2,400 to go at Rover

ROVER TOLD union leaders yesterday that it intends to scrap 2,400 jobs, most of them at its Longbridge plant in Birmingham, as the Government ruled out an aid package for the stricken car maker.

Peter Mandelson, the Secretary of State for Trade and Industry, stated his position bluntly: "It [Rover] really has to sharpen up its act. It has done so dramatically in recent years but I have to say it has a long way to go before it is up there with the best.

"The salvation for Rover lies in its own hands - the hands of its management, executives and entire workforce."

Confirmation of the planned job cuts came as it emerged that Rover's losses this year may be close to pounds 1bn.

Bernd Pischetsrieder, the chairman of Rover's parent company BMW, is understood to have told a delegation of British union officials in Munich last weekend that losses could be as high as pounds 900m.

In a message to all 38,000 employees yesterday, Rover said that the "very heavy losses this year" were mainly due to the strength of the pound, which made it hard to sell cars and make a profit on them.

Unless unions agree to the job cuts in the next six weeks, production of the new Mini, due to appear in 2000, will probably be switched to Cowley as a prelude to the closure of the Longbridge plant, which employs 18,000.

Other measures being examined in a bid to cut Rover's employment bill by pounds 150m a year include a wage freeze, reductions in benefits such as holiday entitlements and an end to overtime payments.

In an emergency statement to the Commons, Mr Mandelson announced that he would meet Mr Pischetsrieder and the chairman of Rover, Walter Hasselkus, today to discuss the company's plight. He said that Rover had a "long way to go" to match the best world standards of competitiveness and had productivity levels that were only two-thirds of those at its German counterparts.

While Rover was facing undoubted difficulties, MPs should not forget that Vauxhall, Jaguar, Honda and Toyota were all creating more jobs and the motor industry could thrive with the right investment, he said.

Mr Mandelson's remarks sparked angry responses from opposition MPs and trade union spokesmen, who attacked his statement as a crude attempt to duck government responsibility for high interest rates and a strong pound.

John Redwood, the Conservative spokesman on trade and industry, said that Mr Mandelson resembled an "undertaker trying to deny all knowledge of the reasons for the death.

"Peter Mandelson wants to try and put all the blame for Rover's difficulties on its management and its workers. Rover are not responsible for the high interest rates, high business taxes and high employment costs which are hitting British business and jobs. The Government is."

Ken Jackson, the general secretary of the AEEU engineering union, said the Bank of England's Monetary Policy Committee should cut interest rates by at least 0.5 of a percentage point to help British manufacturing.

He called on the Government to commit Britain to joining the single currency at the earliest opportunity.

"Rover workers have already improved productivity by 10 per cent in just two years. We want to build on that achievement, but blaming people for job losses is not the answer," he said.

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