News : October 2005
RDX60 back in development
BACK in May, Ricardo PLC announced it had signed a significantly sized development contract, with Shanghai Automotive Industry Corporation, and began work on a programme to productionise the Rover 75 in China, as well as work on engine development and further product strategy. Although the programme appeared to have gone quiet recently, the company has been working hard at recruiting former MG Rover and Powertrain staff in order to maintain continuity with previous MGR development programmes.
Rodney Westhead, Ricardo’s Chief Executive officer said: “We have been exploring opportunities to develop our business in China for a number of years and I am very pleased that as part of this process we have been able to win important engineering development work back home in the UK.”
As a long established partner with MG Rover, Rover, Triumph and many other UK car producers over the years, the company’s experience would prove instrumental in helping SAIC execute its plans to re-instate Rover’s products at its new production facility near Shanghai. In July, these plans were underlined by the news that Ricardo had opened a new suite of offices. Located in the prestigious Maxdo Centre in the Hongqaio area on the west of the city, the brand new offices would soon be seeing ex-MGR and PT engineers, temporarily re-located from the Midlands.
The confident expansion plans tabled by SAIC are said to have included a deal with Nanjing Automotive Coropration (NAC) to gain access to the Rover 75’s production line – a car that it already owns the intellectual property rights.
However, we hear the programme goes further than work on the Rover 75. Ricardo 2010 (as the joint SAIC venture is known as) has re-commenced the MG Rover RDX60 programme, with a view to getting it into production by the landmark year. Although the project name has changed, and we’ve yet to hear what it is, we can confirm it picks up where the original programme left off.
We will be watching this one very closely indeed.
Will we be seeing this car on the roads before 2010? Don’t bet against it if SAIC and Ricardo get their way…
First interview with new MGR bosses
THE corporate flags are still flying outside Q Gate at Longbridge – but inside, the panelled walls and enormous oak table of the MG Rover boardroom look hugely inappropriate. They speak of a time when big men in dark suits sat there deciding the future of the Midlands motor industry, perhaps chomping on cigars as they led Britain’s last car-maker to its demise.
It is doubtful those well-padded executives could ever have foreseen that Wang Qiu Jing and Wang Yao Ping would one day be in their place, as bosses of the Nanjing Automobile Corporation, which in early summer bought the bankrupt remains of the MG Rover business from the administrators, PricewaterhouseCoopers. The two Chinese gentlemen, with deliberate informality and understatement, are now firmly in charge of the Longbridge complex.
Between them, they did the deal with PWC that sold Rover to NAC, with Wang Yao Ping, the elder of the two, playing the major part in the delicate talks. When that was done, he handed over to the younger man, an engineer in his early fortieswith training in engineering from Beijing’s prestigious Tsinghua University. Wang the elder now acts as finance director and legal counsel for the UK side of the NAC business.
Their names are on the plaques leading to offices just outside the boardroom, and outside their countrymen are everywhere, casting a slide-rule over Longbridge, apparently measuring much of it up for shipment to Nanjing.
‘I am sorry about the informality,’ says the younger Wang through an interpreter. ‘We understand that people – the press and local people – are interested in the changes that are taking place here at Longbridge.’
You could say that. Since NAC bought Rover – beating its fierce rival Shanghai Automotive Industrial Corporation in a last-minute round of financial poker with PWC – there has been little communication from behind the Longbridge fencing. A statement a few weeks back confirmed that everything was on course for the Chinese, that plans were still on track to restart production at Longbridge (no details given) and that it was envisaged that multi-million-pound investments (again, no details given) would be coming into the area.
What prompted NAC to agree to its first ever media interview (back home, PR stands for nothing but ‘People’s Republic’) was news from China last week that set the gossips whispering, especially in Shanghai. All hell had broken loose in Nanjing, said one SAIC aide, with sackings and demotions all round as Nanjing city and regional bosses realised what an awful mistake it had been to take over MG Rover.
That speculation now seems completely off the mark. The two Nanjing executives were at pains to explain in detail the boardroom changes that have taken place back in China, which they insist are completely positive for NAC and MG Rover. There had been major changes at home, but they should not be read as a sign of dissatisfaction at the Rover deal. And they should be interpreted against the background of the porous interface that exists between Chinese business, Chinese government and the Communist Party, which still has ultimate control of all political and economic power in the People’s Republic.
The changes involved the promotion of Huang Xiao Ping, long-time chairman of NAC, to the position of deputy director of the economic and trade commission of the region of Jiangsu, of which Nanjing is the capital. His place at NAC will be taken by Wang Hao Liang, previously a high-ranking executive in the municipal government of Nanjing.
‘It is a sign of the great support local and regional government would like to give to NAC. It is a vote of confidence from Nanjing and in our motor business. So it is also a vote of support for the Rover deal,’ says Wang Qiu Jing. ‘There have been no differences of opinion about MG Rover.’
Though this may sound like an arcane bit of internal Chinese politicking, advisers to NAC are in no doubt that it is a significant development. ‘We said all along that government contacts and support were just as crucial to this deal as cash on the table, and this proves we were right,’ says John Myles, senior partner at engineering consulting group Arup, which advised NAC.
But the government connection did nothing to harm matters when it came to financial aspects of the deal either. NAC would not have been able to transfer the foreign exchange needed to convince PWC they were serious about the bid without Beijing’s approval; the fact there was a multi-million-pound deposit ready within 24 hours of an outline deal did a lot to swing the talks in NAC’s favour.
The cross-fertilisation between Nanjing and Jiangsu is also set to have important ramifications for the Chinese motor industry – and, by extension, for MG Rover and Longbridge. Jiangsu may be just a province of China, but it is bigger than any western European country, with a population of 70 million and severalbig cities. Huang Xiao Ping’s job may sound bureaucratic, but it is equivalent to ministerial status. One Chinese adviser said: ‘You should view him as something like Alan Johnson – but with a lot more power.’
Wang Qiu Jing explains that the job changes are the first step in a government-backed initiative to make Jiangsu a hub for the Chinese car industry: ‘We already have four large industrial groups around Nanjing which manufacture parts and vehicles, with factories there run by Ford, Cherry, Hyundai as well as NAC. The strategy is to make Nanjing a major supply base for automotive components in China, with the support of the government.’
This plan will also, says Wang Qiu Jing, encompass engine and vehicle assembly facilities, in which the Powertrain engine plant – currently being dismantled in Longbridge and shipped to China – will play a major role. ‘Powertrain will supply engines for all the MG vehicles to be sold and used in China and also engines for the joint venture in Britain. We can improve it and modernise it, and have already begun development of this process,’ he says.
Of course, there is another big motor manufacturer in this part of China, just 300 kilometres down the Yangste river in Shanghai – SAIC. There has been a traditional historical rivalry between Shanghai and Jiangsu going back decades, and these days the exploding Shanghainese economy has given that rivalry a keen edge. Nanjing’s plans for a giant motor industry hub will make it all the more acute.
‘We admit there is competition between us,’ says the younger Wang. ‘Without competition there is no development, and that is a good thing. There has been co-operation between us and Shanghai too, but at this time I do not think there is room for co-operation between us.’ That would appear to rule out suggestions that the two cities would do a deal over the production of Rover models, which SAIC claims it already bought from Rover before it went bust.
The joint venture in Britain with GB Sports – which hopes to keep some 1,200 jobs at the Longbridge site – is ‘progressing’, says the younger Wang, but ‘it is too early to say what it will involve’. He stuck to earlier statements from NAC that the companies’ plans would eventually involve investment of ‘hundreds of millions of pounds’ in the Longbridge area. Some sceptics have questioned where that money will come from, and have suggested that NAC has asked the British government for financial aid.
There is much discussion in Chinese between the two Wangs, interpreters and advisers; a suggestion that the Department of Trade and Industry offered aid, and then withdrew the offer after doubts surfaced about the European Union’s opposition to any such support. Finally, the NAC line is agreed: ‘The MG Rover project is not in any way dependent on a grant from government. NAC hopes to get government support for what it is doing at Longbridge, but if it doesn’t materialise, it will stand on its own two feet.’ The elder Wang phrases it as an old Chinese proverb: ‘It’s my life, and I’ll manage to make it.’
The other motto, repeated time and again by both Wangs, is to this effect: ‘We consider, and have always considered, that the businesses in China and in Britain are to be run in parallel. Success in China and the UK are interdependent.’ NAC’s attitude seems much more optimistic than that of Trade Secretary Alan Johnson.
And, as if to ram the point home, the younger Wang tells how much he likes Britain. ‘The environment is very good and British people are so kind. I’m even thinking of looking for an apartment in Solihull,’ he volunteers. Now that is a commitment that no former MG Rover boss ever displayed.
How MG Rover finally ran out of road
The Sunday Times October 02, 2005 – The man who had to sort through the wreckage at Longbridge gives his first interview to Dominic O’Connell
TONY LOMAS was getting ready to go out to dinner during an Easter family holiday in Washington when the phone rang. It was his office in London. Come back now, was the message. MG Rover, the last British-owned volume carmaker, was going under, and he was going to have to pick up the pieces.
Lomas, senior insolvency partner at the accountancy firm Price Waterhouse Coopers, was used to such calls. But MG Rover was a daunting prospect. Since it had been bought by a consortium of Midlands businessmen from BMW five years earlier, it had hardly been out of the news as losses mounted and sales dwindled.
Rescue talks with a Chinese car group had collapsed, raising the prospect of up to 6,000 workers being thrown on the dole a few weeks before an election — and in a region with more than 20 marginal seats. It was going to be a high-profile job, the biggest corporate collapse of the year and one that could cause a political furore.
Lomas took the call on April 7. He cut short his holiday and was in Longbridge, MG Rover’s Birmingham plant, by lunchtime on Saturday April 9. The MG Rover directors — including the so-called “Phoenix Four” group of investors who bought the carmaker from BMW for just £10 — had met and appointed PWC as administrator the day before. A judge had ratified the appointment.
The future of the group, one of the last remnants of the once- mighty British Leyland, was already the subject of intense media and political interest.
A few days before PWC was called in, a shortage of available cash had forced MG Rover to stop making cars. As the board was meeting to appoint PWC, staff were filing out of the factory, telling waiting reporters they feared the worst. Patricia Hewitt, then trade and industry secretary, sped to Birmingham. She was joined later by Tony Blair and Gordon Brown.
By Saturday morning Lomas and his team had a fairly clear idea of the company’s true financial state. There had not been enough money to pay suppliers the cash on delivery they had demanded. There was not even enough to pay another week’s wages. “It was clear that we were going to have to make 5,000 redundant on the Monday morning,” Lomas said.
The alarming prospect of mass redundancies focused minds. DTI officials and union leaders, including Tony Woodley, general secretary of the TGWU, and Derek Simpson, general secretary of Amicus, were told the news at a meeting on Saturday morning. “It was the last thing the unions wanted to hear, but the DTI had some insight into the real state of affairs,” he said.
Lomas now needed to establish if the Chinese might ride to the rescue. Shanghai Automotive Industry Corporation (SAIC) had been in joint- venture talks with MG Rover until a few weeks earlier, and there was hope it might step into the breach.
But SAIC’s top executives could not be contacted. The eight-hour time difference with China did not help. “We had contact with their advisers (the merchant bank NM Rothschild), but not the top people.”
With time running out — and the offices of the prime minister and the chancellor taking a close interest in developments — the DTI came up with a lifeline. It would provide a £6.5m loan to pay the staff for another week and to give time to contact SAIC.
Even then, Lomas had to tread carefully. Was the government allowed to make the loan, and was it certain that it would not rank ahead of existing creditors when it came to the final wind-up?
PWC was eventually satisfied that the answer to both questions was yes. Lomas spent the next week trying to talk to SAIC, writing to the group and getting PWC’s Shanghai offices to try to establish contact.
The answer finally came on Friday, April 15, in a letter not to Lomas but Hewitt. The Chinese made it “crystal clear”, according to Lomas, that they were not interested in taking on MG Rover as a going concern.
The 5,000 redundancies were now inevitable. PWC drafted in 85 staff to deal with the workload, while the DTI and local agencies made ready.
“The logistics of processing that number of people was quite challenging. Hewitt had personally intervened to make it clear that everyone had to be on board, and that as much practical help as possible should be given to the workers.”
All the time Lomas and his team had been in close contact with the Phoenix Four, who were the subject of public vilification for having taken hefty salaries and pension payments while running the failing group.
Lomas said the four, led by chairman John Towers, were extremely useful. “To their credit, they gave us a lot of help but did not try to interfere. They helped us to understand what the SAIC deal had been, helped us with developing the interests of other potential bidders, and helped us with commercial decisions on who we needed to finish cars or engines.”
Lomas had warned creditors, whose claims totalled £1.4 billion, that they might get nothing back. The task now was to get the best price for MG Rover’s assets, given that it would not be sold as a going concern.
A mergers-and-acquisitions team from PWC was appointed to run the sale, and a field of about 700 expressions of interest was whittled down to just three: SAIC, Nanjing Automotive Corporation, another Chinese group, and a British consortium led by company doctor David James. It turned out to be a bitterly contested and high-profile auction.
A potential hurdle was property rights. SAIC claimed to own all MG Rover’s important intellectual-property rights, including engine designs, thanks to a £67m deal before the British company’s collapse. PWC had a different view.
Nanjing turned out to be the dark horse. “By the end of June I had an unconditional bid from it for the whole company,” said Lomas.
James came back with an offer for the whole group, but at a lesser amount. SAIC insisted that it only had eyes for Powertrain, the MG Rover engine-making plant. Privately, SAIC sources were saying that they did not consider Nanjing’s bid to be serious, and that it might not finally materialise. It was not until the last week of the sale that SAIC finally realised it was about to lose out.
“By the end of July I was satisfied that Nanjing could pay, so I was running for the line with their bid while trying to encourage the others to do more,” said Lomas.
“The week before we were due to sign I called them both and said, ‘look, we are very close.’ This finally prompted an offer from SAIC for the whole business. But it was not an unconditional one and not as high as that of Nanjing.
“On the Friday night (July 29) when we were about to sign, the SAIC offer was still conditional and still less than Nanjing. And Nanjing was running out of patience.”
MG Rover was sold to Nanjing, a minor player in the Chinese car market, for £53m.
The sale prompted complaints from the underbidders that PWC had mishandled the process. “In every single case I have dealt with there has been an underbidder who has felt hard done by,” said Lomas.
“If you miss out, you feel aggrieved. But that is why you have to handle the process professionally. No matter what was written about it, I was able to sleep at night.”
Etsong’s Maestro receives facelift
New front end styling goes someway twards concealing the extra 10cm of length brought by grafting the Montego nose onto the Maestro body…
ERIK Van Ingen Schenau of the China Motor Vehicle Documentation Centre has alerted us to this new version of the Etsong Lubao, which has recently been unveiled. Plans for future production of the car remain in doubt, thanks to Etsong’s factory being bought by Shanghai-General Motors.
For more information about Chinese Maestros, click here.
Gaydon secures final Rover 75…
The final Rover 75 – Firefrost Red and still carrying many of its protective coverings in the interior. (Picture by Ian Nicholls)
AFTER weeks of delicate negotiations, the Heritage Motor Centre at Gaydon has secured the final Rover 75 off the line at Longbridge for its collection. Production of the car was witnessed by Gillian Bardsley, an archivist at the museum, and Colin Corke, the Vicar of Longbridge, a mover in the Austin Federation, and long time Allegro aficionado.
The car was one of several dozen to be hand built on the line at Longbridge after the company went into administration in April.
Once austin-rover.co.uk secures the chassis number, we will be able to announce the full production tally of this model. As for the 25 and 45, production never restarted following administration, and a few MG TFs were completed, until the final example came off the line in July. Once we have all the details, we’ll pass them on…
Longbridge lift and shift continues apace
All pictures by JB
Sign of the times: Is it Red, Amber or Green with the Chinese? (Traffic Lights by the South Engineering Block)
AS talks between the British and Chinese governments get underway regarding future production of cars at Longbridge, the site’s re-development has shifted into overdrive in the past few weeks.
The process of the removal of production lines for transplant into China has been common knowledge for some time, but that does little to lessen the impact of the pictures of equipment being shipped out. Not only that, but many parts of the site are already being levelled in anticipation of future development.
With the prospect of MG Rover owners, Nanjing Automobile Corporation (NAC), and Shanghai Automotive Industry Corporation (SAIC) co-operating on the future of Rover 25 and 75 production, as well as K- and KV6-engine assembly in China, the lift and shift is progressing rapidly. However, as discussed previously in our News pages, this had been planned in advance many months ago.
Re-development of the North Car Park is underway, and the picture shows (what was) the Midland Bank, which used to supply Cash for the Wages Department. Note the Old West Works in the background. In the next few weeks a road will be built leading into the site.
Signs of neglect are easy to see everywhere. Q Gate now looks rather overgrown, and the ‘Handover Centre’ sign takes on new significance these days.
Bye-bye PG1 gearbox: They’re stipping out Number Five, but where’s the equipment going? China or back to Honda in Japan?
The lorry is waiting outside Old West Works as the Chinese clear out Press Tools and Machinery from the Tool Room…