The Fall of MG Rover

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Case Details:

Case Code : BSTR166
Case Length : 16 Pages
Period : 1975-2005
Organization : MG Rover
Pub Date : 2005
Teaching Note :Not Available
Countries : UK
Industry : Auto and Ancillaries

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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MG Rover Seeks Bankruptcy Contd...

Commenting on the collapse of MG Rover, Tony Murphy, national officer for the automotive industry at Amicus⁶ said, "Yet again I'm having to write an obituary for another stalwart of the British engineering and manufacturing industry. The loss of MG Rover is devastating news for the UK car industry…"⁷

Background Note

Headquartered at Longbridge in Birmingham, UK, MG Rover specialized in the production of cars under the brand names of Rover and MG. The MG Rover Group was formed through grouping, regrouping, mergers and takeovers of many famous companies in the British automobile industry.

The Rover Company was founded in 1877 when John Starley and William Sutton formed a partnership to manufacture penny farthing cycles⁸ and tricycles. The name 'Rover'was first used for one of their tricycles produced in 1884. After introducing several motorcycles, the first car was launched in 1904.

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In 1906, the partnership was transformed into Rover Company Limited. Production of cycles, motorcycles and cars continued up to World War I when Rover produced military vehicles, mortars and gas shells under government contracts. During World War II, the company employed more than 21,000 people who produced aero engines, tank engines and aircraft wings. In 1967, the Rover Company merged with the Leyland Motor Corporation (LMC), headed by Donald Stokes (Stokes).

During the period when the first Rover car was launched, Herbert Austin founded the Austin Motor Company at Longbridge in 1905 for manufacturing Austin cars. William Richard Morris (later known as Lord Nuffield) founded Morris Motors Company and produced his Morris Oxford car in 1913. In 1924, Cecil Kimber, General Manager of Morris Garages (MG), who had great interest in body styling and coach building in addition to being an enthusiastic sports car driver, tried fitting the Morris chassis⁹ with special bodywork of a more sporting nature. The first MG car -a four-door saloon body on a Morris Oxford chassis - was born...

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6] Amicus is the largest manufacturing union in the UK with over one million members in the public and private sectors, covering every industrial, occupational and professional sector of the economy.

7] "MG Rover Admits Group's Collapse,"www.edition.cnn.com, April 08, 2005..

8] The penny-farthing was an early model of bicycle, produced in England in 1870. The two wheels were of disproportionate size: the front much larger than the rear. It was this feature that gave rise to the name: the English penny coin of the late 19th century was very large compared to the small farthing. The official name of the penny-farthing is the ordinary bicycle but unofficial names include high-wheel and boneshaker.

9] A general term that refers to all the mechanical parts of a car attached to a structural frame. In cars with unitized construction, the chassis comprises everything but the body of the car.