Rover deal could force suppliers out of sector

5 April 2000
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06 April 2000 | Elizabeth Bellamy

Automotive suppliers in the West Midlands have become too reliant on car manufacturer Rover and many will be pushed out of the sector, according to an industry expert.

Professor Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff University Business School, estimates that BMW's proposed sale of the group will result in at least 10,000 job losses. Half of these will be assembly line jobs - primarily at Rover's Longbridge plant - with the remainder, about 5,000 jobs, to come from its supply chain. He said 90 per cent of the job cuts would take place in the West Midlands.

Many suppliers, especially small and medium-sized enterprises (SMEs), had become "order takers" for Rover, he said. "It's risky, but they didn't want to look a gift horse in the mouth."

Last month, BMW announced that it planned to sell loss-making Rover Cars and the Land Rover businesses. Venture capital group Alchemy Partners and automotive manufacturer Ford are set to take over the two respectively.

A Rover spokesperson said it was "impossible to say" what implications the sell-off would have for the group's purchasing staff, but added there would probably be some changes.

The company has more than 100 purchasing staff in the UK, mainly at Longbridge. They controls an annual spend of £7 billion, and a team of purchasing directors at BMW's Munich headquarters control one of £4 billion.

Rhys said it was unlikely that automotive suppliers could transfer their business to other car makers and that many would be forced into the engineering, electrical and service sectors.

In a bid to minimise the impact on industry in the West Midlands, the government has set up a taskforce that is expected to report back as early as next week. Rhys said that local industry should aim to develop new businesses and encourage existing firms, as well as attract inward investment.

While SME suppliers in the area faced a "bleak future", Rhys said the situation was not as bad for suppliers to Land Rover and Rover's Cowley plant, where the new Mini is to be produced from next year.


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