Rover deals saves 20,000 jobs

Friday 16 August 2013 22:13

Rover workers who have endured more than two years of anguish today celebrated a dramatic rescue deal which has saved the firm from closure.

At least 20,000 car industry jobs have been saved with the deal by the Phoenix consortium to buy the firm from German owners BMW.

It is a deal which safeguards the future of the huge Longbridge factory in Birmingham, which has faced the threat of closure for the past two months.

Last month BMW refused to deny a report that it was to sell factories, including the Longbridge plant, and the future of the car giant seemed in doubt.

It was only a few months ago that workers were breathing a sigh of relief after a mammoth rescue plan was finally agreed to save Longbridge, Britain's biggest car plant.

It was what many hoped was the final chapter in a long-running saga.

The first major sign of trouble came in July 1998 when Rover announced it was to axe 1,500 jobs, blaming the strong pound for making it difficult to sell cars abroad.

Alarm bells rang again in October when the company said production of itsRover 200 and 400 models at Longbridge would be suspended for a month following a "business realignment process".

Days later, Rover admitted to its workers that the company's position was "extremely serious", and said further job losses and cost cutting measures were being considered, again blaming the strength of the pound.

In December 1998, a deal was done aimed at securing the company's future - but at a cost of 2,500 jobs and the introduction of radical new working conditions.

Reluctantly, workers voted to back the deal in the hope that it would spell an end to the misery of uncertainty over the plant.

A month later, fortunes were on the upturn with Rover announced the creation of 550 new jobs under plans to retake control of its parts business.

By then, the company had also confirmed that the new Mini would be built at Longbridge as part of a £400 million investment programme.

But the happy days were not to last.

Nerves began fraying again in early 1999 when news emerged that BMW chief Bernd Pischetsrieder was facing the threat of being forced out.

His widely-tipped replacement was hardliner Wolfgang Reitzle, whom unions feared would slash investment in Rover, especially at the Longbridge plant.

In February 1999, Pischetsrieder did indeed step down as chief executive, to the dismay of union leaders. But the cloud had a silver lining - Reitzle was squeezed out too.

Instead, the man chosen for the helm was Joachim Milberg, considered by many to be a safe pair of hands.

Soon after, he confirmed plans to build a new medium sized car, and raised hopes by indicating that Longbridge was his preferred site.

But the situation was not so good for Rover workers in south Wales, when in March 1999 a long-fought battle to save one of the company's car component plants was lost, despite a campaign by politicians and unions to keep it open.

Forty-four workers, some of them disabled, lost their jobs when the Bargoed factory shut.

The gloom deepened days later when it was announced that Rover had crashed into the red, with 1998 losses put at about £650 million.

By now, there were deep fears for the future of the Longbridge plant as BMW bosses mulled over the wisdom of building a new model there.

After months of nail-biting and seemingly endless rounds of talks between management, unions and the Government to thrash out an aid package, a huge £3 billion rescue deal was finally announced in June 1999.

Hailed by the Government as a vote of confidence in the British motor industry, BMW unveiled a bigger-than-expected investment package of more than £500 million a year for Rover over the next six years, half of which wasearmarked for Longbridge.

The celebrations were soured somewhat by the European Commission subsequently announcing a formal investigation into the Government's part of the deal - a £152 million aid package - but at least BMW indicated that its plans to build a new small car at the plant would not be affected.

Trade and Industry Secretary Stephen Byers then met EC Competition Commissioner Mario Monti to urge him to fast-track the probe and unions were fearing that further calamity could be just around the corner.

But on May 1 with Prime Minister Tony Blair promising to work "night and day" to help rescue jobs at Rover, there seemed to be a light at the end of the tunnel.

Downing Street officials were also intervening directly to win breathing space for the Phoenix consortium in its attempt to take over the Longbridge plant.

With frantic efforts by the Phoenix consortium to secure the crucial financing and meet a 10-day deadline imposed by BMW on May 2, car workers were still left in a state of uncertainty.

Their futures became brighter at 8.30am today when John Towers, head of the Phoenix consortium, signed papers confirming the sale.

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