Thousands of Britons losing jobs as carmaker MG Rover collapses

Shanghai Automotive looks into buying, rejects once premier producer

April 16, 2005|By NEW YORK TIMES NEWS SERVICE

LONDON - Britain's last big automaker, bankrupt MG Rover, will be broken up and sold and 5,000 of its workers dismissed, the company's administrators said yesterday in announcing its collapse.

Hopes to save the ailing company ran out yesterday after Shanghai Automotive Industry Corp., which had seemed interested in saving Rover, said it would not buy the British automaker. Shanghai Automotive backed away in recent weeks after discovering the extent of Rover's losses and difficulties. MG Rover Group is controlled by Phoenix Venture Holdings.

PricewaterhouseCoopers, which has been acting as Rover's bankruptcy administrator, made the announcement.

Rover, which filed for bankruptcy last week, was founded 100 years ago and has had many owners. In 1994, it was bought by BMW of Germany, but after posting continued losses it was sold in 2000 to a group of British investors for a token 10 pounds.

In its heyday in the 1960s, the company had 40 percent of the British market, producing Austins, Triumphs and Land Rovers. Today, that share is 3 percent, and Rover has not produced a new model since 1998.

Its demise leaves Britain without a large domestically owned auto company, unlike other European nations that still have large companies like Germany's Volkswagen and BMW and France's Renault.

The closing of Rover, which was dogged by quality and image problems, has been seen in Britain as a symptom of its industrial decline. While the British economy remains among the most buoyant in Europe, it has been based largely on a healthy services sector, prompting debate about whether Britain can continue to prosper without a large manufacturing base.

The government gave a 6.5 million-pound ($12.2 million) loan last week to MG Rover to keep the company going for a week while it sought a buyer. But Ian Powell, one of the PricewaterhouseCoopers administrators, said the decision by Shanghai Automotive, delivered in a letter to the British government, meant he could not ask for an extension of the loan for another week.

"On the basis of the letter, we decided it was inappropriate for us to seek further funding," he told a televised news conference in Longbridge, where Rover's plant is located. He said dismissal notices would be sent over the weekend to about 5,000 of the 6,100 workers. The rest would finish production of remaining cars and prepare the plant for sale, he said.

With a general election less than three weeks away, Britain's prime minister, Tony Blair, scrambled to limit the political damage. He interrupted his campaign to rush to Birmingham, near Rover's home base, with a pledge of 150 million pounds to help retrain and find new jobs for those affected.

"What we have got to do now is look after the work force and the families of the work force," Blair said in a news conference.

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