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April 15, 2005

UK: Regulations intended to protect employees would hinder any future SAIC MG Rover buy

Shanghai Automotive Industry Corporation is being prevented from buying parts of MG Rover out of administration by union-supported TUPE [Transfer of Undertakings (Protection of Employment) Regulations 1981] regulations, according to the Daily Telegraph's Friday edition. MG Rover's administrators, PricewaterhouseCoopers, have since announced that they are to begin making staff redundant, following confirmation from SAIC that it is not willing to buy all or part of MGR on a going-concern basis.

Shanghai Automotive Industry Corporation is being prevented from buying parts of MG Rover out of administration by union-supported TUPE [Transfer of Undertakings (Protection of Employment) Regulations 1981] regulations, according to The Daily Telegraph ‘s Friday edition. MG Rover ‘s administrators, PricewaterhouseCoopers , have since announced that they are to begin making staff redundant, following confirmation from SAIC that it is not willing to buy all or part of MGR on a going-concern basis.

The paper said UK government pressure is mounting on SAIC to rekindle its interest in taking over the Rover production line at Longbridge and potentially saving 3,000 of the threatened 6,100 jobs at the Birmingham car plant but it became clear on Thursday that if the Chinese did the original deal now, and took on 3,000 Rover workers as well as the Rover production line at Longbridge, it would have to pay for the cost of sacking the remaining 3,000.

One source close to SAIC told The Daily Telegraph : “If we wanted to pick up the business and some employees, the cost of redundancies, pensions and warranties will follow us around like a bad smell.” An SAIC spokesman reportedly added: “We remain highly unlikely to do anything while MG Rover is in administration.”

Employment experts told the paper that the TUPE rules were an obstacle for the Chinese, and any other potential buyer while MG Rover was in administration.

A spokesman for the Department of Trade and Industry reportedly rejected any suggestion that the government could suspend the TUPE rules to assist the Chinese in buying Rover .

The Daily Telegraph said a £6.5 million DTI loan to pay for MG Rover ‘s wages and administrator for a week expires on Sunday, but could be extended – DTI officials are working round the clock with the administrator Price Waterhouse Coopers to try to secure the future of the collapsed car maker.

The paper added that one – possibly far fetched – suggestion yesterday was that the UK might be prepared to offer to pressure the European Union to lift the arms embargo on China to get SAIC back to the negotiation table but a DTI spokesman reportedly said: “That is speculation.”

The Daily Telegraph noted that government ministers are desperate to avoid the need to make thousands of MG Rover workers redundant during a general election campaign in an area of England peppered with marginal Labour seats.

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