Original Article  - Birmingham Post 16 April 2008

The last car to be manufactured at Longbridge may have already rolled off the production line, industry insiders fear.

They said the decision by main supplier Stadco to stop manufacturing body-shells for the MG TF sports car, as The Birmingham Post revealed on Saturday, could effectively sound the "death knell" for the Nanjing project.

One influential source said he doubted whether Nanjing parent SAIC would ever produce cars from Longbridge.

He said he rated its chances of doing so as "very slim" although he did believe that the former Rover factory could still have some role as a servicing centre.

The source, who has declined to be named, said a lot of money would have to be spent to develop new versions of what was effectively an old model - the MGF.

Then he said there were serious questions to be answered - could it sell sufficient volume? Could the group meet quality standards? Could they develop an engine? Could they meet environmental requirements?

"It is a tall order," he cautioned. "It is a huge task."

He pointed out that far more attractive operations had also struggled.

Jaguar had been "taken to the brink" before being acquired by Indian conglomerate, Tata; Aston Martin was reliant on Qatari money and Russian Nikolai Smolenski had baulked at producing TVRs at Blackpool.

"If SAIC/Nanjing thought they could produce cars at Longbridge economically, then I am sure they would," he said.

"But can they do it economically?

"I cannot see them prepared to spend the sorts of money required. It was always wishful thinking that something would happen. "I accept that some people within Nanjing had intentions to produce. But I have never had the impression they were serious about it."

He said Nanjing never had the capital to do it and SAIC was pro-occupied with making the merger of the two work.

"There is no emotional connection to Longbridge," said the insider. "How would they compete? Who would buy the cars?

"I don't think they will ever produce anything there," he said.

The claims were backed up by a second source who said the decision by Stadco had effectively brought the curtain down on the Nanjing project.

"There is a very real fear now that they will just pull out altogether," said the source.

"The best scenario for Longbridge would be for them to make the panels in China and then send them to Birmingham. But why would they that - why not just assemble the cars in China."

Suppliers have been desperate for some clue as to what the Chinese might be planning but with no word coming out of SAIC, they remain in the dark.

Stadco was just one of about 150 companies supplying components to the MG TF but despite investing heavily in a new operation at Longbridge, its patience eventually ran out.

It announced on Friday it was withdrawing from its contract to supply panels for what it called "commercial reasons". The decision has put 30 jobs at risk.

Production hopes were raised summer last year when the first of the TF's were displayed to the press.

However, almost a year on, has yet to start and not a single car has entered the showroom.

BACKGROUND

Stadco signs contract with Nanjing Automobile Corporation (UK) - 16 OCTOBER 2006

Stadco Ltd, part of the publicly listed Acertec Plc announced today that it has signed a contract with Nanjing Automobile Corporation (UK) Ltd ("NAC") to transfer the production and assembly equipment for the construction of the body of the MGTF sports car from its facility in Coventry to NAC's plant in Longbridge. Stadco will install the equipment and will manage the relaunch of body production in Longbridge for NAC with full production expected to be achieved in mid-2007.

This contract may lead to further long term cooperation between Stadco and NAC in Longbridge.

Andrew Morriss, Stadco's MD, commenting on the deal said: "It is very satisfying to see automotive production returning to Longbridge and for Stadco to be able to participate in the renaissance of the MG brand."

John Sword, CEO of Acertec, Stadco's recently floated parent company, added: "We believe that this transaction is an endorsement of Stadco's strong position in automotive body manufacturing. Whilst the financial benefit for Acertec from this transaction will be modest, there is the potential for growth if there is a good market reception for the relaunched MG."

Stadco Automotive media enquiries

Martin Hayes/Marco Ferrari, Automotive PR +44 (0) 207 494 8050 mhayes@automotivepr.com/mferrari@automotivepr.com