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|02-22-2006, 07:10 PM||#1|
Join Date: Jun 2005
MG means business at Longbridge
Reuters, The Associated Press
WEDNESDAY, FEBRUARY 22, 2006
LONDON Nanjing Automobile of China, which trumped a bid by Shanghai Automotive last year to buy MG Rover out of bankruptcy, signed a 33- year lease Wednesday for the factory site of the former British carmaker and said it would begin producing sports cars at the plant next year.
The future of the Longbridge factory in central England had been in doubt since it was closed in April with the loss of 5,000 to 6,000 jobs when MG Rover, the last major British car manufacturer, declared bankruptcy.
Nanjing surprised the automobile industry when it paid £53 million, or $92 million, to buy MG Rover, which had debts of £1.4 billion, in July. It is one of several Chinese carmakers, including Geely Automobile Holdings and Chery Automotive, that are taking steps to follow Toyota Motor of Japan and Hyundai Motor of South Korea in becoming global brands.
Nanjing said it planned to employ up to 1,000 workers and begin production of the MGTF sports car next year.
The deal signed Wednesday was better than unions and local lawmakers had hoped for. The owner of the site, St. Modwen Properties, had suggested last week that Nanjing would only sign another six-month, short-term lease while it considered whether to restart production.
However, the lease, with rent pegged at around £1.8 million a year, does incorporate a six-month break clause in case Nanjing is unable to confirm a viable long-term future for the site.
"We move forward according to our original plan," Wang Hongbiao, the Nanjing chairman, said through an interpreter at a news conference. "Next year we will produce a sports car here. After that, we will produce a car which will make profits."
But Richard Burden, a lawmaker with the ruling Labour Party who represents the Birmingham area, sounded a note of caution.
"My welcome is tempered by realism, first of all about what is being proposed," Burden said. "This is not mass car production at Longbridge."
Dave Osborne, a spokesman for the Transport and General Workers' Union, said that union officials were told that Nanjing plans to produce 100,000 vehicles each year.
Unions had been unhappy when Nanjing won the bid for Rover because it appeared to offer worse prospects for resuming full-scale production at Longbridge than rival offers.
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