Roll over dead Rover

2005

The news that Rover may have fetched its last bone reminded me of the (Whitbread prize winning) book by Mark Haddon "the curious incident of the dog in the night time".

In it, the anti-hero, fifteen year old Christopher, finds his neighbour's dog lying dead on the lawn with a garden fork sticking out of it and sets out to discover "who has killed the dog and why".

A similar question is now praying on the minds of 6,000 workers and their families in the West Midlands.

The obvious answer is "a succession of the worst management decisions in automotive history". Then there's the angle that "the world just doesn't need Rover anymore". Not to mention the people-perspective: "Rover's own culture killed it".

True, there are too many cars being produced in the world. Or at least there are more cars being produced than there are customers to buy them.

Which is quite a problem, because the over-production of cars is driving down prices while driving up costs. Globally, there is something like 40 per cent excess car production capacity – or about 80 car assembly plants across the world that that are (or should be) surplus to requirements.

But Rover, which has been producing cars for 101 years, has hastened its own downfall by manoeuvring itself into an (even worse than) Marks & Spencer "middle-of-the-road" position. Too mainstream to be either niche or upmarket but too small to be able to compete with the really big boys.

The company's plight reminds me of Anatevka, the village featured in the musical 'Fiddler on the Roof'. You can almost hear its mournful employees and once-loyal customers singing the same tune:

"A little bit of this, a little bit of that.
A badge, a wheel, a brand, a mat.

Someone should have set a match to this place years ago.
A canteen, a tree.
So, what's an assembly line? Or an office?
People who pass through Rover don't even know they've been here.
An urban hatchback. An ugly 75.

What do we leave? Nothing much.
Only little Rover."

Now I admit that this might offend people who either are directly connected to Rover or who harbour nationalist automotive passions. To these individuals, the question still remains: "what (apart from tradition) justifies the continued existence of Rover?"

Is it better than any of its competitors? No.

Will it become a place in which people can experience success? No.

Does it offer growth for the future through design and marketing excellence? Not likely.

Is it just a waste cash and careers – and a mechanism to line the pockets of its directors? In the words of Hong Kong Phooey, "Could be!"

But hold on. Other companies have managed to use Rover's famous ex-brands (Mini and Land Rover) to create profitable businesses. But the tragedy is that it has required non-UK companies – namely BMW and Ford – to introduce cultures that are able to make products that people want to buy. And the same is true of almost every other 'British' car manufacturer: Jaguar, Aston Martin, even – God forbid - Rolls Royce and Bentley.

A nation of grocers. How true.

Ok, so maybe you're a diehard patriot who is willing to pay a premium for your Rover in order to buy British? Come off it! Only 120,000 rover cars were sold last year and almost all were sold at a big discount. Rover's sales were down 40 per cent in January and February - that's a huge proportion of former customers voting with their feet.

Maybe many agreed with the pithy "TopGear" readers six-word review: "Makes me ashamed to be British".

OK, so MG is doing better. It sells half-decent (although rapidly-aging) sports cars, largely thanks to the zing imbued by its legendary name.

But just look at the advertising! One recent poster showed an MG owner driving to a retirement home. Let's face it, MG is only going to survive as a specialist car manufacturer if it can attract new design, invest new money, and rekindle the potential of its brand.

But Rover's problem over the past 20 years has been a succession of bad decisions delivered by bad - incompetent, ill-informed, and ignorant – managers.

The company's culture could have made more of an effort to learn from its various partners and acquirers but it never really did. The only thing that changed during the time with BMW, for example, was that managers stopped wearing overalls - in the Honda egalitarian mode - and started wearing suits - as per the Bavarian model.

Rover managed to learn neither engineering from the Germans nor empowerment from Honda. As a management culture it stayed resolutely stupid. Proud and stubborn beyond its means.

The current team, Phoenix, led by John Towers, bought the company for £10 in 2000 and over the past five years has already sold off the land, the parts business, and the intellectual property in their products, leaving a company with no new models, no partners and no future (except the multi-million pound pension fund for Phoenix's four directors, of course).

Meanwhile over the same period, Carlos Ghosn managed to transform Nissan from a company making an annual loss of 684 million yen into one that made an 860 million yen profit last year.

The difference is that Ghosn unleashed the potential of his workforce, creating multi-functional teams that worked relentlessly to deliver new efficiencies, increased profit margin and 50 new products.

Sadly, it seems that nothing can save Rover. Not nationalisation, not privatisation, not Honda, not British Aerospace, not BMW and not China. The truth is that the company does not have the leadership, the machines, the know-how, or the cash to save itself.

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About The Author

Max McKeown
Max McKeown

Max McKeown works as a strategic adviser for four of the five most admired companies in the world. He is a well-known speaker on subjects including innovation and competitive advantage. His latest book, #NOW: The Surprising Truth About the Power of Now, was published in July 2016.

Older Comments

I find it funny that you fail to mention one of the more recent causes of Rover's decline; mainly that of the managerial incompetance as that of BMW.

Rover Group was operating in profit pre-1994 and BMW takeover. The mounting losses that crippled the company was down to lavish projects such as the Range Rover, the MINI and the Rover 75, as set out by BMW, rather than concentrating on the 'bread and butter' vehicles, such as the Rover 45 replacement. These assets which had caused so much strife for Rover group were then kept on, or sold to Ford.

Lets not even begin with the diabolical 'jobs for life' agreement signed under BMW ownership, denying MG-Rover management from axing staff from the plant to lower labour costs.

This reason and this reason only caused it current company's decline. They were dead from the start.

Regards. Liam. (Harbourer of nationalist automotive passions.)

Liam Olphert UK

Sorry pal, but you are talking out of the wrong orafice here, and in a manner that sums up why manufacturing and engineering in Britain is struggling.

There has been mistakes at MG Rover, but these mainly pertain to decisions made in marketing which was woefull at best. With the benefit of hinesight, it may well have been a better idea to persue a joint venture for production and design with one of the Russian brands rather than the Chinese, as the Rover brand is better thought of over there than the likes of Ford, BMW and Peugeot.

It is an unpleasent trend in Britain that we continually knock and put down our own industries, and in many cases this is unwarranted. The success of manufacturing and engineering to a large extent is so dependant on central Government for its success in terms of economic strategy. Whitehall in my opinion, has for too long been pandering to the 'Square Mile' in persuit of econimic success and has ignored the heart of our true economy. Outward investment in retail, banking and service, together with assembly, has pushed the value of Sterling to an artificially high level. Sucking in cheap imported goods and leaving our manufacturing sector fighting an uphill battle to export at an economical rate.

Predominantly, this is what let MG Rover down, and is the case that manufacturing has seen a 10% fall in exports this year alone. No management can plan for this type of insane economic strategy, and more manufacturing will go the same way unless there is a change. The Government absolutely must come out of London and experience the real world, and build an economy that will drive forward economic growth in key manufacturing and engineering industries.

One last word about MG Rover - it is not dead and Longbridge will re-open. For goodness sake, wake up and be proud of what we are good at and stop knocking us down for no reason.

Simon Robinson Burnley, Lancashire