§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppelli]
6.15 pm§ Mr. Colin Pickthall (West Lancashire)I am extremely grateful for having been given the opportunity to discuss this matter with the Minister this evening. For the sake of the record, I want to correct the Order Paper's spelling of the name of the firm, Garrett, which might otherwise alarm workers in another firm.
Just before Christmas, the parent company of Garrett in my constituency, Honeywell International of New Jersey, announced the factory's closure later this year. That ends the jobs of 350 directly employed and highly skilled workers in Skelmersdale. In the time that is available to me, I want to make clear to the Minister the nature of this economic and social tragedy in my constituency. I also wish briefly to comment on a wider issue that it illustrates all too clearly—the bloodless way in which multinational companies can operate and the part that they seem to be playing in stripping Britain of sizeable chunks of its manufacturing industry.
Garrett manufactures turbochargers for passenger car diesel engines and commercial vehicle diesel engines. The firm is the centre of excellence for the manufacture of commercial vehicle turbochargers in Europe. It has operated in Skelmersdale for almost 30 years. Garrett is profitable and efficient, and it has a market. Some 70 per cent. of its production for passenger car turbochargers supplies the Dagenham engine plant. That amounts to a total of 500,000 turbochargers in 2002.
The high quality of the product and the work force are acknowledged even by Honeywell International. The work force at the factory total 470. All the direct manufacturing jobs are to go, leaving design, testing and development personnel in Skelmersdale. Of course, I am very glad for them, however temporary that arrangement might prove—we do not know yet—but the fact that those jobs will remain scarcely moderates the scale of the disaster.
Skelmersdale is a smallish town of 42,000 people and small and medium-sized firms. Garrett is the largest private sector employer in the town. Indeed, I believe that it is second only to the local authority out of all the employers in the town. It is also one of the highest paying firms, if not the highest paying. It is the firm that most workers and young people in the town have, for as long as I can remember, always aspired to get into. Of course, its reputation for training and skills training only exaggerated that bias among the work force.
While unemployment in Skelmersdale has diminished vastly since 1997, it is still a lot higher than the national average, and the majority of jobs in the town are low paid and low skill.
The end of manufacturing at Garrett is therefore a substantial psychological as well as economic catastrophe for the town. Why has it happened? The simple answer appears to be that Honeywell has made the decision because it can. Its central reason is that work will be moved to Romania because wages there are a fraction—an eighth—of those in the United Kingdom.
Honeywell International has three plants in Europe: Thaon-les-Vosges in France, Atessa in Italy and Garrett in Skelmersdale. Its plan is to move the car turbocharger 541 work from Skelmersdale to Atessa in the next six months. At the same time, a similar amount of work will move from the Atessa plant to the plant near Bucharest. The manufacture of commercial vehicle turbochargers from Skelmersdale will move straight to Romania later.
The company has given other reasons apart from wages. It claims that there is overcapacity in Europe and that there is no sign of an upturn in demand for several years. It says that it therefore needs to reduce the number of plants. However, it is not doing that; it is simply moving the three around a little and opening another in Romania. It claims that the cost of closing the Skem plant is less than that of closing either the French or the Italian plants. Other multinational companies have presented such arguments and they have often been discussed in the Chamber.
However, perhaps most chilling for us in government is the fact that Honeywell tells us that the customer and supply base is moving to eastern Europe. That means that car manufacturing and the manufacture of the appropriate components is moving slowly but surely towards eastern Europe.
I am delighted that my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) is present. She lived in Skelmersdale for many years and was a distinguished representative on the county council and district council. She knows all the arguments from her many years in Skelmersdale.
I have supplied the Minister's office with a copy of a paper that Amicus AEEU prepared. I am grateful to Harry Howard of AEEU and John Jones, the plant manager at Garrett, for the information that they prepared for me, and hence indirectly for the Minister. The company's documentation includes graphic illustration of the apparently inexorable move of car manufacturing and component supply eastwards to the low-pay areas of eastern Europe. I am sorry that I cannot read the map into Hansard, because it is so graphic.
I have nothing against the development of Romania, and I wish that country well. After some years, Romanian wages and conditions of service may improve—I hope that they will—to match ours. Presumably car manufacturing and other branches of engineering will then start moving even further east. To some extent, that is already happening.
In 2001, Ford at Dagenham applied pressure on the component manufacturers, including Garrett, that supplied its engine plant to relocate to the industrial park surrounding the Dagenham plant because of the express need to make the supply lines as short as possible. After the changes that I have described by Honeywell, the supply line will stretch 1,100 miles to Atessa or 1,500 miles to Bucharest.
Garrett workers suspect—I put it no more strongly because they did not—that the apparently illogical move of the work to eastern Europe is part of what Honeywell describes as the migration of the car industry eastward.
I have no knowledge of Ford's view of this development, but I would be very interested to hear it. I have alerted my hon. Friend the Member for Dagenham 542 (Jon Cruddas) to the possible implications of Garrett's move for the Dagenham engine plant. Will Ford tolerate a 1,500-mile supply line for this component? Do not all passenger car manufacturers have a strategy of establishing industrial parks around their assembly plants, in which their component manufacturers will be concentrated? I concede that that makes both economic and environmental sense. I would not suggest for one moment that Ford would follow a component supplier to the other side of Europe. That would be a case of the tail wagging the dog. I suggest, however, that the eastward migration that I have described may eventually involve both.
There may be many factors involved in such a migration of engineering and manufacturing, and this is the second engineering firm to move out from Skelmersdale to Romania in the last couple of years in almost precisely the same circumstances. Those factors include the level of the pound, the fact that we are outside the euro—a fact that Honeywell cited—and the comparative ease with which companies can close down plants in the UK, compared with the way in which obstacles are placed in the way of that in many of our European partner countries.
I know that the scenario that I am describing is not uncommon in manufacturing industry across the north-west. Indeed, I am embarrassingly aware that the Minister and his colleagues in the DTI have rather more Adjournment debates, questions and deputations than they would like, and I am sorry to have to add to that number.
In Skelmersdale, I represent a town with a long and painful history of unemployment and economic disadvantage, which crippled it during the Thatcher and Major years. Since 1997, thanks to its own strenuous efforts, substantial help from the Labour Government, and positive proaction from the county council and the district council, Skelmersdale's economy and, therefore, its community life have improved in a marvellous way. I am very proud of the part that the Labour Government and the Labour authorities have played in that.
Through thick and thin—most of it thin, I have to say—Garrett has been a solid rock of skill and success in Skelmersdale. It is, therefore, bitterly ironic that in the generally auspicious circumstances that we now have, faceless men or women sitting in New Jersey should snuff out such a success story in a game of long-distance chess, by
seizing the opportunity to take cost out of our European operation",as the American representative of Honeywell who came to meet us said to me. I am desperately sorry for the Garrett work force and for those workers in the other firms—not only in my constituency—that supply Garrett, whose jobs will now also come under threat. I am also very angry that we, as a country and as a Government, seem so helpless in the face of these decisions. This is socio-economic crime, and attention must be paid to it.In summary, I want to put some questions to my hon. Friend the Minister. I am well aware of the restrictions on what he can do about them. First, what advice and help can the DTI offer to the work force and the management at Garrett in relation to combating the 543 closure and coping with its consequences, if and when it happens? Will he be able to find the time to meet workers and management from the firm, or possibly even to talk to Honeywell? Secondly, what, if any, leverage can the DTI bring to bear on an international company such as Honeywell to make it think again on this export of jobs? Thirdly, what is the scale of the exporting of engineering and manufacturing from the UK to eastern Europe and, indeed, to the EU? Would it be possible to break that figure down for the north-west? Fourthly, will the Minister examine the fact that Garrett's move to Romania could have serious implications for Dagenham?
If my hon. Friend cannot reply to, in particular, my third and fourth questions, I hope he will write to me at some point.
As I have said, Garrett is not a weak or a struggling firm; quite the reverse. It is a firm of the highest quality, producing high-quality products, with a first-class work force. Its closure is not just a tragedy for Skelmersdale. It strikes me as a frightening portent of things to come.
§ The Minister for Employment Relations, Industry and the Regions (Alan Johnson)I congratulate my hon. Friend the Member for West Lancashire (Mr. Pickthall) on securing this debate, and on describing so eloquently the effects that the closure of Garrett—the 90-day period has not ended yet, but the situation looks grim—is having in his constituency. I know how hard he has worked to try to find alternatives on behalf of his constituents.
Garrett manufactures turbochargers for the automotive industry. Let me first say something about that industry, about Government support for it and about manufacturing more generally. I will then deal with the case raised by my hon. Friend. I hope to be able to answer most of the questions that he asked at the end of his speech.
Following publication of the enterprise, innovation and skills White Paper in February 2001, the Department of Trade and Industry established the automotive innovation and growth team. It was chaired by Sir Ian Gibson, former chief executive of Nissan's UK and European operations. It consisted of a strategy team comprising trade unionists, industrialists and others who had been in the automotive industry almost all their lives, and several sub-groups. They would examine various issues such as design, development and manufacture, distribution, competition and the consumer, the environment, and technology.
The team's report was published in May 2002. It contained seven recommendations relating to the future of our automotive industry over the next 20 years, all of which the Government accepted. We are committed to implementing the recommendations—many of which are relevant to the points raised by my hon. Friend—and we have allocated £45 million to the process. Following the report's publication, the DTI's automotive unit was restructured to focus on strong and effective relationships with key companies in the UK's automotive sector and on the team's recommendations. We are arranging to fund supply chain groups across the UK, as was announced at the Birmingham motor show on 22 October. Progress has also been made on 544 implementing the other recommendations: that includes setting up an automotive academy and two centres of excellence, a pilot mobility services project and a retail motor strategy working group. Those initiatives reaffirm the Government's commitment to the automotive sector.
I think it highly unlikely that Ford is preparing to end diesel production in Dagenham, although I will do as my hon. Friend asks and look into the ramifications as set out in Amicus's detailed and comprehensive report. Ford has only just invested £340 million as part of a programme to establish the UK as Ford's European diesel centre of excellence. I visited the site recently, and observed enormous excitement about the amount that Ford is investing.
Garrett is in an assisted area and a European funding area, so there is scope for financial assistance. When companies experiencing difficulties, as is the case with Garrett, contact their local Government office—they must want our assistance in the first place—or regional development agency, they can expect advice and assistance relating to all the issues confronting them. Regional selective assistance, which is administered by the RDAs and which Garrett has received at least four times over the last 20 years, can be used to safeguard as well as create jobs when companies are in assisted areas. In the past three years in West Lancashire there have been nine offers of grants totalling £1.3 million, against a capital expenditure of £14.5 million, creating 355 jobs and safeguarding 79.
As a Government, we have helped more than 3,000 businesses across the country, supported £6 billion of investment and ensured that 135,000 jobs, most of them in manufacturing, which attracts 96 per cent. of all regional selective assistance grants, were created or safeguarded. It is clear that there are measures available to persuade Garrett to retain a presence in Skelmersdale but obviously the final decision rests with the company.
The level of assistance available to support companies, and Skelmersdale in the wider economic context, is considerable, and time after time we have succeeded. We must remember in this debate that it is not Romania, Hungary, Poland or the Czech Republic that attracts the most inward investment in Europe; it is the United Kingdom. We are second only to the United States in attracting inward investment, which is one of the reasons why—I will come to the specific problems of manufacturing in a second—last week's figures showed that, even though there is a global recession in manufacturing, we have the lowest unemployment in this country and the highest employment for 30 years.
In addition to having assisted area status, Skelmersdale is supported by objective 2 money, and under objective 2 priority 1, assistance is available to meet the specific needs of small and medium-sized companies. Operating under two action plans, the north and west Lancashire partnerships and the Northwest Development Agency plans have been awarded more than £40 million to date.
Financial assistance is an important means of support but the full range of regional and national support is much wider. Representatives from the north-west automotive sector have met on a number of occasions to discuss the possibility of setting up a north-west 545 automotive group. The Northwest Development Agency has completed an automotive sector study seeking to take forward the findings.
We have invested £15 million in a new manufacturing advisory service to spread best practice. The Northwest Development Agency appointed the Manufacturing Institute as the regional centre of manufacturing excellence, designed to provide a range of support measures to help companies to develop "lean" manufacturing processes and to act as a one-stop shop, providing advice particularly to companies in the supply chain.
The Northwest Development Agency also delivers the supply chain programme, which helps and encourages north-west businesses to use north-west suppliers as well as assisting small businesses to devise recovery plans should their main customer reduce production or move from the area.
I turn to the substantive issue. I was extremely sorry to hear the announcement by Garrett of its plans to close the plant in Skelmersdale. As my hon. Friend said, as many as 350 jobs are to be lost, with consequential negative effects, no doubt, both locally and further afield. The effects will be devastating for staff and their families.
I understand that the company has given a guarantee that no one will be forced to leave before 1 May 2003 and is in consultation with staff representatives over the proposed move of production to Romania. West Lancashire district council has already liaised with Jobcentre Plus in order to find out what help could be offered to Honeywell if assistance is needed after the consultation period. On 16 January, an advisor from Jobcentre Plus met with the company to discuss the current situation.
It is obviously essential that Government agencies provide help to the company and most especially to the employees in dealing with the traumatic effects of the closure.
The question of skills, retraining and the redeployment experience of those who face redundancy is crucial both for those affected directly and for the country more generally. The Northwest Development Agency has published its framework for regional employment and skills action—FRESA—the purpose of which is to promote a healthy labour market in which employers and individuals get effective help to meet their employment and skills needs. We have a good record of getting people back into work quickly after plant closures and major redundancies. Ensuring that training is training is crucial to that effort.
The Government are committed to manufacturing, not least because it comprises one fifth of our national output, employs in excess of 4 million workers, produces the majority of our exports and is a key driver of productivity and innovation in the economy. These are difficult times for UK manufacturers, and for manufacturers in Japan, the US and Germany. For the 546 first time since 1974, a synchronised global slowdown in manufacturing is affecting all the world's major industrial regions. We must see the sector through this recession and ensure that it is well placed to take advantage of the upturn, when it materialises.
Here in Britain, traditional manufacturing industries such as car making have been transformed through new technologies and techniques. Computers, robotics, and innovative processes and design have been harnessed for greater efficiency and productivity. The zenith of car manufacturing in Britain was not, as some maintain, in the 1960s. It is now: we export more than 1 million cars a year—five times more than in 1986—and we have nine major car manufacturers in the UK, which is more than any other EU country. We also have the world's most successful motor sports industry, and both Ford and Nissan have established their design centres in London.
I very much regret the Garrett announcement and the terrible consequences that it will have for employees. Representatives of the Northwest Development Agency and other agencies stand ready to talk to the company about options for retaining jobs and capacity at the site. Jobcentre Plus staff are ready to help Garrett employees if those discussions fail to bear fruit. I should be happy to meet trade unionists and managers from the company if my hon. Friend the Member for West Lancashire wants to set up arrangements with my office.
I have tried to put the matter in the context of what is happening with manufacturing in this country. Manufacturing makes up 19 per cent. of the UK's gross domestic product, compared with 14 per cent. in France, 18 per cent. in the US, and 22 per cent. in Germany. It is therefore wrong to say that manufacturing in Britain is suffering adverse effects that do not hit other countries. Our manufacturing industry needs the skills and abilities to compete effectively. We cannot stop companies moving to countries with low-wage economies, but—like Japan, Germany and the US—Britain has never wanted to compete on low wages, and never will. We compete on high wages, high skill and high added value. We must continue to do so, even through these difficult times.
To sum up: the Government will make advice and help available to the workers concerned in this matter. I will meet those workers, and look at the scale of exportation that could emerge from this, as set out by Amicus. In addition, I shall look at the validity and implications of the Garrett case, although that may be an academic exercise, as we do not live in a command and control economy and therefore cannot prevent companies from locating where they wish.
It is important that we learn from situations such as that described by my hon. Friend the Member for West Lancashire, and that we continue to help manufacturing businesses to raise their game so that we can develop and maintain a sound manufacturing sector in this country—one that is fit to face the challenges of the 21st century.
§ Question put and agreed to.
§ Adjourned accordingly at seventeen minutes to Seven o 'clock.