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Job Losses (Aerospace Industry)

Volume 229: debated on Tuesday 27 July 1993

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10.59 am

I draw the attention of Ministers to the front page of the Evening Leader of Friday 16 July, which says in large letters that the proposed axe for job losses at British Aerospace, Broughton was promulgated to the dismay of many of my constituents. I am pleased to see the Minister for Industry in his place. North-east Wales is a respected aerospace sub-region. There is Trefn Engineering in Llay, Cynamid in Wrexham, RD Precision in Deeside and the British Aerospace works in Broughton.

At Broughton, there are two companies—Airbus, which makes the wings of the airbus airliner family, and Corporate Jet, which makes the twin-engine executive jet that is capable of flying across the Atlantic. Last month, 269 Corporate Jet workers lost their jobs. Last week, 250 Aerospace workers learned of their redundancies. After those redundancies, the work force will be down to fewer than 2,500. It has been estimated that 1,250 jobs have been lost from Airbus and Corporate Jet in some 13 months.

Recently, our work force exceeded 4,000. I can remember when the apprenticeship school was large, and acclaimed as the best in northern Britain. Today, it barely exists. The redundancies that I am pinpointing relate not only to north-east Wales but to the north-west of England —to the great city of Chester, the large county of Cheshire, the Wirral and, indeed, Merseyside. There is a widespread work force. They are one of Britain's greatest reservoirs of skills.

The factory where the redundancies have been announced is arguably the finest in the civil field in western Europe. It is equal to anything on the west coast of the United States or in the territory of the former Soviet Union. Boeing is running scared of Airbus and is deeply concerned about how it will cope with the challenge. When I talk about Airbus, I am talking about skills, training, achievement and success. The Broughton work force are the best in their field, and I am proud of them.

I have seen the Broughton works grow. I have been able to journey to Toulouse and Hamburg to see the final assembly of the airbus product. It is heartening when we see this great project under way in Europe—it makes me more proud of my constituents. They are loyal to British Aerospace and they give of their best whenever they work on the production line.

I ask Her Majesty's Government whether they can assist British Aerospace in any way. Can they give British Aerospace short-term cash aid to hold back the redundancies? The work force have asked me to put that question to the Minister today. Can the Government persuade British Airways to buy the airbus? The work force believe that that would be a major boost. If we could persuade British Airways to fly the flag, it would help the employment scene greatly. What intervention will the Minister make to save the workers who are doomed to redundancy?

The work force are a small army of the finest plane makers imaginable. I want the Minister to agree that they deserve his help. Such a work force should not be put on the scrap heap. My constituents are paying dearly for the crass errors of judgment made by management at the highest level in the company. The previous board went into the property market and bought a motor car factory.

Within days, the floor fell out of property and a deep recession saw car sales plummet. There were golden handshakes for departing board members, but redundancy notices were printed for my plane maker constituents. It seems that the new board is impelled to sell off parts of its empire—plane making to the United States and Taiwan. In British Aerospace, there seems to be a pressing need to get cash to balance the books to keep the shareholders happy.

Today, I raise my voice for my constituents on the production line and in the offices at Broughton. In all fairness, I must record my thanks to Mr. Sean Dyke, who heads the airbus operation at Broughton. He allows me access to his work force and takes me on conducted tours of the plant. I am grateful to him and to his management team.

Redundancy for each of those 250 workers means worry for a whole household. It means that there is a shortfall on the mortgage. There is a problem in paying the hire purchase on the car. The family may not be able to buy new school uniforms. That is a definition of financial crisis in any household. The holiday will probably be cancelled, and tension and worry will permeate the whole household. There is great anxiety even for those who are not made redundant.

Many of my constituents in Delyn work at the British Aerospace plant in my hon. Friend's constituency. The concerns that he has expressed are shared by me and many of my constituents, because we have seen the great sadness that job losses bring about. We know about the lost opportunities, especially on the apprenticeship scheme. I fully support my hon. Friend in this debate. I hope that the Minister can give some positive help to assist this magnificent industry.

I am grateful to my hon. Friend for his loyal support. I look forward to working with him on behalf of the large work force at British Aerospace in Broughton.

I was about to ask the Minister whether there was a long-term future for the plant at Broughton. I believe that there is a future for it—indeed, there must be. That question is being asked by the work force as a consequence of the announced redundancies. Assurances from the Minister on this matter would be welcomed.

The work force are asking whether the work that is done at Broughton is likely to be sent somewhere else in the short or long term. It is natural to ask such questions at a time when redundancies have been announced. I have been told to ask the Minister whether Deutsche Airbus is seeking to take over work on the airbus wings. If British Aerospace continues to invest in research and technology acquisition, that cannot happen. Will the Government assist Britsh Aerospace in the vital field of research? Will they assist the company more generously in its aim of investment? That is the key question. It is a strategic question which relates not only to manufacturing and its future in Britain, but to the future of a great company, the largest employer in Britain.

I place emphasis on my question to the Minister: must there be 250 redundancies at the airbus factory? Will there be genuine negotiations about the redundancies? Mr. Mike Nesbitt, the works convenor, is now prepared to discuss anything bar compulsory redundancies—if necessary, he proposes short-time working. He and his senior stewards, who have been constantly meeting to try to resolve the crisis, have even considered proposing lay-offs, which shows how serious they view their position.

I believe that Mr. Nesbitt and the stewards are reasonable and honourable men and women. All they want is to keep a winning team together until times are better. I am proud to say that the team has delivered time and again. When challenged by the company, by events or by competition they have increased their productivity. They have enhanced, developed and invested in their personal skills in response to Government policies.

Mr. John Beard is a senior trade unionist in north-east Wales, a magistrate and full-time official for the transport workers' union. He has reminded me that the work force is by no means full of luddites. He says, and I agree, that the leadership of the work force belongs to the 20th century. However, in its hour of need, after many great successes, after becoming famous worldwide and providing a magnificent product with which it is taking Boeing to the cleaners, it has asked for Government help. I am also asking on behalf of the company, as I believe that it deserves Government help because it makes a world-beating product. The work force deserve work, not dole. I want them to be helped, not abandoned, and, on their behalf, I am asking the Minister for that help.

I said earlier that, British Aerospace Corporate Jet division was also on the site. It produces an executive jet which is a brilliant machine. Today, the United States Government buy and use the machine, and have adopted it for military use. The machine is twin-engined and is capable of crossing the Atlantic. It ferries the rich and famous throughout the world. It even carried the Minister and me to Hatfield recently, when the Minister took the trouble to visit the factory. He was well received and made a good impression. He showed that he was fully briefed, and was welcomed by the management team with open arms.

The machine also carries Defence Ministers to Northern Ireland and western Germany. The machine even flies the Prime Minister, and I know that he has only praise for the pilot and crew. He does not use the inappropriate epithets which it is said he has used about Cabinet Ministers. I shall not go into that issue now—suffice it to say that the Prime Minister uses the magnificent machine, which is a gem of an aircraft. On test flights, displayed in its green factory livery, it screams over the local chimney pots, including my own. I want the machine to continue to be made—long may the green jets scream over Hawarden, Deeside and the mountains of north Wales.

Hundreds of my constituents make the aircraft, but 269 of those makers of the corporate jets lost their jobs last month. I know those people—some of them are known to me personally and some of them are my neighbours. I am sorry that some of them have had to put "for sale" notices outside their superb houses—a personal tragedy for them and a tragedy for the community which I represent.

Mr. Roger Smith, who leads the Corporate Jet work force at Broughton, has told me of the anxiety which affected morale after the loss of those 269 jobs. Morale has fallen among the airbus workers and the Corporate Jet workers, and I understand why. Mr. Smith is a highly skilled man, as are his peers. However, it appears that the British Aerospace Corporate Jet division is to be sold to Raytheon, the United States conglomerate, and Mr. Smith and I need answers from the Minister. I beg the Minister to give me those answers. If he cannot do so in this debate, I am sure that, as a conscientious, senior and considerate Minister, he will reply to my questions by letter when it is convenient for his Department to do so.

Whenever I receive correspondence from the right hon. Gentleman, it contains caring and detailed answers, which show that he and his official staff lean over backwards to assist me in informing my constituents who work at British Aerospace. I am grateful for that, and I hope that the tenor of my remarks shows that I wish to work with the Minister for the benefit of my constituents. I need answers, and I look to the Minister to help me—as well as Mr. Smith and Mr. McGlade—to help those who work on the shopfloor of the Corporate Jet division to serve their fellow workers.

I appreciate the way in which the Minister works in his Department, and I also thank the managing director of the Corporate Jet division, who, like Mr. Dyke, allows me access to the production lines and tries at all times to inform his employees in an exemplary way. However, we have not yet received the answers to serious questions. My complaints are not directed at management of airbus or the Corporate Jet division.

The individual destinies of my constituents are decided not at plant level, but at national board level, European level and Cabinet level, and at international conferences such as that of the G7 at Tokyo, which was attended by the Prime Minister and other Ministers. The destinies of my constituents among the plane-making work force are also being decided at Capitol hill, in Washington in the United States. They are decided at the oval office in Pennsylvania avenue. Those are some of the reasons why my constituents are worried.

The Daily Post, the regional newspaper in the north-west, north Wales and Liverpool, on Friday 23 July carried an article in its business section written by the business editor, Ian Herbert. The article refers to Mr. Richard Hook, a former British Aerospace executive who is keeping alive a British bid for the company. The former executive says that the agreement reached for the Corporate Jet division in the United Kingdom is an asset deal by Raytheon.

The report says that it will involve the transfer of existing craft, craft design and copyright and commitment to customers, but not liabilities, including the employment contracts of the work force at Broughton at Chester. The report goes on to say that industry analysts agree that the terms of the contract are ambiguous and may preclude the work force. It says that the contract may include just the craft and copyright—it is unclear, says a spokesman at Flight International magazine.

The short-term future of the Corporate Jet staff appears to have been secured by Raytheon's agreement to take craft from Broughton for another three years. But within the terms of the contract, that may mean that only modules are maufactured at the plant before transportation to the United States for assembly. Alternatively, Raytheon may feel that it would make more sense to construct the craft on the site where the parts are manufactured.

Mr. Hook, the former executive, said that the deal was complicated by the fact that the Corporate Jet operation was spread over three companies. Corporate Jets (UK) was set up by British Aerospace in May 1992 to control the production lines of the 125 jet. Some of its assets and management were transferred to the United States by British Aerospace last November, when a new company, Corporate Jets, was formed. A third company, Arkansas Aerospace, purchased by British Aerospace in 1987, is now responsible for completion work on the craft. There is a quotation in the report from Mr. Hook, who said that he believed that Corporate Jets (UK) had not been purchased, only the drawings, craft and commitment to customers. He said that it was an asset deal.

On behalf of my constituents—the superb production staff at Corporate Jets—I must ask for answers to my questions. Is there a long-term future for the employees of Corporate Jets at Broughton? I want to be told that there is a future beyond three years, into the foreseeable future to the end of the century.

Have we seen the end of redundancies at Corporate Jets? When will the work force and my community be told that Corporate Jets has been formally and legally sold to Raytheon? On the selling day—indeed, before the transfer of ownership is finalised—I want a statement from the company and the Minister that the remaining work force is safe, that green jets will continue to roar from the runway at Broughton and that they will be made and tested in my constituency for the foreseeable future.

Given the magnificent record of my constituents, it would be remiss of me not to pose the questions now being asked by the work force, the whole community, Alyn and Deeside district council—which has taken a close interest in the matter—Broughton community council, Hawarden town council and all the other local councils, including Clwyd county council. They want those questions answered, and I pose them in good faith.

I want to guarantee that, under Raytheon, for the foreseeable future my constituents will continue to produce the 125 executive jet at Broughton. Simply to say that the status quo will continue at Broughton for three years will not be good enough. As it is, almost 100 jobs have already been exported from the site in my constituency to Little Rock in Arkansas. Incidentally, that is where the President of the United States of America and his wife are resident. There are some rumours, but I will not go into them now. Will the Minister answer the questions that are vital to the plane makers at Corporate Jets?

A constituent of mine, John Vaughan of Shotton, has written to me on the matter. He says that he wants me to be aware that British Aerospace is intending to out-source information technology lock, stock and barrel to outside companies, who will have complete control of British Aerospace's database, including design and business management. As the firms most likely to win the contract are American, this will not only mean more lost jobs in British Aerospace but compromise the security of important data and hamstring the development within British Aerospace of tailor-made systems and applications for future needs, which could have disastrous results on their future competitiveness. It could also be another loss of British expertise.

Mr. Vaughan is the network engineer at British Aerospace, Broughton. He says that this is another example of short-term monetary gain outweighing the future security of the British aerospace industry. Should that be the case, it is an important matter, and I ask for a response from the Minister.

Soon, there are to be 250 redundancies. I protest at the decision to denude some of my constituency of assisted area status. I make the strongest protest to the Minister for Industry, who stood at the Dispatch Box yesterday and announced that decision. I sought to catch Mr. Deputy Speaker's eye, but failed, so I say now to the right hon. Gentleman that he has done wrong by my constituency.

With 3,200 people out of work in Llay, Buckley and Deeside, and with 800 long-term unemployed, we should not lose that status. There is much to be done. Why should Deeside lose and the south-east coast gain? Wales appears to have had a very raw deal. It has lost and the the south coast has gained at its expense. Extra resources should have been pumped in so that other areas in Britain could have enjoyed an advantage.

Across the River Dee, opposite Deeside and a mile or so away, the Wirral area is to retain assisted area status. It just so happens that that is the constituency of the Secretary of State for Employment. What a surprise; what a coincidence that such a prized status survives in the Wirral, but not in those parts of my constituency that previously enjoyed it. That was a point made about other areas in Britain when the statement was so courteously made by the Minister yesterday.

I want to put on record the deep disappointment of the Redrow group. The Minister will be aware that St. David's park is unique in north-east Wales. The company that built that impressive park says that exclusion from assisted area status, without even the granting of intermediate area status, will be a serious blow to the park's attractiveness to inward investment. It says that this is particularly relevant while Chester business park retains intermediate grant status, this latter development sharing the same employment catchment region.

I draw to the Minister's attention the report on the British aerospace industry published last week by the Trade and Industry Committee. I back it totally, and I urge the right hon. Gentleman to study it and to say loudly that he backs the Committee's recommendations. I emphasise that the Committee says that he should commission a regular survey of the level of United Kingdom Government support for the aerospace industry compared with the support given overseas, and that as much as possible of the survey should be reported to Parliament and published.

It also says that applications for launch aid for smaller aircraft should be considered on their merits rather than imposing an arbitrary restriction of one third of total costs. I support the proposals, and I believe that they would help my factory and the industry.

My constituents are at the eye of the aerospace storm. Aerospace is our greatest exporter, our greatest employer and the national military defender—but for how long? Do the Government intend to keep British Aerospace at the top of the league, or will it, by neglect, be allowed to slide down to the second division?

We need a strategy from the Cabinet; we need money for research—perhaps another £80 million a year. We need Government leadership for the jewel in the crown of our manufacturing industry.

I want Britain to be a great nation again—a proud manufacturing nation. I want us to halt the erosion of our manufacturing base. I want us to be a nation capable of manufacturing the goods that we need rather than importing them. Above all, I make a plea for my constituents, the great plane makers of the airbus division and Corporate Jets division. They are the best men and women, and have proved to the Minister that they can deliver. I seek from the right hon. Gentleman, indeed I beg him for, assurances that they will not lose their jobs. I know that he admires them, and I ask him to help them urgently.

11.31 pm

I fully understand the concern of the hon. Member for Alyn and Deeside (Mr. Jones) for his constituents at Broughton. I am grateful for the way in which he has presented his concern to the House and for his remarks about my interest in the industry. It is an interest that we share.

As the hon. Gentleman knows, I visited the site last year for the roll-out of the 1,000th airbus wing, and I recall the obvious commitment of the work force in the airbus and Corporate Jet companies. I shall return to some of the particular points he made, but he has raised wider questions which need to be answered over the prospects of the aerospace industry in the United Kingdom.

I am the first to recognise the central importance of our aerospace industry. It is a key contributer to our economy and a major provider of employment, but I hope that we all recognise the difficulties that the industry is facing, not just in Britain but elsewhere.

Aerospace is an international industry—perhaps the most international of industries. It is inevitably sensitive to world events and changes. It is characterised by a large number of projects involving companies from more than one country, and has always been subject to cyclical change in demand.

The aerospace sector worldwide is now having to adjust to the worst downturn in its post-war history. The industry has been hit by the double whammy of recession in the civil airline industry and a global reduction in defence spending. All the world's major aerospace producers, not just Britain's, are having to adapt to those changes. They are all having to cut production, cut staff, which is regrettable, and restructure.

Boeing, the world's biggest manufacturer of commercial aircraft, announced that it would cut more than 28,000 jobs over the next 18 months. McDonnell-Douglas is cutting its work force by 10 per cent. this year, after a 20 per cent. reduction last year. The two main competitors of Rolls-Royce in the United States, Pratt and Whitney and General Electric, have announced cuts of up to 14,000 jobs.

All the major European producers have been affected. Deutsche Aerospace has announced 7,500 job losses this year, representing a 11 per cent. reduction in its overall work force. Aerospatiale of France is to lay off more than 2,000 workers next year in the cuts triggered by the world recession, in addition to 1,000 redundancies this year. The French aerospace trade association GIFAS has predicted that at least 32,000 jobs will disappear from its member companies by the end of 1994.

I know that this litany of job losses overseas is of little comfort to those in Broughton or elsewhere in the United Kingdom who have been affected by the personal tragedy of redundancy. I assure the hon. Gentleman that we understand only too well what that means. I appreciate also that it is little reassurance to those now facing an uncertain future in the industry on whose behalf he was speaking.

It is common ground that forecasts show that air traffic is set to double by the end of the century. Against the background of the immediate problems that the sector is facing, it is encouraging to find that many of the major civil programmes involving British manufacturers have fared rather better than those of some of their overseas competitors. Both Airbus and Rolls-Royce are increasing their share of world markets. The hon. Gentleman referred to Boeing being in fear of Airbus. That is not quite the way I would put it, but Boeing recognises that Airbus is an important and efficient competitor.

Today we heard the good news that the Taiwanese Government have endorsed a joint venture between BAe and the Taiwan Aerospace Corporation to produce regional jets. That will be welcomed by the 4,000 BAe employees at Woodford, as well as the many subcontractors involved in that work. The joint venture should ensure continued production, open up a wider market for the aircraft in the Asia-Pacific region and provide for the development of a successor aircraft.

Despite the difficult world market conditions, British companies are continuing to win major orders. Last year, the United Kingdom industry had a turnover of more than £10 billion of which it exported more than 70 per cent., or nearly £8 billion. For every year over the past decade, it has made a contribution to the United Kingdom balance of payments. The whole House will applaud those remarkable achievements.

The recently published report of the Trade and Industry Select Committee, to which the hon. Gentleman referred, said:
"The United Kingdom industry is far from being a lame duck industry, seeking rescue from its own failure or protection from more efficient competitors. It is an area of United Kingdom technological strength".
I fully endorse that view, which is very different from the picture of an industry in crisis that others would have us believe.

In replying to the Select Committee report, the industry's major trade association, the Society for British Aerospace Companies, said:
"The aerospace industry is not a lame duck in crisis looking to the Government for rescue packages. Rather it is a high technology jewel in Britain's industrial crown".
Of course the industry is not without its challenges, and I have already referred to its current difficulties. Every industry has to have regard to the market. I know that the hon. Gentleman has worked long and hard for the interests of his constituents at the Broughton site. I well understand his and their concern over the future of executive jet production at the site following the announcement of the proposed sale of Corporate Jets to Raytheon.

The proposal is currently being considered by the Director General of Fair Trading. I hope that, in those circumstances, the hon. Gentleman will appreciate that it would not be appropriate for me to comment before the director general's advice is received, but I can assure him now that my Department has discussed the future of Corporate Jets at Broughton with BAe, and we are continuing to keep in close touch.

I recall many flights in the aircraft to which the hon. Gentleman referred, including the one where we travelled together. I first started travelling in those aircraft when I was a Minister at the MOD.

Of course it was without a parachute; if I had had one, I am not sure it would have been much use.

The hon. Gentleman's praise of the aircraft makes me think that perhaps he has missed a career as a salesman. Perhaps BAe would recruit him in that task even now. However, the sale is a commercial decision by BAe. It is not the result of Government policy and Government support was not a factor in the decision to make the sale. As part of the sale agreement, BAe will secure from Raytheon a contract for the continued supply of wings and fusilages for three years. It is not for the Government to second-guess the commercial judgment of BAe or Raytheon.

I recognise the desire to ensure that, if the sale goes through, Raytheon makes a longer-term commitment to remain in the United Kingdom. If the sale goes ahead, we shall want to discuss with Raytheon and the Welsh Office whether there is any way that we can help bring that about. I am sure that Raytheon will also want to have early discussions with the work force about the future of the plant.

What are the longer-term prospects for the industry? The Select Committee's report states:
"There is no likelihood of a sudden decline in the short or medium terms."
The aerospace industry has out-performed the rest of United Kingdom industry in productivity gains—the hon. Gentleman referred to what has been achieved at Broughton. We are at last beginning to see the signs of recovery in the civil airline market. In the longer term, we expect to see air traffic doubling in 15 years, and doubling again in the 25 years thereafter. There will be good, long-term demand, both for new aircraft, to satisfy traffic growth, and to replace old aircraft.

The hon. Gentleman and the hon. Member for Delyn (Mr. Hanson) asked about Government support. We hope and expect that the industry will be in a strong position to benefit from the recovery in demand when it comes. The Government already provide substantial support for the industry. Since 1979, more than £1·2 billion has been paid in launch aid to support major programmes such as BAe's participation in airbus, which is particularly important to the hon. Gentleman's constituents, and the Rolls-Royce RB211 engine. The industry clearly believes that launch aid has been instrumental in keeping the United Kingdom aerospace sector globally competitive. No other United Kingdom industry enjoys that level of Government investment.

Also uniquely for a manufacturing industry, aerospace has a dedicated DTI-funded research budget—CARAD —currently running at more than £20 million a year. That adds to the already high investment that aerospace companies make in research and development, and is aimed at protecting the future competitiveness of our industry. The Broughton site has been a major beneficiary of Government investment and support: launch aid of nearly £250 million for the airbus A320, and more than £440 million for the airbus A330 and A340—all supporting the airbus division at Broughton, where all the wings for those aircraft are made. The site has also received more than £10 million in regional development grants and regional selective assistance.

We also, of course, play our part in less visible ways —for example, by supporting aerospace exports, and in providing more than £735 million in export credit guarantees over the past three years. We shall continue to discuss with the industry ways in which it is appropriate for the Government to help. We already have a close dialogue. That is not just my view, but the view of industry. Mr. Dick Evans, chief executive of BAe, who is well known to the hon. Gentleman, said:
"I think the dialogue between industry and individual companies and Government today is certainly better, in fact as good as anything I can recall in my own period of time in this sort of business."
I can tell the hon. Gentleman that I am committed to improving that dialogue still further.

An example of my Department's dialogue with the industry is our aviation committee, which is comprised of senior executives from the industry and representatives from the financial and academic institutions. It advises us on the needs of the United Kingdom aerospace industry so that they can be taken into account when developing and implementing policies that affect the industry. It recently set out, in what it called the national strategic technology acquisition plan—NSTAP—its assessment of what needs to be done to maintain the industry's technological competitiveness.

The Select Committee welcomed my decision to adopt the technological priorities identified by the industry in NSTAP. Those priorities will inform my Department's work in the design of its aerospace policies and its liaison with other public sector funders of research. That is the essence of the NSTAP recommendations. The NSTAP process will now continue so that, as industry's needs change and develop, the Government can take them into account.

All job losses, and certainly aerospace job losses, are to be deeply regretted, but, by taking the hard decisions on rationalisation—decisions that, as I have said, our overseas competitors cannot avoid and clearly are not avoiding—United Kingdom companies are acting to protect the longer-term interests of the industry. As I have emphasised, the longer-term prospects are extremely good for Broughton and other aerospace centres. They are protecting the longer-term interests of the country and importantly those employed in it.

Britain's aerospace industry is among the largest and most capable in Europe. Our companies are world class and world beaters. Most of the airliners bought throughout the world will have at least some United Kingdom equipment and systems on them. British companies have won contracts on the new Boeing 777 worth more than $1 billion. Our industry exports more than 70 per cent. of its turnover. By comparison, the United States aerospace industry exports less than a quarter of its turnover. Unemployment in the United Kingdom has fallen for the past five months. We have seen the first real but small increase in air traffic since 1990, but the problems facing the industry remain. However, I hope—