§ Motion made, and Question proposed, That this House do now adjourn.—[Jim Fitzpatrick.]
10.26 pm§ Andrew Bennett (Denton and Reddish)I am grateful to have the opportunity to debate manufacturing industry in Denton, but I am sad that I have to report the tragic state of that industry in my constituency.
In the past four months, in and around Denton, a substantial number of jobs have been lost. Just across the border, in the constituency of my hon. Friend the Member for Ashton-under-Lyne (Mr. Heyes), we have lost Celestica—the former ICL company has completely disappeared from the Greater Manchester area. Strachan and Henshaw has closed. A large number of my constituents work at Woodford and Chariton, where there have also been substantial redundancies. Other engineering firms in my constituency face short-time working.
The real blow for the people of Denton—I feel it too—is the decision by Oldham Batteries to close its operation at Crown Point. The company has been in Denton for more than 100 years and it employed more than 1,000 people not so long ago. It is a sad blow that the firm—the largest manufacturing firm in Denton by far—is about to close.
There is a sorry tale of lack of interest from a succession of the people who owned the company. As long as it was a separate enterprise, there was a willingness to invest, but as the company gradually moved—first into the Mirlees Blackstone group, then to the Hawker group and, more recently, to Invensys—there has been a lack of concern for the people of Denton.
It is especially sad that, recently, Invensys has been sending a managing director to Denton for only one day a week to run the plant. How can anyone have a commitment to a local community when they visit it only once a week? That makes it extremely difficult for shop stewards and other people to lobby and argue for more investment in the Denton plant.
We can see in Denton a microcosm of the problems facing the whole UK. We are allowing manufacturing industry in this country to get into a state of terminal decline. Who is to blame? There has been a succession of people in Whitehall—civil servants as well as Ministers from both parties—whose hearts were not in trying to protect and defend manufacturing industry in this country.
I want to examine some of the factors that are crucial for manufacturing industry. The first is the rate of exchange between the pound and the euro. That has worked against manufacturing industry. If we go into the euro system, we must find an exchange rate that is much more favourable to the industry.
It appears that it is much easier for companies to get rid of jobs in Britain than in many EU countries. I have repeatedly been told by shop stewards that employment laws in France and Germany offer workers far greater protection. Because of that, firms with trans-European interests are much less likely to consider reducing employment in those countries, but find Britain a soft touch.
Perhaps shop stewards always make that point, but Oldham Batteries' managing director, Mr. Rowson, said the same thing when he gave the management's point of 404 view. It is high time the Government gave much better protection to people in British industry, and ensured that they were not the soft touch in Europe when it came to getting rid of staff.
We must also consider how the capitalist system works in this country. Shareholders seem to feel little or no concern about whether companies operate as manufacturers or whether the aim is simply to sell off land. When I look around Denton, I am sad to see the numerous examples of how manufacturing industry has been destroyed by companies that can make more money from selling sites than from maintaining manufacturing.
Such companies include Lancaster Carpets and Sainsbury. I am not quite as critical of the toilet seat company called Celmac, which is turning its site over to Morrison supermarkets. It is moving to another location in Tameside, so at least the jobs are being retained, but it is another example of a company that sees that it can make more money from turning a site over to retail than from continuing in manufacturing.
Oldham Batteries wants to sell its site for retail usage, but the company now complains that it might not be able to. That seems a sad reflection on the attitudes of companies and shareholders in this country. They are just as happy to make money from selling land as from providing jobs.
How far should the Government support industry? It is recognised, on the east side of Manchester, that there is a lack of jobs. However, instead of helping industry, the Government devote money to various regeneration packages. That money does not find its way through into encouraging innovation.
I argue that the Government should encourage innovation with regard to batteries. I accept that, since Oldham made the generating batteries for underground haulage in mines and for cap lamps, the industry was likely to contract. However, there has been great opportunity for innovation in the manufacture of electric batteries for cars, for small vehicles used in street cleaning, and so on. The Government should have encouraged innovation much more.
I shall not go on much longer, as my hon. Friend the Member for Ashton-under-Lyne wants to make a few comments. However, I hope that the Government will act quickly to ensure that companies in Britain cannot get rid of their labour force more quickly than firms elsewhere in Europe.
My second plea to the Government is that, if we are to protect manufacturing industry in this country, we must look at the exchange rate. We cannot consider joining the euro at the present rate.
At present, Oldham's work force is working with the local Tameside council to see whether a rescue package can be produced. One possibility is that the manufacture of miners' cap lamp batteries could continue as a small operation in Tameside. I plead with my hon. Friend the Under-Secretary for at least some help in that regard. It would be much appreciated.
A small number of manufacturers have an attitude different from the one that I have described. For example, the Hyde group that operates in Tameside does not have to worry about making a profit this year and satisfying shareholders in the short term. That is because of the way the shares are held in the company. The group has a 405 record of investing in manufacturing industry in Tameside. The Government should work hard at finding ways to help the group with that, and they should recognise the large amount that it does to help the area.
I spoke to Tony Hodkinson, the managing director of Harvey, which is a part of the Hyde group that wants to make machine tools for the aircraft industry. During September and October it was on short time, but it has the necessary long-term commitment and is trying very hard to fight its way through what in manufacturing terms is a recession. I plead with the Minister to offer some hope to those companies. The Government should realise that some companies are trying to fight the system and keep manufacturing in place, and they should give them some recognition for doing so.
It would be easy for the Chancellor to provide much better allowances for the investment, but the message that I want to get across in this Adjournment debate is that manufacturing industry is in crisis across the country, of which Denton is a microcosm. We cannot go on just with service industries; we need to keep our manufacturing base.
When I was brought up in Greater Manchester, one of the best things that a youngster could do was get an engineering apprenticeship. Over the years, we have destroyed almost all the apprenticeship system because of the decline in manufacturing industry. We now have at least to tell the companies that are trying to do something about that that the Government want to help them, so I have some requests for the Minister. Please let us do something about changing the redundancy regulations in this country, so that we give workers some protection. Let us consider our exchange rate policy, so that it provides manufacturing with some protection. Let us ensure that some help is provided in the Budget to keep manufacturing industry going in this country.
§ Mr. David Heyes (Ashton-under-Lyne)I congratulate my hon. Friend the Member for Denton and Reddish (Andrew Bennett) on securing tonight's debate on this most important matter, which is hardly less important to my constituents than to his. I am pleased to have the opportunity to make what I promise will be a very brief contribution.
My hon. Friend and I are, of course, next-door neighbours, with the larger parts of our constituencies sitting in the borough of Tameside. Many of my constituents travel to work in Denton, and I am sure that many of my hon. Friend's constituents travel to work in Ashton-under-Lyne. That travel-to-work pattern has been made easier in the past year, since the opening of the final section of the Manchester outer ring road. Junction 22 at Hollinwood and junction 23 at Ashton- under-Lyne serve my constituency, and junction 24 serves Denton in my hon. Friend's constituency.
Although that road's completion was 20 years behind schedule, we all had great hopes that improved access to the national road network would give a much-needed boost to efforts to attract industry and employment to our part of the world. In fact, the reverse has been the case. Despite the energetic and persuasive efforts of local partners—I single out for special mention our local 406 authority in Tameside—there has been an exodus of relatively high-tech manufacturing jobs in the past six months. In some cases, those jobs were located just a few yards from the new motorway.
My hon. Friend has spoken of the problems in Denton, and I share his sadness about hundreds of job losses at British Aerospace in Chadderton and Woodford, where many of my constituents and his are employed, and at Siemens in Hollinwood. More than 800 electronics jobs have gone at Celestica—the remnants of the once mighty ICL, which bestrides the boundary between our constituencies. Many other jobs have gone or are currently under threat.
So how are we to explain what has been happening? One thing is certain: in none of those cases should blame be laid at the door of the workers or trade unions. Productivity levels can match those anywhere else in the United Kingdom or western Europe. Our industrial relations climate has been exemplary. Our labour costs, given the highly skilled nature of many of these jobs, are among the keenest. That, coupled with the skill, dedication and experience of many of our locally based managers, has often given us the competitive edge, until recently.
The global economic forces, structural shifts and exchange rate problems that we have witnessed being played out locally, which my hon. Friend has mentioned, are frankly beyond the ability of our constituents or local agencies to control. My hon. Friend has given his explanation for what has gone wrong and his prescription for action to hold the situation and to start to turn it round. I need not repeat that; I simply wholeheartedly endorse what he said. For the benefit of my constituents, as much as his, I join him in requesting that serious attention be given to what has been said in this debate. I know that I can count on the Minister to take on board our plea.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths)I congratulate my hon. Friend the Member for Denton and Reddish (Andrew Bennett) on securing this debate on manufacturing in Denton and my hon. Friend the Member for Ashton-under-Lyne (Mr. Heyes) on his thoughtful contribution.
I wish to express my concern at the loss of the manufacturing facility of any leading company. Manufacturing matters, and it matters to the Government, to the economy, to the people who work in it and to all of us who enjoy its products. It accounts for about a fifth of our national income, with almost £150 billion of output each year. It employs about 4 million directly, and millions more depend on manufacturing for their livelihoods, including 2.5 million people in the service sector. A strong manufacturing sector is the backbone of our economy.
As the Minister responsible for small and medium-sized enterprises, I have visited manufacturers who were pioneers 200 years ago and who are now innovators at the cutting edge of competition. On Monday this week, I visited two leading manufacturers in Cornwall—Precision Audio Products and Allan and Heath—and both are major local employers and leaders not just in the UK but worldwide. They export all over the globe. Many of the components for those companies are foreign sourced so 407 they do not advocate the devaluation that my hon. Friend the Member for Denton and Reddish has advocated. However, I recognise that the exchange rate impinges on companies in variable ways.
Manufacturing is led by some of the most innovative businesses that invest heavily in research and development. It drives innovation in the rest of the economy and creates jobs and prosperity. It is the crucible for productivity improvements across the whole economy, through advances in technology, new goods and processes; but most of all through a highly skilled and highly flexible and dedicated work force. In the last four years, we have helped 3,000 businesses, and supported £6 billion of investment and 135,000 jobs—most of them in manufacturing.
Manufacturing is proportionately even more important in some areas of the country, and Denton is one of them. In Tameside as a whole, around one third of the work force are employed in manufacturing, as against a national average of about 17 per cent.
I was very sorry to hear about the announcement made by Hawker Traction UK that the Oldham Batteries site in Denton is to close. No constituency has a more doughty fighter for manufacturing than that of my hon. Friend. Although such decisions are for the companies concerned to make, they are always extremely regrettable and the effects are devastating for staff and their families.
When redundancies are inevitable, we will not walk away. We will do everything that we can to help people to find new jobs and to get new skills. We cannot, sadly, make up for what my hon. Friend described as the lack of interest shown by successive managements. That is a damning indictment of those managements, but I fear that the Government find that the position is difficult to influence or to reverse.
The company has been in contact with the Small Business Service in connection with the present situation, and the service has provided advice for and assistance with the task of identifying alternative employment opportunities for Oldham Batteries staff. In the north-west, helping businesses is a key element of the North West Development Agency's regional strategy. A number of tools are available to the agency and other Government bodies to help them to assist businesses. In 2000–01, 81 offers of regional selective assistance to businesses in the north-west were accepted. That is the largest number of any English region. The total value of the assistance was close to £20 million, and went towards capital investment of almost £158 million. That had the effect of creating 3,267 jobs and safeguarding 2,056 more across the region. At the same time, 93 offers of enterprise grant funding were accepted in the 12 months to March 2001, with a total value of £3 million going towards capital investment of more than £26 million.
We are always seeking to improve the assistance that we give to companies, and we want to have the right toolkit to do that. Our rapid response units have a creditable record in finding new employment for people who are affected by major job losses. The rapid response unit helped to ensure that about 94 per cent. of the work force at Fujitsu in county Durham found new jobs within 12 months. At Siemens in north Tyneside, the Employment Service played a major role in helping about 90 per cent. of the work force to find new employment. Recently, the Government helped Kirpak Ltd., near 408 Wigan, when its plant was threatened with closure. Plans to move production overseas threatened 169 jobs. Following Government assistance, the company invested £10 million and created an extra 116 jobs. The new plant will be officially opened on 1 February this year.
The rapid response service has shown that it can be effective in the constituency of my hon. Friend the Member for Denton and Reddish. The Canadian-owned company Celestica announced in September its intention to close its plant in Ashton-under-Lyne, with 570 job losses. By the end of the year, 412 employees had sought the assistance of the Employment Service job shop. Some 243 were referred to job opportunities and 71 were referred for training.
My hon. Friend touched on the comparative costs of making people redundant across Europe. He will know more than most that that is a difficult and complex assessment to make. It is not necessarily cheaper for companies to close down plants and make people redundant in the United Kingdom than it is elsewhere in Europe. The Organisation for Economic Co-operation and Development rates the UK eighth out of 15 for redundancy costs. Many firms here pay above the statutory minimum redundancy compensation.
Individual circumstances of employees in companies that are making redundancies can, of course, cause significant variations in the overall cost of each large-scale redundancy. By comparing Britain, France and Germany, economists at the Department of Trade and Industry found, on average, that while it is cheaper to make workers with only one or two years' service redundant in the UK than it is in France or Germany, if a worker has longer service, the cost of making them redundant in the UK is less than it is in Germany.
§ Andrew BennettDoes my hon. Friend accept that one of the problems is the amount of consultation, in particular the period of notice in which discussions have to take place? As I understand it, the consultation period is substantially longer in both France and Germany.
§ Nigel GriffithsI am happy to refer my hon. Friend's concerns to Ministers in the Department for Work and Pensions. However, I chaired a meeting with my hon. Friend the Member for Alyn and Deeside (Mark Tami), a trade union, and key representatives of a plant that was threatened with closure. I put it to the management of that company, which was based in the United States, that the local work force believed that it was keeping the German plant open at the expense of the British plant because it was easier to make people redundant in the UK. The management told me that that was not the case and, separately, that the German plant was being closed as well. There is not a uniform position on that, but obviously I will ensure that the DTI considers my hon. Friend's thoughtful points carefully.
It is of course important that we constantly review the Department's business support activities. My right hon. Friend the Secretary of State for Trade and Industry has announced several important changes to ensure that, in the regions, Government agencies work together to improve the delivery of support to manufacturers and other businesses.
We can no longer compete on labour costs and raw materials alone. With globalisation, low value added goods can be produced more cheaply elsewhere. The challenge for 409 the UK is to shift focus from competing on cost alone to competing on high skills and high value added products and processes based on quality, innovation and know-how—the very qualities demonstrated in many of the manufacturing plants in the constituencies of my two hon. Friends. Like many British manufacturers, companies in their constituencies are responding positively to the new challenges. A good example in the north-west is that of Bodycote International in Macclesfield in Cheshire. Originally a garment manufacturer, it is now a world leader in heat treatment technology.
The Government are committed to providing high-quality help to people faced with redundancy and to companies facing change. To enable them to overcome the difficulties, we have put in place a combination of mechanisms to encourage inward investment and technological investment in UK companies. At the same time, if companies are not able to keep up or catch up with global competitors, we want to enable the work force to be redeployed to more successful companies, and to retrain if necessary.
§ Andrew BennettWill my hon. Friend consider carefully the possibility of helping people, especially the stewards, who want to keep the manufacture of cap lamp batteries in Denton? Are the Government able to give some help to get their efforts off the ground?
§ Nigel GriffithsWe are already in touch with the Small Business Service and the Business Links organisation in my hon. Friend's constituency. I am happy to give him an assurance that we will facilitate a meeting with our key business advisers and Employment Service representatives to ensure that every avenue is explored 410 and that all thoughtful and practical suggestions made by my hon. Friend's trade unionist constituents are taken fully into account.
We recognise that the Government have a clear role in helping companies to face the challenges of globalisation, technological change, and the various stages of the business cycle. We are investing £15 million in a new manufacturing advisory service to spread best practice; that will include a centre for manufacturing excellence in every region. The Government are committed to working in partnership with manufacturing and other business sectors, and with employees, to maintain and develop a strong British economy.
We will promote closer links between education and industry, with a view to improving the skills base on offer in all the regions of this country. The Government's policies for delivering stable and steady growth are working, and we shall continue to pursue them as the best means of supporting manufacturing and British industry generally in a global and competitive economy. British manufacturing and business will change, as they must, but we will ensure that they match the best in the world.
§ Question put and agreed to.
§ Adjourned accordingly at six minutes to Eleven o'clock.
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