MG Rover

Why Rover Crashed

Julia Finch, City editor of the Guardian

The consultant director of design claims senior staff wasted company cash by taking business flights to Europe from Birmingham airport, when they could have flown for a fraction of the price on low-cost carriers.

He also accused the car group’s top executives of naivety in the way they handled negotiations with Shanghai Automotive, whose withdrawal from takeover talks pushed MG Rover into bankruptcy.

His comments, in a TV interview to be screened tonight and on Friday, come just a few days after the car group’s creditors were told they are unlikely to receive a penny of the cash they are owed. MG Rover’s debts, the administrators revealed, totalled £1.4bn and they have now all but given up hope of selling the business as a going concern.

Mr Stevens, who designed the McLaren F1 racing car before joining MG Rover in 2000, said the chances of pulling off the rescue deal with the Chinese were never more than 50-50. Even if it had been successfully concluded, he says, the benefits were never going to be as people had imagined. “They [Shanghai Automotive] weren’t going to take on the factory here, continue production just as it was and send cheap seat frames from China or something to cut the cost. It wasn’t going to happen like that.”

He describes Shanghai Automative as “undoubtedly very sharp people” and tells of a dinner for the two teams of negotiators in China. Mr Stevens claims the Chinese plied the MG Rover team with alcohol before starting talks after midnight in a bar. “I think the Chinese would have given themselves an advantage there.”

Mr Stevens says that an alternative deal could have been done with Fiat, but says the car group’s chief executive, Kevin Howe, seemed “over-awed” at a meeting with the Italians.

Fiat, he says, were keen to do a deal. “They were really up for that, totally,” but Rover backed out. Mr Stevens says the Rover bosses were worried about doing a deal with a company they did not know and concerned about the number and cost of redundancies it would have caused at Longbridge.

The car designer said executives refused to consider taking cheap flights to save money: “The concept of getting up early and driving to Stansted was just absolutely anathema to people within the company,” he says. Instead staff would spend £640 to fly from Birmingham to Italy. “I just used to die of frustration at that.”

Mr Stevens also criticised huge overstaffing at the plant. There were people employed, he says, to ensure snow chains would fit on cars.

The TV programme also suggests Rover wasted millions of pounds trying to build the brand with a return to motorsport. Former racing driver Mark Blundell, who was employed by the company as a driver and adviser, says: “There was a massive muddle in terms of what they were trying to do … There was disarray at so many different levels.”

A department of trade and industry inquiry is now under way into the collapse.

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