. Sales of the 200 and 400 have been bitterly disappointing.

The future of Rover will soon claim the attention of the Secretary of State for Trade and Industry, Peter Mandelson. After talks with BMW chairman Bernd Pischetsrieder and Rover chairman Walther Hasselkus last month, Mr Mandelson indicated that a government subsidy for Rover might be forthcoming once the question of productivity at Longbridge has been resolved.