By Alan Jones, Industrial Correspondent, PA News
German car giant BMW today launched a strong defence of its shock decision to
sell Rover as it revealed the huge scale of losses left it with "no choice"
but to break up the group.
Losses rose by over £152 million last year to more than £730 million - an
increase of 26%.
BMW chairman Professor Joachim Milberg said the figures highlighted the
"bitter reality" facing the German owners.
He also fiercely denied that he misled the Government over the future of
Rover, maintaining that he had given several warnings that the high value of
the pound was causing problems.
Prof Milberg made his comments at the BMW headquarters in Munich as MPs from
the Commons Trade and Industry Select Committee visited the huge Longbridge
plant in Birmingham as part of an inquiry into the likely jobs impact of the
Rover sale.
The German car group revealed in its annual figures that it had made
accounting provisions for £1.9 billion in costs to cover restructuring at
Rover during the year.
The Rover burden offset improved performance at the BMW car and motorcycle
business and drove the German group into a net loss of £1.52 billion for
1999.
Sales of Rover cars were down by 7%, and Prof Milberg said British car buyers
could help secure jobs which will remain despite the break-up of the group.
He told a press conference there was "no alternative" to the decision to
break up Rover, including the sale of Longbridge to venture capitalists
Alchemy Partners.
He admitted that BMW had not been able to penetrate the lower mid-range
segment of the car market with Rover.
Answering claims that he had misled the British public and the Government
over Rover's future, Prof Milberg said: "That accusation really hurts me
personally.
"At all times I answered all questions on the future of Rover to the best of
my knowledge."
He asked what would have happened if BMW had announced its "considerations"
in January, saying it would have had the opposite of the "clarity" which was
needed.
BMW had worked "all out" on restructuring Rover right up the very end, but he
added: "We could no longer justify continuation at Rover. The brand was not
strong enough to do the job."
He said the bitter reality was that BMW had no choice but to move to talks
with Alchemy Partners.
Prof Milberg said there had never before been an investor in Rover of the
calibre of BMW, adding that the investment would not be lost forever.
He strongly denied accusations that he misled Government ministers over the
prospects for Rover's future.
"The truth is exactly the opposite. For years we have taken every opportunity
to tell the Government that the high value of the pound makes it impossible
for companies such as Rover to be viable in the long term."
BMW drew the attention of the "serious situation" at Rover to the Government
on many occasions and Prof Milberg said no-one could claim to have been
misled or not have known about the situation.
BMW would continue to employ several thousand workers in the UK, at the
Cowley plant in Oxford and Hamms Hall, Birmingham.
Union leader Sir Ken Jackson repeated charges that BMW had misled workers and
the Government despite Prof Milberg's denial.
"If BMW had invested the cash it promised, then we could be looking at a
successful Longbridge. Rover workers will be sickened that BMW is once again
trying to shift blame for their appalling behaviour."
The select committee will question business leaders in the West Midlands
later today before reconvening in Westminster tomorrow when unions, dealers,
Rover officials and Alchemy Partners will be quizzed by MPs.
Liberal Democrat trade and industry spokesman Vincent Cable called for the
Government to devise a strategy for entering the euro.
Dr Cable said: "This confirms once again that the over-valuation of the
currency is a major economic problem which accounts for troubles at not just
Rover, but also Harland and Wolff and the impending difficulties at Ford.
"Until the Government develops a clear strategy for entering the euro at a
realistic exchange rate there will continue to be massive uncertainty and a
great deal more damage to manufacturing industry."
Triumph Sports Six Club
International Liaison Secretary
1963 Triumph Vitesse 2-Litre Convertible
Wimbledon, London, England.
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