§ 3.41 p.m.
§ Lord Young of Graffham
My Lords, with the leave of the House, I should like to make a Statement on a major Japanese inward investment project in the motor sector by Honda.
Since shortly after its return to full private ownership this day last year, Rover have been discussing with Honda how best to strengthen each other's position in Europe. One element in these discussions has been Honda's site at Swindon, which has already been developed for engine manufacture. I am sure the House will join me in welcoming today's announcement that Honda is to extend that facility to full manufacture of cars for the European market. The new plant will add some 1,300 jobs to Honda's existing workforce at Swindon as well as providing additional opportunities for Rover Group's own Swindon facility, from which it will source pressings. The project will involve additional investment of around £300 million and no financial assistance has been requested.
The plant is scheduled to commence manufacture at the end of 1991 with a limited volume of Honda cars. These will be in direct substitution for imports from Japan. One year later a full range of production operations will start with output rising rapidly to 100,000 cars per annum in 1994; this will include cars built for Rover. Rover will continue to build cars for Honda at Longbridge. Honda have indicated its wish to achieve the maximum commercially feasible level of local content throughout the project and it is its firm intention to reach an 80 per cent. level within 18 months of the start of full commercial operations.
The companies have now decided to cement their partnership through significant minority cross-shareholdings beween Honda's UK manufacturing company and the Rover Group. They believe this will have important commercial benefits for both companies. I see it as a vote of confidence by Honda in the United Kingdom and in Rover Group, and a tribute to the efforts of Rover's management and workforce in restructuring that 428 company to meet the exacting standards of today's market place. I am confident that today's announcement amounts to a further step in the renaissance of the United Kingdom motor industry, ensuring that it will play a significant role in the European market of the 1990s. I commend it to your Lordships' House.
§ 3.43 p.m.
§ Lord Williams of Elvel
My Lords, the House will be grateful to the noble Lord for making this Statement. The House is always grateful to the Secretary of State for making all Statements. Of course we welcome the announcement. As I have said before on a number of occasions, we welcome Japanese investment in our industry provided that it is complementary to and not destructive of our indigenous industry. I join the noble Lord in tribute to the Rover workforce. It has done extremely well in adjusting to the new times in which we live.
However, I have to ask the noble Lord what exactly is the purpose of this Statement? What has it to do with Parliament? Is not Honda a Japanese company in private ownership? Is not Rover a subsidiary of British Aerospace, which is a company in private ownership? Has not the noble Lord said directly that no financial assistance has been requested and therefore Government money is not involved? Why was there not simply a press statement from the two companies? What is the point on which Parliament needs to be informed?
If I were a shareholder of British Aerospace, I would probably ask the board of directors of British Aerospace what will be the employment and other implications for the Rover factories at Longbridge and Cowley. If I were a shareholder of Honda, I would no doubt be asking whether the company was correctly quoted on 21st June by Reuters as saying, "We have no plan to buy a stake in Rover or produce cars in Britain at the moment". Those are the kinds of questions that any shareholder would ask at any general meeting.
I fully understand that after the beer fiasco the Secretary of State needs good news to announce. But for the life of me I simply cannot understand why a deal between two private companies, however welcome it is and however much of an improvement it is, without government assistance and without any government money should be the object of a parliamentary Statement particularly from this Government which claims to be non-interventionist in industry. Unless the Secretary of State can satisfy me on that, I am bound to say that he seems to be treating it as a glorified press conference and as such is wasting the time of the House.
§ Lord Ezra
My Lords, I am grateful for the Statement given to us by the Secretary of State. I should like to raise three specific issues on the Statement that he made, and make a more general point.
The three specific issues are as follows. First on sourcing: it is very satisfactory to note that it is the intention of Honda to build up to an 80 per cent. level of sourcing from the UK within 18 months. Is the noble Lord satisfied that the component 429 suppliers will be suitably geared up to meet that increased demand in that period? Obviously if they can do it sooner, that is all the better.
Secondly, we have been reading much about transport bottlenecks these days, Are we satisfied that as a proportion of this increased production will, I presume, be for export, the transport facilities to the ports will be adequate for this extra traffic? It would be unfortunate if all the cars were built but that there were delays in getting them to the ports.
Thirdly, research has not been mentioned. There are cross-holdings between the two companies; but will efforts be made by Honda to build up its research effort over here, either on its own or preferably in conjunction with Rover?
My more general point is that I do not know whether the noble Lord is aware of the report in the Daily Telegraph of 10th July in which it was stated that the UK's industrial growth in the next few years is likely to be increasingly dependent on the performance of Japanese and other foreign investors. We all welcome foreign investment in Britain. It would be unfortunate if relatively more and more of our industrial effort were in overseas hands. Is the noble Lord satisfied that the increase in foreign investment will be matched by a smilar growth in indigenous investment?
§ Lord Young of Graffham
My Lords, never before has the noble Lord, Lord Williams of Elvel, ever made a more accurate statement. "I cannot understand", the noble Lord said two or three times, and he demonstrated that completely. "Will not understand" may perhaps be a more accurate expression; but I remind the noble Lord precisely what he would have said had I not come down to the House, for it was exactly a year to this very day that I announced that the arrangement with British Aerospace was being completed. Here is British Aerospace selling off one-fifth of its company to Honda, and Honda selling one-fifth of its company to British Aerospace, within the United Kingdom. All who were consulted on this matter advised that it would be of concern to your Lordships' House.
The noble Lord is not the slightest bit interested in good news. The noble Lord is not the slightest bit interested that Nissan, Toyota and now Honda are investing £1.8 billion in industry in the United Kingdom. That will create some 16,000 to 17,000 jobs. As a result at least half a million cars will be produced in this country, and that will give employment in areas such as Swindon, Derby and Sunderland. That will do more than almost anything else to resuscitate the component industry in this country to world standards.
I do not think that I need to say any more about the remarks of the noble Lord, Lord Williams. But to the noble Lord, Lord Ezra, I should say that there is one matter with which I have little doubt that Honda had to deal. That was to ensure that the component suppliers were up to standard. It is a tribute to the component suppliers in this country that Japanese manufacturers feel that they can now settle here. Their settling here is dependent not only on the quality of labour and quality of workmanship 430 which has been shown to be superb, but the quality of component suppliers on which all these projects depend.
We have already seen from some of the earlier arrivals to our shores that they are now beginning to bring in research and development. We have seen that from those who came here a long time ago. Even today Japanese inward investment amounts to only some 2 per cent. of all foreign inward investment. We have a long way to go. At a time when the United Kingdom is the greatest equity investor around the world we should welcome whatever inward investment arrives.
§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that, contrary to the comments made by the noble Lord, Lord Williams of Elvel, many of us would be delighted to hear similar Statements to this very regularly indeed? It is good news for our country and in particular for those who are still unemployed and are being offered increasing opportunities for jobs.
Is my noble friend also aware that many of us find immensely encouraging the fact that a foreign country, with the world to choose from, has the good sense and good judgment to invest in this country where the economy is sound and the Government are pursuing sensible policies?
§ Lord Young of Graffham
My Lords, I am grateful to my noble friend because he at least recognises something which noble Lords opposite have not. It is that we provide the most welcome climate for manufacturing investment anywhere within the European Community. That is not my judgment and it is not the Government who say so. It is that of those who come to settle within our shores.
§ Lord Stoddart of Swindon
My Lords, is the Minister aware that naturally I welcome the fact that Honda has decided to invest more in Swindon, a constituency which I represented and in which I am still most interested? Can he give the net total of new jobs and say whether what was called the Pressed Steel Fisher plant will be combined with the Honda plant, or whether the British Aerospace factory at Swindon will continue to produce pressings for its manufacturing capacity in other parts of the country? Can he also say what is meant by "80 per cent. local content"? Does it mean that there will be 80 per cent. UK content or 80 per cent. EC content? Noble Lords will understand that the two are quite different. Can he also confirm that it will be 1994 before 100,000 units are produced, and can he anticipate what proportion of those will be for export?
§ Lord Young of Graffham
My Lords, I am happy to assure the noble Lord that the new plant, which will be in addition to the existing engine plant in Swindon, will add some 1,300 new jobs to Honda's existing workforce. It will also provide additional opportunities for Rover Group's Swindon facility from which it will source pressings. Pressings will come from the Fisher plant and that will be an extension to it.
431 There are agreed definitions of the content. It is of course Community content and not United Kingdom content. That would not be possible in today's world, but according to experience the overwhelming majority will come from the United Kingdom.
§ Lord Young of Graffham
My Lords, I require notice of that question but I can say that it is quite low.
§ Viscount Caldecote
My Lords, we all welcome my noble friend's Statement. It provides further evidence of the confidence of Japanese industry in the UK as a place in which to invest and in our workforce. However, is he aware that the motor car component manufacturing companies are concerned that it will lead to a position where motor components are made under licence or to the designs of foreign companies? Therefore, our components manufacturers will degenerate into subcontractors making to other people's designs. Is he satisfied about the future of our motor components manufacturers in that respect? Can he also say why he believes that it is possible for a great Japanese motor car manufacturer to invest such large sums of money in this country in order to make a large number of motor cars while it does not appear possible for our own companies to make such large investments for the same purpose?
§ Lord Young of Graffham
My Lords, for the answer to my noble friend's question one must look back over the past 20 years. In particular one must look at the history of British Leyland from the moment that it was nationalised to realise that the course of conduct upon which it then embarked was such as to ensure that it could never be in a position to invest the kind of money which Japanese companies have invested.
I recall the time that I visited Nissan in Japan and saw that its 1952 car was an Austin A30. When one looks at many of the Japanese car manufacturers which have achieved such a dominant position one realises that we lost that market as much as they gained it. Now some of the foremost manufacturers in the world are coming to this country. The components that they buy will be produced by United Kingdom companies provided that we manufacture to their standard.
I should not be concerned too much about who designed the components. In the end the car companies always have the last say. In addition to those companies, there is always a large manufacturing interest in this country. According to the way things are going, by the mid-1990s we shall have returned to the maximum production which we saw previously—something approaching 2 million cars a year.