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The Big Picture: Why MPs are listening

'The Government is determined not to make the same mistakes again. In 1998, when then BMW boss Bernd Pischetsrieder dropped the bombshell at the British motor show that he would close subsidiary Rover's Longbridge plant unless it made huge cost savings and efficiency gains, MPs were caught completely cold.

Hapless Transport Secretary Stephen Byers floundered around as it became clear that the Government's communications with the motor industry were close to non-existent.

Last week, MG Rover's new bosses went to Parliament for a tete-a-tete with the Commons Select Committee. The session was, by all accounts, fairly brutal as John Towers faced intense questioning over press allegations that he and his fellow directors were siphoning money away from the car business to line their own pockets.

As the Government gave Towers its full backing during the purchase process, in the face of alternative bids, it appears that MPs are now attempting to distance themselves from any fall-out should the company not survive. “We did all we could,” will be the rallying cry.

MGR wasn't the only carmaker to meet with the Commons Committee that day, although the conversations with executives from Ford, Toyota and Nissan, amongst others, were decidedly more casual. Their position is more secure, although the Government should not ignore the possibility that one or more of the carmakers currently manufacturing in the UK could shift production to another country – even MGR itself is looking at Daewoo's former plant in Poland as a potential base. And it needs to keep an eye on the migration of component supplier business away from the UK.

Vauxhall halted car production at Luton, although it still makes vans, and Ford transformed Dagenham from car plant to engine development centre. So who's next? Despite Nissan CEO Carlos Ghosn's concerns over the Euro, the Sunderland plant is Europe's most efficient and a stronghold for Nissan outside its home Japanese market. Similarly, Honda's Swindon plant looks secure, as it is the company's only facility outside Japan.

Peugeot's plant at Ryton, on the other hand, looks most at risk – especially after the decision to end the fourth shift, making 700 people redundant. True, the UK is an important market, and having a plant here helps protect Peugeot from exchange rate fluctuations (that argument becomes redundant if/when the UK joins the Euro), but the company has alternatives on the mainland.

The main argument for not moving production plants is the high cost of investment. Much of this is tied up in tooling, so those plants that have yet to secure the next generation model – such as Ryton with the 207 – have most to fear. Time for the Government to listen up and act.'



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