Associated Press
MG Rover Suspends Production at Factory
04.07.2005, 10:36 AM
Cash-strapped car manufacturer MG Rover Group said Thursday it has suspended
production at its British factory, blaming negative media coverage
surrounding its talks with the Shanghai Automotive Industrial Co. about a
takeover for spooking suppliers.
Reports have suggested that the deal, announced in November by MG Rover, is
close to collapsing because of Chinese concerns about the British
manufacturer's perilous financial situation. MG Rover executives and British
government officials are in China holding emergency talks with SAIC.
MG Rover said no cars were being built Thursday on the day shift at its
Longbridge plant in Birmingham, central England.
"Given the amount of negative media coverage this week it is no surprise
that we have suffered a few isolated component supply problems," the company
said. "For this reason we have temporarily suspended production."
MG Rover said it remained optimistic that production would return to normal.
Tony Murphy, national officer at union Amicus, which covers the MG Rover
workers, urged supply companies to wait for news of a deal.
"The problem is that some in the supply chain are panicking and this is
having an effect on the delivery of parts," Murphy said. "We would urge MG
Rover's supply companies to hold their nerve."
The troubles at MG Rover - an industry stalwart that employs more than 6,000
Britons - come at a sensitive time for the government, with a general
election just four weeks away, and the Department of Trade and Industry has
offered a 100 million pound (US$188 million, euro142.42 million) bridging
loan to keep MG Rover solvent if a deal with SAIC proceeds.
Trade and Industry Secretary Patricia Hewitt said the government would do
everything possible to bring the deal to a successful conclusion.
"We have been giving Rover every possible support," she told the House of
Commons on Thursday. "A bridging loan has been offered in order to provide a
bridge to a commercial deal and that remains the case but commercial
discussions are taking place and I'm afraid that at this point there is
nothing more I can say publicly."
MG Rover Chairman John Towers said from Shanghai earlier this week that the
company's directors have offered "extensive personal commitments" to ensure
the deal goes ahead.
SAIC's acquisition of MG Rover requires 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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