INTERNATIONAL BUSINESS; Trouble Is Nothing New at a Rover Auto Plant in Britain
By ALAN COWELL
If Rover Group P.L.C.’s sprawling auto assembly plant here had a middle name, it would probably be trouble.
One of Britain’s oldest auto plants, the factory first produced a car in 1906. In more recent years, it has consistently failed to surpass its annual production record. Sales of the midrange models built here — the Rover 200 and 400 — have been hobbled by the strength of the British pound, which makes exports more expensive abroad and gives a competitive edge to imported rivals.
With their collars turned up against gusting snow at the factory gate today, some of the workers here said they had no idea how long they would have jobs. The workers, a labor leader said, ”must be dizzy with despondency.”
The cause of their malaise is simple: Longbridge, situated on 430 acres on the outskirts of Birmingham in the English Midlands, is the leader in losses among Rover’s three assembly plants, and its failure to turn a profit has turned into a crisis both for the people who work here and those who own the plant, BMW A.G. in Germany.
On Friday, a bitter board room dispute over Rover’s losses and BMW’s strategy for its future led to the ouster of BMW’s top two executives, a move that stunned the usually staid world of German business. One of those forced out was Bernd Pischetsrieder, BMW’s top executive, who had gambled and lost on being able to turn Rover around.
The ousters ignited speculation that BMW would be taken over by a larger rival, but the company said today that it intended to stay independent. BMW said the controlling Quandt family had assured executives of its commitment to the company. Investors, however, drove shares of BMW up 8.6 percent on the possibility of a sale.
BMW’s multibillion-dollar investment here highlights the paradox of investing in Britain: when times are good, foreign investment is seen as a triumph for flexible, cheap labor, but when times turn tough, the outsiders may be tempted to lead the retreat, as Siemens A.G. did last fall when it closed a semiconductor plant.
And when investment is trimmed, so are jobs, bringing politicians and labor unions into the discussion.
Prime Minister Tony Blair is said to have raised the Longbridge matter with Chancellor Gerhard Schroder of Germany. Stephen Byers, the Trade and Industry Minister of Britain, called BMW executives in Munich over the weekend before traveling here today to talk to the local management about possible Government aid worth $330 million — the price BMW is seeking to develop a successor to the 200-400 models at Longbridge rather than at a cheaper plant in Hungary.
British labor union representatives petitioned BMW to use Longbridge for a new midrange car, and with so much political artillery in play, they were ”reasonably optimistic” that Longbridge would be chosen, said John Partridge, a labor representative for the Transport and General Workers Union.
BMW is more reticent. The company declined to comment today on reports that it had given itself two weeks to decide among various options, including the continuing development at Longbridge of a midrange successor to the 200 and the 400, a quest for a partner to share the burden or a scaling back of its commitment.
Few would say, though, that the plant could look forward to an easy ride. Some analysts say Longbridge will ultimately shed 5,000 more jobs from its work force of 12,000 before the cost-cutting ends.
Late last year, Rover workers agreed to 2,500 job cuts among the work force of 35,000 at all three plants as part of a deal to adopt more flexible working hours in return for job security. Now they wonder whether that accord was only a beginning. ”Everyone’s down,” said one worker who, like others outside the Longbridge plant today, spoke on the condition of anonymity. ”We had an agreement. Now we don’t know if it’s worth anything.”
In part, the crisis has highlighted the patchiness of Rover’s record: while its successes in niche markets include sport utility vehicles, Minis and MG sports cars, its mass-market 200 and 400 models have been poor performers. Its newest executive-range sedan, the Rover 75 — the first model designed and produced under BMW ownership — has just been introduced to generally good reviews but at precisely the moment Rover’s losses have forced BMW to scale back its profit expectations.