Hope rises that BMW will put £1bn into Rover

THE GUARDIAN
By David Gow, Industrial Editor

Hopes rose yesterday among union leaders and the workforce at Rover that its German parent, BMW, is poised to commit more than £1 billion in investment to build a new medium-sized car at its Longbridge plant near Birmingham. Confidence was boosted when Trade and Industry Secretary Stephen Byers told MPs during Commons exchanges that the Government was prepared to give financial support 'to raise skills at Longbridge and improve productivity.'

Mr Byers made it plain that the Government would not 'bail out' Rover or BMW but was prepared to lever in much more money from the German owners. 'If we can secure that then there is a bright prospect for Longbridge,' he said.

BMW is expected to use the Geneva Motor Show early next month as the venue for announcing that it will build the new medium-sized car at Longbridge, which is already earmarked to produce 100,000 new Minis a year and could secure its long-term future by building up to half a million new family saloons and derivatives. BMW is also examining green-field sites in countries such as Hungary.

Mr Byers said he was confident that Longbridge was in 'a strong position' and the investment, with government backing, could save the 14,000 jobs at the plant and the tens of thousands in the West Midlands which depend on it. 'This government wants to ensure that the workers of Longbridge can be partners in change and not the victims of change," he said.

But union leaders accept that several thousand jobs could disappear, partly because the new engine plant at Hams Hall, Warwickshire, will employ less than half the 4,000 now making engines at Longbridge and because the new production facilities will require less labour. BMW has also said that it will buy far more components from abroad.

BMW, following its recent boardroom shake-up which saw Bernd Pischetsrieder, chairman and architect of the 1994 Rover takeover, and arch-rival Wolfgang Reitzle, resign, has been reviewing its model strategy under new chairman, Joachim Milberg. It is expected to seek £200 million in state aid, with half coming from the UK Government and half from the European Community, if it opts for Longbridge.

Ken Jackson, leader of the AEEU engineering union, said: 'The secretary of state's clear indication of support will boost confidence at Longbridge.' Other officials added that it was particularly significant that this had been given in the Commons.