Uncertainty over future of Rover continues

Controversy over the break-up and sale of BMW's UK subsidiary, Rover, has dominated newspaper headlines over the weeks since it was announced on 16 March 2000. We highlight recent developments.

In the period since the announcement in mid-March 2000 of the controversial break-up and sale of Rover (UK0004164F), the UK subsidiary of the German-owned motor manufacturer BMW, recriminations have continued over the handling of the issue by both BMW and the UK government. Newspaper headlines have been dominated by an acrimonious dispute between the UK trade and industry secretary Stephen Byers and BMW executives over their differing accounts of whether BMW had given the UK government prior warning that it was preparing to pull out of car production at the Longbridge plant near Birmingham. On 5 April, Mr Byers took the unusual step of publishing civil service records of contacts he had had with BMW in the run-up to the company's decision to sell Rover. These showed that, a week before BMW announced its deal with UK-based venture capitalists Alchemy Partners, Rover chair Werner Sämann outlined BMW's plans for dealing with Rover's escalating losses to Mr Byers but did not indicate that the option of selling Rover was being considered. Opposition Conservative MP s, however, continue to argue that the evident scale of Rover's problems should have alerted Mr Byers to the possibility of its sale by BMW.

Trade unions and the UK government have been seeking to put pressure on BMW to look seriously at alternative proposals offering the chance of continued employment for a higher proportion of Longbridge workers than is likely under the plans of the prospective purchasers, Alchemy Partners. The Alchemy proposals focus on the production of sports cars carrying the MG marque and are thought to entail extensive job losses among Longbridge's 9,000 employees. On 1 April, a march and rally to oppose the sale of Rover took place in Birmingham. Organisers claimed that over 80,000 people took part, though other estimates of the turn-out for the demonstration were lower. Two days previously, trade union leaders met the Prime Minister, Tony Blair, for talks on the Rover crisis, and workplace representatives from Rover's UK plants have also been active in lobbying members of the UK and European Parliament s.

At the time of writing, an 11th-hour rival bid to buy parts of Rover is expected to be made in mid-April by a consortium headed by John Towers, a former chief executive of Rover. The Towers bid is thought to be the preferred option of both the UK government and the Rover unions as it is likely to involve higher-volume production at Longbridge than the Alchemy proposals currently under negotiation with BMW. Mr Byers reportedly chaired a meeting on 10 April between BMW, union leaders and Mr Towers at which BMW said that it was prepared to give consideration to an alternative bid. However, it is widely believed by commentators that the consortium led by Mr Towers faces an uphill battle to prevent the transfer of Longbridge to Alchemy.

BMW's sale of Rover has prompted UK trade union leaders to call for improved rights to information and consultation on company restructuring. In an interview with the Financial Times on 27 March, Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, was quoted as saying: "It was not right that BMW could plan to sell off its UK operations without any notice to anybody. We need consultation rights urgently." Sir Ken reiterated his strong support for the early adoption of the draft Directive on national information and consultation rules (EU9812135F) - a move opposed by the UK government (UK9811162N). He stressed that "employers must accept that social Europe is on the agenda because British workers are treated less fairly than in mainland Europe."

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