Matt P

http://news.bbc.co.uk/1/hi/business/4447323.stm

MG Rover's rescue deal collapses

Unions describe this latest development as devastating
Redundancy notices will be sent out to a "significant" number of MG Rover workers this weekend, the firm's administrators have said.
The news follows confirmation that talks on a last-ditch rescue deal with Chinese car maker Shanghai Automotive Industry Corp have collapsed.

The Chinese firm said it would not be having any further talks with MG Rover, which employs 6,000 people.

MG Rover went into administration after talks on a tie-up with SAIC broke down.

"We will not be entering into any talks over joining with MG Rover or buying MG Rover out of administration," an SAIC spokesman said.

Devastating

Tony Woodley, head of the T&G union, said the deal's collapse was a "devastating development".

He said the unions' worst fears had been realised. As well as the employees at its Longbridge plant in Birmingham, about 18,000 people at firms in the area supplied MG Rover.

Administrators PricewaterhouseCoopers (PwC) said there was "no realistic prospect of obtaining sufficient further finance to retain the workforce while the position with other parties is explored".

The government earlier provided an emergency loan of £6.5m ($12.2m) to pay wages at MG Rover for this week.

Without this cash, PwC said, 5,300 workers would have been made redundant.

BBC business correspondent Russel Hayes said it would now be "almost impossible" for the government to renew the loan.

State aid?

Meanwhile, the Financial Times has reported that Prime Minister Tony Blair went against advice to insist that MG Rover be offered a £100m rescue package.


Redundancy notices are being sent out to workers

According to the paper, Chancellor Gordon Brown, Trade Secretary Patricia Hewitt and other officials had feared the proposed loan would not be "proper" use of taxpayers' money.

There were also fears such a loan might be illegal under laws on state aid, the paper said, quoting a civil service insider. Under EU and UK laws, such aid can be given only if there is a genuine prospect of a rescue.

The prime minister was said to have acted after a private meeting with union officials.

Supplier meeting

Some of the suppliers owed a total of about £200m by MG Rover are holding a meeting on Friday to discuss what happens next.

Lawyers and accountants will be on hand to offer advice at the meeting organised by the Birmingham Chamber of Commerce and Industry (BCI).

The BCI said about 400 suppliers in the West Midlands had been affected by the decision to put MG Rover into administration.

Suppliers are facing "serious and immediate cash flow problems," it said.

The industry estimate of the amount owed by MG Rover to suppliers was made after the BCI said 25 firms had indicated they were owed £9m by the company.

Lobbying

BCI chief executive Sue Battle said the government and banks could help suppliers with VAT and tax holidays.

The BCI is now lobbying for an immediate refund of VAT on MG Rover's bad debts.

"There is no clear picture about what stock is paid for and who owns it.

"This needs clarification by the administrator so that suppliers can recover their property or at least know the extent of the bad debt."

A government task force set up to help MG Rover suppliers has so far made payouts of £156,000 to 26 firms.

PCatWork

Who would have thought it?

Freak

Just in time for every single person affected to notvote labour........

bye tony

TelBoy

Couldn't have come at a worse time for NL. My heart bleeds.

Shark Man

Had to happen sooner or later

There is no way a company of its current structure or profitability can or will ever cope with such a huge workforce.

Reading the tea leaves in my mug suggests ( ) that the MG name will be sold off and a small low volume sports car company may emerge from this. But without the right people, I'd guess it will be a very long time before you see a decent MG branded car on the road that won't cost megabucks or actually be any good.

hawkthescoobslayer

who gives a **** about labour, I pity the poor sods that have lost thier jobs and those that will lose them due to companies losing money owed to them by rover.


A very very sad state of affairs indeed.


Paul

Matt P

I for one suspected the Chinese were sitting on the sidelines, waiting for the whole lot to go under so they could pick up the pieces cheap... seems not tho.

Shark Man

6000+ on job seekers...not looking good for the next government

Ahh well, they can always blame their predacessor (unless Lab win again )

Andy Tang

iTrader: (3)

If I worked for a company that was loosing that much money per week, I'd be out of a job as well.... but I wouldn't have Tony Blair trying to save my job/vote!!

You work for a **** company, you will lose your job eventually.

Sad that so many people have lost their jobs, but thousands of people are made redundant every year, but what do the govenment do to help them??

OllyK

I dunno, I suspect when the break up and sell off starts they'll be back sniffing about for the bits they do want at real bargain prices without the worry of having to take on UK staff at the wages they earn compared to chinese wages.

class_A

So, who's your favourite to buy the MG badge? Lotus, TVR or someone bigger?

Wish

iTrader: (2)

Watch this space.......... MG = Ford.

Harry_Boy

It's the suppliers that are owed money by MGR that I feel more sorry for.

MGR's demise was surely inevitable anyway - old products; insufficient capital to develop new models; management unable to broker an alliance with/takeover by a cash-rich backer.

As a private company, I don't see that NL and Bliar's intervention could have done much anyway. And I'm by no means a NL supporter.....

OllyK

It'll be one of the big players or some entrepreneur. I can't see TVR being remotely interested and Lotus are owned anyway aren't they?

Matt P

Unlikely I'd have thought. Ford have got enough worries in this country already without adding another...

Besides which, MGR don't have nearly enough market share to be attractive to Ford.

OllyK

As a private company NL are not allowed to meddle.

class_A

Lotus are owned by Proton. Perhaps they could make a "soft" car based on the Elise. Might fit well given their re-entry to the USA market. TVR was a wildcard, just mentioned them since they have some Russian cash behind them ATM.

Harry_Boy

Exactly - that's why their offer of 'aid' was dressed up as bridging loan....

Stevie.p

As some have already said another 6000 more unemployed not good comming up to a general election. I feel sorry for the employee's and some of the papers say today that the government are going to investigate where exactely the

427 MILLION has gone i mean how can you spend that kind of money in such a short space of time !!! it will be inseresting to see where the cash has gone to.

Shark Man

Possible. Ford at current don't have a down-market sports car brand.

With Ford's ST ranges of cars being hatchbacks and saloons, there is scope for a 1.6 to 2.5 engined coupé or convertible.

Whilst Jag and Aston Martin are too high-class. The x-type as the "budget" Jag being somewhat of a flop prooves Jaguar as a marque is not suitable for small cheap cars. This is where the MG brand could step in.

It would be a shrewd move. But I don't think Ford are in the best financial position to set up a new car manufacturer at the moment due to such huge investments caused by Jag, LR, AM, Volvo etc.

Anyhoo I should mention the MG badge is still owned by MR-Rover not Pheonix...so that's one thing they still have left.

If I were Ford or a big manufacturer who is interested in buy the badge (not the company ). I'd hunt down the owner of the "Triumph" brand......Triumph was always a better brand than MG (excepting the accalim and TR7 )

jasey

The Irony of it - Labour to Investigate missing millions. While they're at it maybe they could try tracking down the billions of extra tax they taken and given to Education, The Police & Hospitals. Apart from Scameras I haven't seen much improvement in these areas (unless you include the UK becoming the centre of excellence for MRSA) !

OllyK

That badge is currently being stuck on 3 cylinder motobikes in Derby!
Joking aside, interesting that they split in the 1930's but both kept the name - although the bike had the stylish logo version!

class_A

Ford are launching a Focus coupe/convertable in the near future and also have the StreetKa, although I understand production of that model is soon to end. Neither are exactly "sportscars" though. Also, they own Mazda, producer of the MX-5 which pretty much is the definitive reincarnation of the "sportscar".

I believe the rights to the Triumph brand for use on cars are currently owned by BMW. Link.

Graz

It's a shame so many people have to lose their jobs over it however some good may come of it.....

A certain MG Rover / Subaru dealership not a million miles from me might close, good riddance Most useless bunch of incompetent muppets I have ever come across in the car trade.

gsm1

It's a shame when anyone loses their job but if that industry is not working there's no point subsidising it.

The actions of the directors that bought Rover for nothing and then fleeced the company for millions is certainly scandalous. Their assets should be seized.