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Guy Motors (Wolverhampton)

Volume 14: debated on Tuesday 8 December 1981

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

11.49 pm

Far be it from me to keep the Members and staff of the House at such a late hour, especially when the angels above have swept our London with snow storms and it may be difficult for them to return to their beds, but I have a duty to perform on behalf of hundreds of my constituents whose job security is paramount and who are threatened with the loss of their employment due to the closure of Guy Motors, Wolverhampton, which is part of the British Leyland organisation.

I have received from the joint shop stewards of Guy Motors, who represent all the unions in the firm, a letter from which I shall quote a few extracts. The letter states clearly the shop stewards' case. It reads:
"The announcement of the closure came as a complete shock to the work force as the order book is healthy with more orders pending."
I have made inquiries and I find that the establishment is viable, it is profitable and it has many orders pending. There is no loss for British Leylands at Guy Motors. The letter continues
"Guy Motors has been remarkably free from strikes or any other form of industrial action."
There have been no strikes at the factory and the unions' relations with the management have been based on harmonious unity. They have had a good and close understanding. They go further and say:
"With regard to output, the following is an extract from the Plant Director's redundancy statement to employees",
who said that they must be worried because everybody was so busy—so busy that they were working a 46-hour week to fulfil the orders on the books. They were working overtime because the factory was so actively engaged in producing products to be exported mainly to the Third world. There was no problem.
"The recent and current performance"—
said the director—
"of Guy has been good but unfortunately no amount of performance improvement can now overcome Leyland Vehicles basic problem of surplus capacity".
There is no surplus capacity in this factory, but there is, apparently, in the overall structure of Leyland Motors. So this Wolverhampton factory is to be the victim of some top-heavy overall plan of Leyland Motors. The surplus capacity, it is said, is elsewhere in the group. Guy appears to be the lamb to be sacrificed. That is the unions' view. They feel that the Guy workers are to be sacrificed for a plan which has not been discussed by the unions.

When British Leyland forced workers to accept a small increase in wages—well below the inflation rate—it was suggested that there would be new and close co-operation with unions and the workers, but the company has broken its promise in this case. There was no consultation.

New workers who had been made redundant when the steel works in my constituency was closed took employment in Guy Motors on the clear understanding that the jobs would last and that there would be no question of redundancies or closure. The management did not know what was happening.

The shop stewards say:
"The whole output of Guy is exported, mainly to Third World countries. The T43 Landtrain is a heavy duty truck which is becoming popular in Asia and Africa. Landtrain came to Guy at a very early stage of development and much work was carried out here to bring it up to the standard required of a vehicle which has to operate in extremely arduous conditions. The decision to transfer production to Bathgate is blatantly political."
I hope that the Under-Secretary will note the remarks about the politics of the issue. Talbot's Linwood factory was closed and that led to what was called the motor sale of the year, when £200 million of the British people's property and machinery was sold for the knock-down price of £10 million—a dead loss to the community. Much of that complicated modern machinery was exported to compete with British motor vehicles in future. I have never understood how that could be justified.

I could go on reading the statements of the shop stewards outlining the development of the factory in Wolverhampton over the past 50 years. It has been one of the best centres for training young engineers in the West Midlands. It is to close, with no consultation, and we shall lose that training scheme at a time when the motor car industry is desperately short of the new technology that it needs to compete in world markets.

In the past decade, we have lost 200 factories in Wolverhampton and 16,000 jobs have disappeared as if they had never existed. We have 24,000 workers unemployed. The black plague of permanent unemployment is sweeping Wolverhampton. The people are asking that a halt be called to unnecessary closures.

In the 1930s Wolverhampton was an oasis where workers from South Wales, the North-East and Scotland came to find jobs. There is no oasis today; it is becoming an industrial wilderness and the people are resentful. The whole community—not just the trade unions—is calling for a public inquiry. If the Under-Secretary is not prepared to initiate a departmental inquiry, a public inquiry will be organised in Wolverhampton, with the backing of the whole community. That is how desperate the situation has become. How can one justify British Leyland coming to the House and winning permission to borrow millions of pounds? How can one refuse an inquiry into its operations, which lead to the closure of factory after factory with no consultation?

There is no social responsibility in evidence. We are asking for some understanding of the problems of working people and of the permanent unemployment of highly skilled men who want to work and serve the community and the country and who are not allowed to use their skills. This is a classic example of a closure forced on a community and a factory against the people's will.

That factory is profitable and has a full order book. Is it not important that we are able to supply goods to the Third world? Is it not important that we help those people? Some 20 years ago it took 10 tons of sugar to buy a tractor. Today it takes 50 tons of sugar to buy a tractor. We could supply all the tractors that those people desperately need to increase their food supplies, if we had the will. Thousands of engineers are out of work because they are not allowed to use their skills to produce the products that are needed in the Third world. We need the jobs desperately. Thousands of tractors are in cold storage and no one can afford to buy them. We do not have the will to produce a scheme of long-term loans to supply them and give our people decent employment.

We ask the Department, because of the special circumstances of the closure of Guy Motors, to hold a departmental inquiry. If that is refused, we will have a public inquiry. After that inquiry, the Government will hear things that they may not like.

Guy Motors has a history that goes back 50 years. It is not an old factory. It has developed its technology year by year to meet the problems. It was the first factory in the world to produce trolley buses. It was the first factory in Britain to produce passenger-carrying motor cars. It was the first factory in Britain to produce the six-wheel tractor. It was the first factory to build the big "J" chassis and 17,000 big "J" chassis were sold all over the world. It was the first factory in Britain during the First World War, which I am old enough to remember, to produce the Dragonfly aero-engine. That was done at short notice. It was the first factory to produce a tank.

That factory is not outdated. It has a skilled and intelligent work force that has been able to apply its knowledge and accumulated wisdom to meet renewed circumstances and new developments. That factory is to disappear if the will of Edwardes is to prevail. There is a lack of understanding of the concept that small is beautiful. Some of our smaller factories are beautiful. They are productive and profitable. Why should they disappear in the interests of centralisation which is only interested in selling our assets to private enterprise?

There is a suspicion that that factory will be sold under the hammer to private enterprise, when millions of pounds of equipment that belongs to us will be sold to Turkey, South Africa and Latin America at knock down prices. Does not that justify an inquiry?

If the Government do not respond, the people of Wolverhampton and the people and workers of Leyland will be bitterly resentful. I hope that the Minister will respond.

12.4 am

With the prior agreement of my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards), I wish to ask the Minister a question of which I have given notice to the Department.

I ask once again what co-operation the Comptroller and Auditor General and the Audit Department can get from the Scottish Office, the Treasury and the Department of Industry in their preliminary inquiries not only into Bathgate. As my hon. Friend said, Bathgate is part of a whole package.

Yesterday, the Secretary of State for Industry attacked me for using extravagant language. When Secretaries of State attack hon. Members they might do them the courtesy of getting what they are supposed to have said in context. My speech in the Public Accounts Committee sets out the legitimate suspicions of the people in Bathgate, Wolverhampton and Leyland.

I wish to corroborate one thing that my hon. Friend said. I hope that the Government realise the trouble that may well be caused in January and February when the work force at Bathgate, and, I suspect at Wolverhampton, vote. They will not go down the Linwood road. They will be like the girls who stuck out for their jobs at Lee Jeans. In such circumstances there will be trouble with a big "t". What will the Government do then? I suggest that one step that they can take now is to have the inquiry for which my hon. Friend asks.

12.6 am

I am glad of the opportunity to discuss the developments within the truck industry. I thank the hon. Member for Wolverhampton, South-East (Mr. Edwards) for raising the topic. I appreciate his strength of feeling and the clarity with which he made his case. However, I cannot comment in detail on the Leyland group's future plans or on the detailed reasons for the closure of the Guy Motors plant at Wolverhampton.

As the House well knows, we have always taken the view that BL must be left to act commercially without constant fear of Government intervention, but I welcome the debate as it concerns the commercial vehicle industry, which the Government consider to be an important part of our industrial sector. It is, therefore, most important that the House has an opportunity to debate the matter.

I start by dealing with the closure of Guy Motors, which is an old-established firm, as the hon. Gentleman said. I believe that I am right in saying that there has been a commercial vehicle manufacturing business at or near the site for about 70 years. The factory has produced superb vehicles. It is well known for its double-decker buses and Big J heavy trucks. Its current main products are the well-established and well-used Victory bus chassis. Buses on that chassis can be seen daily performing in rugged country throughout Africa and Asia. The Landtrain truck is one of a new breed of Leyland export trucks. It is heavy duty and designed with Third world conditions in mind. Production of the truck started at Guy Motors in 1979, and so far about 1,000 have been sold. It has already been much praised and the outlook for future orders is promising.

The Guy work force has a lot to be thanked for. Of that there is no doubt. Nor is there any doubt about its work record. BL would be the first to acknowledge that that has been good.

Taking all those factors into consideration, it is fair to ask, as the hon. Gentleman has done this evening, why a plant like Guy Motors, with superb products and a good production record, is now being closed. Why is that sort of action necessary? Why do 740 people have to lose their jobs in an area which already has an unemployment rate of 17 per cent.? I fully appreciate the hardship which will be caused by the closure and which has been well expressed by the hon. Member. However, to answer those questions, one has to look further afield than Wolverhampton. They are, in fact, of great significance in the wider context of BL. The key question is the level of capacity within the Leyland group and whether that is matched to the market demand for its vehicles.

Any company, in whatever field, must take into account the conditions in which it operates. There have been several factors working on the truck industry in 1981. There has been a very severe fall in demand for trucks in the United Kingdom, and BL does not see any signs of a significant recovery in market demand in the immediate future.

I should emphasise that that fall in demand is not a phenomenom unique to the United Kingdom. The recession is also affecting most developed countries, and a recession has a direct effect on truck sales as companies seek to economise in order to ride out the recession. A further factor is that exporting—which is a company's normal recourse in a recession—is made more difficult by the low competitiveness of United Kingdom products against, particularly, Japanese products in Third world markets. The exchange rate and the rate of inflation are key determinants of competitiveness. The Government are committed to bringing down the rate of inflation and improving productivity in manufacturing industry so that it can compete whatever the exchange rate.

The effects of this depressed level of demand have been intensified by import penetration, up 10 per cent. this year on last year. Imports to the end of November have taken 25 per cent. of the truck and articulated lorry market. The Government recognise the depressed state of this industry, which is at once a cause for concern but also a challenge to our industry to prove itself competitive in price, quality, design and delivery.

It is not the Government's role to protect industry from these facts of life. All companies in the commercial vehicle industry are having to adjust to the altered external environment. Reduced volumes mean that painful and regrettable but necessary decisions have to be taken in order to bring the industry's cost base into line with the more modest levels of demand. If these decisions are not taken, the industry will have no future.

No, I shall not give way. The hon. Member for Wolverhampton, South-East spoke for at least the full 15 minutes and I gave some time to the hon. Member for West Lothian (Mr. Dalyell). I should in courtesy reply as fully as possible to the hon. Member for Wolverhampton, South-East.

There is no reason why the Leyland trucks division should be excluded from the process of adjustment going on within the industry and which is necessary to establish the United Kingdom as a competitive and efficient manufacturing base. Leyland trucks division faces problems of overcapacity and uncompetitiveness. The remedies must involve the contraction and closure of certain activities as well as investment in plant and machinery to enable the company efficiently to manufacture products which can compete in the market place. The Government have shown themselves able and willing to help in the transition to higher productivity and greater competitiveness.

The hon. Gentleman will be aware of the statement by my right hon. Friend the then Secretary of State for Industry on 26 January this year to the effect that the Government had approved BL's 1981 corporate plan and had agreed to fund that plan by the provision of £990 million between 1981 and 1983. Some £450 million of this funding has already been granted. This clearly shows that the Government have not stood back from the process of restructuring within the industry world wide. Funding on this scale is not the action of a Government indifferent to the fate of the industrial sector.

As a result of this support, the Leyland group has been able to carry out a programme of investment. The fruits of this investment can be seen in the new manufacturing facilities, the new technical centre and test track at Leyland, and also in the development and launch of new products—the Roadtrain and Cruiser models for the European and domestic markets and the Land train and Landmaster models for Third world markets.

These new models have been well received and have proved competitive in their respective sectors. However, there is no disguising the fact that the Leyland group still has a long way to go. It is still losing substantial amounts of money—a loss of £47 million was announced at the last half year. Action clearly had to be taken in the light of the reduced demand. The investment by the company has had to be accompanied by measures to achieve the reduction in the company's cost base that is essential for the restoration of the company's competitiveness.

That, in turn, will eventually remove from the taxpayer the burden of continued funding of the company as well as offer the best chance of secure employment and growth in the future. But it is not the Government's job to manage the company, or to decide where and when action must be taken. That is the task of the BL board and the management of the company. They must take and implement whatever decisions are necessary in order to remain on course for viability, however difficult the decision involved. The company's proposals for further wide-ranging closures and redundancies in the Leyland group were announced on 20 November.

We are concerned this evening about Guy Motors in Wolverhampton, where 740 jobs are to be lost. We must not lose sight of the 1,365 jobs that are going at Bathgate or of the 1,860 jobs that are being cut from the work force at Leyland. I relate those figures only to show that Guy Motors is not the scapegoat, by any means. Leyland management have reached their decisions as to the best shape for their company on the basis of their new forecasts, and one of the results is that the capacity which Guy provides is no longer required. As I have already explained, this is a decision that only BL can take.

Of course the hon. Gentleman is concerned about the considerable economic difficulties facing his constituency at present and, more immediately, the welfare of those of his constituents who work at Guy Motors and whose jobs will disappear. No one can deny that these jobs are going at a most difficult time, both in the country as a whole and in the West Midlands in particular. Indeed, the hon. Gentleman will be aware that the House devoted most of last Friday's business to a wide-ranging debate of high quality on the problems of the region.

In his intervention in that debate, my hon. Friend the Under Secretary of State made quite clear the extent of the Government's concern for the difficulties faced by the West Midlands. He announced on Friday a significant change in regional policy as it affects Wolverhampton and other non-assisted areas. We intend to introduce an order before Christmas to revoke the regulations that prescribe the sorts of industrial buildings in relation to which industrial development certificates are currently required. IDCs will thus be suspended until further notice, and industry will thus be completely free to invest where it considers it most advantageous to do so.

Beyond that immediate and most recent measure, the hon. Gentleman must not forget the whole panoply of other measures that we have taken to support industrial development in non-assisted areas, such as his constituency. Firms in Wolverhampton are eligible for assistance under section 8 of the Industry Act 1972. Since May 1979 we have made 45 offers of assistance in the travel-to-work area to the value of £781,000 on total project costs of £4·39 million. Funds are also available to assist the producers of new and advanced technologies, particularly those based on microprocessors.

I hope that the message that the hon. Gentleman can take back to his constiuents will be one of Government concern, and we have taken a number of steps in his area. We are beginning to see signs of the end of the recession, and when the upturn comes, the opportunities for Wolverhampton will be there.

Before I conclude, I must deal with the point raised by the hon. Member for West Lothian. I repeat to him what my hon. Friend said in the House yesterday, that if the Comptroller and Auditor General or any House authority wishes to investigate this matter or the other matter that the hon. Gentleman raised, on the normal basis he and the Department of Industry would fully co-operate. I am happy to reiterate that statement to the hon. Gentleman. Of course, I cannot speak directly for my colleagues in the Scottish Office or the Treasury, but I have no reason to believe that they would not co-operate in the normal way.

Question put and agreed to.

Adjourned accordingly at nineteen minutes past Twelve o' clock.