The Independent & The Independent on Sunday

9 October 2005 17:34

Nanjing's plan for Longbridge won't work, warns PwC

By Tim Webb

The joint administrator of MG Rover has questioned whether large-scale car manufacturing can return to its Longbridge site.

The statement by Rob Hunt, from PricewaterhouseCoopers, contradicts an announcement less than a fortnight ago from MG Rover's new owners that 100,000 cars a year could be made at the Midlands site within five years.

The Chinese company Nanjing, which bought the collapsed car maker in July, had said it was considering building up to four or five new models at the site, under plans being drawn up with UK group GB Sports Car. It claimed up to 1,200 jobs could be created

But Mr Hunt told The Independent on Sunday that Longbridge might only be suited to building a sports car.

"A good result might be a sports car," Mr Hunt said. "As a realist, I question whether anything else can be done. I am not convinced large-scale manufacturing can be done there."

He stressed that future plans for Longbridge were the responsibility of Nanjing and its partners, and not PwC. But his comments will fuel cynicism about Nanjing's commitment to the UK. The company is transporting much of MG Rover's machinery and assembly lines to China and wants a partner to fund most of the investment needed to resume large-scale car production at Longbridge. GB Sports Car has not yet announced its plans for the site.

PwC also revealed it has brought in over £40m by selling 8,500 new and used cars. This means PwC has raised around £100m from selling its assets, including the cash received from Nanjing for the business.

But creditors of MG Rover and its Powertrain engine subsidiary, who are owed a total of £1.4bn, may not see proceeds from the sales until next winter. Mr Hunt said that because of the complexity of the business, the standard 12-month period of administration might have to be extended by another six months.

According to Mr Hunt, the administrators, who have taken over operational responsibility for the Midlands site, are still valuing its remaining assets and checking claims made against it. He said a decision on whether to ask creditors to extend the administration period would be made in January.

Creditors of MG Rover should expect no more than a negligible payout, of around 5p in the pound. Powertrain creditors, owed around £150m, could receive 13p in the pound.

The National Audit Office has said it is investigating the government payments that temporarily kept MG Rover from collapsing in May this year.

The joint administrator of MG Rover has questioned whether large-scale car manufacturing can return to its Longbridge site.

The statement by Rob Hunt, from PricewaterhouseCoopers, contradicts an announcement less than a fortnight ago from MG Rover's new owners that 100,000 cars a year could be made at the Midlands site within five years.

The Chinese company Nanjing, which bought the collapsed car maker in July, had said it was considering building up to four or five new models at the site, under plans being drawn up with UK group GB Sports Car. It claimed up to 1,200 jobs could be created

But Mr Hunt told The Independent on Sunday that Longbridge might only be suited to building a sports car.

"A good result might be a sports car," Mr Hunt said. "As a realist, I question whether anything else can be done. I am not convinced large-scale manufacturing can be done there."

He stressed that future plans for Longbridge were the responsibility of Nanjing and its partners, and not PwC. But his comments will fuel cynicism about Nanjing's commitment to the UK. The company is transporting much of MG Rover's machinery and assembly lines to China and wants a partner to fund most of the investment needed to resume large-scale car production at Longbridge. GB Sports Car has not yet announced its plans for the site.

PwC also revealed it has brought in over £40m by selling 8,500 new and used cars. This means PwC has raised around £100m from selling its assets, including the cash received from Nanjing for the business.

But creditors of MG Rover and its Powertrain engine subsidiary, who are owed a total of £1.4bn, may not see proceeds from the sales until next winter. Mr Hunt said that because of the complexity of the business, the standard 12-month period of administration might have to be extended by another six months.

According to Mr Hunt, the administrators, who have taken over operational responsibility for the Midlands site, are still valuing its remaining assets and checking claims made against it. He said a decision on whether to ask creditors to extend the administration period would be made in January.

Creditors of MG Rover should expect no more than a negligible payout, of around 5p in the pound. Powertrain creditors, owed around £150m, could receive 13p in the pound.

The National Audit Office has said it is investigating the government payments that temporarily kept MG Rover from collapsing in May this year.

Not surpirised at all by this. All the big 4 accountancy firms believe this. They are a bunch of accountants who would argue that it's a bad idea. A couple of years ago PwC urged the West Midlands to encourage more financial services and high growth companies into the area.

In fairness to this arguement PwC itself is a massive exporter of financial services and employes a lot more people in the UK than MG Rover did. However not everyone is cut out to be a consultant or accountant, and that to my mind is why we need to make things!

"A good result might be a sports car," Mr Hunt said. "As a realist, I question whether anything else can be done. I am not convinced large-scale manufacturing can be done there."

Why not? 100 years of large-scale manufacturing at Longbridge is not enough evidence?

And why is a member of the administrators making public comments on the viability of business?

Sometimes I do despair of my fellow countrymen!

"A good result might be a sports car," Mr Hunt said. "As a realist, I question whether anything else can be done. I am not convinced large-scale manufacturing can be done there."

Why not? 100 years of large-scale manufacturing at Longbridge is not enough evidence?

And why is a member of the administrators making public comments on the viability of business?

Sometimes I do despair of my fellow countrymen!

Don't forget he's looking at it as a number cruncher. He's probably thinking to himself:

1.) How many dealers do they have?
Answer - erm......

2.) How many new models do they have?

3.) Do they have a big parent co like Toyota?
Answer: No they have an inexperienced not very well funded parent co in China.


I don't agree with him. But I can see what he is thinking, not very loyal of him all the same....

Given the mess they made of the administration, he's the last person to advise as to what Nanjing / GBSC should be doing at Longbridge.

I notice he's used the crap excuse of the complexity of the company to explain why he'll be running up a nice bill the size of a small 3rd world countries GDP for handling the administration of MGR.

He should stick to what he knows best.

I'm currently stuck to think what that is though...



Oh, apart from making masses of money out of failed companies. If it wasn't for the huge bill that'll he'll be putting in, the creditors may actually get more p in the £.

"A good result might be a sports car," Mr Hunt said. "As a realist, I question whether anything else can be done. I am not convinced large-scale manufacturing can be done there."

He may have been miss-quoted, or he may have phrased it badly, but the way I read that sentance the last word is significant: 'there'. He seems to be implying that Longbridge is not a good place for large scale manufacturing. Not that the new company does not have a viable business plan (which may or may not be true), or that the car industry is bad news (which it might be). No.

The quote was :

"...not convinced large-scale manufacturing can be done there."
Why not there?

Does he class the MG ZT as a sports car?

Think we can say Bye Bye to "ZR" Class cars built here, but i would have thought that "ZT" type cars were a go-er. As for MG my thoughts are this, i am willing to expect ZR built in China as long as we get some UK production.

If its just a case of China only production than, it's Bye Bye MG!
Mega

Price is the big one, i mean they do the "Death Trap" Landwind for £8500 in Holland........I wonder how much for a ZR?

I suspect the greed of the P4 will mean they try for big cash again, hopefully to get unstuck like they did with CityRover.
Mega

Does seem a bit wishy washy.....I don't see why they couldn't build 100,000 cars a year, however, selling 100,000 cars a year may prove a little harder if they haven't got some good advertising.

They can't sell 100,000 without Rover. MG wont stretch that far esp in foreign markets. The 75 outsold the ZT 4 to 1 or so.

Well he's only saying what people have been saying for 10years or so; and its what PwC said when MGR first folded- that there was no chance of the business being sold as a going concern; ie in its current state as a volume manufacturer it wouldn't work. Which it didn't.

We have to remember that the plan is to produce 100,000 cars within 5 years, lets not forget that from an almost standing start, in 2001 MG Rover managed to churn out 50-60,000 MG's annually by 2004.

Given some new metal, this should not be a problem at all for GBSCC within 5 years.

I like the way they say this AFTER they have sold the company to them, when there was other bidders which potentially had more sensible business plans.

Smacks of them trying to wash their hands of this one...

Smacks of them trying to wash their hands of this one...
Why do they need to wash their hands of it?

In fact why do they need to make the comments at all - its none of their business any more is it?

I think maybe PwC is just trying to get publicity for themselves by saying something controversial! :(

And who in their right mind wopuld take any note of what an accountant thinks? By their nature, they are not risk takers, they are the sad geeks who always did their maths homework and get very excited when Carol Voderman does the numbers on Countdown. Faced with a choice between FHM and The Times Sudoku you'd know which they'd pick up.

The last car company run by accountants was Chrysler in the Seventies. Nuff said.

Nanjing's plan for Longbridge won't work, warns PwC



Because of course PWC are highly regarded in the field of automotive manufacturing consultancy are they not?

T*ssers.

Remember reading how PwC were taking advice from Warwick Manufacturing Group (that Batterycharger bloke and the one who always runs MGR down).

For starters that would make them think the whole plan was doomed, and the same half-baked romantic ideas about sports cars, global economy and Germans-do-things-better are going to be trotted out.

These people may be very good at what they do (no one mention Enron please!) but that doesn't make them naturally intelligent. They are not car manufacturers or economics experts, if they were, they would not think sports cars are a BETTER commercial option. Large-scale manufacturing might be out of favour in this country, but most of Europe and the rest of the world won't be a more attractive place for it for ever. Meanwhile, the service ewconomy is collapsing, companies are becoming foreign-owned (O 2) and personal debt is spiralling.

These people probably confuse overproduction with overcapacity!