German car manufacturer BMW has admitted it is considering selling its troubled UK subsidiary, Rover. It is one of “several possibilities” it is considering, BMW has said.
If BMW does sell the factories, it could lead to thousands of UK job losses at Rover plants in Longbridge in Birmingham and in Cowley, near Oxford. Rover’s future is expected to be discussed at a board meeting on Thursday.
“The management board of BMW has for the past several months considered several scenarios regarding how to restructure the Rover group and has kept the public regularly informed about the Rover situation,” BMW said.
“The plan as discussed ( in a German newspaper) is only one of several possibilities,” it added.
Close to completion?
The report in the Sueddeutsche Zeitung implied that a sale was close to completion. The group is planning to sell all plants making Rover models as well as the Rover brand name to an unknown car company, the report in Wednesday’s edition of the Suddeutsche Zeitung said.
The German company is expected to keep Land Rover and Mini, the report said. BMW’s chief executive Joachim Milberg is to inform the board of the plans on Thursday at a meeting, it added.
The report met with disbelief from unions. Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said BMW had given assurances that it remained committed to Rover.
“Cash has already been pumped into Longbridge and this report will cause dismay throughout the Rover workforce because they just want to get on with their jobs and build cars,” he said.
“I am confident that BMW will remain committed to Rover but they have to make their position absolutely clear. It is time to remove any shadow of doubt about the future,” he added.
The Birmingham Chambers of Commerce and Industry estimates that up to 50,000 jobs in the West Midland were dependent on Longbridge’s survival. “It would affect the supply chain and there would be a domino effect which would be pretty devastating,” a spokesman said.
The English Patient
Rover, dubbed “The English Patient” by German media, has weighed on BMW’s results and speculation has been rife BMW will choose to get rid of it. BMW has had frequent clashes with the press over the future of the Rover, amidst continued reports that it is either to sell its subsidiary or stop manufacturing in the UK.
Last year, poor performance by Rover kept BMW car sales static. Rover has been hit by low productivity, falling sales and mounting losses. In an effort to turn the tide, BMW has cut costs and embarked on a massive investment programme.
BMW has given its British subsidiary until 2002 to “break even” – the point when revenues are higher than costs. The paper also said that Rover’s losses in 1999 would be at least 2.5bn marks. BMW has previously warned that Rover’s loss in 1999 would be wider than its 1.87bn mark loss in 1998.