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peterbirksPerhaps I'm a little old-fashioned when it comes to political campaigning, but I can't help but feel that, if one of the buttresses of your electoral strategy is the strength of the economy, having the last British-owned mass car manufacturer in the country go belly-up on the first day of the campaign might not be considered the best of starts.
That it is in a region stuffed with marginal constituencies makes it worse for Labour, while Blair's bleating that (in effect) the best and only way to save Rover would be for the Chinese to step in is hardly the stuff of "proud British manufacturer". Anyway, surely if the Chinese DID step in to save the company (which they won't) they would be classed as economic migrants and promptly make themselves liable for deportation? The Shanghai Auto Company will pick up what it wants from the ashes of bankruptcy. There will be no Phoenix this time.
But this is by-the-by. The real story for games-players is that the purchase of Rover in 2000 by Phoenix is frighteningly reminiscent of keeping the cash in 1830 and "pushing the stock into the brown". Jonathan Coe's recent book The Closed Circle covers the rescue of Rover, where a sensible company that saw that the only way to save Rover was to cut production (and jobs) was beaten by a company that promised fewer job losses and thus got hold of the company for a tenner. Here are the ugly numbers;
Phoenix inherited £427m from BMW to fund redundancy settlements, plus £350m worth of unsold stock. It also got land and other businesses that it sold off for £1bn, If all this had been used to pay off the Longbridge workers in 2000, then the workers would have got an average of (wait for it), more than £150,000 apiece. Instead those workers got the satisfaction of working another four years and being thrown on the scrapheap, four years older, with only statutory redundancy pay. Oh, and there is STILL a hole in the Rover pension fund.
But the buyers of Phoenix managed the following; There is a £16.5m directors' pension pot. They have personal control of a (profitable) financing business which might (I am not absolutely sure of this) have been bought via a £10m loan note from, yes, Rover. What might be equally staggering, more than 30 years after Edward Heath called Robert Maxwell "the unacceptable face of capitalism", is that none of this was illegal. Rover was kept alive solely by burning money, week in, week out. And it wasn't the directors' money. This was a brilliant financial mugging. Immoral, but quite within the law. Depending on your attitude, the directors of Phoenix were brilliant, or amoral gits.
What Labour should emphasize is that there are still 240,000 car manufacturing jobs in this country. Rover was actually quite a small part of the British car-manufacturing industry. It just happens that the owners of the surviving companies are foreign. Looking at the way the British directors run car companies, this may be no bad thing.
That it is in a region stuffed with marginal constituencies makes it worse for Labour, while Blair's bleating that (in effect) the best and only way to save Rover would be for the Chinese to step in is hardly the stuff of "proud British manufacturer". Anyway, surely if the Chinese DID step in to save the company (which they won't) they would be classed as economic migrants and promptly make themselves liable for deportation? The Shanghai Auto Company will pick up what it wants from the ashes of bankruptcy. There will be no Phoenix this time.
But this is by-the-by. The real story for games-players is that the purchase of Rover in 2000 by Phoenix is frighteningly reminiscent of keeping the cash in 1830 and "pushing the stock into the brown". Jonathan Coe's recent book The Closed Circle covers the rescue of Rover, where a sensible company that saw that the only way to save Rover was to cut production (and jobs) was beaten by a company that promised fewer job losses and thus got hold of the company for a tenner. Here are the ugly numbers;
Phoenix inherited £427m from BMW to fund redundancy settlements, plus £350m worth of unsold stock. It also got land and other businesses that it sold off for £1bn, If all this had been used to pay off the Longbridge workers in 2000, then the workers would have got an average of (wait for it), more than £150,000 apiece. Instead those workers got the satisfaction of working another four years and being thrown on the scrapheap, four years older, with only statutory redundancy pay. Oh, and there is STILL a hole in the Rover pension fund.
But the buyers of Phoenix managed the following; There is a £16.5m directors' pension pot. They have personal control of a (profitable) financing business which might (I am not absolutely sure of this) have been bought via a £10m loan note from, yes, Rover. What might be equally staggering, more than 30 years after Edward Heath called Robert Maxwell "the unacceptable face of capitalism", is that none of this was illegal. Rover was kept alive solely by burning money, week in, week out. And it wasn't the directors' money. This was a brilliant financial mugging. Immoral, but quite within the law. Depending on your attitude, the directors of Phoenix were brilliant, or amoral gits.
What Labour should emphasize is that there are still 240,000 car manufacturing jobs in this country. Rover was actually quite a small part of the British car-manufacturing industry. It just happens that the owners of the surviving companies are foreign. Looking at the way the British directors run car companies, this may be no bad thing.
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Where is Stephen Byers now?
Date: 2005-04-09 10:38 pm (UTC)this state of affairs is long way from Byer's triumphant mood as the Phoenix group signed the deal.
I do wonder if the Alchemy group would have actually done any better, but its a moot point now. I suspect Labour will still win the election though.
Re: Where is Stephen Byers now?
Date: 2005-04-09 11:51 pm (UTC)thanks very much for covering this story. I was hoping that you would. It seemed too good to be true when Rover was given a breath of life in 2000 and it turns it that it was. What a colossal waste of UK taxpayers' money! Do you think that it was a 'long firm' based on emotional blackmail from the outset or did the directors actually believe that it could be restored to greatness? I can think of no faster way to go broke than to be the smallest of the volume car makers.
DY
P.S. I speak as someone who drives a 1996 Rover by the way. I am actually quite happy with it, but I appear to be in a minority. I rarely see the same make on the road.
Re: Where is Stephen Byers now?
Date: 2005-04-10 07:30 am (UTC)I see that the secretary of the TGWU, who also backed the Phoenix deal in 2000, has come up with a novel piece of blame-shifting, putting the whole caboodle at the door of BMW. If in doubt, blame the Germans.
Was it all a scam from the start? That's a good question and the correct answer might lie in the land of a bit of both and a bit of self-deception. Perhaps they convinced themselves that they were doing it to save Rover, but I'm sure that they were aware of the existence of the assets that they were effectively being given for nowt. If there is a choice between incompetence and immorality amongst British leadership, I tend to plump for incompetence. I mean, had the Phoenix team been REALLY crooked, they could have ripped off the company for a lot more than they have paid themselves for four years' hard work. Then again, perhaps they realized that by paying themselves a smaller amount and merely setting fire to the rest of the money would make it less likely that any official DTI inquiry will find against them.
Ity would be nice for there to be an official inquiry and for Byers and the TGWU guy to be called.