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Impact of Rover Closure

By The Drum | Administrator

May 5, 2005 | 8 min read

A week is usually regarded as a long time in politics, and in the run up to any general election it’s an absolute eternity. Bearing this in mind it’s impossible to second guess the political machinations that are poised to unfurl as the government desperately attempts to uncover whatever tiny hint of silver there may be in the great big storm cloud that is the collapse of MG Rover.

The facts speak for themselves. The last volume production, British-owned car manufacturer has gone to the scrap yard in the sky, taking with it 6,000 jobs, potentially threatening a further 12,500 more (in supplier-related industries) and rocking a political party that very publicly prides itself on its handling of all matters economic. Dark days indeed.

Speaking to John Sanders, the former global sales and marketing director at MG Rover, and now a board member at McCann Erickson-Birmingham, it is difficult to come to terms with how hard the firm’s collapse has hit everyone connected to the automotive giant. Sanders wheel-spun out of his position there almost two years ago now, and it is fair to say that he is still absolutely gutted: “I’m very upset for a number of reasons,” he confirmed in resigned tones. “Firstly, a lot of people are likely to be made redundant from this and I worked for a long time with a great many of them, getting to know them and their families. That is something that, personally, is very difficult to deal with.

“Secondly, I’m upset because of how hard these people worked to turn the business around. They all demonstrated a massive amount of passion, dedication and absolute belief in the business and its sustainability, and did everything they could to keep it afloat. Even if you’d spoken to them a matter of weeks before it closed they’d have been convinced and committed that they were going to see any difficulties through and take the business forward. For them to show that much dedication and for it all to come to such a sudden and dramatic stop is just a huge slap in the face.”

From his voice it’s easy to tell that Sanders is smarting from that slap almost as much as his ex-colleagues.

Sanders joined the company in 1998, and in his five-year tenure experienced some fairly tumultuous times. From the break-up of the business by BMW, to its sale to the ‘heroes to zeroes’ that are the Phoenix Four (in case anyone’s forgotten, that was for a mere £10), to the scaling down of production and eventually, probably the last straw as far as he was concerned, to the subsequent scaling down of marketing budgets. Which begs the question, does he think this parsimonious approach to marketing may have contributed to the group’s decline?

The pause at the other end of the phone line suggested this was ‘a chicken and the egg’ line of questioning. “Well,” he ventured with some consideration, “the decision to cut the marketing spend was certainly not taken lightly. The fact of the matter is that in a business where the flow of cash is a problem you have to make cutbacks to survive – marketing was a casualty of this. Whether that was the right decision to make is not for me to say, but it is an understandable one. At the end of the day the money simply wasn’t there to spend, and that’s the reason for the firm’s ultimate demise.”

Continuing, he explained: “The issues that caused the decline are obviously far deeper than a simple cut of marketing spend. Look around at the automotive sector – everybody is struggling and only a tiny handful of companies are actually making a profit. The firms that aren’t doing particularly well but are surviving, Jaguar for example, are only doing so because they have benefactors with very deep pockets helping them out [Ford in Jaguar’s case], and that’s the relationship Rover were looking to foster with the Chinese. When that was no longer a feasibility, neither was the business.”

The ironic thing about the past marketing situation, and the historical shortage of cash, is that MG Rover was on the brink of launching the first salvo in a £20m publicity assault when the firm collapsed. Sticking on the irony-go-round London’s St Luke’s had devised a major TV push titled “Meltdown”, and what’s more this was a job that Sanders himself had pitched for with McCann Erickson, alongside regional rivals Cogent. The Drum ventured that possibly, just possibly, he’s now quite happy that he didn’t get the job after all?

A question that induces another pause and much umming and ahhing. “Well, I guess you could say that the disappointment of not getting it has been made slightly ‘less sharp’ than it would have otherwise been,” Sanders cautiously imparted, before adding: “Having said that we would have loved to have beaten a major London agency, that we ran very close to the winning post, and had the opportunity to work with Rover in bid to turn their sales and the business around. That’s something we would have been very proud to have been involved in.”

What is a bitter pill though is the effect the collapse is set to have on the marketing community in the Midlands region and just goes to show how reliant agencies can become on one major client. Sanders was quick off the mark to acknowledge this: “Ultimately it’s bad for the image of the Midlands to have such a major employer go down. It’s obviously not good for the thousands of employees and their suppliers, but it’s also not good for the standing of the region as a whole.”

Or for the marketing services scene?

“From a Midlands perspective the implications aren’t as major as you might think. Some firms will feel the effects, certain print suppliers for example, but there was a much-reduced roster of agencies over the past couple of years. Cogent were doing a lot less work than they once were, RBH has ceased working on the dealership front a few years ago and a great deal of the activity was handled in-house – that’s obviously the area that’s going to be hit incredibly hard.”

It is here though that Sanders tone raises an octave as he spots that first elusive glint of silver. “There’s got to be about 50 to 60 people still employed in the marketing department, handling everything from PR through to production. It goes without saying that it’s terrible that they’ll be losing their jobs, but on the bright side what they’ve learnt from their time there is absolutely invaluable. The experience of being part of that failure will have taught them a great deal; but much more than that, in the time beforehand, they’ve been working with very tight budgets, using their creativity and innovation to keep sparring with the other manufacturers and producing real results. That will be something their future employers can’t fail to be impressed by. There’s going to be a lot of talent flushed out into the marketplace; hopefully that’ll give the individuals some exciting new positions and it’ll give employers the opportunity to take advantage of some first class marketers.”

A pretty dull sliver of silver we suppose, but a small one nonetheless.

Finally it’s important to add that Sanders doesn’t see this as the end for the Midlands and motoring, or for the local agencies that service various car accounts.

He says: “To be honest there’s still plenty of accounts around. Peugeot, Jaguar, Aston Martin and Land Rover all still have business based in the Midlands, and there’s a substantial amount of suppliers in the area. In the last five years these suppliers have diversified so that, although the collapse of Rover will hit them, it won’t be quite as tough for them had the firm collapsed without any warning signs. Midlands agencies have diversified over the years too.

“There’s plenty more to the major marketing services agencies than car accounts, and because of that wider talent and client base they should be protected too. As sad as the collapse is, it isn’t the be all and end all for the sector or for local agencies. That is something that really needs to be stressed.”

Pulling up and turning the interview ignition off on a positive note, Sanders concluded: “Also, we still don’t know what’s finally going to happen at Rover, and there is some hope. The business could be sold as a going concern and there could still be jobs for people. Fingers crossed there might be just one more throw of the dice for someone that’s willing to invest.” Well, if they’re going to jumpstart this business they better get throwing soon.

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