By 17 January 2010 0 Comments Read More →

Press Report : Towers lifts the lid on Longbridge

Jon Griffin, Birmingham Mail, 15th January, 2010

John Towers

LONGBRIDGE could have been sunk as long ago as 1994 by Japanese car giant Honda, former MG Rover Chairman John Towers has claimed. In a rare interview for a new West Midland book on the car industry, Mr Towers has revealed that the Japanese firm – which held a 20 per cent stake in Rover – could have thrown a huge spanner in the works of the deal that saw BMW take over at Longbridge from British Aerospace.

Acquisitions in the UK Car Industry, written by Coventry University Principal Lecturer Dr Emanuel Gomes, lifts the lid on the behind-the-scenes moves at Longbridge which saw the German group take control.

The takeover was to cost BMW billions of pounds, before the dramatic sale for just £10 to John Towers’ consortium in May 2000 saved thousands of jobs. The factory ran under the Towers regime for a further five years.

But MG Rover eventually collapsed amid debts of over £1 billion in April 2005, with the loss of 6500 jobs. Mr Towers, who has not spoken in depth about Longbridge since the 2005 closure, says in his interview with Dr Gomes: ‘One of the not hugely publicised issues at the time was that Honda could have sunk us.

‘Our agreement with Honda was that if we were bought by anyone else then the agreements would be terminated. I took the position with BMW that if Honda sinks us then they are mad, because it will sink them in the UK as far as the Swindon organisation was concerned and it will also sink them in a marketing sense.

‘The workforce and our employers knew that if we did not get Honda’s toys back in their pram then we had a major problem.’

The book also reveals that unions and management believed Longbridge could have survived under BMW if the German group had hung on at the Birmingham factory for another 18 months.

Vin Hammersley, former Director of Communications for BMW/Rover, says: ‘You have to look at six years long term before you know whether you have made a good buy… given time and given nerve by BMW it could have been a success.’

And Dave Osborne, National Secretary for the Car Industry of the T&G section of Unite the union, said: ‘If we had been 18 months further down the road, I don’t think they would have sold Rover.’

[Source: Birmingham Mail]

Posted in: AROnline News, MG Rover
Keith Adams

About the Author:

Created www.austin-rover.co.uk in 2001 and watched it steadily grow into AROnline. Is the Editor of Classic Car Weekly, and has contributed to various motoring titles including Octane, Evo, Honest John, CAR magazine, Autocar, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, Classic Car Weekly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, and the the Motoring Independent... Likes 'conditionally challenged' motors and taking them on unfeasable adventures all across Europe.

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  1. Simon Hodgetts says:

    “If we had done this, if we had done that…..” yaddah yaddah yaddah…..

    Isn’t rhetoric wonderful!!

    As far as BMW holding onto ARG for another 18 months – why should they? They’d got the MINI, the Cowley plant and all the 4WD and FWD expertise they needed. Why hang on to a loss-making car firm with no exciting new models in the cupboard?

  2. Leslie Button says:

    They did have exciting models in the cupboard – the R30 which would have replaced the Rover 25/45. BMW kept the car themselves.

  3. Peter Harris says:

    It is clear for all to see that BMW took a very ‘USA business model’ approach to MG Rover in that they were unwilling to suffer losses in the short-term even with long-term prospects looking very promising.

    BMW took everything that had a real immediate value – MINI and the 4WD technology – and sacrificed the rest even though it could have yielded long-term success. Isn’t this called asset-stripping?

    The 4 Directors that took over the project very nearly made a go of it – they have been criticised for their expensive motorsport activities but this surely was a shop window for potential partners in the business as they knew that a partnership/merger was the only long-term solution for the group. If BMW had hung on it could have been them but they, alas, took a very short-term view in the end.

    I can’t imagine why anyone in this country would now want to be involved with these asset-strippers!

  4. Martyn Bradd says:

    I whole-heartedly agree with Peter Harris, especially his very last point. BMW should be totally ignored by the UK car buying public. It is unfortunate that BMW builds products that people conceive they want!

    Anyway, as a past BMW owner and a patriotic (Rover-owning) Englishman, I will say that I will NEVER buy another BMW car, no matter how good.

  5. David O'Neill says:

    As an ordinary member of the public, let’s face it BMW only wanted the company for its technology, new small model range and heritage. They asset-stripped like no one ever has in British industrial history, taking the 4wd technology, the new MINI while I bet leaving Rover to bear the cost of the development and the factory build? Then there is the 25/45 replacement… seems familiar when you look at the 1-Series?

    The 75 was never large enough in the sector where it was competing. The BMW Group is a company with no scruples, it is just the way the are.

    I believe the British Govt. should have boycotted BMW’s cars instead of allowing Police forces all over the UK to make them richer while Rover workers rebuilt their lives.

    I also believe that, in some way, the Rover marque will return eventually even as a niche manufacturer as part of a larger brand. Most makers these days recognise they need niche brands – look at how VW has become the BLMC of Europe now. Well done them!

  6. Ian Merriman says:

    A German friend asked, when being told of yet another BMW being purchased by a family member, “Don’t you make cars in Britain anymore?” That is, unfortunately, nearly the case.

    I have had Rovers for many years and enjoy my ZT V8 for best using a Rover 75 Tourer as an everyday car.

    BMW sent Rover down the pan. It seems incredible after such a short time that Land Rover is no longer seen by the British car buying public as having been part of the same group as Rover Cars. As others have said, BMW got the 4 wheel drive technology and the MINI before selling off Rover.

    I am thinking ahead to replacing my 2004 car and Saab was on the list until a few days ago. My feelings now are Audi or Mercedes but BMW… NEVER!!

  7. Ian says:

    ahem… or a Jaguar?

  8. Russell K says:

    Why doesn’t anyone level any blame at BAe? It was BAe which sold Rover Group to BMW when, at the time, everyone assumed that Honda would just increase their stake. IMO, the Rover/Honda partnership would have worked well with Honda as owners of Rover Group but BAe seemed to sell the company from under Honda’s nose.

  9. Jonathan Carling Jonathan Carling says:

    I just think BMW wanted to make a go of Rover and developed the MINI, R30, 75, new Range Rover etc. as evidence of that. However, they weren’t at all used to making massive losses and pulled the plug. A pity they didn’t hang on for the R30 to come out though, as that looked really promising. It was a business decision, however hard. Would I buy a BMW? Nah, don’t like the image!

  10. Ross Armstrong says:

    Too much short-termist thinking. Mind you, don’t forget that BMW were losing money hand over fist especially towards the end. There were, of course, also the commercial, ‘cultural’ and personal diferences between certain sections of the company that made it difficult to make things work properly.

    To be honest, the blame can squarely be laid on both Margret Thatcher’s strategy (this is NOT, though, a political criticism) and BAe’s strategy thereafter. The simple chronic under-investment in this period, just when the company needed it most and really truly pulled it’s socks up enough to deserve it, just wasn’t forthcoming enough. This heavy dependence on other people’s tech and engineering to allow Rover to produce it’s ‘own’ products essentially knocked the nails down on the coffin a long time ago. It took until 2005 for the company to die from the suffocation that followed.

    The lack of a reliable (and cheap) international factory units also meant that they could not cut costs by using labour from the likes of Spain or the newly emerging East European areas, Czech for example. A benefit of this is where the company builds their cars, they are most likely to buy in that area – look at Coventry… 206’s and Jags were quite common place.

    Had BMW had a long-term target such as 10 years, chances are that they could have seen a return on it, provided they kept their eye on the ball. Jaguar got messed up because Ford messed up in a big way. Eventually it could have meant that product developments for both BMW and Rover could have then syncronized to allow for platform and systems sharing to occur, resulting in reduced costs from the smaller numeber of unique parts needed for each vehicle. Perhaps even the same assembly processes could have been used whereby building Rovers on a BMW production line would seem more viable, and taking Rover to the international stage where it might not have been possible before.

  11. Mike C says:

    David O’Neill :

    They asset-stripped like no one ever has in British industrial history, taking the 4wd technology, the new MINI while I bet leaving Rover to bear the cost of the development and the factory build? Then there is the 25/45 replacement… seems familiar when you look at the 1-Series?

    Well, BMW produced a 4wd 5-Series well before they bought Rover, so I’m not sure how much they really took from LR and their legacy was the current RR which is light years better than P38A. Furthermore, would there have been a new MINI without BMW?

    Ian Merriman :

    It seems incredible after such a short time that Land Rover is no longer seen by the British car buying public as having been part of the same group as Rover Cars. As others have said, BMW got the 4 wheel drive technology and the MINI before selling off Rover.

    I think Land Rover are quite happy not to be associated with what ended up as MG Rover. CityRovers and Streetwises hardly help sell Discoveries and RRs…

  12. Jon T Pierce says:

    BMW Group, as has been mentioned so many times before, only wanted Rover for the MINI and for no other reason – they never had any intention of investing or replacing any of the older models.

  13. Jon T Pierce says:

    I think that you would have to be completely stupid not to realise that Land Rover etc. is not associated with Rover – the name slightly gives it away! Tata Motors, which now owns Land Rover, also owns the Rover name – this was part of the deal between Ford and BMW and again with Ford and Tata.

  14. Paul says:

    This article presents Honda as the bad guys. Hardly surprising they where more than a little upset given the relationship they had built up in the 15 years before.

    Rather than contemplate what might have been if BMW had hung onto Rover for another 18 months, it might be rather more appropriate to remember that the Honda years where BMC/BL/Rover’s best so far as sales and product where concerned.

    Longbridge would probably still be churning out cars today if that relationship had remained and a greedy BAe management had not betrayed Honda by chasing BMW’s deutschmarks!

  15. Ross Armstrong says:

    @Mike C

    As far as I’m aware, the only technology BMW really copied was Hill Descent. Everything that LR produced was pretty much tried and tested technology.

  16. Paul Briden says:

    The bottom line is that, however much it is dressed up and debated over, not enough people in this country bought Rover cars.

    One sector that I do not hear blamed too much is the press, both written and visual. Other car makers have had problems with cars, but it is not blown out of the water like Rover’s troubles were.

    It’s the same in the airline industry. BA are slagged off all the time, while Easyjet, if you have ever flown with them, are awful. You never read about it though do you?

  17. Honary Swede says:

    Could somebody tell me what technology was taken by BMW from Rover?

    The X5 was already signed off at the time of takeover and its technology is purely BMW’s. The BMW-inspired RR (launched after Ford takeover) takes far more from BMW than Land Rover.

    As for the New MINI, the direction and funding came from BMW – the Rover path was for a SMART-style solution.

    Basically BMW sunk billions into Rover with significant investments into Gaydon, the R75 and Freelander track, of which only a fraction was recovered with the sale of Land Rover.

    It is true to say that, had BMW realised that the MINI was going to be such a success story, then they may have pushed harder for the Government support to make a Longbridge re-development competitive with a Green Field solution.

    However, of course, if Peter Mandelson had not been following the anti-car agenda during the early years of the New Labour agenda (remember Prescott’s 10year Transport Plan to reduce car usage), then he would have recognised the importance of supporting BMW at what was a difficult time for them financially.

  18. Jorge Santos says:

    All those mother-f***ers keep saying it’s not their fault and that they did the best they could while their pockets are full of money and blood is once again on the carpet… Up theirs!!

  19. Shame on the British Governments who destroyed British Leyland and allowed pityless capitalists to eat one of the crowns of the UK industry & technology.

    The same politicians, today, claim they want to fight pollution and the financial crisis by wasting public money with Car Scrappage Schemes which feed the market with cheap imported cars without soul…

  20. Chris Kirman says:

    BAe – surely the biggest asset-strippers in this whole sorry tale.

  21. Chris Chapman says:

    I don’t think this is really anything new. Honda proposed joint minority ownership with BAe but would not take a majority share. Japanese companies shun bad publicity, for deepseated cultural reasons, and although they were annoyed about the BAe/BMW deal they were unlikely to have pulled the plug, albeit unlike what they did with the by now decrepit Rover 45 tooling after the Nanjing takeover. The BAe ownership was only a favour to the government to keep Rover out of public ownership – they didn’t understand high volume car production and what to do with the company.

    I think there’s a lot more to come out from John Towers and his former colleagues, with the passage of time, about the MG Rover era – what was their strategy, were they all managerially competent, did they waste time chasing potential partners who were obviously unsuitable and did they waste too much time/effort on pet projects?

    I would like to know if BMW had known how successful the Mini would be would they have kept Longbridge and let Cowley go, saving the need to swop production lines? The problem BMW had was that it was internally split by pro/anti Pichetsreider factions and they initially adopted a too hands-off style since the Rover (but not Land Rover) Anglo/Japanese culture at the time was alien to them and they could not adapt (or even admit their own weaknesses) to make the most of it.

  22. Dan says:

    Underpinning the sad story again and again is the sheer short-termism of all the participants-a thin line indeed between short-termism and shortsightedness.By way of context, “The State We`re In” by Will Hutton identified in an accessible way, the shortcomings of this approach and contrasts it with the example of sustained ruthless long-term investment in the Japanese car industry (probably now needs to be updated to cover China`s policies). BaE and the Phoenix 4 make Honda look like Father Christmas !

  23. Irish Rover says:

    Personally I think BMW had serious plans for Rover when they bought it, what people are overlooking is that what fatally undermined the Rover brand was the stupid marketing strategies for the HH-R 400 Series and the 200. Those decisions were taken long before BMW got involved and Rover never recovered from the intial failure of those cars especially the HH-R. Reading the development story for that car on this site I get the impression that Honda were angry at the way the 600 totally overshadowed their Accord and they were determined to handicap the Rover version to prevent that from happening. Whoever owned Rover in the 1990’s it’s likely IMO, that unless the strategies for those cars were different the end result would have been the same.

    But clearly the biggest villans are BAe for the way they asset stripped Rover of land at Cowley and Canley and snaffled the proceeds to cover up the shortfall in their balance sheet caused by the end of the Cold War instead of reinvesting the profits back into Rover. That money could have paid for the modernisation of Longbridge and BMW seemed to have been unaware of how few real assets Rover had when it bought it over. BMW clearly behaved dishonourably in 2000, something which Gerhard Schroeder publicly rebuked them for, but you have to remember that there were strong rumours at the time that Volkswagen were planning to launch a takeover bid for BMW, so their board panicked and decided to cut Rover loose.

    The only people who come out of this whole sorry mess are the Longbridge workers who did their very best but were let down by greed and incompetence in the boardrooms.

  24. Simon Woodward says:

    I agree with most of your blog but I do think a succession of governments not just Thatchers government played their own role in Rovers downfall including the current one. I think and have always thought that the best option for Rover was a Honda partnership. It seems that governments regardless of colour are bad news for manufacturing.@Mike C

  25. Mark Hayman says:

    I could never understand why BaE done the dirty, and should have done a deal with Honda, at least with Honda input a good range of cars were produced, BMW just wanted the Mini brand and Rangerover, to take the expertise from themself. I think Mg rovers produce a good range of quality cars its shame they gone. A Rover 800 Viteese and Sterling owner.

  26. Dexter Baxter says:

    Why didn’t Rover learn something from Honda and BMW and even the General Motors components used in the 1980s? That something: Quality.

    There can be no excuse for K-Series engines that blow headgaskets and were NEVER fixed. You can point to nearly ever Rover-engined Rover car and find some fatal flaw that keeps it from being total reliable. Even with a lack of new models and investment, Rover might have survived — if it had bullet-proof quality.

    Many things conspired against Rover for sure, incompetent management, bad timing, lack of money, etc. But Rover had many chances to learn from two of the best automakers in the world, Honda and then BMW, and rectify its long-standing quality problems. But Rover never did. No automaker can survive without quality.

  27. Hodge says:

    This is not exciting news. Most, if not all, major contracts will have a change of control clause, in case the other party is bought out by a competitor. It’s standard business practice. Most of the time they amount to nothing – just as in this case.

    I think BMW should have stuck it out, but I guess they couldn’t afford to. Look at the news stories now – they need to find a partner to share their small engine and front wheel drive platforms in order to turn a profit – if they still had Rover they’d have one in house!

  28. Travis Blackcat says:

    Does anyone else think that Rover were bought by the wrong Germans? Often parked near my home is a first generation Seat Leon and I can’t help thinking that it looks very like a 200/25. Rover would have fitted into VW’s range rather nicely as a wood-and-leather luxury alternative to the sporty Seats, bargain Skodas, Teutonic Audis, et al. We could have had a real Mini replacement rather than BMW’s ‘thing’, perhaps based on the Lupo/Arosa platform. (I wasn’t exactly enamoured of the BINI from the outset, but I really stopped believing that it was a Mini when I saw one towering above the R8 that I was driving at the time.) But let’s not forget that VW were supposed to be considering an under the rear seat mid-engined layout for the Golf at one time, not unlike Rover’s last gasp Spiritual concept. And who knows where MG could have ended up if it could pick and choose from the parts bin – hopefully they could have come up with something better looking than the Audi TT but with the same underpinnings.

  29. C.Stocker says:

    Yann Cherruault :Shame on the British Governments who destroyed British Leyland and allowed pityless capitalists to eat one of the crowns of the UK industry & technology.
    The same politicians, today, claim they want to fight pollution and the financial crisis by wasting public money with Car Scrappage Schemes which feed the market with cheap imported cars without soul…

    I think before you throw mud at those “pityless capitalists” maybe an accussing finger should be pointed at those shameless unions of the 70s that seemed to call strikes every other day!

  30. mac says:

    Next book I want to read is James Ruppert’s ‘The British Car Industry: Our Part in Its Downfall’.

    The Mg Rover/ARG/British Leyland story keeps on going and I am still fascinated by it as are others by the number of posts on here. But as some posters note, maybe we should consider the history of MG Rover as it ended up as and how through the years things never were right probably from inception (e.g. the formation of BLMC?) due to a combination of many factors and that the eventual failure of MG Rover shouldn’t have surprised us? Discuss…

  31. David says:

    Some really constructive comments here about the demise of Rover, the short-sighted approach of BMW, BAE’s asset-stripping in the early Nineties and a succession of Governments not ultimately interested in helping BL/Austin Rover/Rover/MG Rover to survive against the ridiculous proposal of merging all this companies together in the 1960s. I really hope this isn’t the last interview John Towers gives. Perhaps a book is in order now that Mr Mandelson has put his final nail in MG Rover Group’s coffin. Certainly both the Honda years in which Mr Towers was involved in (1988-1996) and his involvement with brokering a deal with BMW and efforts to save MG Rover Group (2000-2005) would be of interest above and beyond what has been documented by the media and through the Government’s 830-page report.

  32. Jonathan Carling Jonathan Carling says:

    @mac
    Thats a really good read. Tells you everything you need to know about why people stopped buying BL vehicles.

  33. Mike C says:

    Yann Cherruault :Shame on the British Governments who destroyed British Leyland and allowed pityless capitalists to eat one of the crowns of the UK industry & technology.
    The same politicians, today, claim they want to fight pollution and the financial crisis by wasting public money with Car Scrappage Schemes which feed the market with cheap imported cars without soul…

    It was the British Government that rescued British Leyland, and how many more billions could the taxpater realistically have invested? The seeds of the decline are long and complex, the original shotgun marriage, poor management, bolshy unions, under investment, poor product decisions, unreliability and quality issues with new models…

  34. Chris Chapman says:

    @Irish Rover
    Good points. Rover was notorious for pitching/pricing cars at the wrong level in the marketplace – marketing graduates fresh out of university who didn’t understand the motor trade?

    Another issue which hasn’t apparently been generally aired is product safety. The 100 had to be pulled and, taking a look at the crash tests of it and also the Rover 200 and the (Honda Civic equivalent of the) 400/45 recently on the Euroncap website http://www.euroncap.com, are all pretty frightening. (The already superceded 600 is also disturbingly bad.) In comparison, Rover 75 does very well (and the MG TF isn’t bad either) but MG Rover were sitting on a time bomb of products which could have easily very quickly sunk them given some bad publicity.

    I note other comments in this thread about quality – this is not just component reliability. Rover were actually good at perceived quality, eg the door thunk on R8’s. I have a couple of Toyotas which are supposed to be the best but can point out a number of design/manufacturing faults – a lot of this can be “handled” by careful marketing. At Rover we had some component suppliers that were so good that BMW would not believe how low their rejects rates were compared to their equivalent suppliers. VW are supposedly good at quality – tell that to SEAT Ibiza (Polo based) owners coughing up £600 every time their console electronics pack up….!

  35. alain says:

    BMW saw the cooperation between Honda and Rover as a great danger. The Rover 600 was a very successful car at the moment and it could really compete with BMW 3-series. Rover was started again. No other Non German car could do this at the time. So the best thing to eliminate the enemy is to get inside. This wasn’t very difficult with BAE that wanted money instead of being a little patriotic. Don’t forget the production methods and enginering at Rover where far better then BMW at the time. But after all VW isn’t that better then BMW. These are two companies who wants to rule the world and they don’t want any opponent. Sad but money rules the world and money is know a Privilege of China and Germany.

  36. MM says:

    ” product safety. The 100 had to be pulled and, taking a look at the crash tests of it and also the Rover 200 and the (Honda Civic equivalent of the) 400/45 recently on the Euroncap website http://www.euroncap.com, are all pretty frightening”

    The Rover 100 did receive a low rating in the NCAP “staged” tests, The UK Police were ordered to record Data for Road Traffic Accidents, deaths etc.

    The Data the Police produced was a contradiction to NCAP, the Rover 100 was a safe car. No correlation between NCAP and “The Real World”. Go figure!

  37. Hilton Davis says:

    Maybe it would have been better if Honda had bought out Rover rather than BMW. Then by now we would have had a stream of Rover versions of Honda’s range. I always thought Richard Wolley’s adaptation of the R600 from the Accord model was a nice car and had a more upmarket image than its Honda version.

  38. Silas Denyer says:

    I may be out of line here, but it is a touch frustrating when we see repeatedly “MG Rover eventually collapsed amid debts of over £1 billion”.

    AFAIK, that £1bn includes at least £500m of soft loans from BMW; essentially the money to pay the P4/5 to take the company away from them as, under German law, BMW would have been responsible for all shut-down costs of the business otherwise.

    From BMW’s perspective, that was already dead money; there would have been little realistic prospect of repayment. As such, it is not germane to a discussion of the degree to which the P4/5 somehow “cheated” people out of money.

    But, I agree, £1bn is a headline-grabbing figure!

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