Monday, 6 July 2009

In Retrospect

It’s not fashionable at the moment to publicly defend financiers, but the news that the Serious Fraud Office is investigating the Phoenix 4 who so memorably ‘saved’ Rover, is a reminder that financiers do, on occasion, get things right.

Those of us with long enough memories can remember how John Moulton of Alchemy Partners, the venture capitalist, was treated, by Sir Ken Jackson of the AEEU engineering union in particular, when he came up with the plan to turn Rover into a niche sports car manufacturer, based on the MGF design. I remember words like parasite and asset stripper were freely used.

The story of Moulton’s involvement with Rover is worth repeating, if for no other reason than to remember the dire straits the company was in. Moulton was attending a board meeting at Hayden McLennan as non-executive director when he learned by chance that the firm had run out of its main product, namely camouflage netting. He enquired why, and was told that they simply couldn't meet the demand from their primary customer, Rover, to disguise acres and acres of its unsold new cars in fields up and down the country (honestly, you can’t write comedy like this).

Moulton’s plan was brilliant but unorthodox. He convinced BMW to sell him Rover at a knock down price and cover its losses by selling Land Rover to Ford with the sweetener, for BMW, of keeping the prized Mini Cooper brand made at Cowley.

Moulton made no secret of the fact that there would be job losses, but the trade unions went on the search for a White Knight and duly found one in the shape of the Phoenix 4 who promised to retain all jobs at Longbridge and continue manufacturing in the volume car market, up against Ford, Vauxhall etal. The end was inevitable, although it took five years.

As Moulton said at the time: “The reality is, there are two choices, no jobs or some jobs.” How right he was and what a pity he was unable to put his plan into action.


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