MG Rover “rescue deal” by British government failed

The desperate efforts by the British government to negotiate a “rescue deal” with China’s Shanghai Automotive Industry Corporation (SAIC), China’s biggest auto manufacturer for MG Rover came to nothing.

Apart from the political inconsequence the MG Rover collapsed.
The latest incident also highlights erosion of indigenous British manufacturing base since the Labor Party came to power in 1997, now dominated by the US and Japan in automotive, electronic and high tech sectors.

It is estimated that some million manufacturing jobs have been lost. The financial collapse of Rover is a devastating blow to suppliers, workers and wider community in the British midlands.

Today the key auto manufacturers in Britain are Nissan, Toyota (Japanese), plus Ford and General Motors - the American companies.

It remains to be seen what “support package” the Blair Government proposes to structure. It is assumed that the government will launch “special retraining” programs to rehabilitate laid-off workers in the job market.
Earlier the government offered a “bridging loan” of $187 million to MG Rover, while it was negotiating a bilateral rescue package deal with China’s Shanghai Automotive Company, but Chinese officials have concluded that British company may remain insolvent despite the “bridge loan” and obviously China has pulled out of the deal.

The car production has stopped at Rover’s Longbridge plants since Thursday. The company has yet to appoint a receiver and it is not known if sections of the MG Rover Company will be put up for sale.

According to some observers, Shanghai Automotive may be interested in buying a part of the company at “basement bargain” price from the liquidators, as Rover name will vanish from car production after 101 years.

Earlier Germany’s BMW tried to launch a rescue operation and bought the company for a nominal sum. But during the two years of “restructuring attempt” BMW incurred sizeable losses. And then BMW was planning to sell the sick company to a venture capitalist, but nothing materialized.

MG Rover’s main brand asset is name of MG sport car, which ruled waves in domestic car markets in 1950s, and the MG brand name is currently worth £50 million but minus this the accountants are unlikely to salvage much from the MG Rover wreckage.
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