The Blues...

It's over, Rover. As redundancy notices are handed out to the Longbridge workers, the politicians - in the midst of an election campaign - barrage the directors of Rover. Only time (and due diligence of the Rover accounts) will tell the truth behind this sorry saga.

This sideshow misses out on the real action. SIAC (Shanghai Auto) had already acquired from Rover the intellectual property to make cars and engines - did they really need a car plant in the UK, when they could build cars more cheaply in China? Remember, the Communist Party needs to create work for the increasingly urbanised Chinese population.

It's a sad fact, but not only is it hard to make money in the car industry (look at the Ford & GM financials), but it has been doubly hard in the UK for the last 30 years. Now that the Longbridge plant will be mothballed, SIAC could pick up machinery at knockdown prices.

This is the second time for Rover. Back when BMW owned Rover, they acquired the 4 x 4 know-how (traction control, etc) from Land Rover, and the packaging expertise (the original Mini, Metro & Maxi come to mind) from the core Rover brand, to be used in the BMW X5, BMW 1 Series and BMW Mini.

People shouldn't be surprised. The lesson is: volume car manufacture is tough and ultimately, a cash burner, as you need to sell an awful lot of cars to make a profit and pay for new model development - the global car industry makes millions more cars than it can sell.

Yes, Rover could have partnered or been acquired, but who on earth wanted to be saddled with the liabilities of the pension fund and an aging product range?

The trick is to pick a niche and concentrate on higher margins, e.g. roadsters. Alchemy proposed such a deal several years ago (focusing on the MG brand), but the resultant job losses were unpalatable. Yep, a lot of people would have lost their jobs, but in the current scenario, everyone loses out.

And the election campaign goes on...