Nanjing Reopens Longbridge MG Plant in U.K.

Nanjing Automobile Corporation (NAC) yesterday held a formal reopening of the former MG Rover factory in Longbridge, United Kingdom, according to Automotive News Europe. Guest of honour were Liang Buo Hua, Governor of the Jiangsu Province in China where NAC MG is based, and Mike Whitby, leader of Birmingham City Council. During the event three MG TF sports cars rolled off the assembly line. A U.K. trade union today called on the Chinese auto manufacturer to honour its pledge to restore 1,200 jobs at the Longbridge facility. Eric McDonald, regional industrial organiser for the Unite trade union said: "The restarting of car production will be welcome but we continue to press NAC to honour their stated objective of 1,200 jobs. There are still many ex-MG Rover workers who are unemployed and hoping to return to Longbridge." Nanjing's chief executive (CEO) Yu Jing Wei said that volume production of the TF would restart "later this year," while he declined to predict annual volumes or reveal pricing for the car. Talking about the importance of yesterday's event within MG's ambitious development strategy, Jing Wei further stated that "We realised from the outset of this project that retaining a manufacturing link with the UK is of fundamental importance," adding that "Longbridge will play a leading role in our European operation and the plant is now in a position to commence TF production for the UK market. This is a very exciting time for MG and it's an important boost to the economy of the Midlands manufacturing region." Paul Stowe, a China-based director of Nanjing who also worked for the original MG Rover company, said that manufacturing facilities for the larger MG 7 sedan were still in place at Longbridge and that the company is still considering restarting production of this model, too. Stowe also said initial markets for the TF sports car will be the United Kingdom and possibly France, Spain and Germany, adding that some 54 dealer applications are being considered for the United Kingdom. Mike Whitby, leader of Birmingham City Council said: "Longbridge is part of the fabric of Birmingham's heritage and we are delighted that MGs will roll off the production line once again," adding that "This clearly shows Birmingham making the most of international investment, and I am proud of the part the City Council has played to bring it about."

Crucial Role in NAC's European Operations

Nanjing has devoted significant amount of work to the Longbridge plant over the past year and therefore the facility will play a very important role in Nanjing's European operations. The role of Longbridge will be as follows:

• Research and development (R&D) centre for MG
• Engineering & testing of MG models
• Human resources (HR) recruiting for China and Longbridge
• A purchasing and logistics centre for China and Longbridge
• Manufacturing base for the U.K. and European markets
• Sales & marketing base for the United Kingdom and Europe

In a vote of confidence in the United Kingdom's engineering capabilities, NAC is investing in Longbridge as a global centre for R&D. Instead of simply adapting Chinese designs to suit local European tastes the Longbridge facility will have the ability to design and develop new models, working in an equal partnership with Nanjing. Based on his research into international vertical joint ventures (IVJV), Michael Wynn-Williams believes that this kind of global vertical structure can utilise the unique capabilities of both sides and so provide a solid foundation for the long-term future of NAC, with Longbridge as the source of R&D excellence.

Outlook and Implications

Before it collapsed, MG Rover was the last British-owned mass car producer, with annual production still at about 100,000 units in 2004. At its peak in the early 1960s Longbridge built over 360,000 cars. Nanjing bought MG Rover in 2005 after the carmaker collapsed due to financial difficulties with the loss of about 6,000 jobs. Since acquiring the assets of MGR Group in 2005, NAC has been devoted to developing the MG brand and MG products, initially in China and the United Kingdom. In only one year NAC completed the construction of a huge, modern production facility in Nanjing and had its first MG cars rolling off the assembly line on 27 March 2007, which was also the date of the 60th anniversary of the company. Longbridge is an essential part of the MG project and the Chinese auto manufacturer fully understands the necessity to keep the originality and Britishness of the brand and the United Kingdom is the only place where NAC can absorb the essence of British culture and transfer it into MG products. In the United Kingdom, NAC has shown hard work at the Longbridge plant, with the production lines having been modified to allow the recommencement of manufacturing. A highly experienced management, engineering and production team is now in place, ready to re-launch MG into the marketplace later this year, initially with the famous TF sports car. Full assembly of the TF follows trial production of a number of MG 7 models in March, the Nanjing version of the defunct ZT model (see United Kingdom: 30 January 2007: Nanjing Starts Test Production at Longbridge, U.K. Facility). The TF will be the main model for Longbridge initially and will only be built in small numbers and involve around 200-300 workers. Nanjing has some ambitious targets for the TF, which seem optimistic in the current market environment. MG 7 assembly at Longbridge will likely follow, although these models will be built from kits imported from China rather than from parts supplied locally.

It is highly unlikely that Longbridge will ever reach its previous glory days of mass production. Moreover, the new TF model is not expected to reach annual production of 15,000 units as it has hardly changed from the original version, launched six years ago, and its main competitor, the Mazda MX-5, has been on the market for less than two years. As a result of this, the promised employment of 1,200 people also seems highly unrealistic.