Britain: MG Rover – 20,000 jobs under threat

The ’ugly face of capitalism’

Three articles from The Socialist, paper of the Socialist Party, cwi in England and Wales.

MG Rover – 20,000 jobs under threat

Our economic record will be at the centre of the election campaign" declared Tony Blair. A few weeks later over 20,000 workers in Birmingham, the West Midlands and elsewhere face losing their jobs with the collapse of MG Rover.

One million manufacturing jobs have been destroyed since New Labour came to power in 1997. At the same time the number of millionaires has doubled.

Blair and New Labour gave their full backing to the ’Phoenix Four’ who were given Rover for just £10 in 2000. ’Vulture Four’ would be a more apt name. In five years they have bled MG Rover of £40 million to line their own pockets, while the company was making massive losses.

6,000 Rover workers, their families and thousands more working-class people face an uncertain future of unemployment, low-paid jobs (if they’re lucky) and insecure retirement. But Phoenix bosses don’t have to worry about their future. They’ve robbed £16.2 million from Rover to build a pension pot for themselves.

The maximum redundancy pay for a Rover worker (with 12 years experience or more) will be just £3,360!

The Financial Times called this "capitalism at its ugliest". We say this is capitalism full stop. MG Rover is not an exception. The capitalist free-market system is all about the super-exploitation of workers to maximise the profits of a rich elite. It’s this ’ugly’ system that New Labour, the Tories and the Liberal Democrats all support.

The Socialist Party stands for a different way of organising the economy and society; one where companies like MG Rover are publicly owned and controlled so that the economy can be democratically planned to meet the needs of the majority not to enrich a privileged few.

If you agree with that, then vote socialist on 5 May. But don’t stop there. Join the Socialist Party and help build a new workers’ party that can fight for a better future.

nationalise rover now

sack the board, not the workers

TENS OF thousands of workers in the West Midlands face an uncertain future, as behind closed doors administrators – in reality, asset strippers – pick over what Phoenix have left of Rover.

Dave Nellist, Socialist Party councillor, Coventry

Five years ago, when the BMW crisis threatened jobs at Longbridge, we warned that no private sector solution would guarantee the jobs of all Rover workers and those in component suppliers. We called for BMW’s assets in Britain to be taken back into public ownership.

That should be done immediately – but no compensation should be paid to the Phoenix Four. They seem to have protected and enriched themselves, unlike the thousands of workers who tragically were persuaded to trust them and who now face redundancy and the insecurity of an increasingly low-wage economy.

Longbridge, like the rest of British Leyland where it sprang from, has lacked the investment from the beginning for it to be able to compete on the world car market. That’s why we call for a plan to be drawn up, in conjunction with Rover workers, for public investment under democratic public control.

Hundreds of millions of pounds of public money will be spent picking up the pieces of this industrial vandalism if the Rover closure goes through. Rather than spend money on the aftermath of Rover’s collapse, it would be far better to invest it in keeping the industry alive.

But such huge public investment shouldn’t be a subsidy to another private company’s profits. Government intervention and public investment should be matched by public ownership and democratic public control.

And by the involvement of Rover workers themselves in the drawing up of a new plan of production to meet the transport needs of the whole of society.

To those who say it can’t be done – I can vividly remember as a young apprentice at the Rolls Royce Technical College in Bristol in 1971 hearing how the then Tory Prime Minister, Edward Heath, had nationalised Rolls Royce to prevent the break-up of the aero engine industry.

This was in only 24 hours of parliamentary time! If this New Labour government were serious about saving jobs, it could be done again.

Five years ago, the threat of massive job cuts led to a huge demonstration in Birmingham. We urgently need that same spirit of trade union action and community support to stop the vultures circling over Longbridge.

Also a 24/7 presence is urgently needed to ensure the administrators move no plant, machinery or cars without the prior agreement of the workforce. Any attempt to move material out of the plant must be actively blocked. There should be no stripping of the assets.


No more asset-stripping, renationalise, don’t subsidise

THE ROVER crisis is mainly down to the greed and short-sightedness of the capitalist owners. But the trade union leaders’ lack of leadership has also played a part.

Bill Mullins, Socialist Party industrial organiser

When BMW abandoned their link with the Longbridge plant in early 2000, Tony Woodley, now the TGWU general secretary but then the union’s national officer for the car industry, supported the Phoenix Four’s takeover of Rover.

Woodley appeared at the factory gates alongside Phoenix director John Towers to the cheers of the Longbridge workers. His support for this group of gangster capitalists, probably through a lack of confidence to demand that the government take Rover into public ownership, played a direct role in the debacle to come.

If he had called for the re-nationalisation of Rover, including the Cowley plant in Oxford and the Powertrain plant near Birmingham, this would have been supported by many of the workers. Instead, he gave Phoenix unearned political capital.

The Rover debacle is a direct result of the deliberate policy by the Labour government not to ’interfere’ with the workings of the capitalist markets. Successive Tory and Labour governments have thought they could swap Britain’s manufacturing base for a service-based economy.

Blair is a proponent of unfettered market capitalism in Europe. He has demanded that Germany, France and Italy as well as the rest of the ’old’ members of the EU deregulate their economies.

He supports the introduction of labour laws that allow the European capitalists to ’restructure’ industry without the irksome opposition of the trade unions. As far as Blair is concerned, this is the only way that the European economies can compete with the rising economies of China and India.

No altruism

When in  2000 BMW announced that it was pulling out of Longbridge, they willingly handed over the whole operation to Phoenix for a token £10. At the same time they agreed an interest-free loan of £420 million.

The hard-headed BMW board didn’t do this out of altruism but to allow them to concentrate on the production of the successful new mini in Oxford. If BMW had hung onto Longbridge they would have been forced to come up with plans for new models. But the cost of developing new models is measured in hundreds of millions of pounds and this didn’t fit in with their plans.

BMW gave a massive sigh of relief when the Labour government and the trade union leaders promoted Phoenix as the new owners. This was a way out of their predicament. It was cheap at the price compared to trying to keep the factory going – with all the political overheads if they eventually had to close it.

The financial jiggery-pokery that the Phoenix Four got up to should have come as no surprise to anyone, least of all the union leaders. Their attempt to suck the Chinese bosses into the morass has failed and no wonder.

The state-owned Shanghai Automotive Industry Corporation has been busy for the last eight months building up facilities to produce the ’K’ series engine that powers most of the Rover models.

Workers from Birmingham have been sent over to train the Chinese workforce and to help build the new production facilities. The Chinese government want to enter the world car market and they needed the rights to produce cars and engines. They have now got this and they don’t need what’s left in Longbridge.

From the outset, the Phoenix Four were determined to keep control of whatever profits they could loot from Rover separate and hidden from the outside world, above all the Longbridge workers. They did this by separating Rover’s finance arm (MGR Capital) from its manufacturing arm. MGR Capital was sold directly to the Phoenix Four in a controversial transaction.

Up to the end of 2002, MGR Capital was showing a profit of £13.7 million. In the same period the four directors paid themselves £15.1 million as directors of MGR Capital. They also set up a trust fund (ie a pension fund) for themselves from MGR for £12.9 million on an unsecured loan.

The Phoenix Four made the most of everything they could get their hands on, including selling off the land and the parts business, before the collapse of the company’s whole financial edifice.

Rover Cars meanwhile were declaring huge losses, which added to the atmosphere of doom and gloom that enveloped the plant.

Some commentators have speculated that Longbridge workers would have been better off if BMW had shut up shop in 2000 and given each of them a lump sum of £50,000 and put the rest into their pension funds, instead of giving Phoenix a free loan of £420 million.

Now the workers face a future with little more than the maximum state redundancy payment of £3,360 and no chance of getting their hands on any of their pension until they are 65, if they’re lucky.

Walking away with millions

200,000 CARS were produced at Longbridge in 2000. By last year this had fallen to 73,000. Instead of developing new models, BMW’s £420 million loan has been used to cover the losses of Rover Cars. For a personal investment of £60,000 each the Phoenix Four have walked away with millions.

But even more scandalous is the behind-the-scenes smug talk by New Labour: "It doesn’t matter about manufacturing in Birmingham or anywhere else because there are loads of jobs available elsewhere".

But what are these jobs?

Back in the early 1980s, the giant Round Oak steel works in Dudley, five miles from the Longbridge plant, was shut down as part of British Steel’s cut backs. 10,000 workers with trade union-negotiated rates of pay and conditions worked there at the time.

Soon after it shut, a couple of Black Country speculators bought up the derelict site and developed a massive shopping centre – Merry Hill.

Yes, the place employs about the same number of people that Round Oak did but 9,000 of them are on no more that the minimum wage of £4.85 per hour. Most are on part time, temporary contracts with all the associated insecurity.

What a magnificent job by capitalism! They have rid themselves of a "Bolshie" trade union-organised workforce and got instead the glories of MacDonald’s, Clinton’s card shops and flower-arrangers. With slave-labour wages to boot.

This is the real threat that the Longbridge workers feel in their very bones and that is why they will have little choice but to fight for their jobs now.

But will there be a fight back?

There has been no shop floor meeting in Longbridge for six months or more. For the last five years union leaders have told the workforce to keep quiet and back the Phoenix Four, as they strove to do the latest deal with whoever they could find. It was a group of Indian capitalists one day and the Chinese the next. All have come to nothing.

What is needed is for the union leaders to live up to their responsibilities and give a lead. What have they got to lose by demanding that the government take Longbridge into public ownership with no compensation to the Phoenix robbers?

  • Keep Longbridge open.
  • Save all jobs – no redundancies!
  • Sack the board, not the workers.
  • Open the finances up to scrutiny.

Socialist councillors call for public ownership and control

Coventry Socialist Party councillor Dave Nellist will move the following motion at the Coventry City council meeting on 19 April:

"This Council notes with dismay the level of job losses in the region’s car industry in recent months including major redundancies or threatened redundancies at Jaguar, Peugeot and Rover, together with a number of smaller companies and those who are suppliers to those named;

gives 100% support to those workers wishing to oppose redundancies and calls for the trade unions to develop an urgent regional and national campaign in support of manufacturing jobs;

believes that the trades unions should be given immediate access to the books of Jaguar, Peugeot and Rover to see how subsidies, profits and internal transfers have affected the financial health of those businesses, and that with many thousands of jobs affected there should be no excuse of "business secrecy" hiding the facts from those most closely involved;

demands an urgent investigation into the role of Rover’s directors and their five year control of the company, and an end to asset stripping or movement of production facilities without the agreement of all plants concerned;

and resolves that since hundreds of millions of pounds of public money would have to come into this region to deal with the consequences of the collapse of Rover, that such public money should be invested now to retain Rover jobs, on condition that the ownership of Rover be now transferred back to the public sector and a plan drawn up, in conjunction with Rover workers themselves, for that public investment, under democratic public control, to produce a new product range that will better address the real transport needs of the whole of society."

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April 2005