BIRMINGHAM, England - BMW AG is bringing a task force of more than 100 senior managers from its Munich, Germany, headquarters into its Rover subsidiary's United Kingdom factories to improve and maintain efficiency and quality levels.
The action comes as the German parent company strives to narrow a 30 percent productivity gap and marks a more hands-on approach to the operation of Rover's plants and component sourcing.
It follows stark warnings from BMW Chairman Bernd Pischetsrieder of major job cuts, radical changes in working practices and the possibility of shutting Rover's Longbridge plant in the British midlands.
BMW sources emphasized that while the task force would not involve 'trampling on Rover toes,' there had been a perception that in some areas BMW had not been interventionist enough since the 1994 takeover.
The move, which involves middle and senior management across most production and supply disciplines, was described by one BMW source as 'supervisory rather than dictatorial.' BMW is determined to extend its stringent QZ quality audit system within Rover, a method that scrutinizes apparently minor shortcomings on a numerical basis.
The higher the score, the greater the imperfections per car, which is not released until quality auditors are satisfied. BMW also has been trying to raise the number of production engineers working at Longbridge, Solihull (Land Rover) and Rover Oxford.
This approach is considered critical to the success of Rover's new 75, which is being pitched against predominantly German opposition.
Rover insiders acknowledge that it is imperative for the two companies to move closer together to take advantage of common practices, economies of scale, engineering and quality. This will speed up the knitting together of the processes.
Rover has suffered from a shortage of qualified production-line engineers at its main plants, and BMW's task force will intensify training programs.
The moves by its parent company took the shine off the launch of Rover's 75 sedan at the British International Motor Show.
In a conference hall 10 minutes' brisk walk from the stand where a London Symphony Orchestra fanfare earlier had signaled, in Pischetsrieder's words, 'the rebirth and the way forward for the Rover brand,' he spelled out the threat to 17,000 jobs caused by productivity levels 30 percent below BMW's German operation.
The same improvement targets apply to British component suppliers, fighting to compensate for the strong pound and reverse a drain of business to mainland Europe.
BMW has frozen nearly £1 billion ($1.7 billion) of investment in Long-bridge, and a decision on the plant's future was to be made by the end of November.
Closing the gap
BMW's chairman would not comment on 'constant discussions' with the British government seeking state aid but said bringing Rover's factories up to BMW productivity standards would be 'difficult and painful.'
Said Pischetsrieder: 'We do not negotiate via the media.'
He also said his statement was not a public relations stunt: 'I would be delighted if that was the case. We must cut deeper to maintain progress.'
Flexible working routines could apply to BMW systems involving employees working longer hours when required, with extra time 'credited' and redeemed when production schedules ease off.
Closing the productivity gap, which was likely to involve more job losses, could take up to three years, but the difference has come down from 50 percent when BMW bought Rover in 1994.
If BMW and Rover cannot achieve a formula for cost and productivity improvements, production of the new Mini, due in 2000, will be transferred to Rover Oxford, and plans for the 200 hatchback and 400 sedan replacements will be revised.
'We have to find a financially successful solution for those product ranges,' Pischetsrieder said. 'If we don't produce that, they will not be Rovers.'
Alternatives to the new Rover 35 and 55 probably would pass to the BMW brand in Germany, as the group is committed to remaining in that sector.
At the heart of Rover's malaise are anticipated losses this year of up to $850 million and growing concern among BMW shareholders.
Factors including the strength of the pound against the German mark mean that Rover's break-even target of 2000 may be missed.
'Our shareholders cannot be prepared to spend money if there is no positive outcome. BMW must give the answer of how quickly we will get our money back, and it is not a question of if, but when,' Pischets-rieder said.
Shareholder dissatisfaction intensified as a leading German investment bank downgraded BMW's stock from 'market performer' status to 'underperformer,' with Rover's problems a central reason.
Running parallel to the halt on investment at Longbridge, which is scheduled to undergo a major rebuilding, is a reduction in nonessential Rover spending, with savings of $340 million.
Said Walter Hasselkus, Rover's chairman: 'This involves cutting spending to the absolute minimum, things like traveling less, but right across all costs.'
Rover's problems aside, Pischets-rieder was upbeat about BMW and reported 517,000 sales for the Munich brand between January and September, almost matching the equivalent 1997 period. This was despite the introduction of the new 3 series.
BMW's decision to establish a plant in Thailand, Pischetsrieder said, came despite the economic turmoil in Asia with the factory costing one-tenth of the figure estimated during planning two years ago.