The joint venture that MG Rover is negotiating with a Chinese motor company is separate from any plans to invest £1bn to save the Longbridge plant, it emerged yesterday.
The proposed deal with Shanghai Automotive Industry Corporation (SAIC), heralded as the salvation of MG Rover, will be restricted to design and development cooperation. The company said yesterday that the £1bn investment by SAIC in new models at Longbridge would be part of separate negotiations.
"The Chinese joint venture and the investment in new Rover models are two entirely different things," a spokesman said.
Earlier, John Towers, chairman of MG Rover, suggested that the Chinese joint venture may not deliver cash or guarantee jobs.
Speaking on Radio 4's Today programme, Mr Towers hinted that no new cash would be forthcoming from the joint venture. "All of the cash, if there is any, goes into MG Rover," he said.
SAIC has already paid about £40m to MG Rover and Powertrain, the engines and transmission business, to secure the rights to those companies' technology.
The joint venture will be based in Shanghai rather than in Birmingham and is likely to offer more support to SAIC than to MG Rover in the short term.
One of SAIC's strategic goals is to sell 50,000 units of a homegrown own brand marque by 2007. MG Rover design specialists are said to be already working alongside SAIC staff in Shanghai.
"MG Rover's technology is becoming outdated at home but could be easily adapted to serve the Chinese market," one industry analyst said.
Mr Towers has made clear that MG Rover's future depends on a successful collaboration with the Chinese and securing investment to develop new models. But the company pointed out yesterday that the Chinese joint venture, currently being negotiated, will not deliver the £1bn investment in the new models needed to keep Longbridge open.
"We hope to give the details of our Chinese joint venture in January but we do not know yet if we will give details of the separate agreement to fund new models at the same time," the MG Rover spokesman said.
He said SAIC had indicated that it would be prepared to invest in new models for Longbridge. However, it appears that there is, as yet, no firm commitment.
Yesterday, Mr Towers confirmed the Chinese would not be buying MG Rover as part of the design and development joint venture.
"They are not buying it," Mr Towers said. "We are setting up a Chinese joint venture company in China. They will have a majority holding in that business. We are not specifying the level of control because we are still involved in detailed negotiations."
The restricted scope of the Chinese joint venture will mean that it will not safeguard jobs at Longbridge.
Mr Towers said he could not guarantee that there would be no redundancies at Longbridge and hinted that now that the workforce had lost its right to jobs for life there could be a rebalancing of staff.
"Nobody guarantees anything in this industry," he said. "In a company where you employ thousands in an industry where you need flexibility, even if there is a handful of people who sit on their hands and refuse to retrain, that is unhealthy."
The company spokesman would not elaborate on what retraining Mr Towers was referring to, but he pointed to the new emphasis on design and development. "We will need more product development engineers."
