Rover grinds to a halt

PRODUCTION of MG Rover cars was at a standstill tonight as the company warned time was 'clearly running out' on a proposed partnership with a Chinese firm aimed at securing its future.

The suspension of production at the giant plant in Longbridge, Birmingham followed a decision by a number of local engineering firms to stop supplying components.

One firm said it was owed almost £1million by MG Rover and it was clear supplies would not be resumed until there was a deal with the Shanghai Automotive Industry Corporation (SAIC).

The Government insisted tonight that a £100m bridging loan to help keep MG Rover in business while negotiations continued was still available, provided there was a deal to be done between the two carmakers.

Workers said there was a mood of despondency inside Longbridge, with people milling around all day as the production line stood idle. A 44-year-old worker, who planned to become a firefighter if he lost his job, said production had been faltering at the site for a while. Dave Wilkins said: 'There's been a shortage of parts happening for the past two months. They haven't been paying their bills.'

MG Rover said in a statement: 'Today MG Rover called on the Government to make a decision on the bridging loan which will open the way to the car maker completing complex negotiations with the Chinese company SAIC. The loan is crucial if the partnership is to be established.'

Peter Beale, vice chairman of Phoenix Venture Holdings (PVH), MG Rover's parent company, said: 'We requested the bridging loan from the Government to provide the additional time needed to complete our partnership with SAIC.

'The PVH directors will provide £10million of personal money to convince the Government of our commitment. What we need now is the Government to decide.

'Speculation about the ability of MG Rover to survive will continue to mount as long as the decision on the loan is delayed. The speculation has affected the confidence of our suppliers and dealers and time is clearly running out.'

Solihull-based Wagon, which makes door frames for MG Rover, said it had decided to suspend supplies because of the carmaker's 'current inability' to meet its payment obligations. 'Wagon currently has approximately £0.9m of receivables outstanding with MG Rover,' said the firm.

Wagon, which employs 1,000 workers in the UK, said it would restructure parts of its operation if supplies to MG Rover did not resume, at a cost of about £1.5m.

Chief Executive Pierre Vareille said: 'For the sake of MG Rover and all its stakeholders, we sincerely hope a positive route forward can be found for the business. However, our first duty is to protect our own business and the interests of Wagon's shareholders, leaving us with no alternative but to pursue this course of action.'

A spokesman for Trade and Industry Secretary Patricia Hewitt said: 'The bridging loan is available provided there is still a deal to be done.'