Rover four-day week ‘only temporary’
The four-day working week planned for some lines at Rover’s Cowley plant will be a temporary measure, according to a company director. Ian Strachan, director of corporate communications, said the number of workers at the plant would rise by 1,000 next year as planned, despite the 1,500 job cuts across the group nationwide announced yesterday (Thurs).
He said that the plant was in a “special position” since it was earmarked to produce the luxury new R40 model. He said: “Production at the plant of the 600 and 800 models will be progressively wound down from mid-August. That is why we are introducing the four-day week next month.”
But he added: “The plant is in a special position because it is scheduled to produce the new R40. “The new model means that we shall still be needing another 1,000 employees from the spring of next year when it will go into general production.”
Rover yesterday (Thurs) announced that it was planning to axe 1,500 jobs across the group and introduce a four-day week on some lines in Birmingham, Solihull and Cowley in a bid to fight the effects of the strong pound. The number of job losses at Cowley is expected to be small. About 3,500 now work at the Cowley plant, producing 800 cars a week. The new luxury R40 will be unveiled in October at the Motor Show in Birmingham and go on general release next spring.
Rover may also buy more components for its cars overseas to cut costs, taking more than £1bn away from UK-based suppliers. The R40 will contain between 25 and 30 per cent of parts made abroad, compared with the current figure of 15 per cent.
Andrew Smith, employment minister and MP for Oxford East, which includes the Cowley works, said: “I am pleased to be reassured by Rover that the 1,000 jobs for the R40 are still in the pipeline. “Oxford will reap the benefit of BMW’s £300m investment in Oxford.
“On the wider issue of the strong pound and Rover’s plans to lose 1,500 jobs, I am pleased that there will be no compulsory redundancies. “We have to avoid an inflationary spiral. The economy is working under Labour, but we cannot expect an instant cure after the boom and bust we inherited.”
Chancellor blasts Rover workers
Chancellor Gordon Brown was today set for a showdown with Rover bosses over the car maker’s decision to axe 1,500 jobs nationwide. Mr Brown said Rover’s bad productivity was to blame for the job cuts, not the Government’s economic policies. Rover said the job losses were needed to offset the impact of the strong pound.
But Mr Brown said: “There is absolutely no doubt that productivity is an issue here. Anybody who has looked at the productivity problems of the British car industry and the comparisons between different sectors of the industry and different companies in the industry knows that.”
Mr Brown said he understood people’s worries about the pound but added: “Unless we face up to the fact that we have a productivity gap with our competitors, we will as a nation be failing to meet the challenges of the future.”
Mr Brown said that a slowdown in the British economy was necessary to avoid inflation. He said: “It is a hard and difficult road for Britain because we are breaking free of the short-termism which has bedevilled this economy for 30 to 40 years.”
Rover chairman Walter Hasselkus insisted that the high pound was the cause of Rover’s problems. It made Britain’s exports expensive and uncompetitive and imports cheaper. Rover’s Cowley plant will go on a four-day week from mid-August but the 3,500 workers there are shielded from the worst of the cuts because Rover is to build its new R40 model there.
Short-time working is expected to end when the new model goes into full production next spring. The company says it will need an extra 1,000 workers to build the car. Motor industry analysts warned that Rover’s announcement could mean the loss of more than 15,000 jobs in the UK car components industry in three years.
Shadow Trade Secretary Mr John Redwood said the Rover job losses typified the problems of British manufacturers which were unable to “export successfully given this Government’s economic policy mistakes”.
From Deseret News archives:
Rover cutting workers, work week
Published: Friday, July 24, 1998 12:00 a.m. MDT
The automaker Rover is eliminating at least 1,500 jobs and putting some workers on a four-day work week as it tries to offset the damage caused by the high value of the British pound. Rover, owned by German carmaker BMW, disclosed Thursday it hopes it can reduce its work force, which now stands at about 39,000, through voluntary and early retirements without resorting to forced layoffs.The company will cut jobs by the end of the year in all areas of its business except research, design and engineering.
“These measures will protect the business for the short term without threatening long-term investment – our lifeblood for the future – and will maintain progress toward our strategic objective of profitability by the end of the decade,” said Walter Hasselkus, the Rover Group chairman. Rover said it is also planning to start buying hundreds of millions of dollars in components from abroad – a move that could affect thousands of workers in Britain’s automotive sector.
Rover has become more productive since BMW bought it from British Aerospace PLC in 1994, but the high value of the pound has made its automobiles far less competitive in other markets, while making imported cars cheaper for British consumers.