Rover loses 2500 jobs, and its chief

BBC NEWS
Business: The Company File
Rover loses 2,500 jobs, and its chief

Troubled car maker Rover has confirmed that it wants 2,500 jobs to go from its UK operations in a restructuring deal with unions to save its Midlands Longbridge plant - and its German chairman is the first to go. The deal offers £2bn for investment in new car models in return for workers accepting radical new practices and job cuts via voluntary redundancies.

Meanwhile, Rover chairman Walter Hasselkus has announced his resignation admitting the company had "got it wrong". He said after announcing his resignation: "Obviously you can't always blame external factors. It has to be admitted we have got it simply wrong in not anticipating the fierceness of competition in the British market," he said.

He will be replaced by Werner Samann, a former professor at Berlin Technical University, who joined BMW in 1976 and rose to its board of management earlier this year. The restructuring plan will be voted on by Rover's 39,000 workers later this week with the deal already sanctioned by senior union officials after more than a month of negotiations.

"This is a good deal that secures Longbridge and puts Rover on course to lasting success - the workforce cannot afford to reject it," said Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union. If accepted by the workforce it will then go to the BMW board for approval.

BMW chairman Bernd Pischetsrieder said at a press conference in London the agreement will lead to cost savings of £150m a year from 2000. The infusion of new investment would see new plant installed for the production of another mini model and a new medium size car at Longbridge in Birmingham.

The Transport and General Workers Union (T&G) said new working conditions would involve a more flexible 35-hour working week, allowing overtime hours to be saved up, rather than paid, to improve productivity. Tony Woodley, national automotive secretary at T&G said the deal will not only "save 14,000 jobs at Longbridge, but up to 50,000 (among suppliers to Rover) in and around the West Midlands."

Rover spokesman David Bower said: "This new approach of flexible working hours will allow us to balance working time to demand, provide more leisure time and days off and reduce costs." He said that under the new arrangements up to 200 hours would be saved up by workers during times of high production to be taken as time off during quieter times.

New shift patterns will be introduced, with production running up to 100 hours a week at each plant in five day and night shifts including a Saturday morning if necessary, at standard rates of pay. The company aims to move from a five-day to a four-day working week of 9.25 hours per shift.

He said more than 3,000 workers had already asked about voluntary redundancy. Trade and Industry secretary Peter Mandelson said: "It is great news that the new Mini will be built at Longbridge. "But this is not the end of the story. The investment by BMW in the replacement for Rover's 200-400 now needs to be secured if the future of Longbridge is to be safeguarded in the long term."