Suppliers to MG Rover Group Ltd., Britain's last home-grown volume manufacturer of cars, are adjusting to news that the company is on the verge of collapse, with its hopes pinned on a Chinese carmaker.
The company entered administration - similar to bankruptcy in the United States - on April 8 and sent home its 6,000 employees in Longbridge, England, after Shanghai Automotive Industry Co. pulled out of takeover talks.
Some United Kingdom auto parts suppliers, mainly small and mostly located across England's industrial West Midlands region, are reliant on business from MG Rover. But most have spent the past few years trying to diversify their sales base as Rover struggled.
The company that became Rover launched in 1952, but strained to compete throughout the 1970s and 1980s. Germany's BMW AG bought the firm in 1994 - but the support did not last for long.
BMW pulled out of Rover in 2000, taking the redesigned iconic Mini Cooper with it. Then Ford Motor Co. bought out the Land Rover sport utility vehicle brand. Financial backers operating under the name Phoenix Consortium took over what was left for a nominal payment.
In recent weeks, the British government has backed a £6 million ($11 million) loan to pay Rover workers, as Rover's administrator, consulting group PricewaterhouseCooper plc, oversees attempts to relaunch talks with SAIC.
In the meantime, suppliers to Rover are adjusting their own schedules.
TRW Automotive Inc., a safety system supplier in Solihull, England, said it will lay off 42 workers on a rotational basis each day at its plant in Resolven, Wales, as it monitors Rover developments.
In addition, TRW warned in a statement, it is considering laying off an unspecified number of temporary workers at its Welsh braking systems plant, TRW Automotive LVBS in Pontypool, Wales.
Injection molder Automotive Applied Technologies Ltd. of Accrington, England, laid off 40 contract workers because of the shutdown, but noted it has reduced its reliance on the carmaker. At one point, Rover made up half of AAT's sales.
Interior supplier Birkby's Plastics Ltd. of Liversedge, England, had worked closely with Rover on future vehicle production, but backed off on its business with the carmaker when it found it could not obtain credit insurance for work with the group. The injection molder now does 1 percent of its business with Rover, down from 7 percent.
``We are exposed, but not to a great degree now. We are still owed money by MG Rover - a matter of thousands of pounds - but to be fair, we found normally that they did pay us in a timely manner,'' said Birkby Managing Director Ian Hunter.
Mann + Hummel GmbH had been discussing development of future models with Rover, but now is ``like everybody else,'' waiting to see what Rover's future will be, said Wilfried Lehr, managing director of M+H's Automotive Original Equipment Division.
If Rover fails, it will not have much of an impact in Europe as a whole, said Jean-Claude Steinmetz, general director of Rhodia Engineering Plastics SA of Lyon, France. Rover's sales already had fallen to the point that it was more of a specialty producer.
Rover Group made 132,816 vehicles in 2003 from its one factory in Longbridge, and 107,235 in 2004. In comparison, BMW's Mini turned out more than 174,000 cars in 2003 and 187,738 in 2004.
``It's the end of a very, very long automotive story for England,'' Steinmetz said.
The United Kingdom still will have high-volume auto production - its factories turned out more than 1.8 million cars and trucks in 2003 - but those assembly plants are owned by companies like Ford, General Motors, Honda, Nissan and BMW, not home-grown brands.
Birkby's, for instance, does 75 percent of its business with automotive customers, but four presses it recently purchased are for business with Honda and Toyota.
Detroit-based staff reporter Rhoda Miel contributed to this story.
