Rover - Act now to challenge BMW asset-strippers -
How concessions cost more car jobs
A Rover worker
ON MARCH 15, the German newspaper Suddeutsche Zeitung revealed that the BMW board were about to discuss a plan to sell Rover cars to a group of venture capitalists called Alchemy.
The plan involved the Longbridge plant in Birmingham continuing to produce Rover 25s and 45s and old Minis until they ran out, and then becoming a specialist factory making MG sports cars.
At best this would involve the loss of 7,500 of the 9,000 jobs at the plant. In reality 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 immediately announced that it 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. The production lines for the new BMW-badged Mini would be moved to Cowley from Longbridge, and BMW would proceed to produce that car for itself. Cowley would also produce the luxury class Rover 75 for Alchemy.
It immediately became quite obvious why the 75 production was not to be moved: the effect of BMW’s shock announcement on the dismemberment of its British subsidiary was that sales of all Rover models stopped, as buyers wondered whether they would be able to get parts, or whether the 3-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. The extent to which production of this model will ever resume must be open to serious doubt.
BMW also declared that they intended to hold on to the Rover body & 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. The most likely situation appears to be that it would soon 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.
Union leaders seem to be making the assumption that some Rover 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 say the reason they have taken these decisions was the enormous losses that they were making: figures of up to £800 million are being quoted. It is no doubt true that they were making losses: but the important questions are what is the real figure – and why did its plans go so horribly wrong?
BMW bosses have blamed the strength of the pound, and the lack of Rover sales in the UK.
The first thing to say is that BMW brought the company for a song 6 years ago, when they took over from British Aerospace.
BAe had in turn been bought the company as Leyland cars from the Tory government, which saw a bargain-basement sale as the means of denationalising it. BAe was attracted to the possibility of slashing back production and selling off "surplus" factory sites, and had asset stripped quite extensively before they sold it on.
Once they had bought the company, BMW took all the decisions. At first they 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 meant they now owned Land Rover. Suddenly they built a plant in the USA producing BMW 4x4s.
They allowed the Rover models to become out of date, and took a very long time to prepare a replacement for the obsolescent 25 and 45. And although they did produce the new Rover 75, this is aimed at the luxury car market, where new models always take time to establish themselves.
Sales figures dropped when they ended production of the 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 what of the figures themselves? How much of the losses were charges imposed on the Rover operation by BMW themselves, minimise any possible 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 in fact the wound up merely working on BMW’s production lines?
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. 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?
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 this decision will have decimated. 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.
There was continuous concession bargaining. The "Rover Tomorrow" deal, in 1992 was a document full of commitments to "flexibility", which would supposedly be given in exchange for a commitment from the company of "jobs for life".
This was at the height of the ‘Japanisation’ period, introducing 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’, but demanded more concessions to maintain it.
They gained a series of concessions from individual plants – and then in October 1998 BMW threw down a fresh ultimatum.
They threatened to close Longbridge unless workers agreed to a new "Working Time Account".
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 2 year wage freeze, and 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, BMW has also introduced large scale use of Agency workers, avoiding adding new staff to the company’s payroll.
Though 1992 deal had been carried by a wafer-thin 51% majority of the workforce, 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 leadership, 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 present government, too, has 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 same threat from BMW that they would pull out of Longbridge, Trade Secretary Stephen Byers came up with a massive £125 million aid package to bail out the firm – a deal which almost immediately fell foul of the European Union.
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 in which they appeared to have successfully prostrated themselves before the German car giant.
Tony Woodley , 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". Mr 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.
More up-beat in his enthusiasm for the ill-starred deal was AEU leader and avid fan of "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 Rover-BMW fiasco is also part of a fundamental 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.
Manufacturing industry within Britain sees no future remaining outside the Euro zone, and has been operating under the assumption that New Labour were keen to get into the Euro zone as soon as politically possible. The big firms thought this would be soon after the next election, following a referendum.
But things have changed. The anti-Europe xenophobia whipped up around British beef and asylum seekers, with the full support and involvement of the government itself, has increased reactionary opposition to the Euro – to a point where no one knows when Britain is likely to join the Euro zone or even whether there is to be a referendum.
Manufacturing companies, particularly in cars and car components, are not prepared to wait any longer. They either want to concentrate their production outside of Europe altogether – taking advantage of the highest levels of productivity available internationally – or they want to be inside the Euro zone.
Rover is just the first of a series of shocks to come. 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.
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 are 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 & 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.