In December 1998, Rover employees in the UK voted to accept a package of job losses and changes in working patterns to secure future investment in the Longbridge car plant by Rover's parent company, BMW.
On 11 December 1998, it was announced that a ballot of union members at Rover, the motor manufacturer, had overwhelmingly endorsed an agreement negotiated between management and union officials involving 2,500 job losses and more flexible working hours. The changes had been sought by Rover's German parent company, BMW, as the price for new investment in Rover and keeping open the Longbridge production plant in Birmingham which employs around 14,000 people. BMW management maintained that a 30% productivity gap existed between the Longbridge plant and BMW plants in Germany, which had to be narrowed by means of more flexible working practices.
The company estimates that the agreement will lead to cost savings of around GBP 150 million a year. About half of this will come from the reduction in the workforce headcount. The requisite number of job losses will come through "natural wastage" and voluntary, rather than compulsory, redundancies. The most radical aspect of the deal is the introduction of new German-style working patterns to extend plant operating hours at basic rates of pay. Workers' basic hours would be cut from 37 to 35 hours a week - a long-standing union objective in the UK engineering sector - but management will be able to schedule these more flexibly, including on Saturday morning if necessary. Annualised working time accounts are to be introduced in all Rover plants, under which extra hours worked at peak periods of production are "banked" and taken as additional leave at quieter times. This practice is already used in BMW's German plants. Savings derive from the elimination of premium payments for overtime and Saturday working.
Elsewhere in the UK, car manufacturing companies have been experiencing contrasting fortunes. Peugeot announced in November that it plans to create 900 new jobs at its Ryton plant near Coventry. The French-owned company is planning to introduce a third shift to meet high demand for its new 206 model. The new shift will work every Friday, Saturday and Sunday, and is thought to be the first weekend-only shift to be introduced in the UK motor industry. Flexible working hours arrangements similar to those just agreed at Rover already apply at Peugeot. Meanwhile, Ford's Dagenham plant is to continue with four-day-per week production because of low demand in continental Europe. Employees are switched to training or maintenance work on non-production days. The US-owned Ford is now expected to pursue a Rover-type flexible working hours deal with its UK employees.