Another Longbridge is happening across the UK - this time in the car dealership network, one of the country's leading industrialists has warned.

Sir Digby Jones, director general of the CBI, said many dealers were staring at insolvency and thousands of workers in that sector of the industry could find themselves out of work following the collapse of MG Rover.

Last week, more than 5,000 of MG Rover's workforce received redundancy notices after the administrators were called in.

Sir Digby, who is on the Rover Task Force and chairman of its sub group on dealers, sounded the warnings during a speech at a breakfast seminar at the offices of finance firm Liquidity in Birmingham city centre.

He noted there were 280 dealerships nationwide employing 8,500 people and said: "We have another Longbridge happening out in the country.

"A lot of those in the dealerships are young people and if we don't keep these people in training then they will never trust business again."

Half, he said, were employed by multinationals like Reg Vardy and others.

"They do not like it, it is causing grief, but it is not terminal," said Sir Digby.

But the other half were independents who had "real problems," he added. They were, in particular, caught up in the scheme by which MG Rover had offloaded its cars.

"Every time a car came off the line it was sold to a dealer," said Sir Digby.

The purchase was financed by Capital Bank and the vehicles were parked up until the dealer was ready to cope with them. They were sold at full price but now were worth only half that. It was, he said, a recipe for insolvency.

He also described how 16 members of his family had worked at 'The Austin', but he revealed he had told Labour not to "put a penny" into propping up the firm.

Sir Digby predicted that many of the MG Rover workers would get a new job quickly, some even before the notice period on their redundancy form had expired.

That was because 3,500 to 4,000 had skills and Britain did not have enough skilled people, he said.

They might not be on the same money as in their former work, but it would be decent money.

Sir Digby rejected the view that Longbridge could not build good cars and neither did he blame the directors for the collapse, albeit taking £40 million out of a company which had burned a £600 million cash inheritance was, in his words, "appalling".

He pointed out that Nissan at Sunderland made 300,000 cars with 3,000 employees, Toyota at Burnaston was making 200,000 cars with 2,000 employees, but MG Rover was making 150,000 cars with 6,000 employees.

"These good people did not have a chance," he said. "Globalisation was going to find them out...and it did."

He also condemned those who said manufacturing was dead, citing the UK's strength in aerospace and pharmaceuticals.

Sir Digby said Britain had benefited from outsoucing and offshoring to the likes of India and China to the tune of £16 billion. Britain had restructured to meet this challenge and the West Midlands was at the heart of it.

We had learned that we had to go for quality, value-added and branding rather than just try to produce on price.

"We are a class act," said Sir Digby.