View from City Road: Benefits of being on the brink

Rover Group's two-year wage deal puts the seal on a remarkable transformation since the once ailing company peered into the abyss.

The plan to cut Rover's 11 pay grades to just three is the most radical attempt yet by a European car maker to tackle the archaic blue collar/white collar divide that has dominated the industry for so long.

Now owned by BMW, Rover ought to be a good teacher to its German parent, which desperately needs to reform entrenched working practices in its own factories.

Putting 28,000 workers into just three pay grades - engineers, craftsmen, and semi/unskilled staff - is about as far as a manufacturer can go in breaking down lines of demarcation. Even Japanese car makers in the UK have more than three grades, though movement between these is easier. Ford is trying to 'flatten' its organisation but is nowhere near as far down the road as Rover.

It shows yet again that being on the brink of collapse, as Rover was, has its plus points - if it concentrates minds in the direction of common sense. No other European car maker has had such a high-voltage shock. Both Rover workers and management understood it was change or die. The price was high in jobs - 8,000 workers have gone since 1990 alone. No wonder yesterday's pay offer (up to 10.7 per cent over two years), still to be approved by ballot, was described by both unions and management as a 'thankyou'.