Mass job losses as Rover collapses

LONDON - Bankrupt carmaker MG Rover faced break-up and mass job losses on Friday as administrators said there was no hope of selling the business whole, dealing a blow to the Labour Party as it campaigns for re-election.

Administrators PricewaterhouseCoopers (PwC), appointed last week after a rescue deal with China's Shanghai Automotive Industry Corp (SAIC) broke down, said the firm's 6,000-strong workforce now faced mass redundancies.

"We have concluded that there is no realistic prospect of obtaining sufficient further finance to retain the workforce while the position with other parties is explored," joint administrator Ian Powell said in a statement.

Administrators said employees were now being notified of "significant redundancies" and there was no chance of selling the business whole. SAIC earlier formally advised the government it would not resume talks on MG Rover's future.

The 100-year-old carmaker, which once produced the iconic Mini and the Land Rover and made MG sports cars and Rover saloons, has been in its death throes for a week.

Its collapse is politically embarrassing for the government which is campaigning on the back of its economic record to win re-election on May 5.

The government, which is defending a number of slim majorities in seats around MG Rover's main Longbridge plant in Birmingham, said it would announce details on a support package for workers later today.

"This is devastating news for the workers, their families and the wider community. Over the last week the unions and government have done everything possible to try and secure Longbridge's future as a going concern," Secretary of State for Trade and Industry Patricia Hewitt said in a statement.

FINAL CHANCE

Unions were already preparing for mass redundancies before PwC made its position clear, indicating there was no point in extending the government's 6.5 million pound loan which keep the company ticking over for the past week.

"The one in a million chance we felt our people had has now been taken away," Transport & General Workers Union (TGWU) General Secretary Tony Woodley said in a statement.

An SAIC spokesman said, "We will not be entering into any talks over joining with MG Rover or buying MG Rover out of administration."

MG Rover is now expected to go into liquidation and sold off in pieces.

"In addition to exploring the interests of SAIC we have received a number of other enquiries. In our view, none of these is capable of resulting in a sale of the complete business," Tony Lomas, joint administrator, said.

Around 15,000 jobs from auto parts suppliers in Britain may also be affected by the collapse. Car dealer Reg Vardy said its earnings for the year would be hit.

Sources familiar with the situation have not ruled out SAIC buying MG Rover assets if the company was broken up, however.

Automotive News Europe, which initially broke news that MG Rover was in talks with SAIC, reported that the Chinese firm was expected to swoop on the firm's assets if it collapsed.

"By forcing the British automaker into bankruptcy, SAIC could get just what it wanted all along -- MG Rover's assets without its liabilities," Automotive News said in a summary of a report due for publication on Monday.

A British icon dating back to 1905, MG Rover has in its various guises produced some classic cars alongside the Mini, including the Morris Oxford and Morris Minor, the Austin Seven, the MGB sports car and the cheap and cheerful Mini Metro.

- REUTERS