HC Deb 25 March 1981 vol 1 cc1054-60

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

11.57 pm
Mr. Delwyn Williams (Montgomery)

It is my sad duty to draw the attention of the House to the proposed closure of the BRD factory in Newtown, which is a subsidiary of the giant GKN group. We have become used to hearing of factory closures involving job losses of hundreds and even thousands. In Newtown, the staff involved at BRD numbers a mere 430—small by United Kingdom standards but large in the context of Newtown, which has a total work force of 5,000.

BRD came to Newtown 18 years ago. At one time it had nearly 1,000 employees and in the main manufactured rear axle transmission units. According to BRD, it is now proposed to close that factory because of:

  1. "(a) The increasing proportion of smaller and lower powered cars using front wheel drive applications, incorporating C.V. Joints, for which we have no manufacturing capability.
  2. (b) The significant growth of imported cars into the U.K. market.
  3. (c) The fall in exports due to the strength of the pound.
  4. (d) The recession, which in the Automotive and Tractor Industries, is almost worldwide."
I am proud to say that the factory at Newtown has a loyal work force, which has accepted 60p to 70p an hour less than the comparative rate for the job in Aldridge, in Staffordshire. Part of the problem arose during the period of the Socialist Government, when the work force was reduced from 750 to 430. Most of those lost were voluntary redundancies, but that reduced the viability of this outpost of the GKN group.

The work force has been loyal and strike-free. There have been only three weeks on strike in 15 years. There are 100 skilled men there. I know that the company lost £750,000 in operations last year. Taken in isolation that is a lot of money, but it is chicken-feed compared with GKN's world-wide group profits. I accept that it has recently announced lower profits for the last commercial year than it would have liked.

My work force has been discriminated against. Hardy Spicer—part of the group—has taken over much of its work. In the Midlands, Aldridge, which has a greater work force and which does the same sort of work, has been kept going. Justly, my constituents feel that they are being discriminated against by the management of GKN. The Government should use their influence at least to persuade GKN to lease the factory in Newtown to the Development Board for Rural Wales. There is great uncertainty about the future of this vast amount of factory space. GKN should give some indication of its plans.

Other multinationals have seconded executive staff to development boards to help find alternative sources of employment. The GKN group, with all its multinational involvement, has treated my constituents very badly. The management should consider making finance available for a venture capital investment scheme in my constituency. That is the very least that I expect it to do.

I call upon the Government to bring forward the review to development status. We are a special case, because when the Development Board for Rural Wales was set up, its aim was not only to create employment but to stem depopulation. That sets us apart from the rest of the United Kingdom. A special case can therefore be made for bringing that review forward without further ado.

Our development board lost development area status about 18 months ago. Although it has done a tremendous job for the area it must now compete with areas that have kept their status. Soon, we shall have to compete with nearby special enterprise zones, particularly in South Wales. The Government have pumped in £48 million to help the steel and coal industries of South Wales. If the Government, in all conscience, cannot renew our development status prematurely, they should give more money to the development board so that it can set up alternative employment for those skilled and semi-skilled men.

After all, the Government poured money into British Leyland, which hardly has a hard-working, strike-free or successful work force. A fraction of the money given to British Leyland would help my constituents through a very bad patch. The work force is loyal and skilful. With more money, alternative industries could be attracted to Mid-Wales. We have something to offer industrialists and working people. We can offer them fantastic scenery and an education for their children that is second to none. Even in these hard times Powys spends more on education per capita than any other part of the United Kingdom. That should give industrialists an incentive to come to my area. We have the sporting facilities of golf and fishing. There are good communications and housing costs are reasonable.

We in Mid-Wales are not gloomy about the prospects. The Budget affects Wales as much as any other part of the United Kingdom. Let us look on the bright side. Everyone spells out the bad news, but there is also a lot of good news. Year on year inflation is down to 13 per cent. Over the past six months inflation has fallen to 7 per cent. Our trade surplus is on the right side. The savings ratio is very high, at 17 per cent. Pay settlements are realistic; 50 per cent. of the work force settled for pay settlements of under 10 per cent. Of the national work force, 33 per cent. settled for pay settlements of between 11 and 15 per cent. In the United Kingdom, employment offices placed 122,000 people in jobs in the last quarter of 1980. The value of retail sales in the United Kingdom is constant, despite rumours to the contrary.

My constituents in BRD might blame the Government, but as soon as consideration is given to the company's excuse it becomes clear that it is not the Government who are to blame for the closure but the management of GKN. Any decent management would have foreseen that front-wheel drive was taking over and that rear-axle drive would be a thing of the past. Nevertheless, it did nothing to diversify or meet this eventuality.

My area has been dealt a severe blow. One-tenth of the work force in a development area town has been destroyed. Despite that, Mid-Wales could, with help, have a great future. As at April 1980, £11.5 million spent by the Development Board for Rural Wales produced 141 factories and created 4,500 jobs. Reducing its budget and doing away with the development area status has been a severe blow. We cover 40 per cent. of the full land area of Wales. The total regional aid for Wales was £190 million. Yet between 1977 and 1980 only £1½ million of regional aid came to Mid-Wales, but we delivered the goods, we produced the jobs and we are going ahead.

We need incentives. Dr. Ian Skewis, who does a magnificent job as the chief executive of our development board, analysed 111 cases of applicants for factory space. He found that 93 of those applicants were influenced by regional aid. So it is that I look to the Minister to give me some assurance that Mid-Wales will not be allowed to go back to the depopulated state that it was in some 10 to 15 years ago, before the Development Board was brought into being.

We have the capacity, the will power, the men, the loyalty and the traditional skills. We must not allow the impetus that has been created over the last 10 years to disappear suddenly. It is in that sense of achievement, mitigated by some sense of grievance, that I look to the Minister to give me some assurance and, indeed, to give some hope to the work force of BRD in Newtown that although they may lose their jobs in the next six months in the near future they will have alternative employment to look forward to. This is not because we feel that we should be treated any differently from the rest of Europe; in fact, we do not feel that we should be treated differently in a general employment sense.

The Government have already said that we are a special case because of rural depopulation. That trend of depopulation has not been helped by the recent Budget annoucement of an increase in the petrol tax. I accept that there might be a conservation element in the rise in the price of petrol, but it is stilt inflationary and a blight on rural people. Many of my constituents who are farm workers and factory workers have to travel up to 20 miles to work. To them the recent increase represents an extra cost of £100 a year. They are already earning less than the average wage. Some of them would be better off on the dole, but they are honourable men with dignity, who would prefer to work rather than skive and live off the State. This is why my appeal is all the more pertinent.

I should have thought—I hope that the Minister will convey this to the Chancellor—that there were alternative ways of raising the money besides putting an increased petrol tax on rural areas. He could increase each dog licence by £5. He could increase the revenue from one-armed bandits and gaming machines. He could increase the duty on off-course betting by 1 per cent. He could tax towing caravans and non-residential static caravans. He could have a jewellery tax. All we look to the Chancellor for is more flair and imagination.

I mention this tonight because some people must be dissuaded from coming to Mid-Wales by the fact that there is no public transport. That came about because of the bureaucratic approach of the last Government, who eliminated small bus companies and the small independent transport operators. That is why public transport is almost non-existent in Mid-Wales and why all of us there have to rely on private cars.

Overall I have managed to get in a little attack on the Budget during this debate. I make no apology for that, because it is pertinent to the Mid-Wales situation. In that spirit I look to the Minister and to the Government to help the people of Mid-Wales and the men of BRD in particular and give them smile hope after all the loyalty and devotion, that they have shown to their work in the last 18 years in Newtown and Powys.

12.9 am

The Under-Secretary of State for Wales (Mr. Wyn Roberts)

I fully appreciate the reason why my hon. Friend should want to raise this issue at the end of this fairly long day for Welsh Members. As you may know, Mr. Deputy Speaker, the Welsh Grand Committee met at 10.30 am and some of us were involved in it.

The closure of the BRD factory is a matter of great concern to many of my hon. Friend's constituents in the Newtown area and, indeed, one of concern to all of us who understand and appreciate the problems posed by the closure of this factory for all those living in this predominantly rural area. This is all the more true because Newtown is an area that so far has experienced a rate of unemployment much lower than that in some of the more industrialised areas of Wales. The town has been the focus of the activities of the Development Board for Rural Wales and its predecessor in the area, the Mid-Wales Development Corporation.

I have no intention of seeking to understate the seriousness of the blow for Newtown when about 430 employees are to lose their jobs in the next six months and when Mid-Wales is losing what has been one of its largest employers. It will be a major blow for employment in the area. Over many years the company has provided substantial and high-quality job opportunities, and these will be very difficult to replace. At the same time, when considering the future we must not forget what the board and its predecessor have achieved in Newtown.

First, I should mention that my right hon. Friend has received a request from the chief executive of the Montgomery district council to meet a deputation—including my hon. Friend—to discuss the proposed closure and associated matters. Although the closure is not a matter in which the Government can intervene—it could not seek to impose a different solution on the company—my right hon. Friend considers that in view of the scale of the closure for the area there should be a meeting to hear at first hand the views of the local authority and others involved. We shall be taking into account what my hon. Friend said this evening.

My hon. Friend placed great stress on the assisted area status of Mid-Wales in general and the Newtown travel-to-work area in particular. The decisions on assisted area status for Mid-Wales, which are due to be made next year, will take account of all the relevant factors set out in the Industry Act and all the representations that have been made. The effect of the job losses at BRD will be taken on board in the review. An important factor in the review will be an assessment of the relative positions of various areas. Consequently, it would not be appropriate to consider individual areas in isolation. Changes in assisted area status that have already taken place and those proposed have not been a factor in BRD's decision to cease production at Newtown. My hon. Friend should not, therefore, overestimate the role of regional policy in overcoming the problems of the area.

My hon. Friend said something about the company's history in Newtown. It is part of the GKN group and is not one of the many firms that occupy a factory belonging to the Development Board for Rural Wales. It has, nevertheless, had a long association with Newtown and came there before the board and the Mid-Wales Development Corporation came into being. It was formed in 1940 and set up its subsidiary factory in Newtown as long ago as 1963, in what was an old war-time shadow factory. The premises comprise about 200,000 sq ft of floor space, which only a few years ago catered for about 700 employees. The property is owned by the company.

There is no dispute of which I am aware about the circumstances that led to the company's decision to cease production. The company made this clear in the press statement which it issued on 27 February, which stated: The severe effects of the current recession and a continuing reduction in demand for British-built cars, have caused a tremendous reduction in business activity at BRD Company Ltd. This has led to financial losses which totalled £750,000 in 1980 and which, under present conditions, would result in an even greater loss in 1981. The company went on to state that it foresaw no prospect of recovery in demand in the foreseeable future and therefore had decided to rationalise production on to one site at its headquarters in Aldridge, in the West Midlands. Employees at the subsidiary factory in Pool Road, Newtown were therefore advised that it would be impossible to continue production on that site after the end of August 1981. The closure will result in the loss of 430 jobs.

The company's statement went on to say that A close analysis of current order levels and forecast demand indicates that there is insufficient business to maintain two production centres. Therefore, without this urgent action to reduce costs and improve productivity, the future of the whole company would be put in jeopardy. The announcement has been made at the earliest possible time, to allow full discussions to take place with employees and their representatives on the phasing out of operations at Newtown and all other matters arising out of today's announcement. Every effort will be made by the company to assist employees in obtaining alternative employment. That was the end of the statement.

There is in that statement no suggestion that labour relations in the factory or the rate of output of employees were factors influencing the company in reaching its decision, and I understand that the company has discussed its closure plans with the unions affected. I am sure that my hon. Friend would join me in paying tribute to the contribution that the company has made to the economy of Mid-Wales for nearly 20 years. It has made the reasons for its reluctant decision to close its Newtown operation entirely clear. It has not been arrived at lightly, but because it has no practicable alternative.

My hon. Friend recognises that the decision to cease production at Newtown by the end of August 1981 was one for the company to take, on the basis of its commercial judgment of the future market position. Given the company's assessment, this is not a situation in which the Government can actively intervene. It is a matter for management, and management alone. The problems that the company have faced are shared by others whose business is to supply the needs of the United Kingdom vehicle industry.

I need hardly remind the House that the car industry in Britain, France, the United States and elsewhere in the Western world is in recession and is struggling to survive severe financial losses. Consequently, component manufacturers are experiencing grave difficulties everywhere. Many are having to reduce their labour forces and to rationalise their operations to adjust to the situation and to improve their efficiency and productivity to compete and prosper when the car market revives.

We have reason for deep regret when those painful realities result in closure of a plant that has served a company well and is of such vital importance to jobs in an area that has very few other large industrial employers. But we can hardly feel that it is altogether unexpected.

Neither Mid-Wales nor any other area can be entirely isolated from the effects of the recession or exempted from the vulnerability of car component manufacturers and their imperatives of improving competitiveness and productivity by rationalisation.

To attempt to persuade responsible industrialists to set aside their commercial judgment in favour of such a proposition would be no favour to anybody—and certainly not, in the long run, to Newtown, which has been successful not least because over the years it has faced economic change realistically and adaptably.

The suggestion has been made in some quarters of indifference by the Government—a dogmatic rejection of intervention. That is a curious proposition in the context of the car component industry. But for the massive support being provided to British Leyland, car component companies throughout the country—including many providing major employment in Wales—would be facing a much bleaker future. The Government are backing BL—and thus the car component industry—to improve its efficiency. We are certainly not saying to BL "Improve your efficiency but do it without reducing your work force or rationalising your plants."

Of course, we are concerned about the special problems of Mid-Wales and the serious effects of BRD's closure. As long ago as May 1980 the Welsh Office Industry Department discussed with the local management of the company the possibility of assistance under Section 7 of the Industry Act 1972 for any investment to safeguard employment, but the company was understandly not able to follow up that line.

The Development Board for Rural Wales, as the agency responsible for the planned development of Newtown, reacted quickly to the firm's announcement of its closure plans. The chairman-designate of the board, together with his senior officers, met directors of the company on 3 March to hear in detail the reasons for the closure and to determine what scope there was for postponing or mitigating it. The company made it clear to the board that its decision would stand, but said that it was prepared to discuss the future of its premises in Newtown.

If the company goes ahead with its closure plans, the board, with the other agencies, will take all the action open to it to meet the difficulties that are bound to be caused locally.

At present the future use of the factory is a matter for BRD Ltd., since it owns the factory. If it decides to seek to sell or let it, the board will offer every assistance in helping to find suitable new industry to take it on.

Meanwhile, the development board will continue to assist BRD Ltd. in finding alternative industrial uses for its factory. The board has also its normal programme of factory developments in Newtown. At present it has six factories, totalling 54,000 sq ft, completed and available for new industry, in addition to 78—of over 605,000 sq ft—already occupied and employing about 1,450 people. Five others, 15,000 sq ft in total, are under construction, and the possibility of another 12 units totalling 49,000 sq ft is under discussion.

The board has maintained in Newtown a considerable programme of factory building and has succeeded in attracting a good range of industrial developments to set up there. Newtown has become a focus for the integrated development of employment, housing and social amenities in an area that has traditionally experienced depopulation from its rural communities. It has been, and continues to be, a growth point that is attractive to industry.

As well as its other activities the board is in a position to offer advice to those seeking to set up business on their own account in the area. No doubt some of those unfortunately being made redundant will take advantage of that facility. The board, in addition, supports the training facilities of the area in a variety of ways.

The facilities of the Welsh Office industry department are available in full measure to assist in the introduction of new employment into the area. I stress the determination of the department to do everything possible to help find an alternative occupier of the BRD factory if the premises become available for letting. My right hon. Friend will also make full use of section 7 assistance if that is deemed appropriate.

The Manpower Services Commission has already made plans for a team of specialist advisers to be on hand during the period of rundown. They will be able to offer advice on prospects for employment and guidance on opportunities for retraining.

Despite any special help and advice that the Government may be able to offer, I end by saying that the most important factor will be the state of the overall economy of Britain. We are determined that our policies to reduce inflation will be successful and provide the right climate for industrialists to invest in the future. It is essential to Mid-Wales, as it is to the rest of the United Kingdom, that these policies should succeed.

In Committee earlier today we discussed the effects of the Budget and the measures that my right hon. and learned Friend the Chancellor of the Exchequer has introduced to help small businesses, and I will not go over the ground again now. My hon. Friend referred to the increase in petrol duty. We dealt with that matter in Committee, and it has also been dealt with by my right hon. and learned Friend the Chancellor of the Exchequer. We believe that we are creating the right conditions as a framework for industrial recovery and we all hope that Mid-Wales—as indeed the rest of Wales and the United Kingdom—will soon be able to move towards a period of more success and prosperity.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past Twelve o'clock.