Deal to save Rover plant

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Business: The Company File
Deal to save Rover plant

Any deal will be subject to union members' approval

Car giant Rover and the trade unions have reached an agreement to secure the future of the company's Longbridge factory in Birmingham. The deal involves 2,500 voluntary job losses and new working practices.

In a joint statement the two sides said: "The Rover group and trade unions have reached an agreement in principal on key issues surrounding agreed cost savings and working time flexibility." It follows a trip by union leaders to Germany where they held last-minute talks in Munich with the company's bosses at BMW.

Trade and Industry Secretary Peter Mandelson said the deal was "great news" for region and the country. "I am absolutely delighted with this breakthrough. Of course the company is not out of the woods yet, but the basis is there now to create a strong, successful company."

Union leaders are flying back to Birmingham for a further meeting before the deal is put out to ballot. All 39,000 Rover workers at the plant are being asked if they want to volunteer for redundancy or early retirement which will lead to around 2,500 job cuts.

There will also be radical changes to working practices under which workers will be compensated for extra work at at busy times by taking time off during quieter periods. Unions have, however, won a concession concerning the length of the working week which will be cut from 37 hours to 35. Roger Lyons, general secretary of the Manufacturing Science and Finance Union, said negotiations had been difficult but he said the deal was "absolutely essential" to secure the future of Longbridge and safeguard the economy of the West Midlands

Mr Lyons said without the deal, the the future of BMW investment in Rover UK would have been in doubt. He also said he believed the redundancies agreed could be achieved on a voluntary basis through retirement and natural wastage.

Deadline approaches

The deal comes at the 11th hour as the company had set a deadline of Monday 30 November for reaching an agreement on jobs and working practices. Negotiations have been continuing since a warning about the future of Longbridge was issued last month. Rover's owners BMW said the firm's domestic and export markets were being hit by the strength of sterling.

Chief union negotiator Tony Woodley of the Transport & General Workers' Union said the negotiations were the toughest he had ever been involved in. The deal is subject to details being finalised and will have to be approved by the board of BMW. The company wants to achieve annual savings of £150m.