Outlook - Rover

Outlook: Rover

TRUST ROVER to lower the tone on the opening day of the Paris Motor Show. Renault and Michelin may be celebrating their centenaries and Porsche its half century but the mood over at BMW, Rover's German owners, was anything but festive. Bernd Pischestrieder, the urbane chairman of BMW, has every reason to be glum. He bought Rover in a haze of sentimental attachment to its illustrious predecessors, the Wolseley and Riley, but quickly discovered that the current model is not in quite the same league.

The R75 - the successor to the uninspired 600-800 series - is Rover's next great hope and goes on show in Birmingham in three weeks' time. But as luxury executive saloons go, it will be a pale imitation of the real thing, the latest Mercedes S-class, which is also getting its first outing in Paris. Four-and-a-half years on, all BMW has to show for its pounds 4bn of investment in Rover is mounting losses of perhaps as much as pounds 500m this year and a faint hope that its purchase will turn the corner some time in the millennium with the aid of a revamped version of a 40-year old car, the Mini.

Meanwhile, the Rover workforce is being fed on a diet of bad news, with more cutbacks due in the next fortnight on top of the 1,500 job losses and four-day week announced in July. Amid the wreckage, the one consolation for Mr Pischetsrieder is the performance of Land-Rover. But at some point his shareholders have to ask whether BMW might not have spent their money better building its own entry into the 4x4 market from scratch.

It is hardly time yet to press the panic button, and BMW remains a highly profitable brand. But with the millstone of Rover around his neck, Volkwagen's Ferdinand Piech knocking at his door, and Daimler married to Chrysler, Mr Pischetsrieder must be starting to feel the heat.

BMW warns on Rover jobs
By Michael Harrison

BMW WARNED yesterday of further cutbacks at its Rover car plants as the manufacturing industry was hit by a fresh wave of job losses. Speaking on the opening day of the Paris Motor Show, BMW's chairman, Bernd Pischetsrieder, said further action would have to be taken if the current downturn continued and the pound remained strong.

BMW has already cut 1,500 jobs at Rover, put the Longbridge plant on a four-day week, and announced plans to switch pounds 1bn worth of component purchasing abroad. Rover is in talks with its unions about the additional cutbacks amid fears that it may suffer losses of up to pounds 500m this year. "What they will be is being discussed with workers and unions, but I expect it will go beyond what we already announced," said Mr Pischetsrieder.

The company indicated that it would rein back production further to try to limit job losses. A spokesman also rebuffed suggestions that BMW's investment programme, currently running at pounds 600m a year, was under threat because of increasing losses. Rover managed to cut its losses to pounds 92m last year from pounds 119m in 1996. But this year the strong pound has inflicted a double blow, making Rover's exports more unprofitable and exposing it to increased competition from cheap imports.

OXFORD MAIL
Rover hit by jobs fears

CAR workers at a major Rover plant faced an uncertain future today after company bosses warned the strong pound could force the firm to shed more jobs. But bosses said cuts would not affect Oxford's Cowley plant, where 1,000 extra jobs are being created with the launch of a new executive car.

The latest warning at the firm's Longbridge plant in Birmingham comes two months after Rover announced it was axing 1,500 staff there. But Cowley recently secured a deal to manufacture Rover's new car, codenamed R40, to replace the 600 and 800 models. The new car will be unveiled at the Motor Show next month.

The spectre of further redundancies at Longbridge was raised after a warning from Bernd Pischetsrieder, head of Rover's parent company BMW. Speaking at the launch of the Land Rover Discovery at the Paris Motor Show, Mr Pischetsrieder said: "We must differentiate between what's necessary in the short-term and right in the long run.

"But it is clear that short-term measures are required in England." A Rover spokesman said: "What Mr Pischetsrieder was talking about was that we have already announced 1,500 job reductions, but if the current situation continues we will have to look at measures over and above that."

He added: "We have not announced any jobs are in jeopardy. We are not referring to job cuts in Oxford at all."