BMW promises £3bn for Rover `world-class facility’

BMW this week unveiled plans to pour £3bn into Rover over the next five years – half of which will be used to transform the ailing and outdated Longbridge car plant into one of the most productive in the UK. The move was announced on Wednesday by Secretary of State for Industry Stephen Byers, who […]

BMW this week unveiled plans to pour £3bn into Rover over the next five years – half of which will be used to transform the ailing and outdated Longbridge car plant into one of the most productive in the UK.

The move was announced on Wednesday by Secretary of State for Industry Stephen Byers, who confirmed that the Government would support the investment with an aid package totalling £152m.

The deal is the biggest ever in the UK car industry by an overseas investor, and makes BMW the biggest inward investor in the UK. BMW has already injected more than £2bn into Rover since 1995.

The massive new funding will lead to a complete rebuild of the Longbridge site, creating hundreds of new engineering jobs and substantial orders for capital equipment suppliers. Around £550m a year will be pumped in up to 2005, around twice the amount committed when Rover was owned by British Aerospace.

Byers said the move would safeguard the 9,000 jobs at the plant, as well as 50,000 in the West Midlands.

BMW board chairman Professor Joachim Milberg said: `We are not just refurbishing an old plant. This will be a total transformation from Britain’s largest car factory to a world-class manufacturing facility.’

BMW has pledged to boost productivity at the plant by more than 10% per year over the next five years. A range of moves include further flexible working arrangements at its loss-making subsidiary, dubbed `The English Patient’ by the German press. Rover is not expected to break even until at least 2002.

Milberg said the long-term employment target at Longbridge would remain at its current level when the new Mini and successor to the Rover 200 and 400 come on stream. The two model ranges are planned to take capacity at the plant to nearly 400,000 cars per year.

Byers said the aid package, which includes £23m of local funding, will be delivered in six installments, and is tied to productivity improvements and investment at the plant. Officials were said to be confident the funding would be cleared by the European Commission.