HC Deb 22 July 1970 vol 804 cc715-26

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

12.14 a.m.

Mrs. Renée Short (Wolverhampton, North-East)

I am very glad to have the opportunity to raise on the Adjournment this very important matter of the closure of Courtaulds' factory in my constituency. I would say at the outset that I am not going to talk about the Department of Employment and Productivity's part in this at all. I am absolutely satisfied with what the Department is doing to help my constituents, and the constituents of other hon. Members involved, to find other employment. My remarks, therefore, will be directed to the Ministry of Technology. I am glad to see one of the Parliamentary Secretaries on the Government Front Bench; I hope he has a very full, adequate and comprehensive reply to the points I intend to raise with him.

The closure of the factory involves 1,357 employees, and it is the largest redundancy of this kind that my constituency has experienced for a very long time.

The first intimation I had was a confidential letter of 21st May from Courtaulds advising me that viscose operations were to be discontinued at Wolverhampton because prices of raw materials were rising, higher wages and salaries were causing difficulties and there was an inability to raise selling prices to compensate for the rising prices and costs. Spinning output was to be reduced from the holiday period in July and August. Two spinning units were to be phased out by October, and tyre yarn production would probably continue somewhat longer than textile yarn production.

I immediately wrote to Lord Kearton and to my right hon. Friend the Minister of Technology. Lord Kearton replied on 28th May reiterating the reasons for the closure which had been given in the first letter, and adding that the refusal of the National Board for Prices and Incomes to allow the request to raise prices in November, 1968, was really the death knell of the factory. I was also informed that operations at the Wolver hampton site would continue, but that it was not possible then to say what products would take the place of viscose production. I received a letter from my right hon. Friend dated 5th June in which he said that he had been informed that Courtaulds did not intend to dispose of the factory but that no decision had been made about its future use. He understood that there would be few discharges before September.

I went to see representatives of the management at their London office on 3rd July. It was made clear to me that there were no plans for putting alternative work into the Wolverhampton factory and that, although there had been difficulty in this factory for a period stretching as far back as five years ago, no contingency plans had been made for the alternative use of the site or for safeguarding the jobs of the employees.

The only undertaking which the management was prepared to give was to make sure that watchmen would be posted on the site so that the factory did not become a target for vandals and hooligans. We have had experience of this in my constituency with the closure of the railway workshops some time ago. These are now derelict, no alternative use has been found, the site has not been sold, every pane of glass in these large works is now broken, and the whole place is an absolute disgrace.

The management gave an undertaking that watchmen would be placed on the site and that when new processes and products were being considered in future the Wolverhampton workers would be borne in mind and the Wolverhampton factory would be considered for development. No real promises were given; all this was nebulous and very much in the future.

During the period of the letters and the meeting discussions took place with the unions concerned, the main union being the Transport and General Workers Union, about the problems of redundancy pay, retention pay, pensions for long-standing workers, the order of run-down of the staff and all the human problems involved in the run-down of a long-established works like this where many employees have served the firm for most of their working lives.

The upshot of the discussions with the union was that the union's proposal to protect long-service employees was refused. Retention pay for employees who would have to be kept on to operate the run-down and effect the final closure of the works was refused. The firm refused to make changes which the union was trying to negotiate in the noncontributory pension rules to safeguard workers over the age of 50 who will find considerable difficulty in getting jobs, and no progress was made in negotiations to obtain more generous redundancy payment over and above the statutory minimum. It was, therefore, announced that the works would close at the end of July instead of in October, about three months earlier than was expected.

The firm pleads poverty in refusing the legitimate claims of its workpeople, but what are the facts? The trading profits show a steady rise each year since 1962, with the exception of 1967, when there was a slight fall. World sales rose from £394 million in 1968 to £576 million in 1969 and to £626 million this year. Each year ends on 31st March, and the figure declared this March—of £626 million—was a record one. Home sales rose from £254 million in 1968 to £383 million this year. Profits rose from £36 million in 1968 to £52 million this year. It is not exactly a poor company, nor an unprofitable one.

The company has wide-ranging overseas interests and has invested large amounts of capital abroad, providing jobs for many people in many countries. Thus, there are factories in Canada, America, Australia and South Africa. It was reported in Italy in 1969 that the firm's interests continued to flourish and grow. But I notice from the managing director's statement this year that in the United States the firm's production was affected by the recession, and its Italian interests have been badly affected by industrial unrest in Northern Italy. Australian interests have suffered from a long and expensive strike at a key factory, and in New South Wales there was a strike that also affected production.

On the other hand, shareholders were informed that the factory at Calais is being expanded. Courtelle and Celon are produced in France and knitting interests are established at Lille and Colmar. Thus while there is contraction and redundancy at Wolverhampton, in some areas abroad there is expansion and growth. In some, production is affected by strikes. It seems extraordinary to my constituents that there should be continued development in countries abroad, and that some countries where there is a considerable amount of labour unrest are favoured, rather than British interests, and particularly Wolverhampton interests. My constituents are beginning to put two and two together and to understand that this is merely a foretaste of what may become the pattern if we enter the Common Market. If firms decide, for various reasons, that production is unattractive at home, nothing can stop the gradual erosion of job opportunities in Britain and the transfer of production and investment abroad.

This really underlines the basic ailment and failure of capitalism here. Private firms are starving British industry of adequate capital, creating grey areas in many parts of the country. Industrial slums are producing inefficient industries while at the same time there is investment on a vast scale in some industries abroad which bring profit to some but no profit to the people of this country, who are looking to these firms for their future employment and prosperity. Far less benefit is brought than if investment on a similar scale were made in modernising existing industries here and in setting up new industries where they are needed. This is a matter of great concern nationally, as well as to my constituents.

Lord Kearton has had some harsh things to say about what he calls "Government meddling" and "ignorant interference" by bodies like the Monopolies Commission and the P.I.B., but it seems clear that some Government action needs to be taken when a firm as profitable and with such varied interests as this one can decide to throw a work force of more than 1,300 people on the scrap heap.

The prospects are not good for the older men, because for those who become redundant at this age it is difficult to find jobs in any part of the country and this is no less true in the West Midlands, which everyone thinks of as a prosperous and booming area. The closure will also affect the job opportunities of many young people. The youth employment officer in Wolverhampton was telling me yesterday that there is added, increasing and visible difficulty now in finding jobs for school leavers and that many of them are many months out of work after they leave school at the end of the summer term.

So at both ends of the employment scale the prospects are not good, and they will be made worse by this closure. This is why I take such a serious view of this and why I am asking the Government to take action on certain points.

First, I ask the Minister to undertake at once a thorough inquiry into the affairs of the company, particularly the reasons for the closure of the factory. I should like him also to investigate the cost to the national economy if tyre cord requirements which are now met in Wolverhampton have to be met by imports instead after the end of the month. This will obviously add to our balance of payments difficulties.

I would ask the Minister to intervene at once, in the interests of my constituents who are affected by this considerable redundancy, to urge that the factory be kept going and urgent plans be made for alternative uses of the plant and the site. Has the management asked to be able to increase the prices of its products to keep the factory going? What would be the Minister's reaction to such a request, and how does the general situation at the factory fit in with the Department's general attitude to industry? Is the company to be allowed to raise its prices—a policy which appears to be acceptable to the Government? What is their attitude to price rises and possible redundancy?

I should like him to urge on the management responsible and generous treatment of all employees whose jobs are likely to disappear, unless the Government can use their influence to prevent or postpone the closure, and particularly those with many years of service to the company. This is an example of capitalism at its most ruthless and its most uncaring for a large number of working people who throughout their working lives have added to the profitability of the company.

Had it not been for the introduction of the Redundancy Payments Act of the previous Labour Government the situation for all these employees would have been much worse. But there is no doubt that the firm is treating particularly the long-term employees ungenerously. I have given enough information about the financial stability and strength of the company to show that it could certainly treat them more generously. I hope, therefore, that the Minister will reply to my five main points, that he will undertake that he will not treat this closure lightly, that the Government will use their influence with the firm particularly to ensure that alternative uses can be found for the factory as soon as possible, and that, in the meantime, those workers who become redundant will be treated generously by the firm.

12.30 a.m.

Mr. Patrick Cormack (Cannock)

I am grateful to the Minister for giving me the opportunity to say a few words about this issue. Like the hon. Lady the Member for Wolverhampton, North-East (Mrs. Renée Short), I have a number of constituents who are affected by this closure, and I am greatly concerned about them.

It is important to put the record straight. With the greatest respect, I do not think that the hon. Lady has given us the whole picture. For instance, only this morning I spoke to officials of the D.E.P. at Wolverhampton and was assured by the manager that the firm had leaned over backwards to be helpful. Officials from the D.E.P. are working full time at the factory helping to settle people. The manager also told me that the arrangements for extra payments to workers laid off were much more generous than those which are made by most firms. It is important that these facts should be put on the record.

I deplore the closure of the factory, but why is it being closed? Here again we have to look at the whole picture, and I do not think that the hon. Lady has given us all the facts. In this case there has been a great deal of inflexibility on the union side. It was a walk-out which helped to precipitate this crisis. The hon. Lady has been castigating capitalism, but it is important that every unit should pay its way, and this unit has been losing money at a high rate. By May of this year it was suffering a loss of £70,000 a month.

The unions involved have not been as co-operative as they might have been.

Mrs. Renée Short

Has the hon. Gentleman been in touch with the unions concerned to discover their opinions on the matter? The hon. Gentleman has spoken about the unions being unco-operative. What does he know about the activities of unions?

Mr. Cormack

I have spoken to various people about the issues involved. There has been far too much inflexibility at the factory.

I share the hon. Lady's concern for the older employees who will find great difficulty in getting employment over the coming months. According to the D.E.P., it seems likely that the younger employees will not have much difficulty in being re-employed, but there is tremendous concern for the older employees, many of whom are highly skilled people, but their skills cannot readily be adapted elsewhere, and they could well find themselves in grave difficulties for a long time.

This case illustrates above all else the necessity for the closest possible co-operation between all the parties concerned, and it emphasises the absolute necessity, when any sort of difficulty faces a factory of this type, for all the people involved to sit down to talk about the matter to try to reach a solution which can safeguard everyone.

12.33 a.m.

The Parliamentary Secretary to the Ministry of Technology (Mr. Nicholas Ridley)

The hon. Lady the Member for Wolverhampton, North-East (Mrs. Renée Short) and my hon. Friend the Member for Cannock (Mr. Cormack) have raised the question of the closure of the Courtaulds factory at Wolverhampton. I think the House will agree that an event of this kind causes great upset and upheaval to those concerned, but the first point which I should make is that the Government have direct responsibility for very few of the matters upon which the hon. Lady touched. Indeed, my Department, as opposed to the D.E.P., does not have powers to intervene in the matters that she discussed. Nor do I believe that it would be right for my Department to have those powers.

The hon. Lady asked the reasons for this closure, and I have tried to ascertain them as best I could. If I attempt to answer her questions I hope I shall not put forward any wrong propositions, because it is not I, or my Department, who analyse the reasons. One can only take the reasons put forward by those responsible for running the company.

At present the viscose filament made at the factory is in decline. The market is shrinking. It is a product which has been superseded by the new man-made fibres, and for some time demand has been shrinking, although, perhaps, not quite as quickly as some had forecast. Against that background, it is obviously necessary to shorten capacity as the market contracts. I understand that this is the oldest and least efficient, in the sense of industrial efficiency, of the four plants which Courtaulds possesses, and it was, therefore, naturally keen to close down a plant which was losing a considerable sum of money and no longer seemed to have any effective future.

The hon. Lady asked about prices, and I will say a word here, because although the price of this product was referred to the Prices and Incomes Board, the market did not sustain the price increase which was eventually allowed. Although the company has put up its prices since then by a further 10 per cent., the market has not been able to take this and the company has not been able to increase sales. It appears that increases in the prices of viscose filament result in more of the custom being switched to manmade fibres, thereby not increasing the market or the profits of the factory. So we must conclude that it was a factory which was on the way out because of technological change, and as it was losing money it would, I believe, be in no sense in the national economic interest for the Government in any way to suggest that it should be kept going.

I believe that there is need to accept change of this sort, and it is part of the duty of hon. Members to try to persuade constituents that in a modern, dynamic, changing society there will always be difficulties of this sort when one process or plant goes out of action and is replaced, elsewhere perhaps, by new plants and processes.

The hon. Lady felt that the profits of the company were considerable, if not excessive, but she did not give the latest profit figure for this year, which is down by 25 per cent. on the £52 million she quoted—and even that £52 million was only a return on capital employed of 11.4 per cent. That, in itself, makes one feel that the company has by no means been earning large profits in relation to its very great size. These profits are essential for companies if they are to re-equip, build modern plant, do research, and make the investment in the future which in the past has enabled Courtaulds and other companies to grow.

I should like to pay a tribute to Courtaulds in one respect, and that is that it has been a major supporter of past and present Governments' regional policies. A very large amount of its expansion has taken place in areas which are less fortunate than Wolverhampton in relation to work. Scotland, Cumberland, Northern Ireland and Wales have all got large Courtauld factories. It might be of interest to the hon. Lady to know that the Canadian viscose plant has also been closed down, and if it is not possible to make that plant pay in a country where it is right on top of the wood pulp which is the raw material of viscose, it is unlikely that it can be a profitable operation in a place like Wolverhampton, which is far from sources of raw material of that sort.

I must, therefore, conclude that it would be wrong to intervene in any way, and, indeed, we have no powers to do so, and it is quite right that the facts of industrial change should be accepted and not hindered.

Having said that, we can now all share concern for those who suffer from this closure. The hon. Lady rightly paid tribute to the way that the Department of Employment and Productivity has been handling this redundancy, and I should like to say a few words about the prospects and the conditions which have been offered to those who have been made redundant.

Of the 1,400 people employed, some have already left and some will be kept on after the closure, but there will be a considerable number of people made redundant by the end of this month, as the hon. Lady said. It is a pity that the run-down could not have been phased over the six-month period which Courtaulds originally suggested, but the company was, unfortunately, unable to negotiate an agreement with the trade unions which would have enabled the complicated juxtaposition of people to be worked out so that the various processes could be kept going through the week and through the night which would have enabled production to be phased out instead of closed down altogether.

That, of course, is not a matter for me to comment upon, but the fact that the trade unions and the company were not able to come to that agreement has been the cause of the complete shut-down, rather than anything which the company has done to make life more difficult for the workers. They have, however, as my hon. Friend the Member for Cannock said, been very reasonable in providing more than the statutory minimum which is laid down to redundant workers. There is a pension scheme which applies to all those over 55, and that is something which many companies do not have. So all those who are older in the work force will receive benefit from that.

The company has fulfilled its obligations under the Redundancy Payments Act and it feels that its contribution to the redundancy fund, which it has paid in the past, is a sufficient contribution to help those who are made redundant. On top of that, the company has offered ex gratia payments to certain persons who are, unfortunately, particularly affected.

I also confirm, as my hon. Friend said, that the company has been remarkably co-operative with the officers of the Department of Employment and Productivity in facilitating the provision of new jobs and the analysing of the unemployment situation while the factory is still running. Wolverhampton has a very low rate of unemployment. It is only 2.1 per cent.—well below the national average. In the past, several thousand workers have been made redundant due to previous closures of factories in the town. Despite this, the level of unemployment has hardly risen at all. So we are confident that the great bulk of those concerned will be able to find jobs—some sooner, some later—and, indeed, in the whole area of the Black Country there will be plenty of opportunities for work for those who are made redundant.

The Question having been proposed at thirteen minutes past Twelve o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at sixteen minutes to One o'clock.