LONDON - The MG Car Company, formed by London venture capital firm Alchemy Partners to operate the remains of Rover Group, faces a formidable task in the next five weeks.
The company must convince skeptical workers, dealers, suppliers and customers that it is a real car company that can achieve what BMW, a giant by comparison, failed to do. It must make a profit with a business built upon an antiquated factory, motley product lineup and a couple of damaged brand names.
While Alchemy puts its new management team in place, BMW will continue running its Rover Longbridge, England, plant until roughly mid-year, or whenever Alchemy can conclude the deal.
From that point, MG will continue to make the MGF and will buy the Rover 75 from BMW, which will continue making it at Oxford, England. Alchemy officials have said MG would be a producer of niche vehicles including sports cars like the MGF and sports sedans. That is a small scale operation compared to Rover Cars, now sold in about 125 countries worldwide.
'In the short term, I think the Rover 75 will continue under that name,' said Brandon Gough, 62, just a day after being named non-executive chairman of MG. 'It is designed and detailed as a Rover - it has Rover brand qualities. I believe it's a good car. It's a new car. It should have seven or eight years of life. We want to maximize the value out of that vehicle.'
Alchemy's plans mean a drastic downsizing of the Rover Longbridge plant, now employing about 9,000 making the Rover 25 and 45.
MG faces a massive employee relations task convincing a work force disillusioned and embittered by BMW's sudden bailout to go along with its plans.
Said an angry Tony Woodley, chief negotiator for the Transport & General Workers Union representing workers at Longbridge: 'BMW has basically given Rover Cars away. They paid a group of people with no experience in the industry to take the whole of this giant company off their hands.
'At the end of the day we've got a company (MG) that doesn't have the industry resources of design and development or the finances for new models or even the management experience to run the business,' he said. 'With their plans, the best that can be hoped for from Longbridge is a skeleton company that would produce the MGF sports cars - and that cannot be large numbers - along with one or two niche cabriolet vehicles.'
Said Charlie Moss, analyst for LMC-J.D. Power in Oxford: 'They're going to have to develop cars from scratch. Unless they're talking about building a niche car like the Lotus Elise. It does become an expensive game - $400-500 million to develop those niche cars.'
But Gough, the non-executive chairman of MG, sought to allay such fears about his new company's capabilities: 'Alchemy is a serious organization, which aims to improve businesses and not close them down. Secondly, the management team is interested in long-term business development, not closing businesses down.'
Jon Moulton, managing director of Alchemy, said MG-Alchemy is aiming to produce something under 100,000 units annually. That would be a drastic reduction from the 225,772 Rover cars BMW built in 1999.
Alchemy will introduce its first new MG model within 18 months.
The MG management team includes Chief Executive Chris Woodwark, 53, a former Rover and Rolls-Royce marketing executive; Group Finance Director Graham Hallworth, 41, who helped Alchemy founder Moulton turn around the Homestyle and Fads home improvement stores, and Gough, a non-executive chairman of several companies and an accountant whose former clients include British Leyland.