EMPLOYMENT (KILMARNOCK)

HC Deb 12 December 1978 vol 960 cc498-508

4.19 a.m.

Mr. William Ross (Kilmarnock)

I make no apology for troubling the House at this hour of the morning, because I am concerned, as are all those in my constituency, about the serious employment position in the Kilmarnock area.

Kilmarnock is—I stress" is "—the industrial heart of the Ayrshire area. It always has been, and to my mind it will get over the present difficulties and remain so. But we must face the dismal fact that in the past five years unemployment has nearly doubled and has now reached 9.5 per cent.

Like other industrial areas, Kilmarnock has been hit by the economic recession. We have seen a decline in manufacturing industry, particularly in mechanical engineering, brickworks, cotton and other textiles, including carpets. In addition to what has affected other areas, we have suffered one considerable blow in recent years. Only about a year ago I troubled the House with the problems over the activities of an American firm that had taken over Glenfield Kennedy, one of the oldest hydraulic engineering firms in the country, which had been in existence for over 120 years. Within a decade of the takeover the holding company made that long-established company bankrupt, with the loss of nearly 1,000 jobs.

With the help of the Scottish Office and others we were able to recover some ground. Neptune Glenfield, of the United States, has come in and has done a first-class job. There has been a build-up of labour, and by all accounts the firm has been doing very well. That confirms the statement we made about the quality of labour in Kilmarnock.

My present concern is the latest threatened blow. All in Kilmarnock, including the district and regional council and the chamber of commerce, are concerned to do what they can to ensure that this blow does not fall. The threat is to Massey-Ferguson, which is well known worldwide. The company came to Kilmarnock in 1949, about three years after I became a Member. I remember the day it came in. It was welcomed. After all, Kilmarnock is the centre of a prosperous agricultural area, and it seemed fitting that a firm making agricultural machinery should come there.

The firm built up its business, and in the mid-1960s decided to concentrate combine harvester manufacture in Kilmarnock. The factory is virtually single-purpose; 80 per cent. of the production is combine harvesters. It is the site of the only remaining combine harvester production in the whole of the United Kingdom, so the matter is important from a national point of view. By the late 1960s employment had risen to about 2,000. The firm has naturally been hit by the more recent economic blizzards, and the number employed now is about 1,500.

The only other place where Massey-Ferguson makes combine harvesters is in Marquette, near Lille in France, where combine harvester production accounts for about 29 per cent. of the work. Workers there, too, have been on short time. I do not believe that the troubles of Massey- Ferguson stem from its agricultural machinery work. Such production is sensitive to changes in climate. Last year the drought in Australasia affected it. There are other, economic, difficulties in other parts of the world which affect production. I am sure that Massey-Ferguson expects that unsettled conditions will become smoother and combine harvester production will increase.

When I hear it suggested that all the firm's troubles stem from Kilmarnock, I think that someone is trying to hoodwink someone. Kilmarnock's record for quality, efficiency and profitability as compared with that of Marquette is very much better. For some other reason this firm decided to hold a feasibility study. I received a letter from the local manager on 8th November which said: As you will no doubt recall, in September of this year our parent company in Toronto announced that as part of the programme to restore Massey-Ferguson to profitability, there was to be a world-wide study of the utilisation of our manufacturing resources. Earlier, in September, I had received Massey-Ferguson's financial report for the nine months ended 31st July, in which these words appear: The company is currently studying its world-wide manufacturing facilities, and although this study is not yet complete ". That was what it was telling the shareholders. In the meantime, it was telling me and the workers that it was just about to embark on the study. I am not a suspicious-minded man, but when we were told that the study was to last three months and then, suddenly, after two months, the company produced the results of that study, affecting Kilmarnock and Marquette, I naturally ask one or two questions.

I received another letter from the company saying: I am now pleased to be able to inform you that our study group has made recommendations ". These recommendations meant the loss of 1,100 jobs in Kilmarnock, taking combine harvester production from a plant which, with the experience of all these years, has been built up to a high level of efficiency, exporting to about 60 countries. The production was to be transferred to Marquette.

It is not the first time that Massey-Ferguson has made mistakes in its calculations and forecasts. It was said in its financial report to have lost $ 145 million in the first nine months of the year. It is worth seeing where it lost that sum. We discover that in the consolidated statement of income there is an item called Provision for unusual items—$64,56l million. That has nothing to do with tractors or with combines. It is related to the construction machinery business.

As for the other escalation of costs, marketing, general and administrative costs went up by about $34 million. Interest on long-term debt and other interest, net— which are not unrelated to the disasters on the construction machinery—show a total of about $120 million. I think that it would be worth the company's while to hesitate and look elsewhere for the sources of its real troubles instead of visiting the iniquities of someone else on the people of Kilmarnock.

In 30 years, I must confess, Massey-Ferguson has played a great part in building up the prosperity of Kilmarnock; there is no doubt about that. But Kilmarnock has been good to Massey-Ferguson. Its factory there was built for the company by Scottish Industrial Estates and has been expanded by the Scottish Development Agency. It has had the benefit of grants, subsidies and REP. It would be interesting to calculate from the Government point of view how much has been given to this company.

I was very surprised that on its feasibility study the company did not actively seek the participation of the trade unions or of anyone else but then faced the trade unions with the decision to transfer to Marquette and to put 1,100 jobs in jeopardy.

As I see it, the trouble goes deeper. It is worth quoting from the final paragraph of the letter to which I have already referred: At this stage, the group's recommendations are the subject of discussion and consultation with the unions and must be viewed in that perspective. I sincerely hope that discussions will not take place just with the unions. There is a role for the Government here. The Government must not stand idly by and let this sort of thing happen. They should be telling Massey-Ferguson one or two things.

The United Kingdom is Massey-Ferguson's biggest market for its agricultural machinery and combines outside the United States. Again, I am indebted to the company for the figures. In fact, according to the figures here in the document, the market in the United Kingdom over the past nine months has been nearly double that of France. In these nine months the company's sales went up by 30 per cent. in the United Kingdom. They went down in France.

I regard that as a consideration which Massey-Ferguson should bear in mind, and I hope that the Government will tell the company that we cannot stand idly by and see a development area being robbed of 1,100 jobs, those jobs then going to a part of the Common Market which is not an assisted area.

Have the Government made any inquiries of the Regional Commissioner of the EEC about how this fits in with EEC policy? I remember being told of the great benefits which would come from membership of the EEC. I was even told by some people in Massey-Ferguson that I was most misguided in opposing our entry. It seems that here is one of the benefits. In the case of every item made by Massey-Ferguson in Kilmarnock, 60 per cent. of production was exported and the other 40 per cent. went to the home market. That will no longer be available in Britain and will have to be imported, and someone else will get the benefit of the 60 per cent. export trade. That must mean a loss of £20 million or £30 million to our balance of payments.

This is the state that the Government have got into. As a country which is so proud of her intensive agriculture—the figures given by Massey-Ferguson show the extent of the market—we cannot allow in future our combine harvesters which were provided by Kilmarnock to be imported from Marquette. But there is nothing to stop that happening. Yet there is also nothing to stop Massey-Ferguson from concentrating in Kilmarnock and exporting to Marquette, where only 29 per cent. of production is dependent on these considerations.

I sincerely hope that this is the kind of thing that the Government will tell Massey-Ferguson. If a company thinks that it can simply move its production from one country to another, it cannot avoid the consequences. At present, in Coventry, Manchester and Peterborough, where the engines are made for the combines, the workers are very much concerned. There is nothing more destructive of confidence and industrial relations and co-operation than this kind of thing being done without consultation.

I spent many months, starting last June, discussing with the trade unions their concern over the redundancies projected for October. Eventually, there was a meeting between the Government, Massey-Ferguson and the unions. Not once was it suggested that such drastic action would be taken at Kilmarnock. There has been a lack of frankness, and that, too, is disturbing.

I want the Government to face the situation. The factory belongs to the Scottish Development Agency. It is about 800,000 sq. ft., and the company proposes to cut the manpower by two-thirds and employ only 500 instead of 1,500. Indeed, the conditions it lays down cut across many of the things that the unions have battled for and won in the past 20 years. Instead Massey-Ferguson wants a factory of 400,000 sq. ft. employing 500 men. I do not know what the SDA has to say about this. It is a fine factory—some work was done on it not so long ago. There is office accommodation as well as factory space. As I have said, the factory belongs to the SDA, and I believe that there is a contract in respect of it, renewable in 1983.

I hope that the Government will not just sit on the sidelines. The cause that the unions are fighting, along with the district council, which is Tory-controlled, and the regional authorities, is really the nation's cause. It is not just a question of what we will lose on the balance of payments. I think that what the Government will have to spend on unemployment benefit, in their share of redundancy payments and in the loss of taxation means that they will lose more than Massey-Ferguson.

But the company can visit all this on the Government without even telling them until two days in advance of telling the workers. Have the Government accepted the Massey-Ferguson figures? Will Ministers, not only from the Scottish Office but from the Department of Industry, confornt Massey-Ferguson with the gravity of what it is doing? Do the Government accept that this country should lose its only factory manufacturing combines?

I am sure that the Government are as concerned as I am about this matter, but concern is not enough. We want a promise from the Government that they will do everything they can to make Massey-Ferguson change its mind. They should remind the company that it has been wrong in its calculations in the past and that perhaps it is wrong in its calculations now.

I appreciate what the Scottish Office has done. Kilmarnock draws its labour from a radius of 15 to 20 miles, but many Kilmarnock people go out those distances to jobs that have been safeguarded in Troon by British Shipbuilders. I have already paid tribute to my right hon. Friend for what he did there. The jobs that have been safeguarded and the jobs that are coming at British Aerospace at Prestwick are indications that not all the news is bad, but from a purely Kilmarnock point of view this is the worst shadow over us.

About 60 per cent. of the people employed by Massey-Ferguson—just over 1,000 people—come from the Kilmarnock and Irvine valley areas. About 300 people come from an area where unemployment is even higher than it is in Kilmarnock, and that is the Irvine-Ardrossan area, and another 200 or so come from Troon, Prestwick, Ayr and surrounding areas.

It will be seen that a wide area is affected by this problem, and I hope that I have been able to impress upon my right hon. Friend the importance of this matter not just to Kilmarnock but to a very much wider area and to the nation because of the contribution that Massey-Ferguson, Kilmarnock has made in supplying the home market and exporting to help the balance of payments.

4.42 a.m.

The Minister of State, Scottish Office (Mr Gregor MacKenzie)

I am grateful to my right hon. Friend the Member for Kilmarnock (Mr. Ross) for the kind way in which he commented upon what the Scottish economic planning department has done about employment in his constituency and, indeed, in Ayrshire generally. I think he knows that I am concerned about employment in Kilmarnock where, as he said, the level of unemployment is about 9 per cent., which is well above the Scottish average, and which I am sure he finds as totally unacceptable as I do. I think he knows, too, that we have had a number of difficult industrial cases in the Ayrshire area, and I can give him my assurance that we shall do what we can to ensure that these companies are made viable and that there are reasonable levels of employment in them.

I think that it is fair to comment, as I know my right hon. Friend has done over the past few weeks, on the unemployment problem in general. It is a massive problem in Scotland and it is one that we share with the rest of the United Kingdom, and, indeed, with many other industrial countries. Nevertheless, some satisfaction is to be gained from the fact that unemployment in Scotland has fallen by several thousands over the past year and, as my right hon. Friend knows, in the Kilmarnock and Newmilns area it has dropped by several hundreds. At the same time, there are about 321 notified vacancies. That is more than double the figure a year ago. During the past six months we have been notified of only about 70 redundancies.

I note the real concern of my right hon. Friend not just about the subject that he has raised tonight but about redundancies that have occurred during the past few years in engineering, in the carpet industry and in textiles. The news that we received from Massey-Ferguson a few weeks ago came as a major blow to my right ron. Friend and those of us who are concerned about employment in this area. I think that we were all impressed —I see the hon. Member for Glasgow, Cathcart (Mr. Taylor) here, and I am sure that he was as impressed as I was—when a few weeks ago the workers, representatives from the district council and all kinds of representatives from the Kilmarnock area came down and discussed with us in a most responsible manner their genuine concern about what was happening.

My right hon. Friend knows that the Secretary of State and I share his concern about the plans of Massey-Ferguson. It is a good plant, as those of us who know it can testify, and I take my right hon. Friend's point that it is unique in this country and, as a unique operation, is worthy of preservation. By its exports it helps our balance of payments, and it is exceptionally important to the area in terms of jobs. As soon as the announcement was made, my right hon. Friend the Secretary of State indicated in a press statement his worry about the situation and his concern to do all he could about it.

We are having discussions with the trade unions and others and we look forward to receiving their proposals. We have indicated to all concerned that the Secretary of State is prepared to look at any plan that will make this a viable project and provide long-term jobs. Our track record in trying to save such jobs will be continued. I assure my right hon. Friend that the Government will not be sitting on the sidelines in this matter, because the loss of 1,000 jobs and the great opportunities for that sort of industry in Scotland will ensure that we bear in mind what my right hon. Friend said and do what we can to help.

This is a debate about employment in the whole area, and my right hon. Friend has expressed concern particularly about unemployment among young people. The job creation workshop at Kilmaurs is to be converted to a youth opportunities programme in mid-December when it will be divided into two training workshops. One workshop at Kilmaurs will provide places for 35 young people and eight supervisors to do knitwear, sewing and catering. The other will be in Kilmarnock and will provide places for 30 young people and seven supervisors to do engineering, metalwork and woodwork. Discussions are in progress with the Kilmarnock and Loudon district council, representatives of which I met on the Massey-Ferguson lobby, to provide project work based on the various schemes in its area. In the near future, two community services agencies are being set up in Ayrshire, with the Strathclyde regional council as sponsors, to provide community service schemes.

Those schemes are good, but, as my right hon. Friend and I have said time and again, they are no substitute for real jobs. I thank my right hon. Friend for what he said about the efforts made by the Secretary of State and myself to find work for the area in which people from Kilmarnock will find jobs.

Hoffman La Roche has recently announced the important expansion of its plant at Dalry to produce vitamin C. That is a costly project—it will total about £140 million—but will create about 430 long-term jobs, many of them for skilled people, and a substantial additional number over the construction period.

Only a week ago British Aerospace announced its intention to proceed with the launch of the re-engined version of the Jetstream aircraft at its Prestwick factory. I hope that many people from Kilmarnock will find jobs there. This project will lead to the creation of about 960 new jobs. If all goes well, it is possible that there will be between 1,200 and 1,500 new jobs. My Department is considering what assistance it might give to the project under the Industry Act. We shall support the project in every way possible. The Scottish Development Agency is involved at Prestwick with the new British Caledonian engine testing and maintenance facility.

Not far from Kilmarnock, at Irvine, the Beecham company has a factory which employs 600 people. The company is planning to expand production on a site adjacent to existing premises. The detailed employment consequences are not yet clear but it could mean a further 250 jobs. Hyster Ltd., at Irvine, plans to create an additional 450 jobs while safeguarding about 200 existing jobs.

Mr. William Ross

Does my right hon. Friend realise that, although these plans are welcome, the unemployment rate in that area is even higher than it is in Kilmarnock?

Mr. MacKenzie

I realise that. That is one reason why we are anxious about the situation.

I was pleased that my right hon. Friend paid tribute to the work done by my staff in connection with Neptune Glen-field. It is just over a year since Neptune Glenfield was formed by the take- over of Glenfield Kennedy by the Neptune International Corporation of Atlanta. That takeover was aided by Government assistance amounting to about £1 million. We all remember the dilemma that faced that company last year. It is a tribute to the Secretary of State and the workers that it is now a success story. Perhaps the management of Massey-Ferguson should consider that with the same degree of ingenuity, enthusiasm and concentration other companies could be equally successful.

In the last year we have given over £1 million in selective financial assistance to firms in the Kilmarnock area. This will create investment of about £6,250,000. We hope that it will create or safeguard 565 jobs. The SDA for its part has helped Prosper Engineering and the McCrindle group in the area with small advance factories.

I realise, however, that my right hon. Friend is most anxious about Massey-Ferguson. That concern is shared by the Secretary of State and everybody in the Kilmarnock area. I assure my right hon. Friend that we shall do everything possible to preserve jobs at Massey-Ferguson, in the interests of the company and of the people of Kilmarnock.