British government loans MG Rover US$12.2 million - Brother, can you spare a dime?

[Marc]

British government loans MG Rover $12.2 million
By MarketWatch on April 10, 2005

SAN FRANCISCO (MarketWatch) -- The British government has loaned MG Rover $12.2 million, helping stave off for a week thousands of layoffs at the last major British-owned car company, according to a published report.

AFX, citing British government officials and union leaders, reported early Monday that the loan will help the company cover costs and salaries for one week.

In a statement issued with two union leaders, Trade and Industry Secretary Patricia Hewitt said: "The government has been in discussion with trade unions that represent workers at MG Rover and the administrators throughout the weekend, AFX reported. "The government has agreed to provide the necessary funds to the administrators in order to avoid the issuing of redundancy notices at MG Rover while efforts are made to keep the business together."

It went on: "The government has agreed to assist and work with the administrator and with the unions who will be developing, with all reasonable speed, a realistic business proposition for SAIC (Shanghai Automotive Industry Corp) and other possible purchasers to consider.

"We will monitor the situation closely and review the adequacy of funds available while there is a realistic prospect of re-engagement with SAIC."

AFX reported that a spokesman for Hewitt's ministry said she would be prepared to go to China with the union leaders and even opposition party members.

The firm's failure last week to reach a deal with SAIC has not only put in jeopardy Rover's workforce of 6,100 but also an estimated 18,000 jobs at its component suppliers, according to media reports.

Industry sources quoted by Britain's domestic Press Association news agency said that suppliers had already begun laying off hundreds of workers despite a government aid package announced on Friday. MG Rover entered bankruptcy proceedings Friday.

Steelmaker Corus Group, a top supplier to Rover, was a hefty decliner in the FTSE 100 index Friday, falling 1.4%.

A senior official at China's national industry planning agency said Friday that SAIC was still in talks with Rover, Dow Jones Newswires reported.

"The firms' talks are ongoing," Chen Bin, deputy director of the Industry Department of China's National Development and Reform Commission, told Dow Jones Newswires.

But a Rover spokesman in the U.K. said talks between Rover and SAIC had come to an end, saying that Rover's negotiators had left Shanghai.

Shanghai-based SAIC has been one of the most aggressive carmakers in China in expanding its operations. It has joint ventures in China with the General Motors Corp. of the U.S. and Germany's Volkswagen AG.

SAIC lists a car parts manufacturing affiliate, Shanghai Automotive Co. on the Shanghai Stock Exchange.

[AllanJ]

As a Brit one has some mixed feelings about the MG situation. Sad that a great marque is in trouble but also fed up because the British taxpayer supported British Leyland (of which both the MG and Rover marques were a part - alongside Austin, Morris, Land Rover etc.) to the tune of many Billions of pounds over the course of years. Enough is enough: not a penny more. Give it a decent burial.

Of course the blame game will start but the whole lot of management, unions, designers and suppliers and so forth have contributed to the situation in one way or another.