MG Rover staff get a week's grace with government loan

LONDON - The British government Sunday granted a 6.5 million pound (9.5 million euro) loan to under-threat automaker MG Rover, putting off for a week thousands of layoffs.
The loan will enable the company to cover its costs and salaries for one week, in the hope of finding a solution to its problems.
In a statement issued with two union leaders, Trade and Industry Secretary Patricia Hewitt said: "The government has been in discussion with trade unions that represent workers at MG Rover and the administrators throughout the weekend.
"The government has agreed to provide the necessary funds to the administrators in order to avoid the issuing of redundancy notices at MG Rover while efforts are made to keep the business together."
It went on: "The government has agreed to assist and work with the administrator and with the unions who will be developing, with all reasonable speed, a realistic business proposition for SAIC (Shanghai Automotive Industry Corporation) and other possible purchasers to consider.
"We will monitor the situation closely and review the adequacy of funds available while there is a realistic prospect of re-engagement with SAIC."
Hewitt would be prepared to go to China with the union leaders and even opposition party members, a spokesman for her ministry said.
The firm's failure last week to reach a deal with SAIC has not only put in jeopardy Rover's workforce of 6,100 but also an estimated 18,000 jobs in its component suppliers.
Industry sources quoted by Britain's domestic Press Association news agency said that suppliers had already begun laying off hundreds of workers despite a government aid package announced on Friday.
MG Rover, Britain's last major automaker, on Friday placed itself in the hands of administrators after a planned partnership with the Chinese firm collapsed.
The company's woes come at a bad time for the government. Prime Minister Tony Blair will be seeking a new term in office on May 5, and his Labour Party is basing much of its election campaign on the government's management of the economy.

04/11/2005 01:34 GMT