HC Deb 28 February 1969 vol 778 cc2175-84

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]

4.25 p.m.

Mr. Laurence Pavitt (Willesden, West)

I am grateful for the opportunity to raise a very important matter which affects 1,100 families in my constituency, namely, the closure of the G.E.C.-A.E.I. switchgear factory in Neasden Lane, Willesden. Although this closure is still only a matter for discussion, I want to bring before the House the problems of what can be done to keep it open rather than to discuss the closure.

There is a tremendous human problem of uncertainty which needs to be resolved by the consultations and discussions now taking place. I was informed on 3rd February that the matter was being discussed between management and workers. No decision has yet been taken, and there is to be a further meeting on 5th March under the chairmanship of Sir Jack Scamp, and I have no wish to interfere, through the processes of the House, in any way with those negotiations. However, I am glad that consultation is proceeding, for, if that consultation is to be meaningful, it means inevitably that there must be the possibility of a change in the position and that the factory could be kept open.

I am fighting to keep it open not only because of the workers in my area, but because I believe that keeping the factory open is in the long-term interests of the management, the workers and the country. I am proud of the record of this factory. It was started by British Thomson-Houston in 1913, and from the skills there were developed new designs in switchgear which have been made world famous. A giant circuit-breaker, which was the first in the field, was made in this factory and proved to be an export winner over a long number of years. The Kariba Dam project resulted in orders of £2 million or £3 million on that project alone, and most recently the factory has produced the only 132 kV vacuum switch-breaker in the world, now in the generating station at West Ham. This is an entirely new development which over a long period of time may lead to important exports and give Britain a lead over some competitors.

I am aware of the hard fact that the industry is facing a falling market. From about £70 million in 1964, it has fallen to about £20 million in 1968. Yet, by its skill, good labour relations and know-how, the Willesden factory has managed to increase its share, in spite of a falling market, from 10 per cent. in 1964 to 15 per cent. in 1968 and the workers: in the factory are naturally hoping that their efforts will be given some recognition by the management.

Many of the people working in the factory have been through this experience before. A similar situation arose in the 1930s when my hon. Friend the Under-Secretary of State for Employment and Productivity, the hon. Member for Jarrow (Mr. Fernyhough) predecessor was busy on the march from Jarrow to London. There was a crisis in the factory in the 1930s, but it was decided at the time to diversify its production and to hold on for a few years. It was thus able to be immensely valuable to the nation in 1938 and 1939 and was vital during the war years. Its record has been incomparable. I suggest to the management that even though there is a recession, one of the considerations which it should bear in mind is that in the long view, if it makes every effort to hold on in bad times, it will be able to take advantage of that when good times arrive.

I accept that the Central Electricity Generating Board's programme has been a large factor in the last few years and has represented a large proportion of the incoming orders, but now cannot be regarded as an important reason for keeping the factory open. But if the Government's policy of expansion and increasing productivity is right, when we get over the present hump it should be possible even in this country for there to be an upsurge of demand by electricity undertakings. I accept that the C.E.G.B. programme has been largely fulfilled, but if the Government's economic policy is right we shall have an upsurge in productivity and a need for more power.

It has not been unknown to bring forward future programmes which are not immediately in the pipeline, so that we can maintain an important national industry. I ask the Government to look at this question. I realise that there are other considerations and accept that the main problem is that if this factory is to be kept open, we have to increase exports. At present this factory has something like £1 million worth of exports a year, which is quite a creditable record in view of this extremely competitive market. There has been no diminution in sales. In 1964 exports for switchgear and similar products amounted to £19.8 million. Last year it stood at £21.2 million. There was a sag in 1966 down to £19.3 million, but in the main the markets have been held.

We should tackle this from the selling angle rather than looking to see how we can cut back. If Sir Donald Stokes can sell Leylands in Cuba, I cannot see why we cannot sell switchgear. We ought to be making greater inroads into the whole problem of selling. Two-thirds of the world's population live in appalling poverty, waiting for development. In the next 40 years, one of the inevitable consequences in whole continents such as Asia, Africa, South America and the Caribbean will be that, inevitably, electric power will become the prime mover of many things. When I was recently in Pakistan, I saw undergraduates still doing their homework sitting beneath street lamps for lack of electric light in homes.

There is no doubt that if the wherewithal can be found to tide over economic problems there is a colossal market through the extension of electrical switch-gear throughout the rest of the world. Instead of trying to compete with Siemens in the Common Market countries, it would be as well if we were to activate those channels which we have with the Commonwealth countries. We should use the Export Credits Guarantee Department of the Board of Trade in a far more aggressive fashion and look at everything being done in that direction to see whether sales can be stepped up here. We should harness the trade departments at the high commissions and embassies, realising that here is a specific problem, very wide in its application, among the receiving countries.

We cannot expect the switchgear factories to be able to create new large hydroelectric schemes, the dams which could be the main users of their products. These are very large undertakings, requiring the co-ordination of the whole of the engineering industry and the Government. It means using the best brains and planning that we have, the Ministry of Overseas Development, and especially the Minister of Technology, to find out how, instead of a disparate use of resources, we can concentrate them so that we have in developing countries these large schemes, such as the Kariba Dam project of many years ago.

If it is proposed, in the closure at Willesden, to transfer some of the existing lines of production elsewhere it is pertinent to ask whether, when it has happened in the past, it has proved to be the right system, whether products which have been made in Willesden and gone to other factories in the combine have maintained their sales and goodwill following this change. The whole question of design rationalisation is also part of the problem. This has not yet been decided. Would it not, therefore, be right that before the decision to close, perhaps, the Willesden and Witton factories is made, the research should be concluded on design rationalisation rather than jumping the gun?

I return to the human problem. In the last five years, as a result of closures in my area, there have been 5,817 redundancies from the Willesden factories and 37 factories have been completely closed down in my area. We have to remember that these include such large firms as E.N.V. Engineering, the Lancashire Dynamo, Thrupp and Maberly and U.D. Engineering.

As the hon. Member for Hendon, North (Sir Ian Orr-Ewing) knows, people who live in my constituency sometimes work in Hendon, and Hendon people work in Willesden factories. Areas such as Wembley, Hendon, Harrow, Camden and Marylebone have suffered similar closures, and the patterns about which I have been talking can be duplicated there. I estimate that something like 10,000 people in my area alone are affected. When we have trained and skilled men who have worked for many years in one place it is difficult to find them alternative work. This means that alternative work of a comparable standard is not available and these skilled teams, which should be producing for the country the exports which are so necessary, will be broken up and made valueless.

Thirty per cent. of the present employees have between 25 and 50 years' service. These people, after having given a lifetime's service, will be uprooted. They still retain their skills. The teams can still work. I therefore ask my hon. Friend to maximise the help which he can give on the human side and ensure that should the decision be made to close the factory—and I sincerely hope that that will not be necessary—consideration is given to making generous redundancy payments. For people who have been paying into pension schemes for 30 years, there should be something more than the bare legal minimum requirements, and generosity here would not be out of place.

I know that my hon. Friend the Joint Parliamentary Secretary to the Ministry of Technology cannot answer this question, but I should like to know whether the preliminary assessment in the area which was being undertaken by the Department of Employment and Productivity has been completed.

This is a fine factory. It is a gem of a factory. The labour relations at it since 1913 are a model. This is something which I have boosted in the House time and again since I became a Member in 1959. Not only relations between management and workers, not only the degree of productivity, not only the selling overseas, but the relationships with the buyers of Willesden products and the confidence which people have in maintenance and repair after the products have been sold cannot be assessed in pounds shillings and pence and put in a balance sheet. The factory is an asset to the nation, and its closure would be a tragedy, not only in respect of the human personal problems which would be created for workers in my area and my constituents in Willesden which has been hard hit and hammered over the last three years, but for the nation.

We cannot afford to waste assets of this kind merely because of the need to rationalise in other directions. Despite the intense competition in the world market, of which I am aware, if when that market increases Britain is to play its part in it and is to be ahead of the others, it is the kind of development which has taken place at Willesden which will give us the edge over our competitors. I plead with all four Ministries involved and the Government to do all that they can to keep this factory open.

4.36 p.m.

Sir Ian Orr-Ewing (Hendon, North)

As time is short, I wish merely to endorse the remarks of the hon. Member for Willesden, West (Mr. Pavitt) on behalf of Members representing Wembley, Hendon and Barnet and the surrounding areas where many employees live.

4.37 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Jeremy Bray)

I much appreciate the concern about this matter of my hon. Friend the Member for Willesden, West (Mr. Pavitt) and that of the hon. Member for Hendon, North (Sir Ian Orr-Ewing) and of my hon. Friend the Member for Willesden, East (Mr. Freeson), who is not able to speak on this matter as he is a Ministerial colleague.

The question of the closing of the Willesden factory is part of the continuing pattern of rationalisation within the electrical engineering industry. The Government and all my colleagues in the different Departments are very much aware of the human consequences for the 1,100 people affected.

As my hon. Friend said, the factory has had a long and distinguished record of innovation and production in the switchgear field. It has many long-service employees. I know of no suggestion that the factory has not operated profitably. Why, then, do we have to face the prospect of its closure? The basic reason is not the merger of the companies and the rationalisation of the industry, but the fall in demand in heavy electrical engineering at home and the excess capacity overseas.

At home, investment depends on estimated simultaneous maximum demand for electricity in the sixth winter ahead. The estimate made in May, 1964, for the winter of 1969–70 was 53,000 Megawatts, and in successive years 54,000, 55,000, 54,000 and 54,000, showing virtually no growth in the demand estimates over a period of four years. This led to a reduction in home orders for heavy electrical plant right across the board. In the switchgear area for the 132 to 400 kv range the orders placed with major suppliers amounted to £50 million in 1963. Since then, the demand has declined each year and in 1968 amounted only to £11 million, with a forecast of £8 million for 1969 and £9 million for 1970.

The proportion of the output of Willesden which has been exported, although significant, is not sufficient to counterbalance this enormous fall in home demand. The prospects in the home and export markets have been thoroughly examined, not only by the firms and B.E.A.M.A., but also by a special sub-committee of the Electrical Engineering E.D.C., whose report has recently been received by the E.D.C., including its trade union members. There are no grounds for believing that the present capacity of the switchgear industry can be economically employed at its present level.

My hon. Friend raises the question of rephasing C.E.G.B. investment, as was done for the Hartlepool power station, and increasing export efforts. As a variant to the former, one might add the possibility of accelerated obsolescence of old capacity.

These possibilities are not being neglected. The Government have given close attention to the effect of the electricity investment programme on the electrical engineering industry, and will continue to do so. The C.E.G.B. fully recognises the cost and dangers of such marked fluctuations in the investment programme, and will use all available means to smooth out investment.

Companies are trying to increase their exports, designing specifically for export markets, and seeking to penetrate new export markets. Export sales of switch-gear have increased from £26 million in 1967 to a rate of £29 million per anunm in the first nine months of 1968, and I expect it to increase further in years to come. The companies have seen the need coming to increase their exports. The Government lose no opportunity to seek export opportunities for the electrical engineering industry. The Board of Trade has set up a special Overseas Project Group. In the nuclear and conventional field, the Ministry of Technology gives every backing to the export efforts of the industry.

When the most optimistic view is taken of all possible home and export markets, there is still a large margin of capacity which cannot be economically employed. We have, therefore, perhaps inevitably and with the greatest regret, to turn to the prospects of the redeployment of workers in that factory. The unemployment rate in Greater London currently is about 1.5 per cent., but well below the national average of 2.5 per cent. To put the problem of finding a job in perspective, in the Greater London area there must be about 1 million job changes a year.

My hon. Friend asked about any preliminary assessment being made by the Department of Employment and Productivity. The Department is not able to get on with this very important and urgent task of finding the most suitable jobs for the people in that factory until the unions and the management have agreed that it should. Therefore, there is every advantage to be gained in probing the situation thoroughly, but as quickly as possible, so that alternative arrangements can be made.

The actual terms of redundancy are a matter for negotiation between the company and the unions at national level. The Government have repeatedly stressed to industry in general, and firms facing redundancy in particular, including G.E.E.C., that they expect to see full consultation between firms and unions on all aspects of redundancy arrangements, including placing and redundancy payments. The Government obtained specific assurances from G.E.E.C. on consultation with the unions before the recent merger. The statutory provisions for redundancy payments, notice of termination of employment, and unemployment benefit no more than underpin redundancy arrangements negotiated between firms and unions.

It is, therefore, to be hoped that the management and the unions involved in this important, but very difficult case in the restructuring of industry should, with good will and understanding on both sides, in the human interests of their own employees and union members, get on with the job of finding the best possible solution in each individual case for the future of those who have contributed so notably to our engineering industry.

Sir Ronald Russell (Wembley, South)

If I heard aright, the hon. Gentleman said that the figure for the home market would be up to £8 million this year and £9 million in 1970. Does that not give a slight ray of hope? Would he not investigate the prospects for more exports to the Commonwealth, as suggested by the hon. Member for Willesden, West (Mr. Pavitt)?

Dr. Bray

Yes, there is a very slight increase, but against a background of a total of £50 million of orders in 1963 it is a very small trend. The export position is being and will continue to be pressed as hard as possible, but I think that it would be unrealistic to suppose that it can take up anything like the total capacity of this industry as it now stands.

Question put and agreed to.

Adjourned accordingly at a quarter to Five o'clock.