MG Rover admits group's collapse
LONDON, England -- British car giant MG Rover has formally appointed administrators as the company's UK factory came to a standstill following the collapse of rescue talks.
Rover workers and the British government were reeling Friday after the sudden collapse of Britain's last mass auto manufacturer after its Chinese partner pulled out of a proposed tie-up.
The potential loss of 6,000 jobs at Rover and up to 15,000 at component makers in Britains' West Midlands is an embarrassment for Prime Minister Tony Blair's government as it seeks re-election on its economic credentials.
"We will do whatever we can possibly do to safeguard the livelihoods and jobs of the people here," said Blair, who met trade union officials and Longbridge workers in Birmingham, after returning from Pope John Paul II's funeral in Rome.
Flanked by Treasury chief Gordon Brown, Blair said he would work with unions and the administrators to try to secure further car production at the factory.
Blair's ruling Labour party holds three parliamentary seats in the area which are seen at risk to rival parties.
The 100-year-old car maker, which once made the iconic Mini and the Land Rover, had hoped China's Shanghai Automotive Industry Corporation (SAIC) would step in and invest in the company, allowing it to continue production.
But SAIC, worried about Rover's financial position -- particularly with regard to pension and possible redundancy liabilities -- pulled out after weeks of tense talks in Shanghai.
Workers left the company's Longbridge plant in Birmingham, England, at lunchtime at the end of their normal Friday shift and were told to return for duty on Monday.
But many said they believed they had made their last car for Rover and were now focusing on any payoff.
Company officials and union leaders met administrators from PWC (PricewaterhouseCoopers) in a bid to salvage motor manufacturing at Longbridge.
The owners of MG Rover, Phoenix Venture Holdings, issued a brief statement which read: "The board of directors has met with PricewaterhouseCoopers this morning. The directors are taking the necessary steps to appoint administrators from PWC for MG Rover Group and Powertrain.
"Following the completion of these formalities, the administrators will issue a statement and press release later today. All employees are asked to come to work normally on Monday."
Support package
UK Trade and Industry Secretary Patricia Hewitt, who held talks with workers at Longbridge Friday, announced a £40 million ($75m) support package for Rover's suppliers, based throughout the region.
The opposition Conservative Party described the government's handling of the issue as "a shambles," but the Confederation of British Industry, a leading employers' group, said Blair's administration was not to blame and applauded it for refusing to prop up "unviable companies" with state aid.
News of Rover's demise dominated British newspaper front pages and TV bulletins at a time when Blair is campaigning hard on the back of his party's economic record.
The Financial Times said the ruling Labour party had begun an "intense damage limitation exercise," while the Daily Mail said Rover's collapse could "haunt" the government on election day, May 5.
The Times said it was "grim news for Labour," but noted that voters no longer expected governments to bail out struggling companies.
A spokesman for SAIC quoted by the UK's Press Association said: "The requirement from SAIC was that MG Rover was demonstrated to be solvent at the point of signing a deal and for two years thereafter.
"They have not been able to demonstrate that and therefore we are unable to negotiate a deal."
Obituary
Tony Murphy, Amicus national officer for the automotive industry, told PA: "Yet again I'm having to write an obituary for another stalwart of the British engineering and manufacturing industry.
"The loss of MG Rover is devastating news for the UK car industry and for the West Midlands coming after the loss of the Jaguar Browns Lane plant and losses announced at the Peugeot Ryton plant last month."
Britain's last mass automaker had issued a plea to Tony Blair's government to "make a decision" on a £100 million ($188 million) bridging loan it wanted to help complete negotiations with SAIC.
Production had already been suspended at MG Rover's Longbridge factory.
SAIC's proposed acquisition of MG Rover would have required approval from the Shanghai city government, SAIC's controlling shareholder, and the National Development and Reform Commission, a cabinet-level agency in charge of economic policy.
Announcing the proposed deal in November, MG Rover spokesman Stewart McKee declined to discuss details but said the deal would involve manufacturing, the joint development of products and the opportunity to build cars in both markets.
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Associated Press contributed to this report.
