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April 18, 2005

UK: MG Rover administrators making around 5,000 Longbridge workers redundant

About 5,000 MG Rover employees are to be made redundant immediately, PricewaterhouseCoopers partner and joint MG Rover administrator Tony Lomas told a press conference at Longbridge on Friday afternoon.

About 5,000 MG Rover employees are to be made redundant immediately, PricewaterhouseCoopers partner and joint MG Rover administrator Tony Lomas told a press conference at Longbridge on Friday afternoon.

About 1,000 employees will be retained for an unspecified time with 600 working to finish off about 1,000 cars still in the plant, Lomas said. The other staff will carry out administrative tasks and plant mothballing, while MG Sport and Racing will retain 25, also for an unspecified time.

Ominously, the future of 400 or so engine makers at Powertrain is not clear. Lomas said they were likely to stay but clarification was required.

“SAIC [Shanghai Automotive] have terminated the royalty agreement we’ve got to produce engines at Powertrain for Land Rover,” he said.

“We need to further evaluate that position before we can conclusively say we are in a position to produce those engines and hence retain those jobs for a little bit longer.”

SAIC earlier spent £67 million on the intellectual rights to several Rover car models and the K-series engine line produced at Powertrain.

Lomas noted that more redundancies could follow.

“We were only appointed over two group companies, MG Rover and Powertrain,” he said, adding that reviews of other group companies would take place over the next few days.

Prime minister Tony Blair cancelled electioneering in west London on Friday afternoon and chancellor (finance minister) Gordon Brown has postponed a US visit. Together with trade minister Patricia Hewitt, they raced by train to Birmingham where they were expected to announce a £150 million aid package for the redundant workers at Longbridge.

During the day, it emerged that workers who bought MG Rover cars on company purchase schemes may have to pay off their loans in full though administrators have made arrangements to ensure that the cars retain the insurance cover provided under the plans.

Joint administrator Tony Lomas said the administrators will now “explore what we would describe as the break up of the business”.  He said the administrators would continue to talk with parties interested in parts of the business and the plant will be mothballed – “the auctioneers won’t be coming in next week”.

That would give the administrators time to go back to SAIC and “ask them to tell us if they do have any interest and precisely what that interest is, recognising that they have acquired some of the intellectual property”.

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