CHRYSLER UNITED KINGDOM LIMITED (Hansard, 20 February 1976)

§ Mr. David Madel (Bedfordshire, South)
I welcome this opportunity of raising the subject of the future of the Chrysler commercial vehicles section in Dunstable and Luton. I welcome the presence of the Under-Secretary of State to make an incursion, for the second time in less than a year, into Luton matters. He last answered an Adjournment debate on the subject of Luton's buses. This debate takes in the constituencies of the hon. Members for Luton, East (Mr. Clemitson) and Luton, West (Mr. Sedgemore). Both of them would have been present but they had unavoidable engagements and have asked me to say so, though their constituencies, as well as mine, are very much concerned with the future of these two plants.
The debate gives the Minister an opportunity to concentrate exclusively on the commercial vehicles section of Chrysler United Kingdom. So far little has been said about the commercial vehicles section. Ministers have, for understandable reasons to some extent, been concerned with Linwood, Ryton and Stoke, and have made only passing reference to the Dunstable area, but now we have the opportunity of discussing the commercial vehicles section.
The Dunstable and Luton complex employs just over 2,700 people. These two plants make a vital contribution to employment locally and to the nation's export drive and its prosperity generally. If we add the Vauxhall plant at Dunstable to the Chrysler plants in South Bedfordshire, we find that almost 40 per cent. of the commercial vehicles produced in Britain are produced in South Bedfordshire. Therefore, the area is one of the pillars on which the Government pin their hopes for economic revival and industrial 1765 upturn and for increasing our overseas earnings.
There are good labour relations in the Dunstable and Luton plants. Since the Government announced their agreement with Chrysler, there has been a great determination in the plants of Dunstable and Luton to make the agreement work and to get on with the job of helping the nation to pay its way and making Chrysler viable and profitable.
The latest figures for commercial vehicle production for January 1976 show that Chrysler succeeded in making a 13.1 per cent. penetration of the total truck production market. That is the best truck penetration by Chrysler since December 1971. Given our economic situation, that is a good performance.
It should be stressed that the commercial vehicle part of Chrysler in Dunstable is the only part of Chrysler Europe producing commercial vehicles. Given the opportunity in the commercial vehicle market in Europe and this country, it is vital for Chrysler that these plants succeed. If they do not, Chrysler will be knocked out of the commercial vehicle export operation in Europe and our European competitors will rapidly fill the gap. A failure to do well in Dunstable and Luton would send shock waves right back to Detroit and severely affect the whole Chrysler Europe operation. Now that the Government have made an agreement with the company, we must consider Chrysler as a European entity.
There are problems at Dunstable. One is the supply of Perkins diesel engines. We desperately need an uninterrupted supply of these engines, and I wonder whether the Government could negotiate with Perkins to see whether supplies could be increased so that a three-day bank of engines is in reserve. Any hiccups or difficulties at the Perkins Peterborough factory would not then cause the Dunstable plant to come to a halt. I pay tribute to the Perkins company, which has won the Queen's Award to Industry for its exports, but I hope that it will look more closely at the home market and help the Dunstable plant to become successful by improving its delivery of engines. There is no alternative source for these engines, so it is very important that Perkins does all it can to help Chrysler in Dunstable.
1766 A second problem is that there is a three-day working week on the Dunstable production lines. My information is that a four-day working week will start in April and a five-day working week, which will be warmly welcomed by all the employees, will begin at the end of June. However, any difficulties over the supply of Perkins engines could cause a slippage and a delay in the introduction of the five-day week. Now that public money has been put into the company, anything the Government can do to ensure the supply of engines will be helpful.
I have with me a document issued by Chrysler this month and signed by Mr. Don Lander. It is called "Building the New Chrysler" and deals with the investment plans for the truck plants over the next few years. Four plans are set out, including detailed improvements to the 100 series truck range to maximise export potential, extensive modification for the PB van and a new, modernised appearance for 1977, a new light truck range to replace Bantam Walk-Thru in 1978–79, and a new consolidated paint shop to be completed in December 1977.
These are all welcome, but are the Government satisfied that there will be enough investment in Dunstable to ensure that these four plans are carried out? Obviously, they can be, but only if there is an adequate investment for them.
Truck building is very different from building cars. It requires a different technique and different skills. Chrysler at Dunstable and Luton are anxious to prove to the nation that they are viable and profitable, and they believe that they can prove this more easily if they are given more autonomy and independence. Every taxpayer is looking carefully at Chrysler, in view of the amount of public money being put into the firm, and I think that if more independence and autonomy were granted in the Dunstable area it would be all the more acceptable to the public.
In the document the company says that it has been working on and has now developed a clearer communication strategy both inside and outside the company. The company speaks of new skills and attitudes which need to be developed and which will not be developed unless the people concerned are properly trained. I see from today's Financial Times that Mr. Ken Young has 1767 been appointed as the new director of employee participation and communication in Chrysler. He will head a work force of 24 people responsible for carrying out Chrysler's ambitious programme. That programme has been accepted in principle by the employees.
Two things are necessary for success in Dunstable; first, an adequate flow of investment and, secondly, an improvement in employee participation. Chrysler is taking that seriously, hence the appointment of a director to do that special job. Success depends on a changed attitude and a new partnership between unions and management plus investment inflow.
Chrysler wants a planning agreement with the Government. Is the Minister able to say anything about the time scale of that agreement? There is a great opportunity for these two plants to help the nation out of its difficulties, and I hope that the Government, given that they have a stake in Chrysler, will do all they can do to help.

§ The Under-Secretary of State for Industry (Mr. Neil Carmichael)
I congratulate the hon. Member for Bedfordshire, South (Mr. Madel) on his presentation of the case for Chrysler UK's commercial vehicle operations as a significant part of the company's overall activities. I well remember the Adjournment debates, during the period in which the hon. Member for Bedfordshire, South and many of my hon. Friends who represent that area had many meetings to consider the problems of Bedford.
This is the first occasion, Mr. Speaker, on which I have addressed the House since you were elected Speaker, although when you were Deputy Speaker we seemed to be together almost nightly on Adjournment debates.
During the difficult negotiations which preceded the scheme of assistance to Chrysler, the importance of the commercial vehicle activity was very much in mind. A great deal has been written and said about the vehicle industry in recent months. It is important not to regard broad generalisations about the industry as universally applicable. In particular, the commercial vehicle sector of the industry has a commendable record of stability and productivity. As 1768 the President of the Society of Motor Manufacturers and Traders said recently, Britain made more commercial vehicles than any other country in Europe and exported more of them than any other European competitor. In this achievement, and despite all the problems besetting the company, Chrysler's contribution has been a significant one.
In 1975, Chrysler UK produced about 20,000 commercial vehicles in this country. About 5,000 of these were exported while the remaining 15,000 were sold on the home market and accounted for just under 7 per cent. of domestic commercial vehicle registrations in 1975. Chrysler UK is the only source for the production of vans and light and medium heavy trucks available to the Chrysler Corporation in Europe, and I have no doubt that Chrysler aims to maximise its use of these production facilities. Indeed, I am assured by Chrysler UK that it is taking all possible steps to increase exports to the mainland of Europe.
The hon. Member expressed his concern that insufficient attention is paid by the Government's agreement with Chrysler to the commercial vehicle division. He is concerned that not sufficient money is being made available to enable this side of the firm, the most successful side, to be adequately developed.
Let me set his mind at rest if I can. In 1974, Chrysler United Kingdom introduced a completely new range of medium-sized commercial vehicles, known as the Commer Commando series. This has proved to be highly successful in its section of the market. Further, the agreement has allowed for the funding of a continuing programme of refinement and improvement of this range over the next few years.
Further plans are well advanced to produce next year an improved version of the popular PB compact van. A replacement for the Bantam Walk-Thru range of light trucks will be introduced in 1978.
These improvements across the whole of the range of Chrysler's commercial vehicle production, from light vans to medium trucks, will strengthen the company's competitive position in both home and export markets in this field.
The hon. Gentleman raised the question of the diesel engines, and I appreciate his concern regarding the supply of diesel 1769 engines to the motor industry in general and to the commercial side of Chrysler in particular. In the year 1973 through to 1975, there was indeed a very serious shortage of diesel engines which severely hampered many industries. This was partly due to shortages in supplies of components at the time.
In recent months, however, the situation has eased considerably, and I understand that shortage of diesel engines is not at present a significant constraint on Chrysler's production. New investment is proceeding in diesel engine and component manufacture, and the Government are hopeful that the industry will make full use of the selective assistance available under the accelerated projects and ferrous foundries scheme to advance these programmes.
Another problem raised by the hon. Gentleman is that of short-time working in certain plants, which is naturally a matter of great concern to the Government, although it would be well to re-remember that the commercial vehicles division, apart from the Maidstone plant, is only minimally affected by the Chrysler UK redundancy programme.
Currently, Chrysler plants at Luton and Dunstable are working alternate three and 3½-day working weeks. This pattern of working is scheduled to last until the end of May, and four-day working should be instituted in June. Full five-day working is expected to be resumed in July. I can confirm that that is the pattern. The short-time working has been necessary by the recently somewhat reduced demand for commercial vehicles and by the high stock levels which had built up and which needed to be reduced.
The position is being reviewed monthly and currently orders are showing signs of picking up. If the position does significantly improve, then the return to full-time working may be accelerated. I should perhaps add that the Dunstable plant is to be considerably reorganised. A new paint shop will be introduced which will be one of the most modern in the United Kingdom and should greatly enhance the existing good production facilities at Dunstable. It will be a major contribution towards the development of the commercial vehicle division.
Perhaps I should say something here about the Maidstone plant. Under the 1770 plans for Chrysler's reorganised actitivies in the United Kingdom, all the automative work now carried out at the Maidstone plant will be phased out. Broadly speaking, the axle and gearbox work will be transferred to Luton and the engine reconditioning work will be transferred to Stoke. The company is reviewing the future of its air-conditioning activities at the plant, which falls outside the agreement reached with the Government, and no announcement is possible at present.
It is a matter of the greatest regret to the Government that jobs are to be lost at Maidstone. Nevertheless, this relocation of the automative activities is an unavoidable part of the re-organisation of Chrysler UK on a stronger and more competitive basis.
A splendid example of the success of the commercial vehicle division in the home market is the major Post Office contract for petrol telecommunications vans. 1,450 in number, which Chrysler have won for the fifth year running. Chrysler also gained the contract for 750 diesel vehicles, in this case for the second year running.
A debate on this subject at this time is bound to bring once again to the fore questions about the more general aspects of Government transport policies. While this is a matter primarily for my right hon. Friend the Secretary of State for the Environment, I can tell the House that a consultation document on the future of transport policy is in an advanced state of preparation. It will outline a number of possible measures to achieve greater integration in transport, and will examine the need for all modes of travel to cover their full economic, social and environmental costs.
Taxation matters relating to transport are another topic which is of considerable current interest. Taxation questions are, of course, a matter for my right hon. Friend the Chancellor of the Exchequer. When making his Budget decisions, I am sure that he will take transport policy considerations fully into account. Naturally, he will also take note of the factors affecting the performance of the motor vehicle industry itself.
The Government have already accepted that they have an important rôle to play in the establishment of a viable and competitive motor industry by, amongst other things, providing, as far as possible, a stable economic environment in 1771 which the industry can develop to its full potential.
Finally, may I take this opportunity of again drawing the attention of the House to the tripartite group on the motor industry, the recent establishment of which was announced by the Secretary of State in last Wednesday's debate on the motor industry.
The Government have often said that we want to establish a viable and competitive motor industry in the 1980s, and in order to bring this about there must be a fundamental change of attitude within the industry. To this end we have established the tripartite group, which first met yesterday under the chairmanship of the Secretary of State. The priority which the Government are giving to this initiative shows the importance which we attach to the problems of the motor industry and our approach to these on two levels—the physical reorganisation of Chrysler into a viable concern and the parallel reorganisation of attitudes within the industry itself.

§ Mr. Madel
I hope that the Government will keep a very special eye on the investment inflow to Dunstable, bearing in mind the four points concerning the truck plant. I do not think the Government have yet appointed their directors to the Chrysler Board. When they do, will the Government please keep a special eye on this aspect of investment?

§ Mr. Carmichael
Quite apart from the specific point, the hon. Member will know from the whole discussion on the motor industry, and particularly on the Chrysler issue, that the Government will certainly keep an eye on these matters. If the Government did not appear to do so, I am sure that the hon. Member would play a very important part, as would other hon. Members, in making sure that in fact, the Government did keep an eye on the motor industry. I therefore find it very easy to give the hon. Member the assurance for which he asks.