The UK government yesterday struggled to resurrect an alliance between carmaker MG Rover and a Chinese partner as the deal's failure threatened thousands of jobs and loomed large over campaigning ahead of general elections next month.
Blair rushed straight to MG Rover's Longbridge factory in Birmingham on Friday after returning from Pope John Paul II's funeral at the Vatican, and pledged to try to patch up the deal.
The owners of MG Rover, the UK's last mass-production automaker, announced on Friday that they had appointed administrators to handle its affairs following the collapse of a proposed joint-venture deal with Shanghai Automotive Industry Corporation (SAIC).
The tie-up would have seen SAIC pump millions of dollars into the ailing British automaker, which employs 6,100 workers but also ensures jobs for thousands in related supply industries.
Blair said on Friday he and UK Finance Minister Gordon Brown had been pressuring the Chinese government to find a way to revive the deal, and pledged to "follow up" contacts with Chinese Premier Wen Jiabao (
"It is possible, still, that there may be the opportunity of doing something with the Chinese company (SAIC), although not the original prospect that was there a few weeks ago," Blair said, standing alongside Brown.
The future of MG Rover, the last remnant of a once-mighty group of British car firms which produced its first car in 1904, was thrown into jeopardy after the collapse of the Chinese deal late Thursday. The 6,100 Rover workers are threatened with losing their jobs.
Rover's slide into bankruptcy protection also threatens an estimated 18,000 jobs at component suppliers, many based in the same West Midlands region around Birmingham, a vital electoral battleground for Blair's governing Labour Party.
The Labour government, which is seeking a third consecutive term in office on May 5, on Friday pledged an emergency rescue package of ?40 million (US$74.7 million) to help suppliers.
Rover's plight is a body blow for the prime minister, whose government is fighting next month's election largely on its economic record.
"We will do whatever we can possibly do to safeguard the livelihoods and jobs of the people here," Blair promised at Longbridge.
Meanwhile, questions arose yesterday about accounting by Rover and Phoenix Venture Holdings, the firm led by four businessmen who purchased Rover in 2000 from German car giant BMW.
The Guardian newspaper said around ?200 million in cash and assets did not appear in the firms' published accounts.
Rover's cash and assets combined were valued at ?1.2 billion, but outflow since the 2000 purchase totalled only ?1 billion -- leaving the balance sheets ?200 million short, according to the paper.
It accused the "Phoenix four" of "featherbedding," since they paid a symbolic ?10 for a company still worth an estimated ?70 million and also gave themselves generous individual pension schemes, while imperiling the jobs of thousands.
Trade and Industry Secretary Patricia Hewitt told the Financial Times in an interview quoted yesterday that Rover executives had not kept the government informed about the seriousness of Chinese concerns about the deal.
The respected business daily said the minister read a list of quotes from company management who had "continued to voice optimism about reaching agreement with SAIC."
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