Defending Jobs at Rover - 2
BMW Throws Rover to the Asset Strippers
By a Rover worker
(First published in Socialist Outlook April 2000)
On March 15, the German newspaper Suddeutsche Zeitung revealed that the BMW board were about to discuss a plan to break up Rover Cars and hand over the bulk of it to a group of venture capitalists called Alchemy with a sweetener of £500m. The plan involves the virtual closure of Rover's Longbridge plant in Birmingham. Longbridge would continue to produce middle range Rover 25s and 45s and the existing (old) Mini until it runs out. It would then become a specialist plant making low volume sports cars with the MG badge. At best this would involve the loss of 7,500 of the 9,000 jobs at the plant. Once the knock on effect on component, supplier, service and dealer networks are taken into account 50,000 jobs are likely to go.
Land Rover in Solihull would be sold to Ford. Although this would not produce immediate redundancies, Ford promptly announced that the acquisition would give them economies of scale in the 4x4 market. - opening up scope for rationalisation, and thus job cuts. Rover's Cowley plant in Oxford would stay with BMW and would produce the luxury Rover 75 for a period of time under licence for Alchemy. The production lines for the new BMW-badged Mini would be moved to Cowley from Longbridge.
It quickly became obvious why the 75 production was not to be moved. The result of the shock announcement of the deal was that sales of all Rover models have slumped, as buyers wonder whether they would be able to get spare parts, or whether the three-year warranty meant anything. As we go to press, the latest news is that production of the Rover 75 is to be halted for another month after disastrous feedback from dealers, with sales at a standstill and orders cancelled after the BMW announcement.
BMW have also declared that they intend to hold on to the Rover body and pressings plant in Swindon, but only while they tried to sell it to a specialist firm. How feasible this might be, when a major part of the Swindon plant's work is for the decimated Rover range, is questionable. It could well close or be drastically cut in size.
The unions are saying that the immediate redundancies will be 9,500 in Rover, although this includes a figure of only 2,500 from Longbridge, and 500 from Cowley. They seem to be making the assumption that some cars will still be sold over and above the enormous stocks that have built up already. But already supplier firms are shedding workers, and Rover plants have already got rid of hundreds of agency workers, who do not appear in anybody's figures.
BMW claim that the reason they decided to get rid of Rover was the enormous losses it was making. Figures of up to £800 million are being quoted. It is no doubt true that they were making losses, but what is the real figure? And why did BMW's plans go so wrong? BMW bosses have blamed the strength of the pound and the lack of Rover sales in the UK.
BMW brought Rover for a song six years ago it from British Aerospace (BAe). BAe had in turn bought it, when it was Leyland Cars, from the Tory government of the day, which saw a bargain-basement sale as the means of denationalising it. BAe was attracted to the possibility of cutting back production and selling off "surplus" factory sites. They had asset stripped it quite extensively before they sold it on. At first BMW let the local management run things day-to-day, but all the major decisions were made in Germany. At that time BMW didn't have a 4x4 vehicle of their own, and the Rover deal gave them Land Rover. But they have now built a plant in the USA producing BMW 4x4s.
They have also allowed the Rover models to become out of date, and took a very long time to prepare a replacement for the obsolescent middle range 25 and 45. And although they did produce the new Rover 75, this was aimed at the luxury market, where new models take time to establish themselves. Sales figures dropped when they ended production of the bottom range Rover 100 three years before its planned replacement - the new Mini, a car which conveniently fits into the BMW range - was ready. So all the decisions that created the sales crisis were made by BMW.
But the figures are dubious. How much of the losses were charges imposed on Rover by BMW themselves in order to minimise profit showing up in their accounts in Britain? For example how much did BMW charge Rover for sending over managers 'on loan'? How much was charged for engineering work, or for research work? How much did Rover have to pay for their workers to be 'trained' on placements in Germany, where they wound up merely working on BMW's production lines? How much has Rover had to pay for development of the new 4x4s, which BMW will now be able to produce in their American plant? The biggest question of all is what proportion of the claimed losses are for the research and development of the new Mini and Rolls Royce models, from which BMW will still have the full benefit once they go into production?
All of the Rover/BMW books revealing these financial details must be opened up to scrutiny by a committee of the Rover workers whose lives will be effected by the decision. This committee should also look back on the details of the BAe deal. Far from Rover workers being to blame, they have followed their union leaders' advice, and done everything BAe and then BMW asked of them.
Concession bargaining compounded the problem
The other major factor involved in this is the effects of the various rounds of concession bargaining engaged in by the unions over the past eight years or so. The infamous "Rover Tomorrow" deal signed in 1992 was full of commitments to "flexibility", which was supposedly be given in exchange for a commitment from the company of "jobs for life". This was at the height of the so-called 'Japanisation' period, which saw the introduction of new management styles which were supposed to be the salvation of Rover as a car manufacturer.
When BMW took over they agreed to continue with the 'jobs for life' commitment, but demanded more concessions to maintain it - which they achieved in a series of individual plants - and then in October 1998 BMW threw down a fresh ultimatum. They threatened to close Longbridge unless workers there agreed to a new "Working Time Account" - otherwise known as the banking of hours. Under this scheme workers would continue to be paid if they were laid off - as they had been previously - but in future they would have to pay back the time when it suited the company to boost production. BMW also achieved what was effectively a two-year wage freeze. The same deal also included the introduction of more extensive shift working, which meant the machinery in all the plants would be used to a greater degree.
Since then management has also introduced the large-scale use of Agency workers, avoiding adding new staff to the company's payroll. Though the 1992 deal had been accepted by a wafer-thin 51% majority of the work force, the 3-1 majority for the 1998 deal was due to workers at Longbridge being persuaded to vote overwhelmingly in favour under the threat of closure. In each instance the union leaderships, notably Tony Woodley of the TGWU, argued that the deal on the table at the time was "the only way to save the company".
The role of new Labour
The present government has also played its part in the BMW-Rover fiasco, seeking to promote the New Labour notion of a "partnership" between workers and capital. Last summer, still under the threat from BMW that it would pull out of Longbridge, Trade Secretary Stephen Byers came up with a £125 million aid package to bail out the firm - a deal which almost immediately fell foul of the European Union rules. Rover-BMW chair Joachim Milberg, while complaining even then of the strength of the pound, insisted that Longbridge would be virtually rebuilt to double its capacity, in a massive investment programme. Byers was fulsome in his praise for the deal, declaring "I wanted the Longbridge agreement to be one which heralded a new approach to government assistance to industry - a new approach which reflects a long term commitment and not a quick fix".
Nine months later the same Stephen Byers is picking his way through the wreckage, piecing together a "task force" to offer some hope of employment to the tens of thousands who stand to lose "jobs for life" with his "partner" firm in the West Midlands. Union leaders, too, were over the moon at the way they appeared to have successfully prostrated themselves before the German car giant. Tony Woodley, whilst flagging up still more concessions that had been made to secure the deal, admitted that "the pain and loss at Rover still isn't over yet". Woodley of course will not suffer the pain: he is happy to leave that to TGWU members. But he still felt able to complain that "My problems as chief negotiator are far from over - they are only beginning".
This was more true than he believed at the time. Even more up-beat in his enthusiasm for the ill-starred deal was AEU leader and avid fan of "social partnership", Sir Ken Jackson, who claimed the package "heralds a new era". His view was echoed by fellow Blairite Roger Lyons of the white-collar union MSF, who declared that "We are particularly pleased about the future job security that this agreement will bring for all our members."
This type of concession bargaining has taken place in a Dutch auction of jobs and conditions in plants all over Europe, leading to huge increases in productivity and a massive extension of antisocial shifts. Each plant has been able to produce much more - and one consequence of this is the growth of so -called "over capacity" in the car industry on a global scale. Now the chickens are coming home to roost.
The Wider Crisis in Manufacturing Industry
The Rover-BMW fiasco is also part of a wider crisis facing British-based manufacturing industry. The current strength of the pound against the Euro - itself a cornerstone in Gordon Brown's economic policy - means that British plants are the weak link in a growing drive towards the rationalisation of production across Europe, driven on by the logic of the EU single market.
Most manufacturing companies either want to concentrate their production outside of Europe altogether - taking advantage of the highest levels of productivity available globally - or they want to be inside the Euro zone and avoid currency fluctuations within their main market. The European Union has resulted in attacks on jobs and services and to the single currency which will deepen this process of rationalisation still further. But currently much of manufacturing industry within Britain sees itself as in the worst possible position - inside the EU but outside the Euro.
The Ford plant at Dagenham, which has been run down to a single model on a single shift is no longer viable under the conditions of today's car manufacture. Urgent talks are going on between Ford and the government to try to avert closure and the loss of thousands of jobs. But last month Ford management announced a sweeping review of its European manufacturing operations, aimed at cutting overall capacity. The review will not be finalised until mid April, but Ford management has said that it will rule nothing out. The precarious situation of Dagenham is obvious. If Dagenham closes the next Fiesta will be made in Cologne. And the rot does not stop there. The plight of BMW now leaves the future of Rolls-Royce Motors in the balance, and the Goodyear tyre making plant in Wolverhampton is also at risk with 2,500 jobs at stake. The plant went on short time last week and management refused to give the unions any assurances for its future. This follows cutbacks and redundancies at other tyre making plants in the Midlands. And finally there is the question in all this as to whether a weakened and humiliated BMW will survive once it has got rid of its UK plants. The vultures are already circling.
So what is the government doing in all this? Absolutely nothing. New Labour is going all the way with today's global market. "There's nothing we can do," they say. "We are only the government: these are multi-national corporations we are dealing with". They have to be confronted with the demand for nationalisation - which is allowable under EU rules. What is not allowable under EU rules, of course, is for the government to put into these companies the money necessary to regenerate them after the ravages of their period in the private sector. Far from saving jobs, years of concession bargaining by the unions has helped to pave the way to more plant closures. The only answer for Rover and Ford workers faced with an increasingly aggressive employer is a fight to oppose the plans for rationalisation. The demand must be that just as the workers have been obliged to stick to the concessions negotiated on their behalf by the unions, BMW must stick by the deal they signed promising 'jobs for life'. This means that BMW must build a replacement for the 25 the 45 at Longbridge. and a new car at Cowley. Similarly Fords should fulfil its agreement to build the new Fiesta at Dagenham. If these companies refuse to do this, then they should be nationalised, alongside the components industry, without compensation.