ROBERT GLEN AND SON LTD., IRVINE (Hansard, 12 July 1976)

§ Mr. David Lambie (Central Ayrshire)
I regret that the debate on this subject of the closure of Robert Glen and Son Ltd. has to take place at this early hour after such a long debate during the night. However, I do not apologise to my hon. Friend, the Minister of State, for continuing with the debate because this matter is of vital concern to my constituents in Central Ayrshire, and particularly in the town of Irvine.
Robert Glen and Son Ltd. is an old-established family business in Irvine, which was formerly a joinery business but which now concentrates on the production of high quality doors. It was taken over by F. Hills and Son Ltd. of Stockton, which is a subsidiary of the Joinery Division of Bowater Building Products, which is part of the multinational Bowater Corporation Limited.
The present employment, excluding sales, is 99 workers, including 15 staff. As well as giving employment to tradesmen and craftsmen, the factory is one of the few areas left in Central Ayrshire which provides training for apprentices in the construction industry.
In spite of the fact that the people running the factory thought they were doing well, on 21st April this year, like a bolt out of the blue, and without consultation at local level, Mr. C. M. Clarke, the General Manager of F. Hills & Son Ltd., producer a memorandum on proposed cost reduction in Stockton and Irvine. This memorandum pat forward 333 alternatives for saving just over £500,000, involving among other proposals the closure of the Irvine factory, making 99 employees redundant.
This memorandum was presented to the national offices in London of the trade unions involved. The first the Irvine employees heard of it was the following week when a rumour started in the factory that the Robert Glen factory was closing.
I thought that planning agreements, employees' protection legislation, and other measures passed by successive Labour Governments meant that such actions, taken without adequate consultation, were illegal and things of the past. Do planning agreements just mean that the decisions affecting the future of an industry and its employees can be slipped on to the table of the national office of a trade union, and nothing else? That was not my opinion, or was it the opinion of trade union delegates and shop stewards in the Irvine factory. They did not take part in any consultations before these plans were published.
As Member of Parliament for the area, I was contacted by the shop stewards and immediately arranged a meeting on Sunday 2nd May with the local union delegates and shop stewards and the senior management of F. Hills & Son Ltd. at the Irvine factory. Mr. C. M. Clarke, the general manager of F. Hills & Son Ltd., gave us the background to his proposals. I again complained about the lack of consultation. I said that it reminded me of nineteenth century industrial relations and that it was completely out of touch with present-day ideas of industrial democracy and the right to work and the rights of workers to consultation.
In the proposed cost-reduction memorandum, the following paragraph appeared, giving the background to the proposal to close the factory. It said, referring to 1976: The final profit forecast will be less than £200,000 which represented a return on turn. over of 1.6% and on capital employed of 5.3%. This is lower than could be obtained if the capital was placed into risk-free investment. A level of profit which is less than 20% of capital employed will not be sufficient to guarantee survival in the medium term. Therefore, a profit of not less than £750,000 is required for 1976…meaning a cost saving of at least £500,000 on present levels of expenditure. 334 That is the background to the proposal to close the factory.
F. Hills & Son Ltd. was getting a 20 per cent. return on the capital involved in this factory. The memorandum put forward the proposal that by closing the whole operation of F. Hills & Son Ltd. in Irvine £120,000 could be saved, and that making redundant 99 people in Irvine and 29 staff at Stockton, the other factory involved, would save £330,000. and with other savings the required figure of £550,000 could be reached.
Other proposals put forward involved making redundant 177 employees over the whole operation, which would save a comparable amount of money. In spite of the fact that it is making redundant 177 employees, whatever the other financial restraints, the management of F. Hills & Son Ltd. decided that it would continue with the closure of the Irvine factory.
To be fair, I must state that the management said that it would consider any proposals that I or local people involved could put forward, but I made the point that it was taking the easy way out. I reminded Mr. Clarke that, since entering Parliament in 1970, I had been in many similar positions, and I had always found that managements which had decided to solve their problems by the easy solution of closing down factories were themselves told the next time round that they were not up to a satisfactory level and declared redundant.
Following that meeting, when we were given the opportunity to put proposals to the management, I contacted my right hon. Friend the Secretary of State for Employment and had an urgent meeting with him, when I appealed for Government help. He immediately offered help, and confirmed it in writing on 18th May, both to me and to Mr. D. J. Worthy, manager of personnel services, Bowater Building Products Ltd. It had become apparent to me that the management personnel of F. Hills & Son Ltd. were only go-betweens. They were the message boys carrying out the orders of Bowater, the parent company with the main financial holding.
Following my meeting with the Secretary of State, the offer of help was confirmed and the Under-Secretary of State 335 at the Department of Employment contacted Mr. D. G. Worthy, making an offer of a temporary employment subsidy of the maximum amount of £20 a week per job to be maintained for 12 months. The offer totalled £128,960 and was made in writing less than one week after my meeting with the Secretary of State. In his letter to Mr. Worthy, the Under-Secretary of State said: We are particularly concerned about the threat of jobs and we are hopeful that the avenues of financial assistance available will enable employment at the firm to be maintained". Of the total of over £128,000 the Government allocated about £103,000 to maintain the jobs of the 99 workers at the Irvine factory.
I also made immediate contact with the Minister who has special responsibility at the Scottish Office for Section 7 of the Industry Act. We had a meeting in Glasgow with representatives of the three unions. We asked the Minister to intervene on behalf of the Government and we told him of the serious problem that the closure would create in the Irvine area. The Minister agreed to make personal representations to Bowater in an attempt to achieve further consideration of the problems facing Robert Glen and Son Ltd.
Unfortunately, the result of that meeting was not satisfactory. The Minister wrote to me on 18th May saying: I explained the various forms of Government assistance available to safeguard the Irvine jobs but it was clear that the company's view was that the commercial situation was such that Government assistance could not prevent the closure". The letter continued: I am sorry that I cannot be more helpful but I was told by the Bowater people that they are making strenuous efforts to find alternative employment, both in other Bowater establishments and elsewhere locally, for those made redundant and that they have so far succeeded in finding possible jobs for at least half of their Irvine employees. At that time the latest unemployment figures for the area were published. On 10th June the unemployment rate for the Irvine travel-to-work area was 9.6 per cent.—a total of 3,572. The male unemployment level was at 12 per cent. when Bowaters offered possible jobs to at least half of their Irvine employees.
I also appealed to the Chairman of the Scottish Development Agency, Sir 336 William Gray, for help. When we passed the Act setting up the agency I thought that it would be able to deal with such situations by taking over and running viable plants. I told Sir William that we had a pool of skilled labour—a great advantage of the factory at Irvine—and that to continue production we needed to have that skilled labour taken over by the agency. Sir William replied on 8th July: We have looked into the case again —that was after I had been in touch with him two or three times by letter and telephone— in some considerable detail. Unfortunately, all the information we have makes it clear that the Stockton plant has sufficient capacity to cope with present and likely future orders: not just in quantity, but also in quality and in diversity. Therefore, in his opinion the agency should not intervene in the closure. He also said, striking a more enthusiastic note, that the outlook was not unpromising in the Irvine area.
The union delegates, the shop stewards and I have been waging a campaign to try even at this late hour to secure direct Government action, or indirect action through the agency, to maintain the labour force as a viable unit at the Glen factory at Irvine. We are dealing not only with Robert Glen and Son Ltd. but with F. Hills and Son Ltd. and the Bowater Building Products Joinery Division.
The decision was taken by the Bowater Corporation Ltd. When we look at its annual report of 2nd April 1976, especially the statement by the Chairman, Lord Erroll of Hale, the real reason for the closure of the Irvine factory becomes apparent. He said: I hope that shareholders will regard the final outcome of a pre-tax profit of £52.9 million for 1975 as satisfactory. That was slightly down on the profit for the previous year. In North America, the increase in economic activity…did not materialise, although I am glad to say that there are now real signs that this has commenced and is likely to continue. He was holding out to shareholders the prospect of a brighter future, with profits being increased from £53 million.
Lord Erroll of Hale also said that the Building Products Division was losing money, but the memorandum given to 337 the employees at Irvine said that F. Hills and Son Ltd. last year made a profit of more than £200,000. Bowater was closing a factory in Irvine controlled by F. Hills and Son Ltd. in an area of the organisation that was making a profit of more than £200,000. That was certainly a much reduced profit, but it had had outstanding profits in 1973. When they were making profits, the workers and the management were all that is good, but immediately the profits began to drop, the workers were faced with the threat of redundancy. In his statement Lord Erroll said: I want to finish this statement by saying thank you to them"— that is, the employees— on behalf of the board and of the shareholders". His thanks to the workers at Irvine for making part of the profit of £200,000 was to put them into the dole queues at Irvine.
I recognise that it is difficult to control a multinational company such as Bowater, not only in this but in many other respects. The Labour Government find it difficult to control the multinational oil companies. But the Labour Government are still the Government of this country, and we have to tell international companies such as Bowater what is good for the country and not accept what is good for Bowater and for its shareholders.
There is one part of Lord Erroll's statement to which I draw my hon. Friend's attention. It is: It has to be recognised that government interference in business is an ever-increasing problem which causes damage to the economy of the country and involves industry in costly and time-consuming activities. Your board believes it esssential, whatever political party happens to be in office in the United Kingdom, for there to be an effective opposition in Parliament to ensure that all shades of opinion are reflected in legislation which is enacted. In order to guarantee opposition to the Labour Government, the board has already decided to give £10,000 to Conservative Party funds and a lesser sum to the Liberal Party. It is no wonder that Lord Erroll is worried about Government interference.
338 We want Government interference, and I am asking my hon. Friend even at this late stage to give us more Government interference in this case. The men accepted redundancies and the factory is to close at the end of the month. In spite of that, I ask the Minister to order the Scottish Development Agency to look at this closure again, to take over the factory, which is owned by the Cunningham District Council, and to utilise the skill that is there. I want an assurance that financial aid and active encouragement will be given to any firm that wants the factory when it is closed at the end of July and that wants to use the available skills.
I want an assurance that the legislation that we have been passing since 1974 means something. Night after night—and this has been a very good example —we have been pushing legislation through this Chamber in the belief that we were bringing industrial democracy into industrial relations, so that actions by multinational companies such as Bowater could not wipe out our proposals, so that we were not just rubber stamps. I hope that my hon. Friend will be able to give me that assurance.

§ The Minister of State, Scottish Office (Mr. Gregor MacKenzie)
Let me say at the start that I share the concern of my hon. Friend the Member for Central Ayrshire (Mr. Lambie) and regret that the closure of this old-established company at Irvine, an area of already high unemployment, will lead to nearly 100 people losing their jobs. Some of them, I know, have been employed there for nearly 40 years, and it is indeed sad that they should be faced with this at the end of their long and loyal working lives.
When the company first advised us that it was to close its Irvine factory, I was mindful of the fact, as were my colleagues in other Departments, that employment in the area had suffered a number of setbacks in the recent past. I therefore asked officials of my own Department to carry out an immediate inquiry into the closure, to see whether there was anything the Government could do to persuade the company to reverse its decision. It soon became very clear that the company 339 believed that it had strong economic and commercial arguments for the closure.
Nevertheless, after I had heard a deputation from the work force, led by my hon. Friend who has raised the subject tonight, I asked the company's management to meet me. I explained to them at some considerable length the Government benefits available for maintaining employment, and I discussed with them, again at some length, the possibility of Government assistance for the Irvine factory. But I was told—I can only report this to my hon. Friend—that the company had concluded that for the long-term wellbeing of the group it was necessary to make substantial savings, and that these could best be made by closing Irvine.
The management also told me that, although 100 jobs were at stake there, the group's main employment was at Stockton, an area very hard hit by unemployment, and that the company employed about 1,000 people in the four Stockton factories.
The immediate choice was between making 144 people redundant at Stockton or 98 at Irvine, but this was not a real choice. To have made 144 redundant at Stockton could have alleviated the immediate problems of the group, but the long-term problem was basically that the group had more capacity than it believed would be needed for the next few years.
The management went on to tell me that to maintain capacity at both Stockton and Irvine they would have to continue to bear substantial overheads at Irvine. They were sure that unless the group was properly organised now, its whole future could be in jeopardy, and that the long-term security of many of the Stockton jobs would be at stake.
It was clear that the management were convinced that no amount of Government assistance would cure their underlying problem of over-capacity. I had to accept that, this being the case, there was very little the Government could do to prevent the closure in this way.
The company has offered, as my hon. Friend mentioned, compensation terms to the employees greater than the statutory minimum, and I have noted that the 340 workers have accepted these terms by an overwhelming majority.

§ Mr. Lambie
They have no alternative.

§ Mr. MacKenzie
I am pointing out what has happened at this time. My hon. Friend seems to think that I am the person closing the factory. I am only reporting what has been happening. We want to get that on the record.
In addition, in an effort to alleviate the hardship, it is only fair to point out, a number of jobs have been offered in the Stockton area to workers at Irvine. Indications at the moment are that only a few will transfer.
My hon. Friend pointed out to me that a number of local employers had been contacted with details of the workers to be made redundant. This was also pointed out to me by the management. A number of these workers have now found jobs in this way.
My hon. Friend asked me, in the course of his comments, whether I would order the Scottish Development Agency to take over the factory at Irvine and to run it as a commercial proposition My hon. Friend must look with some care at the Act which set up the Scottish Development Agency. I can only refer him to the powers of my right hon. Friend the Secretary of State for Scotland in this regard and to the guidelines which were published at the time when the agency was set up.
Whatever powers, specific or general, may be given to the Secretary of State, there is no power which allows him to go into the Scottish Development Agency and to tell it how to run its business on a day-to-day basis, which is what my hon. Friend is asking me to do tonight. I think it would be quite improper for the Government, once having set up a body of this kind, to take on the task itself of running the agency.
My hon. Friend will accept from me, I am sure, that Sir William Gray and his colleagues on the board have gone into this matter very thoroughly indeed. The board has adopted, as it always would, a sympathetic approach to the problem of a closure of this kind, but in its judgment this is not something it would be prepared to take on at the present time.
341 My hon. Friend asked me whether I would be prepared to examine any other application for assistance—