Archive : Outlook – Rover

Outlook: Rover

SIR DICK EVANS, the chairman of British Aerospace, once confided how he wakes up every morning, looks in the mirror, and thanks God that BAe no longer owns Rover. The man he sold the business to, Bernd Pischetsrieder of BMW, woke up on Tuesday morning and decided that he too had had enough. After four gruelling years at the wheel and £3bn of fuel, BMW still has nothing to show for its investment. The new Rover 75 may look like the answer to its prayers, for those who like 1950s retro-styling, but BMW would be ill advised to count on it. If the R75 suffers the same fate as its predecessors then it will be another pounds 400m down the black hole, along, quite probably, with BMW’s top driver.

Threatening to close Longbridge is a handy way of beating the unions over the head and focussing the attention of Government at the same time. We have been here before, of course. The obituary of Longbridge has been written at least twice – first when Sir Michael Edwardes threatened closure, and then when the Conservatives tried and failed to sell Rover to Ford. The men from Detroit bounced back from that disappointment by snapping up Jaguar for the princely sum of pounds 1.6bn. They soon discovered, however, that all Jag’s leather and walnut merely disguised the lemon which lay beneath. For the first four years Ford too repented at leisure as sales shrank and losses ballooned.

Finally, Jaguar is now beginning to come good, as the fabulous S-type unveiled this week in Birmingham demonstrates. The transformation has not been achieved without government support. All told the taxpayer has provided pounds 123m to get the S-Type and the new baby Jag from Halewood on the road. Peter Mandelson, the Secretary of State for Trade and Industry, is playing hardball by insisting that Rover’s salvation lies in its owns hands, not in a bail-out from the Government. On the other hand, BMW is reckoned to be looking for only pounds 100m to ensure that production continues at the Longbridge plant, starting with the new Mini.

It might stick in the craw that the taxpayer is effectively being asked to help guarantee BMW’s profit margin on the next model out of Longbridge. The whole concept of state aid for industry is a highly dubious one, in any case. Unfortunately, all European governments indulge in it, some much more enthusiastically than us. Mr Mandelson has agreed to keep the coal mines open by rigging the energy market – a policy that will cost the country a good deal more than pounds 100m in the longer run. In Rover, he has a much more deserving case. Mr Mandelson expects the car maker to help itself by smartening up its act. In return, he should deliver on his side of the bargain.

Keith Adams

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