The Closure of MG Rover

Book excerpt: MG Rover went into administration in April 2005 when its proposed deal with a Chinese company (SAIC) collapsed and it did not have sufficient cash to continue trading. The subsequent closure of MG Rover's plant at Longbridge in the West Midlands resulted in the direct loss of almost 6,000 jobs and with potentially serious consequences for the local economy. This NAO report examines the support provided to MG Rover by the DTI and other public bodies before and during the Company's collapse in 2005, and on the effectiveness of plans to deal with and mitigate the consequences of the firm's closure. Amongst the conclusions drawn, the report identifies weaknesses in the DTI's contingency planning and questions the cost-effectiveness of the DTI's loan of £6.5 million designed to sustain the business for a week while the administrators sought to sell the Company as a going concern. The report goes on to make a number of recommendations to improve future decision-making, contingency planning, and the delivery of training and support in the event of a large-scale company failure.