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Threat hangs over Rover
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February 8, 1999: 11:07 a.m. ET
British government steps up efforts to lobby BMW and prevent loss of 50,000 jobs
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LONDON (CNNfn) - The U.K. government has taken the first steps in a bid to prevent owner BMW from closing the troubled Longbridge Rover car plant in England.
The situation represents a political and social nightmare as closure of the factory would lead to the loss of 14,000 jobs and have a spillover effect on suppliers in the area which could affect up to 50,000 workers in total.
British Trade and Industry Secretary Stephen Byers was due to meet with Rover management and unions Monday, after receiving assurances from new BMW boss Joachim Milberg that Longbridge remained in the running to build a replacement for the Rover 200 and 400 models, Reuters reports.
Milberg is currently reviewing plans to decide whether to build these new models in the U.K., or indeed at all, despite a deal with Rover unions last year. Under that agreement unions agreed to 2,500 layoffs and more flexible working practices to save 150 million pounds a year. In return BMW (FBMW) promised to invest 1.7 billion pounds in its unprofitable U.K. business.
Analysts say that despite assurances from the German luxury car maker that it will continue to build the new Mini at the factory in the English Midlands, the main part of the factory could still close.
"The Mini is built in an adjunct to the main plant so BMW doesn't have to keep the rest open," said Steve Haggerty, auto analyst at Schroder Securities. BMW has previously considered moving the Rover production to Hungary.
Haggerty describes the Longbridge plant, which has the capacity to produce 440,000 units per year, as a "dinosaur". He points out that new car plants built around the globe are now specified to an optimal size of between 200,000 and 250,000 units.
"A good decision would be to say that Longbridge has to go," said Mr Haggerty. He acknowledged, however, that the "political ramifications" made this scenario unlikely and believed the U.K. government would offer subsidies to BMW to safeguard the plant's future. 
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BMW
Rover Group
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