Monday, 6 July 2009

Longbridge Shame

My decision to leave Rover shortly after The Phoenix group took over Longbridge was based on my belief that the team had up to five years to find a partner or they would have to close. As this would put me in a position of being 55 years old and looking for a job I took the option which provided the best long term security for myself and my family and took the position I still hold at Warwick Business School.

I never doubted the commitment or the capability of John Towers and his team as I had worked with John since the eighties when I joined Land Rover. What I did doubt however was whether there were any serious motor manufacturers in the world who would not be pleased to see a plant with the capacity of Longbridge closed, as there was and still is too much capacity for motor manufacture, the results of which are all too visible right now.

Although they tried, the group could not find a partner even though discussions with a Chinese company went right up to the deadline. We all know the outcome; six thousand Longbridge workers out of work and more in the supply chain and what was left of the company went to China for peanuts anyway. We are still hearing promises about some form of production of the MG sports car but nothing seems to materialise from this either. The government did much the same as they are doing today, they announced loads of meaningless initiatives but said their hands were tied by European legislation regarding financial help – although they didn’t seem constrained by the same requirements when bailing out the financial system recently.

Then the UK government in its wisdom decided that they needed to hold an enquiry to discover what happened to the £300 million that was given to the company by BMW as a loan so that the Phoenix group could take a plant that BMW had announced was loosing £290 million a year off its hands. Now these are all large numbers so they need to be put into some context; to develop a new car and get it to the marketplace costs around £250 – 500 million, so in motor industry terms these numbers are not that big. Bearing this in mind, the Phoenix group made a good job of reducing the losses when a company with the reputation of BMW could not - but it could not invest in new models.

So, there seems to be some smoke screen being put up by the government about £40 million in salary and pensions taken by 4 executives over 5 years. I am speechless, they have spent £16 million to discover that the Phoenix executives who put their own money and reputations on the line were paid about a quarter of what the new chief executive of the bailed out RBS is going to be paid.

I looks to me like the government is trying to ensure that blame is directed towards the people who were trying to save the company rather than towards their own weak and ineffectual efforts. Longbridge was not the same company that hit all the news in the sixties and seventies and by the time it closed they had not lost one minute to industrial action in 25 years and the workforce had voted to accept some of the most modern and efficient working practices in Europe. It is a great pity that their efforts have gone largely unrecorded.

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