Rover predicts 24,000 jobs toll if Longbridge closure goes ahead

Complete shutdown of volume production at Longbridge will seriously affect the regional economy. And the lower tiers of the supply chain are likely to be worst hit, with the prospect of a cascade of business collapses

The immediate effect of the collapse of Alchemy’s bid for Rover last week was to make the outlook for jobs even more bleak, by resurrecting the possibility of the complete closure of Rover’s Longbridge assembly operations.

The demise of Alchemy’s negotiations came within days of the publication of the interim report from the taskforce set up to consider the impact on jobs of Rover’s sale. The report, which considers a range of scenarios for Longbridge up to and including complete closure, makes sobering reading.

The end of volume car production at Longbridge would have a significant effect on the whole UK economy. But the effects would be worst in the West Midlands, particularly in the area around Longbridge, in south west Birmingham and north Worcestershire.

In all, Rover supports around 55,000 jobs in the region, says the taskforce. But not all of these are threatened (see table). The future of Land Rover, which is being sold to Ford, looks assured. Some engineers at the Gaydon R&D site will also transfer to Ford. Rover’s Oxford plant is being kept by BMW to build the new Mini and other future models and had been thought to be safe.

BMW is to keep the Longbridge powertrain operation, due to transfer to a new factory at Hams Hall in 2003, and the body panels operation at Swindon. Some jobs are at risk at these plants to the extent that they supply volume models at Longbridge. But the axe will fall most heavily on volume production operations at Longbridge, which produced over 200,000 Rover 25s, 45s, MGFs and Minis last year.

The taskforce’s worst-case scenario for job losses is that, if volume production at Longbridge ceases entirely, 24,000 jobs in the region would go. These are made up of 8,000 at Rover directly, a further 8,400 to 11,400 in the supply chain, and an estimated 5,500 to 6,400 jobs throughout the region through income multiplier effects – unrelated jobs which nevertheless rely on the purchasing power of workers at Rover and its suppliers.

But even at a volume of 35,000 units annually – Alchemy’s original proposal – 19,000 jobs would be lost.

The picture for job losses among suppliers has been put together from a survey conducted by the taskforce, results of which are still coming in. So far 140 Tier 1 suppliers and 540 other suppliers have been identified. There are 14,000 jobs in first-tier suppliers and 15,300 in the lower tiers dependent on Rover, of which four out of 10 depend on Land Rover and are considered fairly safe. However, the Tier 1 group, mainly multinationals, are ‘footloose’, says the report. ‘The loss of Rover business may trigger decisions to relocate overseas or outside the region,’ it adds.

Even more bleak is the picture for lower tier suppliers. Around 36% of suppliers depend on Rover for at least 20% of their turnover and 3% do 80% of their business with the company. The concern is that for firms which are so dependent the loss of business could be enough to send them to the wall.

The taskforce recommends that long-term attention is now turned to five priorities which it will flesh out in a final report in June. These are:

* To diversify the workforce and the West Midlands economy so that it is less dependent on the automotive sector;

* To modernise the automotive sector and suppliers – building on the work of bodies such as the Society of Motor Manufacturers and Traders’ Industry Forum;

* To regenerate the sites of Rover and its suppliers to accelerate investment and create new employment opportunities;

* To tackle the employment needs of the groups affected by the Rover break-up; and

* To tackle the social consequences of reduced employment opportunities and incomes.

An even more confusing development last week was a leaked suggestion that BMW plans to build up to 200,000 cars a year at the Oxford plant: initially the new Mini, followed by ‘entry-level’ BMWs (such as the proposed 2-series, expected to take the place of the abandoned Rover R30 project) and other future models. If volume production at Longbridge was also saved, this would leave automotive production in the region higher than it is now. But given the current chronic automotive over-capacity in Europe, this looks like a somewhat remote scenario.

{{In the balance: Rover’s direct employees – who is under threat?

Site Activity Jobs

Longbridge Rover 25,45, MGF and Mini production 5,130 Jobs at risk Facing sale or closure

Powertrain (engines and gearboxes for 2,360 Rover, Mini, MG and some Land Rovers) Some jobs at risk To be retained by BMW but would be affected by downturn in Rover production

Admin, design, engineering 1,570 Some jobs at risk

Gaydon R&D 2,330 Some jobs at risk Others will transfer to Land Rover development for Ford

Bickenhill Sales and marketing 340 Some jobs at risk

Warwick HQ 340 Some jobs at risk

Solihull Land Rover production 10,000 Safe Sold to Ford, largely unaffected

Total in West Midlands 22,070

Oxford Rover 75 and new Mini production 3,500 Safe To be retained by BMW, largely unaffected

Swindon Body panels 2,700 Safe To be retained by BMW, largely unaffected}}