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Batuk Gathani

London , April 8

THE oldest British car manufacturer, MG Rover, which has been trading since 1904 has collapsed as desperate efforts by the British establishment to negotiate a "rescue deal" with China's Shanghai Automotive Industry Corporation (SAIC) - China's biggest auto manufacturer - came to nothing.

Last night, MG Rover Company has halted production as suppliers of auto parts demanded "cash on delivery" payment terms. On the eve of the British general election on May 5, the spectre of some 20,000 workers engaged in allied industries and over 6,000 workers at MG Rover being declared redundant, could have far reaching consequences for the ruling New Labour Party led by the British Prime Minister, Mr Tony Blair.

Apart from the political consequences of the ignominious MG Rover collapse, the latest incident also highlights erosion of indigenous British manufacturing base, now dominated by the US and Japan in automotive, electronic and high tech sectors.

Since the Labour Party came to power in 1997, it is estimated that some million manufacturing jobs have been lost and hence, indigenous British manufacturing base has been weakened. Today the key auto manufacturers in Britain are Nissan, Toyota (Japanese), plus Ford and General Motors - the American companies. The financial collapse of Rover is a devastating blow to suppliers, workers and wider community in the British midlands.

It remains to be seen what "support package" the Blair Government proposes to structure. It is assumed that the government will launch "special retraining" programmes to rehabilitate laid-off workers in the job market. Earlier the government offered a "bridging loan" of $187 million to MG Rover, while it was negotiating a bilateral rescue package deal with China's Shanghai Automotive Company, but Chinese officials have concluded that British company may remain insolvent despite the "bridge loan" and obviously China has pulled out of the deal. The Rover team left China last night.

The car production has stopped at all Rover's Longbridge plants since Thursday. The company has yet to appoint a receiver and it is not known if sections of the MG Rover Company will be put up for sale.

According to some observers, Shanghai Automotive may be interested in buying a part of the company at "basement bargain" price from the liquidators, as Rover name vanishes from car production after 101 years. Earlier Germany's BMW tried to launch a rescue operation and bought the company for nominal sum equivalent too less than Rs 200. But during the two years of "restructuring attempt" BMW incurred sizeable losses. And then BMW was planning to sell the sick company to a venture capitalist, but nothing materialised.

MG Rover's main brand asset is name of MG sport car, which ruled waves in domestic car markets in 1950s, and the MG brand name is currently worth £50 million but minus this the accountants are unlikely to salvage much from the MG Rover wreckage. As MG Rover's some 6,000 workers face dire prospects of living off social, welfare and unemployment handouts from the government, the MG Rover directors have set up a £13-million trust fund that mainly benefits them and their families.

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