MG Rover has collapsed after Britain’s last volume carmaker failed to secure a government rescue package or a sale to a Chinese company. It leaves the west Midlands facing 6,100 job losses just 25 days before the general election.
The failure of Rover which will appoint accountants PwC as receivers or administrators this morning is a “devastating blow” to suppliers, workers and the wider community, Patricia Hewitt, trade and industry secretary, said last night.
The company fell apart after appeals yesterday from its directors for Ms Hewitt to grant an emergency £100m loan to stave off insolvency were ignored.
Earlier yesterday the company said that it needed the cash to maintain production, which stopped yesterday morning, while it finished negotiating a rescue deal with Shanghai Automotive Industry Corp, China’s biggest carmaker.
However, Ms Hewitt said a “substantial support package” would now be made available to help the area, where an estimated 15,000 further jobs at suppliers depend on Rover.
The immediate area around Rover’s Longbridge factory contains seven Labour marginal seats, expected to be hotly contested by the Conservatives and Liberal Democrats. The government said there was “no possibility” of granting an emergency loan without the deal with SAIC, but that there was “no reasonable prospect of a deal”.
The collapse means Britain joins Canada as the only members of the G7 group of industrialised nations without a domestic volume car manufacturer. The Rover name will cease production after 101 years. But it could be sold or licensed again by BMW, which retains the right to the brand.
It also brings to an end five years of ownership by a group of Midlands businessmen who bought the company for £10 in 2000 from Germany’s BMW amid a surge of support from government, suppliers, dealers and Birmingham residents.
One large supplier to Rover laid the blame on the management team, who outraged locals, workers and suppliers when they granted themselves a £16.5m pension fund and a £10m payment through a loan note.
“John Towers [chairman of Phoenix Venture Holdings, Rover’s parent] personally vaporised the goodwill,” the supplier said. “Since then no-one has wanted to help them, it has all been strictly commercial.”
It is not clear whether PwC will make an attempt to sell parts of Rover as a going concern, although other accountants involved in the business have said the MG brand, and particularly its TF convertible, could allow production to continue.
Jon Moulton attempted to buy Rover from BMW in order to slim down and specialise in MG sports cars, but the scale of job losses he wanted to introduce at the time scuppered the deal.
