Fears of job losses among Unipart's 4,000 workers were eased this week when the company announced plans to renew its historic contract with MG Rover, writes Chris Koenig.

The Cowley company, formerly part of the Rover Group, took a financial knock two years ago when BMW announced it would not extend the contract between its Rover subsidiary and Unipart beyond June 2002.

Unipart chief executive John Neill told workers in a recent memo: "This deal will play an important part in not only securing jobs for many people but, equally importantly, will put us in a strong position to win the new business we are aggressively pursuing."

The new deal means that Unipart will supply after-market auto parts and warehousing to MG Rover's 350 dealers until at least June, 2004.

The firm has also won the distribution and management contract for Jaguar spare parts worldwide.

Its new £20m Jaguar Business Unit has supplied more than 71,000 spare parts to 700 Jaguar dealers and its computerised distribution system was launched earlier this month.

Fears for jobs surfaced earlier this year after the unquoted Cowley company sought and gained permission from its shareholders, more than half of whom are employees, to borrow extra money.

Unipart has been forced to write off £156m as a result of the poor performence of the Partco business it bought two years ago. It has still to file accounts for year ending December, 2000.

The company is now diversifying into other areas, such as managing NHS demand chains, but MG Rover remains a significant contributor to its £1bn turnover.

Unipart could still lose its £100m-a-year contract with Land Rover, now owned by Ford, in February.