MG Rover bailout - why???

[rynnor]

So - the company's losing money hand over fist it negotiated for a deal with China for 6 months until people finally caught wind that it was running on the goodwill of its creditors...

Its supposed to be in-effecient compared to other plants in the UK and rest of Europe.

The managment team have failed - so tell me again why we are bailing em out? Failed companies shut everyday without big bailouts.

And why are we paying the wages of people who are basically redundant - give em notice and wind the thing up - the alternative is that we support the entire staff for what could be months of em sitting at home while negotiations go on with china that will probably fail anyway...

I thought Labour had learned not to do this - hell why dont we just nationalise it ;P

Stupid election crap

 

[DaGaffer]

You've answered your own question - "stupid election crap". Longbridge sits in the middle of a bunch of key marginals so Labour will show willing even if they don't believe it will make any difference in the long run. There's a limit on how much they can throw at this though; EU rules don't allow this kind of subsidy any more.

Rover was dead five years ago when BMW bailed; its been a zombie ever since (and smelling increasingly ripe), no money to fund new models and the directors have sold off everything with any value to keep it going and [allegedly]to line their own pockets[/allegedly] . The only real asset left in the company is the MG name. Problem is, who would buy it? Its worth about £50m apparently, but there aren't many car companies with the werewithal or inclination to buy yet another car brand at the moment. Even if someone does buy the MG name, it won't save the factory and the jobs, they'll just take it offshore.

 

[anattic]

In general, governments of all hues and at all times will try to save 6000 jobs (and those of the related support industries) if they can. £6.5m is very little money if it can be used to save those jobs when compared to the benefit bill that will result if they are lost. If it works...

Now, if I were a cynic, I'd mention that the then-Trade Minister Stephen Byers did back the Towers bid, and took a fair amount of credit for its success (link), and as a result, there are 6000+ jobs going in a Labour heartland* constituency just before an election.

But that couldn't be it...


* (not all that marginal btw. Labour had a 26% majority in B'ham Northfield last time)

 

[Will]

They may have been waiting until the company was in the hands of the receivers, rather than the former directors. If they don't do anything, the former employees won't be getting any redundancy packages, and the suppliers won't be getting anything owed either.

 

[DaGaffer]

* (not all that marginal btw. Labour had a 26% majority in B'ham Northfield last time)

They won't be too worried about Northfield, but they will be worried about Yardley and Edgebaston, which have much smaller majorities. Don't forget, the knock-on effects will be felt all over the west midlands because of the suppliers, and there's also Peugeot's recent cutting of 850 jobs in Coventry to consider.

 

[Embattle]

The government had to do something, general election or not. The fact is that the members of Phoenix Venture Holdings that took over Rover have done little more than just let it die a slow death. Since theu took over Rover for £10 there was little real innovation to create new models that people actually want and its not as if they haven't had the money, just a few facelifts estimated by analysts to have cost £200 million. According to an article in the FT at the weekend they got:

£550 Million - Help from BMW
£350 Million - Estimate of unsold stock
£100 Million - Sale-and-leaseback of parts of Longbridge
£30 Million - Aborted alliance
£67 Million - SAIC payment for rights to 25 & 75 and Powertrain

I personally don't see why SAIC would really want to take over Rover, they've got the parts they mainly wanted and they can get any others in the sell off.

 

[Aoami]

I personally feel rover isnt making money as rover's are no longer seen as a 'cool' care to have. 10-15 years ago they were seen as top quality british cars. But how often do you see someone driving one now?

 

[DaGaffer]

The government had to do something, general election or not. The fact is that the members of Phoenix Venture Holdings that took over Rover have done little more than just let it die a slow death. Since theu took over Rover for £10 there was little real innovation to create new models that people actually want and its not as if they haven't had the money, just a few facelifts estimated by analysts to have cost £200 million. According to an article in the FT at the weekend they got:

£550 Million - Help from BMW
£350 Million - Estimate of unsold stock
£100 Million - Sale-and-leaseback of parts of Longbridge
£30 Million - Aborted alliance
£67 Million - SAIC payment for rights to 25 & 75 and Powertrain

I personally don't see why SAIC would really want to take over Rover, they've got the parts they mainly wanted and they can get any others in the sell off.

Unfortunately, a billion quid is pocket change in the car industry; you need about $1billion to develop a competitive mid-size hatchback, which is why the industry platform shares; MGR didn't have a platform partner (which is actually largely BMW's fault because the Mini platform was supposed to be used in conjunction with the 75 platform to spawn a range that didn't overlap with BMW's own rear-wheel platforms - which was just silly). MGR, even by selling the family silver, didn't have enough cash to keep operating and develop new models on their own, so all they could do was tart up an increasingly ancient range. Rover was never a viable option as a standalone company and BMW was just about the worst partner they could have had when the industry was consolidating in the 90s. They should have stuck with Honda.

 

[Embattle]

That's the very reason Rover is doomed to fail, the government isn't/can't provide the funds Rover needs and I doubt that SAIC is that interested in providing that sort of money either.

Most of the consolidation of the 1990's didn't work, in fact many of the consolidators suffered huge losses....just like BMW did with Rover.

 

[DaGaffer]

That's the very reason Rover is doomed to fail, the government isn't/can't provide the funds Rover needs and I doubt that SAIC is that interested in providing that sort of money either.

Most of the consolidation of the 1990's didn't work, in fact many of the consolidators suffered huge losses....just like BMW did with Rover.

Depends what you mean by "didn't work", Aston Martin, Volvo and Land Rover have all prospered under Ford, as have Seat, Skoda, Bentley and Lamborghini under VW; the Renault/Nissan alliance probably saved Nissan. Sure, there are horror stories like Jaguar and DaimlerChrysler and GM/Fiat, but, Rover could have worked with the right partner. When BMW bought Rover, I was a graduate trainee with Unipart and we were all amazed at the time that they'd done the deal; the relationship with Honda had really started to bear fruit and there were a load of joint supplier deals that had to be unpicked, which cost a fortune and actually set product development back; problem was management once again, British Aerospace wanted out, and didn't give a shit about pissing Honda off because they wouldn't have to live with the consequences. Honda weren't perfect, but they were a damn sight better 'fit' than BMW.

 

[Tom]

Its a shame really, as the current crop of Rovers (excepting the Cityrover) are supposed to be pretty damn good cars, even if they are old.

Given a choice between a 206 and a 25, I'd take the latter anyday.

 

[rynnor]

In general, governments of all hues and at all times will try to save 6000 jobs (and those of the related support industries) if they can. £6.5m is very little money if it can be used to save those jobs when compared to the benefit bill that will result if they are lost. If it works...

Governments cannot 'save' jobs - either the thing is a going concern or its not and Rover is not - I think they may try to prop it up until the election when the assistance will stop suddenly...

 

[rynnor]

The only real asset left in the company is the MG name. Problem is, who would buy it?

MG Rover dont own the name oddly...

 

[Turamber]

If this company was in YOUR backyard I'm sure you would feel differently. If YOU had many friends that work both there and in the small businesses that supply the company I am sure you would feel differently.

As it is you're just another gobshite who thinks he can run the country.

 

[Embattle]

Most probably were more suitable candidates, not many takers though.

 

[old.user4556]

so tell me again why we are bailing em out?

Either way, the tax payer is footing the bill surely?

Throw tax payer's money at it, keep it running.

Don't throw tax payer's money at it, make them all redundant and therefore sign on the dole and claim job seekers allowance thus using tax payer's money.

Personally, they should bin it and move on. See past the sentimental shite; they're crap overpriced cars with a naff image and incredibly dated parts. Anyone who thinks that MG Rover is sustainable in any shape in this country is deluding themselves, so better now than later.

Depends what you mean by "didn't work", Aston Martin, Volvo and Land Rover have all prospered under Ford, as have Seat, Skoda, Bentley and Lamborghini under VW; the Renault/Nissan alliance probably saved Nissan.

This might work, but it just means Ford/VAG using parts/chassis from their own range and slapping an MG badge on it. I don't see it personally - A Rover 75 sitting atop a Mondeo chassis or a Rover 45 sitting upon an old Focus chassis? Never.

 

[rynnor]

If this company was in YOUR backyard I'm sure you would feel differently. If YOU had many friends that work both there and in the small businesses that supply the company I am sure you would feel differently.

As it is you're just another gobshite who thinks he can run the country.

Fine - every company that fails we'll step in and bail out eh???

I used to live in Brum and have friends in the Midlands but whatever emotional ties you have to it failed businesses close. If it was in my backyard I'd want it to shut if it had no future and theres no doubt it will.

Its unfair on the employees to pretend otherwise.

 

[rynnor]

Either way, the tax payer is footing the bill surely?

Throw tax payer's money at it, keep it running.

Its costing us over a grand a week per person to send em home to twiddle their thumbs - dole is cheaper than that and motivates em to get another job.

 

[Turamber]

Fine - every company that fails we'll step in and bail out eh???

If you think £6.5 million is a lot of money then you are even more clueless than I initially thought. The money isn't there to "bail out" the company, but to give Rover and - more importantly - the hundreds of small companies that supply it locally, time to find alternate business, streamline, whatever.

 

[Embattle]

£6.5 million will last a week, after that the government will need to loan more money, which won't go down too well with the majority of people judging from what I've read and heard, or accept the inevitable.

 

[Bodhi]

MG Rover's are horribly outdated now though, they need some new models ASAP. The 25/45 and ZR/ZS are wonky old 90's Hondas - a Focus or Golf is a far far better car. Obviously cos of the lack of money they wont get the new models they need. Sad, but it's not like the cars will be missed.

 

[DaGaffer]

This might work, but it just means Ford/VAG using parts/chassis from their own range and slapping an MG badge on it. I don't see it personally - A Rover 75 sitting atop a Mondeo chassis or a Rover 45 sitting upon an old Focus chassis? Never.

Why? A Jag X-Type sits on a Mondeo Chassis and the new Ford Focus/Volvo V40 and Mazda 3 are all basically the same car underneath; doesn't stop them being very different on the road though. This is just how the car industry works; I read somewhere that the last Golf platform spawned about 15 different models, from the Audi TT at one end to the Skoda Octavia at the other; its the only way car companies can make money (and ironically, British Leyland were the original pioneers of the whole platform sharing idea...)

 

[rynnor]

If you think £6.5 million is a lot of money then you are even more clueless than I initially thought. The money isn't there to "bail out" the company, but to give Rover and - more importantly - the hundreds of small companies that supply it locally, time to find alternate business, streamline, whatever.

Its one weeks pay for 6000 employees to sit around and think about voting Labour...

Its money down the drain thats the problem and this burden is open-ended... we could be supporting this failed business for months...

 

[rynnor]

MG Rover's are horribly outdated now though, they need some new models ASAP. The 25/45 and ZR/ZS are wonky old 90's Hondas - a Focus or Golf is a far far better car. Obviously cos of the lack of money they wont get the new models they need. Sad, but it's not like the cars will be missed.

They were screwed from when BMW pulled out - they didnt have any money to develop new models and lacking that they were just treading water until the inevitable - everyone with half a brain must have realised this.

 

[maxi]

If this company was in YOUR backyard I'm sure you would feel differently. If YOU had many friends that work both there and in the small businesses that supply the company I am sure you would feel differently.

As it is you're just another gobshite who thinks he can run the country.

Are you this understanding with Criminals and Immigrants?

 

[old.user4556]

Why? A Jag X-Type sits on a Mondeo Chassis and the new Ford Focus/Volvo V40 and Mazda 3 are all basically the same car underneath; doesn't stop them being very different on the road though. This is just how the car industry works; I read somewhere that the last Golf platform spawned about 15 different models, from the Audi TT at one end to the Skoda Octavia at the other; its the only way car companies can make money (and ironically, British Leyland were the original pioneers of the whole platform sharing idea...)

Why? Because I simply don't see it.

True that VAG/Ford use multiple chassis/engines across varying ranges but even these companies are being criticised for simply taking the same car and dressing it up. While it may work from a business perspective, it doesn't change (for example) that the Audi TT is "an overpriced Golf or a squashed beetle."

Taking a Ford/VAG chassis and slapping the MG Rover badge on it isn't going to save the current situation and Longbridge will no doubt go even if Ford/VAG were to, not to mention the stigma associated with such a boring brand. Look how long it took to turn Skoda around, and they're still not particularly appealing cars and suffer from brand snobbery regardless if you tell someone that their Skoda Superb is a Passat/A4/Leon underneath - they'll tell you it's "still a Skoda".

 

[Trem]

What worries me most about all this is what will the old people drive when they stop making Rovers?

 

[Tom]

They're already driving Hyundais and Kias Trem. Mind you, old people don't seem to know about depreciation, and they don't seem to understand that for 5 grand you could have a 7-series Beemer, loaded with everything, and the running costs would be less than the depreciation on their new Jap car.

 

[SawTooTH]

Hands up who hasn't been made redundant?

I think its a waste of money unless there is something we're not aware of.