Rover £204m in the red as three more directors lose their posts

THE GUARDIAN
By David Simpson
Business Correspondent

Rover, the state-owned car and truck manufacturer, slumped to a £204 million loss in the first half of the year, the new chairman, Mr Graham Day , revealed yesterday. The volume car division Austin Rover Group slid from profit to a £60.9 million deficit and the group - now seems certain to be forced to increase its borrowings again.

Mr Day, appointed by Mrs Thatcher to head the group, has swung his executive axe again, chopping three senior Austin Rover directors, including the car division's long-serving chairman and chief executive, Mr Harold Musgrove.

Mr Musgrove, together with ARG product development director, Mr Mark Snowdon and finance director, Mr Peter Regnier; is to leave the group immediately, hard on the heels the two most senior Rover directors, Mr Ray Horrocks and Mr David Andrews, who resigned in the wake of Mr Day's accession on May 1.

Mr Musgrove , aged 56, later suggested that he had sought an early retirement. But it is believed that his role at the helm of the Rover car division had been made untenable by Mr Day's insistence on taking personal responsibility for all operating arms of the former BL group. The departure of Mr Musgrove, who played a significant role in forging a successful joint manufacturing venture with Honda of Japan, after 40 years service with the group, was immediately condemned by the opposition trade and industry spokesman, Mr John Smith: "I fear he is paying the penalty for believing in British industry and for being critical of government policy toward it," Mr Smith said.

"Mr Day's remarks are ominous. It looks as if he proposes a further cutback in production and in jobs and perhaps a handover to Honda of production facilities. It is bad news for the British motor car industry. "

In tandem with Mr Horrocks, who publicly alleged that he was passed over for the chairmanship of the corporation as punishment for his opposition to the Tories scheme to sell Austin Rover to Ford of the US, Mr Musgrove has been severely critical of government interference in Rover. Mr Day came to Rover from British Shipbuilders

Where he supervised privatisation of seven warship yards and material cutbacks in the group 's merchant shipbuilding activities and workforce. He gave no indication that his present pruning activities are near an end.  "There are lots of skeletons I haven't found yet." He said.

"I am not a miracle worker: In this business it may take five years to develop and introduce a new product. What we are trying to do is build on the strength we have." Further criticism of Mr Day's announcement came from Mr Mick Murphy, Transport and General Workers Union national automotive officer, who suggested that "massive job losses" were being planned, and that Austin Rover planned to sell out to Honda.

The total £204.5 million loss compares with a £44.8 million deficit in the first six months of 1985. An operating loss of £118.9 million, including increased borrowing costs of £47.8 million, was compounded by extraordinary charges of £83.6 million relating to book losses and redundancy charges.