Parts lifeline for Austin Rovers
By KEITH ADAMS
RIMMER BROS, long-standing supplier of parts and accessories for a large range of classic Rovers and Triumphs has recently secured a deal with the supplier of parts for the MG Rover range, XPart, to supply a wide range of parts for cars new to the business.
The uncertainty surrounding the demise of MG Rover has left many owners and the trade wondering where they will be able to buy original parts and accessories, and Rimmer Bros has stepped into the breach. It is hoped that the needs of owners of various Eighties Austins, Rovers and Minis will feel the benefit of this new source of parts – one, which will be in place for years to come.
Simon Sharpe, sales and marketing manager of Rimmer Bros said: “With the local dealers closing we saw owners without back-up. Because of this, we decided to talk to XPart and see what we could do to. A deal was quickly struck between XPart and ourselves and we are now in the position of being able to call ourselves official suppliers of parts for MG Rover cars.”
He added: “We have 60,000 square feet of storage space in our warehouse complex and have already built up what we think is the country’s largest stockpile of parts for Eighties Austins – including the Maestro, Montego, pre-1991 Mini, as well as Rovers – in the country – and now we need to get the message out.”
Rimmer Bros has been supplying parts and accessories for classic Triumph and Rover SD1 for 25 years, and has built up an envious reputation among the owners clubs it actively supports. The company now supplies both genuine and aftermarket parts and accessories for Land Rovers, and are an Approved Land Rover Parts Supplier.
Owners can buy the new MG Rover parts over the counter or via its well-established mail order service, as well as the firm’s new local trade delivery service…
Time to find the last MG Rovers
By KEITH ADAMS
Could you be the owner of the last MG or Rover to leave Longbridge?
www.austin-rover.co.uk, is launching an appeal to find the final production figure for MGs and Rovers produced in the Longbridge factory since Phoenix took over in 2000.
We are appealing to owners of MG Rovers built in 2005 to get in touch with us and send in your car’s VIN number, model, trim and colour details. The plan is to track down all cars registered during 2005, and the owner of the car with the highest VIN number will be unofficially declared as having the last off the line car.
It will also be an opportunity to come up with a near-definitive production figure.
We are hoping for a good response, although it is a less than perfect way of arriving at the final production tally. The website contains most historical and contemporary car production data for the company, but it needs completing. When MG Rover went into administration in April, the information stopped flowing from Longbridge – We couldn’t even get a straight answer about when the last car was built, and what it actually was…
If you have a 2005 MG or Rover, and want to take part in the hunt to find the final car, then please get in touch.
MG Rover: the Chinese perspective
By KEITH ADAMS
Rover 75 in China: will Nanjing or Shanghai be the first company to build the Chinese version?
THE long-running controversy over which company actually owns the rights to the MG Rover range of cars continues to rage. In the red corner, we have Shanghai Automotive Industries Corporation (SAIC); and in the slightly-different-shade-of-red corner, we have Nanjing (NAC). Each company claims to possess a legitimate claim over MG Rover, and each is adamant that it will be producing Rovers sooner, rather than later – but there will be many hurdles to cross before that happens…
There has been much discussion over the degree of ownership each company appears to have over the remnants of the Longbridge based company, and in reality, the situation MG Rover finds itself in is that both SAIC and Nanjing appear to have a legitimate claim to one extent or another. In the UK, we have tended to focus on how the Nanjing buy-out will affect the future prospects for production in Longbridge, without really discussing the Chinese implications.
Does China represent a new dawn in the long running Rover story, and will there be the much feared ‘lift and shift’ operation many doomsayers are predicting?
To get a Chinese perspective about the deal, we spoke to Erik van Ingen Schenau, a leading light at the China Motor Vehicle Documentation Centre (CMVDC), an organisation, which acts as a bridgehead between Europe and the Chinese car industry.
Erik certainly feels that both companies are working flat out to secure MG Rover production in China, and it is a case of when, not if, these cars begin to flood off the lines over there. He said: “At the moment there is not much in the way of comment in Shanghai’s or Nanjing’s local media, but that does not mean there is much work going on in the background.”
He added: “The media may be quiet, but there is an interesting set of scenarios building up now – two unlikely, but one a very real possibility.”
Co-operation or takeover?
The first of the unlikely scenarios, but one not beyond the bounds of possibility, is that SAIC and NAC will co-operate. Although this would ultimately be the best deal for MG Rover’s prospect of a re-birth in China, it puts aside a great many obsticles to this actually happening. Erik certainly doesn’t hold out much hope of this happening, saying: “This is not a very plausible situation, as there is a strong competition between different Chinese authorities.”
Because both companies are funded by the state, it is unlikely that the regional governments holding the purse strings would like to see the other gaining what it sees as access to its hard-fought spoils of War.
Slightly less implausible is the notion that SAIC could wipe out all its problems with a single purchase. Erik said: “SAIC could buy NAC. It is not as strange as it first appears, as SAIC certainly has the money to acheive that. Notably, there have been negotiations in this department between the two companies before.”
The idea of an all-out purchase might not be as far fetched as it initially seems because although SAIC and NAC did want to co-operate in the original MG Rover Joint Venture Company, it was Shanghai that was the dominant partner operating from the driver’s seat of this deal. Given that it knows Nanjing’s strangths and weaknesses, it may feel it has the clout to go for broke and buy up what is considered by many to be one of the minnows in the Chinese car industry.
And if rumours of Nanjing’s current financial insecurity prove true, then any proposed takeover/purchase by SAIC could be considerably eased.
Dividing the spoils
The Nanjing Soyat – who said the Rover 25/MG ZR was an ageing product?
However, what is emerging as the outcome of this bizarre tale is that the two companies won’t come closer, and they will end up producing almost identical cars in their own factories without co-operating. That means that China will end up with two ostensibly similar products, but neither company will end up gaining from economies of scale.
Erik sees the SAIC and NAC deals playing out in the strangest way. He said: “SAIC is going to build Rover 25 and Rover 75 together with a Ssanyong SUV in Yizheng, Jiangsu Province, not so far from Shanghai. This is SAIC’s ultimate goal. The Shanghai Automobile Co., Ltd. and the SAIC Motor Corp. Ltd. plan to jointly invest 3.68 billion yuan to establish the SAIC Luwei Motor Co., Ltd. (Luwei is Chinese for Rover) located at the SAIC Yizheng plant in Yizheng of Jiangsu Province, according to a circular released by Shanghai Automobile on July 27.”
He added: “The new company will have regsitered capital of 1.28 billion yuan and Shanghai Automobile will invest cash, land, factories and equipment at the current SAIC-Yizheng production facility worth 512 million for a 40 percent equity of SAIC Luwei, which will produce independently developed vehicles using technology purchased from Rover and Ssanyong and become a key production base for SAIC’s independent brands. The first independent model will be introduced before 2007, according to Zhao Fenggao, president of Shanghai Automobile, a publicly listed company.”
With regards to NAC, he had this to say: “On the other hand, NAC is going to produce MG models (and possibly Austin, too) in Wuxi, not far from Yizheng. Nanjing is already producing its version of the 1984 SEAT Ibiza and an antique SUV, named Yunda. There will undoubtedly be law suits flying between the companies over what are the actual differences between SAIC’s Rover 75 and NAC’s MG version of the car, but this is a situation that it not uncommon in the Chinese car industry.
“There have been far worse problems of this kind in China before (such as the QQ produced by Qirui – Chery – which is nothing more than a stolen copy of the Daewoo Matiz. When GM took Chery to court, it came out in favour of the Chinese company, telling GM-Daewoo that there are ‘some’ differences between the two models).”
Racing to get the new models out
It certainly comes down to a race between the two companies, and right now, it’s probably one that’s too close to call, as both have advantages and disadvantages. SAIC has finance and facilities in its favour, but what it doesn’t have are the production line, and access to many of the technical details of the cars it owns the IPRs to. It is difficult to ascertain what the ownership of IPRs has in terms of access to hardware, and even when MG Rover went under in April, SAIC probably didn’t know what its £67m had actually bought.
As for NAC, it owns the Longbridge production lines and has access to the site. For that reason, production could be restarted relatively easily (compared with SAIC’s situation of starting from scratch from a number of model blueprints), although there would be a lot of supplier re-negotiation to take place, and the unpleasant matter of dealing with the IPR issue. With that in mind, the simple expedient would be to restyle the 25 and 75 enough to avoid the SAIC confrontation – and that takes time and money, something Nanjing isn’t awash with right now.
It’s a lose-lose situation really. With ARUP assisting NAC, and Ricardo acting as consultants for SAIC, there will be significant British input into the cars that finally emerge from the Chinese factories in 2007/2008, but what remains to be seen is how different they will be from each other, and how they compare with the MG Rover cars built between 1999 and 2005.
As Erik sums up, “I expect NAC and SAIC to end up building their own 25s and 75s. That means there will be English car production again in China in two separate factories… Remember the Marina and the Maestro!”
For more information about the CMVDC, click on, www.chinesecars.net.
Back to the drawing board
By MICHAEL WYNN-WILLIAMS
WELL, it’s been a rum do and no mistake. For those of us who have been quietly supporting our beloved MG Rover all this time, even while it steadily sank below the waves, this has been a heartbreaking few months. With our hopes dashed upon the rocks so many times the last resort was to put our faith in the promise of rescue by Shanghai Automotive. Now even that has been snatched away from us and our sense of dejection seems to have robbed us of our courage to dream about the future. Yet if this website is not the forum for speculation, what is?
When the company crashed into receivership it also took with it some of the myths and plain nonsense that had grown up over the past five years. Even though it is not possible for a fully integrated mass market company to operate at these volumes the company still lasted longer than the jeering critics predicted. The cars may not have been in their first flush, but many people in this country and others thought they were perfectly decent. Released from the dead hand of BMW the MG brand was allowed to flourish even beyond the expectations of the company’s management. Not even Jaguar, with Uncle Henry’s billions and access to the vast North American market, managed quite such a respectable return to form. With MG Rover able to achieve so much with so few resources it seems as if the demise of the company was a result of being more sinned against than sinning.
Yet sinning there was. Perhaps out of some misguided loyalty or sense of decorum many of us have avoided direct criticism of the Phoenix Four. That is not my way: my opinion is quite plain, they destroyed our last national car producer through their own incompetence. Some say that the problems can be traced right back to the days of British Leyland and beyond, but that is all ancient history. By the mid 1990s Rover had married into the Japanese tradition and the company was reborn with international parentage. The cars were improved immeasurably, and even if they were not perfect they were a perfectly sensible purchase. Then, like even the best relationships, complacency set in followed by the tragedy of a quickie divorce and a dissatisfactory German marriage. Still, the new dowry was magnificent and dragged Rover into the front rank of the industry. By the time of the second divorce the company had gained the same skills and equipment as the industry leaders, along with a rather handy alimony payment. Emerging as the smallest integrated independent volume manufacturer in the world the management were taking on a huge risk, but they had luck and the people on their side.
At first they seemed to know what they were doing. A discrete union flag appeared on the Rovers to show a quiet patriotism, followed by the welcome resurrection of MG. So far, so cunning. The rest of the plan should have gone like this: as the manufacturer of one of the most popular sports cars in the world the company needed to extend the MG-F range with the company’s own V6 engine and a GT coupe. Then a quick series of facelifts for the range as a whole and a niche derivative or two while all remaining resources were directed at the new medium sized car. Ultimately partners would be required, but there was no time to wait for them to make up their minds, and anyway, nothing showed the company off to suitors like a new model. Instead, this is what happened: the gang of four got it into their heads that they were running the low rent British version of Porsche. The MG badge was slapped onto a second-hand Italian super car with an American engine. Then a high performance large saloon was publicly mooted, not with a home grown supercharged V6 but with another American V8. This required a new platform and so the rear-wheel-drive 75 was born. A version of this then took the world speed record for an estate car but the company inexplicably, and infuriatingly, decided not to advertise the fact. Those of us who thought this extraordinary vehicle would be doing the rounds of local dealers and shaking up the brand image, as Volvo’s racing estate had done, were to be staggered by this wasted opportunity. The Streetwise succeeded in creating a new niche but failed to fill it. The CityRover was a cunning way of getting a decent new model on the cheap from India but the management seemed to think we didn’t read newspapers and priced it as an authentic Rover.
Then a creeping paralysis seemed to grip the company. During my four years of research I came across some shocking statements. A highly placed engineer told me that the V8 saloon range would not be advertised but would be allowed to find its ‘natural level” of sales. Without advertising, what would this be? Zero, perhaps? A European saloon with a stonking American V8 represented a whole new niche, so the public needed to be informed about what it could do for them. The engineer did admit that marketing was not a company strength. Not a strength?! Even the website Sniff Petrol carried better MG Rover adverts, and they were a bunch of cynical comedians. Another time I found myself talking to a senior PR guy who announced that MG Rover was a modest company with modest products at a modest period in its history. I had been expecting a patter as smooth as snake-oil, instead I got resignation with a twist of lemon. Good grief, if this was the PR view then what were the rest thinking?
Of course, to the exclusion of all else they were pinning their hopes on the SAIC rescue plan. Despite the talk of saving Longbridge this was only ever going to be a vertical joint venture. This would have meant further investment in MG Rover’s remarkable engineering skills but a shift of most of the manufacturing to China. Only certain niche models, such as the MG-TF and 75 Tourer, could have remained in production in the UK. SAIC, as hosts for GM and VW assembly, were driven by a need to secure a supply of new product designs that belonged to them before the rules of free trade permitted their foreign guests to go it alone. SAIC had about five years before they would find themselves exposed to the cold reality of global competition. They knew this but they suffered from a lack of political support at home and a lack of courage to commit themselves to the only available deal. MG Rover was the sole independent volume producer in the world that had its own intellectual property rights and could be secured at a very affordable price. Indeed, as a joint venture no capital investment was required. This deal would have thrust SAIC into the big league at a bargain price, but their boots were filled with lead.
Some claimed at the time that the destruction of MG Rover was what SAIC wanted all along. Admittedly, receivership did relieve them of the pension fund burden, but even so this was a high risk strategy. By letting MG Rover go to auction SAIC would find itself up against every other ambitious car maker from the developing world. They were all in the same position, compelled to find access to development skills they could call their own before the Toyota’s of the global industry trampled them underfoot. As leaders of a threatened breed SAIC seemed to be in the most promising position, they even gained the prodigious talents of Martin Leach, yet they threw it all away. How satisfying it has been to see Nanjing give their dozy neighbours in Shanghai a resounding smack in the face. SAIC are left making unconvincing claims that they will form their own UK based product development facility. This is lame: even talk about teaming up with Ricardo, one of the finest engineering consultancies in the world, is a very poor consolation. Ricardo are engaged in blue skies research, only MG Rover can engineer for volume production. Proton made the same mistake when they acquired Lotus: technically brilliant, but of little help when you are fighting the global giants of the mass market.
|Another time I found myself talking|
to a senior PR guy who announced that
MG Rover was a modest company with
modest products at a modest period in
its history. I had been expecting a
patter as smooth as snake-oil, instead
I got resignation with a twist of lemon
In Nanjing’s rush to win the auction we are left with a confusing situation. Honda have repossessed the Rover 45, apparently in a fit of pique but more likely to prevent their old design popping up as cut-price competition in China. SAIC claim to have the rights to the other designs, but this is of little relevance to their long term future. It will take more than a year for production in China to commence, even with help from ex-MG Rover production engineers, but by then the models will be thoroughly obsolete with no successor in sight. The situation in the UK does not seem much clearer. Even now that Fraser Welford-Winton’s GB Sports Car company has joined the fun it will still take some time to get the suppliers back on board and put Longbridge to work. Some have suggested that we might have to wait up to a year for production to resume, time that will also be spent negotiating product rights and bringing the K Series engine up to date.
As always the key is the new models, and if Nanjing have the rights to the RDX60 then they can spend the next couple of years finalising it for launch. A small car will follow soon after, and finally a large saloon. Though SAIC claim to own the rights to all the current products they have no interest in the sports car. Nanjing would be wise to keep the MG-TF going in order to retain some kind of dealer network in the UK and whet appetites for the relaunch of the MG saloons. The V6 and GT versions should also be pushed out, and one even wonders if the rear-wheel-drive 75 platform might be the secret weapon that maintains some market momentum for the saloons. Nanjing may not see a need for the Rover name to return, and in truth they are probably right. Despite what critics say there is nothing wrong with the Rover brand that a decent raft of new models wouldn’t cure, it is simply that the MG brand can offer the same as Rover but with added sexiness and more focussed marketing.
Ultimately, there appears to be little difference between the SAIC and Nanjing plans, in economic terms they amount to the same thing. Whatever assurances have been made in public both companies are new to this country and to this kind of strategy so economic factors will be the final arbiters. My view is that in five years time we will find a very new kind of car company. MG will be a centre of engineering excellence and include some production of niche models for UK consumption. A range of new MG models will be on the market and though they will not be seen in great numbers they will command the respect of discerning buyers looking for something special. Meanwhile, anyone making a visit to China will find the roads stuffed full of…well, who knows what they will be called but they will have Longbridge written into their DNA. The global industry is due for a change, and Britain just might be at the forefront of it.
Unsuccesful bidders show their colours
By KEITH ADAMS
Project Kimber artistic proposal: The plan devised by the Millennium Dome saviour David James CBE to get MG at Longbridge producing roadsters…
TWO of the failed MG Rover bidders have been issuing interesting press statements – splits and denials seem to be the order of the day. Both a commitment to British car production remains…
David James CBE’s attempt to rescue the MG marque with an Alchemy-like plan may have fallen on deaf ears at PricewaterhouseCoopers, but many business analysts felt the plan had a solid grounding. Additional government funding may have been desirable, but it wasn’t essential to the bid’s success. The consortium, however is still very much alive and looking to step into the industry.
The Kimber team has commenced ‘Plan B’, which incorporates elements of plan for the acquisition of MG Rover and Powertrain. Plan B is largely unique and does not involve any MG Rover or Powertrain products nor the use of the Longbridge production site. Effectively, it involves the creation of a specialist small-scale producer of niche cars, something it had in mind for Longbridge.
Barrie Wills of Kimber, said: “We are now in detailed discussions with representatives of two alternative production sites in separate regions of UK, and of one within an Eastern European member state of the European Union. Each of the three sites offers attractive, albeit different benefits. The representatives are keen to assist our plan to assemble specialist sports cars and contract build niche vehicles for third party car manufacturers in the style of Valmet of Finland and Magna Steyr of Austria, recognising that – whilst there is overcapacity in volume car manufacture across the European Union, there is a severe shortage of niche vehicle production capacity and management skills.”
He added: “Having stepped back from the Longbridge opportunity following the deal between PricewaterhouseCoopers and Nanjing Auto, the Project Kimber team remains available should the joint administrators or other interested parties decide that contact with him and his team could be of mutual benefit.”
Bhaskar was also keen to let it be known that although he and Moseley had split, he was still very interested in joining the UK car manufacturing set. He said: “We were naturally disappointed not to be successful in our bid for Longbridge. We would be happy to provide any required support or assistance at some point in the future. However, MG Rover is not the only show in town.”
The Triple A leader would not confirm or deny an interest in acquiring historic British marque names. Although he dropped a hint when he said: “Great British automotive brands such as Austin Healey, still continue to enjoy high levels of recognition in North America. We found this to be the case even amongst younger consumers, which initially surprised us.”
Triple A and Project Kimber: no dice
Bhaskar also made it clear that although his support of Martyn Moseley had come to an end, he would be open minded about working with another of the ex-MG Rover bidding concerns.
He said: “I have a high regard for both David James and Barrie Wills of the Project Kimber consortium. It would be interesting to explore the feasibility of creating a NUMMI type environment at Longbridge or indeed any other location, where we could share a paint plant and perhaps other core production facilities. In principle, I would be happy to concentrate upon the development of SUVs and ‘green’ vehicles, whilst Barrie and David could concentrate upon sports cars. The possibilities for co-operation are potentially limitless.”
However, the Kimber team was quick to distance itself from Bhaskar. A statement from the consortium was quickly issued, and it was unequivocable: “Project Kimber, in conjunction with the automotive consultancy, de Montfort of Solihull, Warwickshire, controlled by Barrie Wills, formerly of Jaguar, Reliant-Scimitar and DeLorean – wishes to clarify that it has received no direct approach from Professor Krish Bhaskar of the ‘Triple A’ consortium in France, nor is it interested in any form of collaboration.”
The Triple A bid was met with a degree of scepticism since its inception – one member of the press told austin-rover.co.uk: “I saw a copy of Triple A’s business plan, and like its website, it came across as being very amateurish – I even saw images lifted directly from your website! It cannot have given PwC a positive impression.”
The ‘Car Wars’ are hotting up
By Frank Kane, The Guardian
Frank Kane reports from Shanghai on the battle to produce Rovers in China, and finds that the tale of two car makers is a tale of two cities – one seeking regional domination and the other resisting it
IN THE downtown, high-rise office of Shanghai Automotive Industries Corporation, it is apparently business as usual.
The flags – red with yellow stars for communist China, corporate blue and white for SAIC – are flying in a stiff breeze that threatens the city with a tropical thunderstorm. Western business types are coming and going, and SAIC is getting on with its plan to dominate the Chinese motor industry, and maybe the world.
Executives and officials do not want to disparage Nanjing Automobile and the deal it has struck with MG Rover. They say the Chinese car giant has most of what it wants out of Rover anyway, in the form of the intellectual property rights to the 25 and 75 models that could be the prototypes for the first fully Chinese-produced volume car marques. It could be selling these by 2007.
The public line is one of ‘disappointment’ that MG Rover did a deal with its much smaller rival 300km away, some surprise that Nanjing was able to make the deal stack up, and that administrators PwC went for it. That is as far as it goes – officially.
But not so far beneath the surface there is anger and bewilderment that the deal to clinch MG Rover eluded them at the last minute, and a determination that it will not stop them consolidating their lead at the top of China’s car league. It is as close as the strait-laced world of Chinese business – still largely under the control of the communist government – gets to a declaration of hostilities.
The obvious target is Nanjing, but that is not much of a contest. SAIC already outsells its rival by a multiple of 25. Where Nanjing has struggled to make a go of foreign alliances, Shanghai has taken the opportunity to exploit partnerships with General Motors and Volkswagen to the utmost. Virtually every car on the city’s streets is a product of its cooperative venture with Volkswagen, or one of a fair number of branded Buicks and Chevrolets made in partnership with GM at the huge Jinqiao plant, 30 minutes’ drive from the city centre.
Judy Zhu, the quietly spoken Shangainese lady who has fronted the SAIC public relations assault during the Rover negotiations, confidently outlines the company’s ambitions: ‘By 2007, we aim to be producing a millions vehicles a year, to be in the Fortune Global 500, and to make 50,000 self-owned brand cars.’ She leaves unsaid whether or not Rover technology might be at the centre of this new brand, but it would be foolish to bet against it.
Founded in 1955, SAIC was a manufacturer of military and agricultural vehicles, but – like most of China’s modern economy – only really took off after the death of Mao Zedong. SAIC did a groundbreaking deal with VW in 1985, but its own ‘great leap forward’ came in 1997, when General Motors came in with an offer of a joint venture, involving technology and new product development.
At the head of SAIC throughout this time, and now perhaps the leader of China’s new generation of businessmen, was chairman Hu Maoyan. He presides over a board of directors organised along familiar western lines, with chief executive Chen Hong and finance director Zhu Genlin. The whole set-up at SAIC – from the sky-scraper HQ at the centre of Shanghai’s Canary Wharf-like downtown area to the Jinqiao production plant and the new research and development facility at Wanggang – is western-oriented.
This being communist China, of course, the government presence is still huge, with Beijing the ultimate owner via the Shanghai city authority. But there is talk of a listing on the Hong Kong market, and maybe New York too, when political circumstances allow. A corporate restructuring, with the creation of a group holding company, is currently paving the way for this. The distinct impression from within SAIC is that executives there cannot wait for the time to come. ‘We are financially prepared for it, and it must be the way of the future,’ says one.
There is no hiding the enthusiasm, either, for SAIC to own, produce, develop and market its own Chinese brand, and this is where Rover came in. It was the reason for its original involvement – ironically, alongside Nanjing – in rescue talks at the end of last year, and it remains an imperative for SAIC executives. The company would like to negotiate with its long-standing partners, VW and GM, to get them to rebrand their products in China, and customise them even further for the Chinese market. It is part of the inevitable process of SAIC owning and selling its own totally Chinese marque.
The insider Shanghainese view of the tortured Rover negotiations is startlingly different from the one prevailing in Longbridge, or Westminster. Executives at the company say they were at first surprised by reports that SAIC was going to pay £1 billion to buy the British car maker. ‘We had no idea where that came from,’ says one, ‘but it was so far from the truth that we just smiled.’
Likewise, the shuttle diplomacy involving chancellor Gordon Brown and then Trade Secretary Patricia Hewitt also bemused SAIC officials.
‘We were told Brown was coming to SAIC, then he wasn’t, then the trip was back on,’ says an official. ‘There were two media releases prepared, one for the Chinese press saying a deal was still a long way from being done, and another for the international media saying it was virtually clinched. In the end, Brown never visited SAIC, and of course a deal was not done. Beijing made it clear all along that it was a business decision, and ours to take.’
However, there is also no disguising the confidence that Shanghai has got enough out of its liaison with Rover, principally through the £67 million deal that clinched intellectual property rights for the 25 and 75 models. SAIC’s right to these is legally enforceable, says Zhu, but court action will be taken only if Nanjing tries to produce these models too.
Somewhere in the sprawling R&D facility at Wanggang there are drawings for the new Rover marques, customised for the Chinese market and ready to be in the showrooms in two years at the outside. But nobody at SAIC is willing to reveal these ‘top secret’ designs – yet. The gleaming R&D plant, which operates under the Patac brand name, is part of the GM global network of technology development. Its 900 employees – to be 1,500 by 2010 – work on an astonishing variety of new-model plans and projects. The aim, once again, is to be the Chinese leader in car design.
In fact, it goes rather further than that. They claim that motor design will be part of China’s economic revolution while retaining Chinese cultural traditions. An ambitious concept car, the Alas, even promised the very Confucian aim that it would ‘harmonise the relationship between sky, earth and human beings’ – all down to the design of the headlamps and the radiator grille.
Back in the showrooms at Jinqiao, there is a range of very modern-looking vehicles on display that openly show their VW and GM lineage. But there is also a distinct Chinese brand mutating from the western marques, and it is here that Rover designs may find their way into production. Shanghai’s determination – understated but resolute – is to dominate its region, including Nanjing; then China; and after that, maybe the globe. This is car wars, Chinese style.
Even in its home town, Nanjing Automobile Corporation does not proclaim its presence for all to see.
The car manufacturer, the oldest in China, does not dominate the city of 5 million in the way that, say, Fiat does in Turin, or Mercedes in Stuttgart. There was no advertising blitz at the bustling train station to welcome visitors to the ‘home of NAC’. In fact, it was hard to find any branding at all for the company, at least in English.
My Chinese guide assured me there was none in her language either, and a command to the taxi driver to ‘take us to Nanchi’ produced much confusion and scrutiny of maps. ‘Which Nanchi?’ he asked, bewildered. Perhaps the deal with MG Rover will change all that, and make NAC more aware of the power of corporate advertising. But now, NAC seems to be doing its best to lie low, even in its heartland in booming Jiangsu province. In a steaming hot day of trying, I could find little trace of the car giant’s presence.
Some of its brands were on display on the city’s broad avenues – Palio saloons and Iveco trucks, made in partnership with Fiat, as well as other domestic marques. But there was little evidence, from Nanjing’s chaotic city centre to its sprawling suburbs of industrial parks, retail centres and residential developments, that I was in the presence of an automotive giant in the making.
Maybe it was my fault. My visit to the city came in the middle of NAC’s annual shutdown, I was told, when the workforce takes a fortnight off to coincide with essential maintenance – and the unbearably hot mid-summer weather. Still, you would have thought there would be more executive life in the city centre building that I was assured was NAC’s corporate HQ, especially for a company in the middle of a high-profile deal with a foreign manufacturer, on which both companies have pinned great hopes.
But a visit to Nanjing could never be wasted. Even a day spent in a taxi looking for a car manufacturer tells you more about the booming nature of Chinese industrial and commercial life – and the Chinese economic miracle – than all the TV documentaries you could ever watch. Built on a huge meander in the Yangtze river, Nanjing is an ancient metropolis, capital to several dynasties of Chinese emperors, burial place of Sun Yat-sen, the founder of Chinese popular nationalism, and capital under the nationalist leader Chiang Kai-shek early in the last century. It was made infamous in 1937 when the Japanese ‘raped’ the surrendered city, killing 400,000 civilians.
There are several memorials to that brutality in the city’s huge gardens and parks, but that soon gives way to evidence that Nanjing is playing a part in the economic boom under way in this part of China. High-rise office buildings in the ‘oriental monumentalism’ style dominate the suburbs, before giving way to the industrial and commercial sprawl of the outer regions.
This was much the same pattern as the other big cities along the Shanghai-Nanjing corridor, the 300 km strip that cuts a swathe of intense industrial development through this part of China. The three-hour train journey from Shanghai is a tour through the past, both recent and ancient. After Shanghai’s glitz, there is dull residential conformity, much of it from the days of Mao Zedong, followed by agrarian tranquility – paddy fields, oxen and all – that might be from a tourist postcard. There is even a hilltop monastery at least 1,500 years old.
Then there are reminders of the communists’ ‘Great Leap Forward’ days, with obsolete-looking industrial plant blowing out heavy clouds of smoke from rust-bucket installations. Huge conurbations like Wuxi and Changzhou – ‘towns’ to the Chinese, despite their populations in the multi-millions – are once again crowned with stunning high-rise architecture.
Nanjing is capital of Jiangsu province, and sits uneasily beside Shanghai, the great financial and economic magnet of this affluent part of China. It is almost as if it resents Shanghai’s reputation as the ‘Paris of the east’, and the financial doorway into mainland China, as Beijing has determined it will be. Maybe this resentment is justified. Even some of the investment overspill from Shanghai gets taken up by the big cities along the way before it reaches Nanjing. A diplomatic source long resident in China says: ‘The big cities will not co-operate on these things, even if Beijing orders them to. The regions have a lot of individual power, a bit like the states in America, and they will compete against each other.’
There is a saying in China that ‘the top makes the policy, and the bottom takes counter-measures’.
Perhaps that is why the future of MG Rover has become a contest between two Chinese cities, represented by their automotive champions. In this rivalry, as well as in the broader socio-economic arena, Nanjing has so far come off second best to its showy neighbour.
NAC was founded in 1947, predating the communist revolution by two years, and is one of four car manufacturers given favoured status by Beijing. It is owned by the Jiangsu regional government, which makes it ultimately a state-owned organisation. Whatever action Shanghai might take in the courts in Hong Kong or Britain, NAC seems set to carry on its strategy with MG Rover. In a nutshell, NAC, and other Chinese car makers, are frustrated that so far they have only made volume cars in partnership with foreign companies. They want to own the technology and equipment that makes the cars, and take full advantage of the exploding domestic market from would-be car owners.
The Chinese car market is the fastest-growing in the world. But the question is whether NAC has done the deal with Rover that will make it part of that explosion. Previous attempts to sign a globalising deal have failed – the Fiat joint venture was supposed to be the one that propelled NAC into the premier league, but did not work. Selling between 20,000 and 30,000 cars a year, NAC is firmly bottom on the list of government-favoured car producers, behind SAIC, First Autoworks and Dongfen.
Despite Nanjing sources in the UK saying it will produce Rovers in China next year, there are dark rumours in Shanghai that NAC is in trouble. Its summer closedown is alleged to be part of a longer stoppage forced on it by lack of demand. The company is believed to have funded some of the Rover transaction with the sale of valuable land in the development zone around the city. Analysts believe it has been losing money for the past two years at least.
With no sign of NAC executives or spokesmen in the city last week, it was impossible to get comment on these allegations. But one thing is clear – it will be a very long time before you see the sign ‘Welcome to Nanjing – home of Rover’ at the city’s railway station.
Arup and Nanjing
By Ben Richardson, Arup.
Arup and the acquisition by Nanjing of MG Rover’s assets.
On 8 April 2005, MG Rover collapsed into Administration with the loss of 6,000 jobs at Longbridge – the automotive heart of the West Midlands – and up to 30,000 jobs in the surrounding supplier base. With debts of £1.4bn, pension black holes and no early signs of a buyer, the company’s administration threatened the loss of volume car manufacturing in the UK.
It became clear that the sale of MG Rover’s assets by the administrator, PricewaterhouseCoopers, was a significant opportunity for us.
We have had a long association with the MG Rover Group for over fifteen years, through our Vehicle Design Group, and quickly began the process of investigating options for working with the different parties competing to buy the company’s assets. These investigations included discussions with a number of groups, both international and UK based, where our strength in technical and business skills made us a valuable partner.
In May, we entered into an agreement with Nanjing Automobile (Group) Corporation (NAC), and a project team led by John Miles, Chair of Arup’s Global Consultancy, and Alan Belfield, Head of Arup’s Management Consultancy division, was established to advise on the transaction, along with Neil Ridley from the Vehicle Design Group and Martin Kelly, of Arup’s Transaction Services.
Arup had two main roles: we were a lead advisor on the transaction itself, advising on the bid; and we also provided Nanjing with in-depth advice on its strategic business plan. We were an advisor along with China Ventures Limited, a Chinese manufacturing and export specialist, and with the corporate lawyers, Herbert Smith. Our role as lead advisor covered advice relating to the valuation, the structure of the bid and the bidding strategy, drafting offer letters, exploring due diligence requirements and detailed contractual negotiations. This role was taken by Arup’s Transaction Advice team, based in Manchester.
Martin Kelly, a recent joiner to Transaction Advice, had gained considerable experience of managing an administration sale process during his time in the turnaround department of KPMG and was able to advise Nanjing on the administration process, which was very different to that which prevailed in China. That Arup secured this role – and successfully steered Nanjing to completion of the bid on July 22 – is particularly important as it is a role usually taken by investment banks or major accountancy firms. Indeed, in this transaction other bidders were advised by major investment banks.
In addition to the lead advisor role, we provided due diligence advice through our Industrial Consulting Group and Vehicle Design Group, and outlined a blueprint for Nanjing to establish a viable business operated within the UK. As the bidding process progressed, speculation in the media intensified, and Nanjing’s bid – and our role in it – were increasingly being portrayed in a negative light.
In particular, speculation was focused on the false perception that Nanjing would take all of the assets to China and would not create any new UK car manufacturing or design opportunities. In response to this, we started a proactive media campaign to stress that we were the lead advisor, providing advice on the transaction and providing strategic advice to Nanjing that would help them to achieve their goals of becoming a significant player in the global automotive industry.
A UK design and engineering presence was a very important element in Nanjing’s strategy, and the media relations activities continually pushed this message. On the 22 July 2005, Nanjing successfully acquired the assets of the MG Rover Group, the first corporate acquisition from administration undertaken by a Chinese company. It is an excellent example of our Management Consultancy services working together to integrate business and technical services, providing a solution to a complex series of business issues.
This unique capability cannot be matched by our competitors and provides us with a significant opportunity in the market place.
Now that Nanjing has acquired the assets, there are considerable ongoing opportunities for us. They include the possibility of significant recurring vehicle design and engineering services, construction of a UK-based design and engineering technology centre, the transfer of operations not only to China but also to consolidate activities on the Longbridge site, and the option of participating in a vibrant UK based automotive business.
For additional information please contact: Ben Richardson, Corporate Communications on +44 (0) 20 7755 4311
New MG cars hope for Longbridge
By BBC Online
THE Chinese company that bought MG Rover’s remaining assets is to work with UK designers to build a new range of cars at Longbridge in Birmingham. Nanjing Automobile Group and the GB Sports Car Company hope to start building the new MGs in a year’s time and reach an annual capacity of 80,000.
Nanjing paid about £60m for MG Rover last month, raising hopes of creating up to 2,000 jobs at Longbridge. Almost 6,000 jobs were lost when the firm went into administration in April. It is unlikely that the number of jobs will ever reach 6,000 again, but the GB Sports Car Company said it would start recruiting shortly.
“We will be recruiting technical specialists in areas like plant layout and planning, and car design and development,” Gordon Pointer, commercial director at GB Sports Car Company, told the BBC.
Nanjing said GB Sports Car Company would team up with its advisers Arup and China Ventures for the research & development stage at Longbridge. Arup Group director John Miles said: “We look forward to deploying our engineering and design skills to help them to bring their vision of an MG car range to fruition.”
GB Sports Car Company is headed by Fraser Welford-Winton, the former managing director of Powertrain, the engine division of the collapsed MG Rover Company. He said: “I am delighted to be at the heart of the development and implementation of a business plan that will produce long-term skilled jobs at Longbridge and create a centre of excellence for sports car activities for which the UK is world renowned.”
But GB Sports Car stressed that actual car making is “some months away” because both companies are still deciding on the types of cars they should be building. “The brands will certainly include, I’m sure, a series of roadster coupe cars and possibly some sporty saloons as well,” Mr Pointer told the BBC. Meanwhile, Nanjing vice president Wang Hong Biao said: “We are delighted to have such fine British partners to reach our goals. The wide knowledge and experience of Fraser and his team will complement the skills of Arup and Nanjing Automobile.”