Nick Hall

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Autoweek

Feeling the Pain

The staff haven’t sold a new car for a month at Friarsgate Rover in Lichfield, just 30 minutes from the near-deserted Longbridge factory that is now a talisman of the marque’s recent descent into administration.

Nor have they heard anything official since before the news broke on nationwide television and the workers at the factory were sent home. MG Rover has not even contacted its own agents to tell them the latest news.

Should MG be pulled from the fire there may well be nowhere left to sell them as loyal dealers like Friarsgate’s Phil Whiting, who has sold the British company’s wares for decades, is about to turn his back and embrace another franchise.

“The Rover itself is a good car,” said Whiting. “But the management has just been a disaster since day one. It’s just been run disgracefully.”

Friarsgate must accept a new shipment of Rovers, too, many dealers were forced to accept a new allocation of stock just before negotiations with the Shanghai Automotive Industry Corporation broke down and the manufacturer fell. They can’t even get hold of the new cars, though, they’re waiting for the administrators to release them while the value falls by the day. It’s a sick situation that Phil takes with good grace.

The margins will be non-existent on these machines. Every price on Friarsgate’s forecourt has been slashed from £700 off a cheap 25 up to £3000 off a fully loaded 75. Fleets and rental companies have dropped their Rovers like stones, too, so the auction houses are flooded. Friarsgate also loses its warranties deal and spare parts supply, the financial implications will haunt the directors for years to come.

“We’ll get through it, but it’s not going to be an easy time and we’re at least lucky that other manufacturers want to do business with us and in fact they contacted us when they heard about Rover,” he said. “As for the others, there are lots that will really struggle.”

Many will go to the wall and join the 5400 workers laid off from Rover in the job market.

Those workers found out their fate when they turned up for a normal day only to find the factory closed, their jobs gone and their lives in tatters. Many took their tools home the same day, the disgust was etched on their faces as the news cameras climbed all over them for a reaction.

When they received letters stating that they must pay off finance deals on new cars they’d bought through the company in one hit, taking all the redundancy money they needed to survive, or return them immediately, their expression went from bad to worse.

Former assembly worker Patrick Connell, aged 36, from Northfield, is now looking for an "old banger" to replace the MG ZR which he had for just four months. "I only got £4,700 redundancy for 20 years' service and need that money to live on,” said 36-year-old former assembly worker, Patrick Connell, who is now looking for an “old banger” to get to job interviews.

The hapahazard way with which the cars are dumped outside the company’s gates speaks volumes for the feelings.

Worse, some workers that had been out in China negotiating the deal found themselves stranded on the far side of the world when their company went down. Corporate credit cards were obsolete and return travel hadn’t been arranged. The receivers, Price Waterhouse Coopers, only agreed to fly them home when their case made the news.

The Phoenix Four. John Towers, Peter Beale, Nick Stephenson and John Edwards have become vilified men in the West Midlands and the government has now ordered an investigation into MG Rover’s accounts. A DeLorean-style scandal could be just round the corner and, if they’re in the slightest bit guilty or even look at the floor during questioning, they will swing from the rafters and bear the brunt of the national anger.

An interest-free loan of £427 million from BMW, 65,000 free cars, government assistance and a series of sale and leaseback agreements on Rover sites, including all but 20 acres of the Longbridge site for £42.5 million in January 2004, netted huge personal wealth for the group but did nothing for the marque’s long-term survival.

In truth BMW couldn’t turn a profit at the Birmingham site and the factory in its current guise has been doomed for nigh-on a decade, haemorrhaging money on each and every car. With every Rover costing twice as much to build as a Toyota in Derby or a Nissan in Sunderland, there was little chance of it ever being truly competitive.

So the Chinese were never likely to keep Longbridge on its current form, which is one of the great unspoken truths of the affair. Labour in China costs a fraction of the price, as does land. SAIC has already bought the intellectual copyright to the 25, 75 and K Series engine, too, in what looks like a clumsy piece of business for Rover, and can now scavenge the rotting corpse of the Rover empire.

Rover was finally strangled by complex English employment laws, argued for and won by the trade unions that ironically represent the worker. Had SAIC bought Rover and cut staff it would have been liable for mass redundancies and the payments that went with them.

"If we wanted to pick up the business and some employees, the cost of redundancies, pensions and warranties will follow us around like a bad smell," a source close to SAIC blurted out.

Now, having cherry-picked Rover’s mass market car designs, it can leave the government to pay the bills and do what the Phoenix Four and BMW before them failed to do, make Rovers at a profit. It was always going to happen this way.

Simple common sense doesn’t come into it, the Rover debate is fuelled by pure emotion. More than 28000 are expected to find themselves on the unemployment register as the ripple effect hits suppliers and local businesses that relied on the Rover workers to fill their tills.

Showrooms have cut sales staff, garages have lost engineers, even cafes near the Longbridge site have been forced to fire staff. Many companies didn’t even realise they were supplying MG Rover, through middle-men, until the orders were cancelled. Jobs will be lost for months and years to come as a result of the black day in April.

Taxpayers will also suffer as the government swiftly found a £150 million package from our pockets for companies affected by the fallout and a package that gave the workers approximately £5000 each. Nobody begrudges them this meagre payout, though, the brunt of the anger lies with the Phoenix Four and misdirected nationalistic anger at the Chinese.

Rover was the heart the West Midlands’ employment market and in a second it stopped beating. The decay from this last bastion of the British car industry will reach far and wide, British industry, and the British people, are badly hurt, and a little Chinese medicine was never going to heal this pain.

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