Motor Industry

HC Deb 29 January 1981 vol 997 cc1081-8

The Minister of State, Department of Industry (Mr. Norman Tebbit)

With permission, Mr. Speaker, I would like to make a statement about the motor industry.

The Nissan Motor Company has approached Her Majesty's Government to seek their views upon the company's intention, subject to a feasibility study, to establish a substantial car manufacturing operation in the United Kingdom. The Government have given a warm welcome to Nissan's proposal and are prepared in principle to give them their approval and support.

Nissan's proposals are to start building a car manufacturing plant, including an engine manufacturing facility, in a development area or special development area in 1982 and to begin production at the end of 1984, reaching the full figure of 200,000 cars a year by 1986.

It is Nissan's intention to achieve a very high local content involving United Kingdom and other EEC suppliers. The local content at the start of production would be 60 per cent. and the company's objective would be to increase this to 80 per cent. as soon as possible after full production is reached. The company is confident of achieving a high level of exports from the United Kingdom.

The feasibility study is expected to last four months and to cover a range of matters, including location. Two matters of special importance in Nissan's decision will be the competitiveness of local component manufacturers and the prospects of establishing a good structure for industrial relations.

The Government wish the company well, and hope that the study will reach a satisfactory outcome.

Mr. Stanley Orme (Salford, West)

This is an extraordinary week. On Monday the Secretary of State made a statement on support for British Leyland to the tune of £1,000 million of British taxpayers' money, and on Thursday the Minister of State is forced by a press leak to make this statement. All that hon. Members have, however, is a one-page statement in which the Minister states that a feasibility study is to be carried out.

We wish to ask a number of important questions. Is the Minister of State aware that many members of senior management in British Leyland will be dismayed by this statement because of the possible consequences upon British Leyland? Will the Minister say whether Japan will use this route to avoid any possible import controls, voluntary or otherwise? What will be the effect on the discussions that are taking place in Tokyo?

What effect will this development have on the assisted areas that already have car plants, namely, Halewood and Linwood? Will production by this Japanese company have any effect on the agreement already reached between Honda and British Leyland? Will the joint organisation be producing a car in the same range as Honda and British Leyland which could have a direct detrimental effect on that production? [Interruption.] Conservative Members should recognise that we are dealing with tens of thousands of jobs in British industry. It is obvious from the two statements this week that Government policy is in confusion. What will be the effect on other firms based in Britain, namely, Ford and Vauxhall? How will the consultations take place? Who will be involved in them?

When the Minister says that a large proportion of the product will be produced in Britain which the company hopes will include engines, starting at a production level of 60 per cent. and rising to 80 per cent., what guarantee can he give that there will be a British content in any such production? How tough will the Government make the agreement? Will it include a request for the Japanese to remove their restrictions on British exports into Japan, which is basically a closed market to us? How many jobs is it envisaged will be created? Can the Minister give an assurance that the British-based car industry will not be injured by these proposals?

Mr. Tebbit

I think that those looking for jobs from foreign investment coming into Britain will be deeply shocked and dismayed by the churlish reception to this good news that I have been able to give to the House. I should like to deal as briefly as I can with the points in the long list mentioned by the right hon. Gentleman.

British Leyland has known of this proposal for some time and has raised no objection to it. Clearly vehicles that are built in Britain will not be subject to import controls. I would have expected the right hon. Gentleman to tumble to that. I think that this announcement will have no effect on the discussions going on between the British and Japanese motor car manufacturers concerning the voluntary restraint arrangement.

The right hon. Gentleman asked about the effect on other assisted area firms. Since over 57 per cent. of the British market is at present supplied by imported cars, representing over 800,000 cars a year, one would have expected that these 200,000 would do more to replace those than to replace other British products, provided that the British products are competitive and up to the mark. The arrangement has nothing to do with the Honda-Leyland arrangements. I have dealt with the matter of the effect on Ford and Vauxhall.

The right hon. Gentleman asked about consultation. I do not know anything about any consultations. I have told the House that the company will be conducting a feasibility study. There is no question relating to the installation of British engines in these motor cars. If the right hon. Gentleman heard my statement—I hope that he did—he would have noted the reference to the intention to build an engine manufacturing facility as part of the deal.

There is the question of restrictions by Japan on British exports to that country. My announcement does not concern exports from Japan to Britain, so there is clearly no effect. This is a question of setting up a manufacturing establishment in Britain. I am sorry that the right hon. Gentleman does not seem to want us to have the jobs.

Sir Albert Costain (Folkestone and Hythe)

Does my hon. Friend appreciate that when Ford of America decided to build a factory at Dagenham there was exactly the same opposition? Should Ford decide to close that factory, does he anticipate a similar howl of protest by Opposition Members?

Mr. Tebbit

My hon. Friend is correct. We have these displays of instant xenophobia, but gradually they fade away. The right hon. Member for Salford, West (Mr. Orme) was very adept at giving large sums of money to foreign motor car manufacturers in Britain.

Mr. Stephen Ross (Isle of Wight)

Will the hon. Gentleman accept that we on the Liberal Benches warmly welcome the statement? I hope that results from it will materialise rapidly. Is it not a fact that if the company did not come here it could go to the EEC and we should lose it just as we lost Mitsubishi? Will Northern Ireland be looked at as a possible site? Will he assure the house that the quota for Datsun imports will be reduced by the cars manufactured in the United Kingdom and that this will answer some of the points put by the Opposition Front Bench?

Mr. Tebbit

The question of where the plant will be sited is a matter that will be a subject of the feasibility study. It is not for me to discuss that matter at this stage; it is for the company. One hopes that the Nissan motor cars that will be built in Britain, if the scheme goes through, will be competitive, and that there will be no need for large importations from Japan. Clearly it will not cover the whole model range, but it will go to the heart of the number of imported motor cars.

Mr. Peter Hordern (Horsham and Crawley)

Does my hon. Friend accept that this application should be given the widest appreciation? It cannot do anything but good for the country, bringing as it does an improvement in technology and in much-needed employment. However, will he stress to the Japanese that it would be as well for them to give as generous a welcome to British investment in Japan as we propose to give to them?

Mr. Tebbit

That is a matter for the British Government to put to the Japanese Government when discussing investment in Japan. Equally, it is for us in this Chamber to welcome this instance of Japanese investment in Britain, because it will be good for our economy if we can secure it.

Mr. Donald Coleman (Neath)

Will the hon. Gentleman make it clear that this development is very much welcomed in this country, and that any means of providing employment for the British people is welcome? Will he draw the attention of the Japanese to South Wales and, in particular, my constituency of Neath, bearing in mind our involvement in the motor industry, both in components and parts? Will he make it clear to the Japanese and to everyone that this investment is welcome to us?

Mr. Tebbit

I am extremely glad to have the hon. Gentleman's support. I believe that he speaks for the electorate on this matter. Location is a matter that has yet to be resolved. Wherever the factory goes, it will bring great benefits to the components industry, which will have an opportunity to supply components to the factory.

Mr. Hal Miller (Bromsgrove and Redditch)

Will my hon. Friend accept that, while any new investment and jobs are indeed welcome, there are still a number of questions that his statement has not fully answered? In particular, will he note, in the context of United Kingdom components, that 60 per cent. is an inadequate figure from which to start, because it is not possible for components manufacturers later to recover lost ground that being one of the main objections to the British Leyland-Honda deal?

Will the hon. Gentleman also note that there is concern about the continued imports of completed cars from Japan? Therefore, should not undertakings be sought from Datsun in this respect once the factory is on stream? Will he also bear in mind that there is over-capacity in the European industry already and that concentration of manufacturers is expected to take place by the time the factory comes on stream? What view does he take at this stage of the prospects for European volume car manufacturers in that year?

Mr. Tebbit

My hon. Friend says that the 60 per cent. proportion of components is too little to start. Surely he will understand from his knowledge of the motor industry that it would be very difficult for the company to guarantee to do better than that at the start of the operation. The company made plain its intention to reach 80 per cent. as soon as possible after the full output of 200,000 a year is reached.

It must surely be clear that cars which are manufactured here will substantially replace imports unless our own manufacturers throw in the towel.

On over-capacity in Europe, another matter has to be considered. It is about time that we in Britain brought our manufacture of motor cars up to the levels that we had a few years ago. Let us have some of the over-capacity on the mainland of Europe cut back instead of always cutting back here.

Several Hon. Members

rose—

Mr. Speaker

Order. I hope that questions will be brief. That will enable me to call more hon. Members than otherwise will be possible. This is not the time to debate the matter.

Mr. Geoffrey Robinson (Coventry, North-West)

Four questions arise out of the statement. I shall put them briefly.

Mr. Speaker

Order. I merely indicate that that will cut out a supplementary question from somebody else.

Mr. Robinson

Will the hon. Gentleman give us an assurance that he will try to limit the continuing import of Japanese cars, even if this project goes ahead? Will he declare that this will involve no Government spending—in other words, that the Japanese will be spending money in this country? Will he give an undertaking that it will have no bearing on the Talbot plant in this country? Lastly, will he ensure that we have a real transfer of technology to our own workpeople and engineers? That is the most important aspect of the whole arrangement.

Mr. Tebbit

This proposal cannot affect the course of the voluntary arrangements between the two industries. It is not a part of those arrangements.

On Government spending, of course the company will be eligible for grants in the development areas, just as any other company, whether British or foreign, is eligible for them. There is no direct Government investment in the company as such. To a large extent, the workers in the Talbot factories hold their future in their own hands between now and the time that this arrangement comes into effect.

On the transfer of technology, it can only benefit British technology to have an extremely advanced factory in Britain, with British workers and engineers operating, repairing and maintaining robotic systems.

Mr. Michael Grylls (Surrey, North-West)

It is clear that the House welcomes the Government's success in attracting Nissan to Britain because of the benefits in jobs and increase in British-made vehicles that will result. Will my hon. Friend bear in mind that, unlike the Government's recent decision on the funding of Leyland, it is important that the Government should resist any more funding that Talbot, formerly Chrysler (UK), may seek?

Mr. Tebbit

I thank my hon. Friend for the compliment that he pays the Government on their success. I pay tribute to the work that was done by my noble Friend Lord Trenchard, who was involved in these negotiations long before I came to the office that I now hold. Investment in Talbot is a matter for future consideration. No decisions have been made. The Government have not been asked directly for investment.

Mr. Gordon Wilson (Dundee, East)

In view of the Minister's last reply, will he confirm that the British Leyland announcement and the investment that is likely to be incurred in the Nissan development will not prejudice any investment help being given to Talbot at Linwood? Secondly, in view of the reports that South Wales has already been earmarked for the purpose, will he say how open the choice of location is? If the matter is still open, will he draw the attention of Nissan to the need for employment in Scotland?

Mr. Tebbit

The company will make its decision on the basis of the site that is most likely to lead to a successful and profitable operation. That is as it should be. Talbot is a separate matter and will be dealt with on its own merits.

Sir Julian Ridsdale (Harwich)

Despite the damp enthusiasm shown by the Opposition Front Bench for the scheme, will the Minister give every encouragement to further joint enterprises? High technology industries produce greater employment, as in this case.

Mr. Tebbit

I can give my hon. Friend the assurance that he seeks absolutely and without qualification.

Mr. Donald Anderson (Swansea, East)

Will the Minister make clear to this very progressive company that, whatever hesitation there may be elsewhere, it will be most welcome in South Wales? To show how objective I am, may I suggest that Neath is a remarkably apt location for the site? It has an adept work force, excellent communications and proximity to two major steelworks which are in difficulties.

I have two other quick things to ask. Will—

Mr. Speaker

Order. Those two quick things will also deprive another hon. Member of the opportunity to ask a question.

Mr. Anderson

Will the steel be bought in this country? Would Nissan be considering this choice if we were not part of the EEC?

Mr. Tebbit

I note what the hon. Gentleman says about the suitability of Wales, and I am glad that he welcomes the project. Certainly I imagine that one town that will not be considered for the investment will be Salford, and I hope that the constituents of the right hon. Member for Salford, West (Mr. Orme) will be pleased about that. I hope that the British Steel Corporation will be ready, able and willing to supply the steel at competitive prices and will get the contracts.

Mr. Michael English (Nottingham, West)

On a point of order, Mr. Speaker. We have all heard the Minister intimidate my right hon. Friend the Member for Salford, West (Mr. Orme) by suggesting that a particular project will not be put into his constituency because of what he has said in the House. I hope that that remark will be withdrawn immediately, because—

Mr. Speaker

Order. It was an expression of opinion. I did not notice the right hon. Member for Salford, West (Mr. Orme) looking as though he had been intimidated. Does the Minister wish to finish his statement?

Mr. Tebbit

I am certain that were we not a member of the EEC we would not be in the position of hoping to receive this investment.

Mr. Peter Emery (Honiton)

Will my hon. Friend consider that, with the unity of the Welsh Members, certain Cardiff constituencies might obtain the investment? Will he make it clear that if the Japanese car industry is to produce outside Japan, Britain is as good a place as anywhere for the factories to be set up, as in so doing it will not only be able to replace imports into this country but will be able to begin exporting to Europe and elsewhere?

Will the Minister tell the House whether the proposed new arrangement means that Nissan's arrangement with Alfa Romeo has fallen down, and that it will be replacing the negotiations that Nissan was having in that respect?

In the discussions that the Minister's Department has already had concerning the plant, there must have been a range of figures mentioned. Will the minister—

Mr. Speaker

Order. The hon. Gentleman is taking even longer than the hon. Member for Swansea, East (Mr. Anderson).

Mr. Tebbit

The tentative conclusion—and I must emphasise that it is a tentative conclusion—of the company is that Britain is the best place in which to make the investment. The study remains to be made and I hope that it will lead the company to a definite conclusion.

The arrangements between Nissan and Alfa Romeo are entirely a matter for the two companies and nothing whatever to do with me.

It is the intention of the company to export motor cars from Britain.

With regard to amounts of aid, since we do not even know where the factory will be, or how much it will cost, it is much too early to talk about those matters.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to call three more hon. Members from each side.

Mr. Giles Radice (Chester-le-Street)

Accepting that there are some problems with the project, if Nissan comes here, will the Minister consider very seriously the claim of the Northern region in view of the very high unemployment, the good industrial relations, and the long tradition of engineering skills in the region?

Mr. Tebbit

I am sure that the company will take all those factors into account in its consideration. The great improvement in industrial relations and the much better strike record over the past year have helped to convince the company that it may well come to Britain.

Mr. John Bruce-Gardyne (Knutsford)

Has the Department of Industry really thought this through? Is it not conceivable that the project could involve taxpayers' subsidies running into hundreds of millions of pounds to enable the company to compete directly with British Leyland, to which we have just given £1,100 million, with De Lorean, to which we are just giving £80 million, and with Talbot, to which we are about to give another £100 million?

Has the Department considered the furious resentment that the project will cause in France, and the possibility that it will lead to the rejection by the Commission of our application for approval of the grant to British Leyland?

Mr. Tebbit

Apart from the grants which would be made available to any company, British or foreign, choosing to come to a development area in Britain, there is no public money involved. This is a case—which I should have thought my hon. Friend would welcome—of a private enterprise company staking its own money. I certainly welcome it.

As to the possible furious reaction from France, I am concerned to precisely the same extent as my French colleagues are concerned at furious reactions which sometimes come from Britain over the actions of the French Government.

Mr. Sydney Bidwell (Ealing, Southall)

Will the Minister accept that in view of the appalling rate of unemployment in Britain under the Tory Government, the attitude of my hon. Friends from South Wales is very understandable, that the trade union movement is concerned about the formation of foreign capital in Britain, and that decisions to close the undertakings in the course of time can be taken miles away from this country?

Mr. Tebbit

The decision to open or close factories is taken by customers who either do or do not buy the goods.

Sir Anthony Meyer (Flint, West)

Is my hon. Friend aware that the investment—which is, of course, dependent on British membership of the EEC—would be as welcome in North Wales as it would be in South Wales?

Mr. Tebbit

I am certainly gaining that impression.

Mr. J. W. Rooker (Birmingham, Perry Barr)

For the avoidance of doubt, will the Minister confirm that when he talks about the percentage of local input—the 60 to 80 per cent. range—"local" means the United Kingdom plus the rest of the Common Market countries, and that he was not talking about British suppliers? Does the figure of 60 to 80 per cent. include the machine tools that will go into the factories? Will there be jobs for British tool makers and British designers, rather than just for assembly workers?

Mr. Tebbit

The jobs will not be just for assembly workers. Who will get the jobs and who will get the contracts, whether here or on the Continent of Europe, will depend on who puts in the competitive tender and who can deliver on time.

Mr. Iain Mills (Meriden)

May I assure my hon. Friend that many of us welcome any means whereby British-built cars will be able to compete equally with the products of our EEC partners in this country and abroad? Will he assure me that he will reconsider a point that I have made to his predecessor on many occasions—that the Government's regional policy therefore precludes any possibility of the factory being sited in the West Midlands, particularly in the Coventry area, near my constituency, which has all the skills and traditional abilities that would aid the enterprise?

Will the Minister take note that, with engineering approval being a difficult matter, it is often difficult to achieve figures of 60 to 80 per cent. local content? Will he therefore consider becoming involved in that aspect?

Mr. Tebbit

The Midlands will receive a fair proportion of the £1 billion which will be going to British Leyland, so I do not think that the Midlands should feel unduly hurt about the matter. It is, of course, up to the component companies in the Midlands to make sure that they get themselves sharpened up to the extent that they are able to get the contracts.

Mr. Orme

I do not need lectures from the Minister on unemployment and on industry. We are concerned about creating permanent jobs, and we want to see a successful British-based industry. I appreciate that my hon. Friends from South Wales and the North-East want jobs in their areas and want to see this development take place. My probing of the Minister was intended to ensure that when the firm comes here it will be on a permanent basis and that the jobs will be guaranteed. That is what we are concerned about.

We are looking at the industry as a whole—at British Leyland, at Ford and at Vauxhall—and we want to see a successful car industry. We want to create more jobs. We do not want to transfer jobs from one part of the country to another. We want jobs in South Wales, in the North-East and in the rest of the country.

Mr. Tebbit

I understand that the right hon. Gentleman did not want a lecture from me, but it would seem that he needed it. During the course of the questioning he has begun to modify his attitude and to accept that the development—if we can secure it—will be as welcome as Ford and Vauxhall. I remind him that no jobs are permanent or guaranteed; they depend upon the customer.

Several Hon. Members

rose—

Mr. Speaker

Order. The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) wishes to raise a point of order.

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

On a point of order, Mr. Speaker. It would be very easy to permit the Minister's comments about Salford's not being considered under these proposals to pass as though it were a light-hearted throw-away remark. Have not hon. Members in all parts of the House the right to ask probing questions about any statement that is made by any Minister without having to suffer interference by the Minister with their parliamentary duties? Should not the Minister of State withdraw that remark?

Mr. Speaker

Order. The whole House heard the exchange. The Minister is responsible for his own statement.

Mr. David Winnick (Walsall, North)

On a point of order, Mr. Speaker.

Mr. Speaker

Order.

Several Hon. Members

rose—