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Britain Eases Burden of Rover Sale

April 26, 2000

LONDON (AP) _ The government is making $16 million in aid available to suppliers expected to be hit by BMW’s sale of ailing British car manufacturer Rover.

BMW is finalizing the terms of a deal to sell Rover to a British venture capital firm, Alchemy Partners, which will greatly reduce production at the car manufacturer’s main plant in Longbridge, near Birmingham.

Thousands of jobs also are expected to be lost at the plant.

The aid package was announced Wednesday after a government task force report warned that up to 20,000 jobs in the region that are supported by production at Longbridge could be in jeopardy. The report said a total of 55,000 jobs across the West Midlands are linked to Rover.

Warning that the impact on the region ``cannot be underestimated,″ the report said ``potentially extremely serious consequences″ are on the horizon for the region’s economy.

In announcing the assistance, which supplements a $206 million aid package for the West Midlands already announced, Trade and Industry Secretary Stephen Byers said it ``will help companies in the supply chain to modernize, retrain their workers, retool and diversify.″

Byers hinted that negotiations already are under way with a number of overseas companies to move to the region and take on the pool of skilled workers likely to lose their jobs when the Rover sale is completed.

Alchemy, which has no track record of car manufacturing, plans to curtail output at Longbridge to a limited number of vehicles, mostly sports cars, bearing the MG brand name.

Byers, who has been criticized for failing to foresee the BMW sale, acknowledged that the deal with Alchemy, which he opposes, is close to going through.

``There is no doubt that they are very close to concluding their negotiations and to a deal being struck,″ he told the British Broadcasting Corp.

A second bidder, a consortium led by former Rover chief executive John Towers, wants more time to prepare its offer. Byers supports the consortium, which contends it can continue high-volume production at Longbridge without having to fire large numbers of employees.

The Towers proposal aims to cut no more than 2,000 jobs from a Longbridge staff of 8,500. Alchemy is thought likely to eliminate at least twice that number of jobs.

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