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Manufacturing (West Midlands)

Volume 447: debated on Tuesday 13 June 2006

This is only a half-hour Adjournment debate, so speeches will be permitted only with the agreement of the sponsoring Member and the Minister, although interventions are perfectly in order.

First, I thank the Speaker for granting us this debate at short notice. I think that he understands the seriousness of the manufacturing situation in the west midlands. Most people will know that the west midlands—be it Coventry, Birmingham or elsewhere—was famous for the motor car in years gone by. I want to concentrate on the situation with Peugeot in Coventry and particularly on how the company has handled the closures.

Over the past 20 years, the west midlands, and particularly Coventry, have experienced a number of job losses and closures. Only last year, there was the collapse of Rover, with the loss of about 6,000 jobs. About seven or eight years ago, Rolls-Royce in Coventry shed probably well over 1,000 jobs. Three or four years ago, Massey Ferguson closed in Coventry. Many years before that, as people will remember, there was the famous Standard Motor Company, which was also associated with Coventry.

That is to mention only a few of the closures and job losses, which also have a knock-on effect, and most experts suggest that for every direct employee in a motor car company who loses their job, two or three indirect employees are probably affected. We are talking about many thousands of job losses, not just a couple of thousand.

I am sure that my colleagues from the west midlands, in particular, will agree, therefore, that it is about time that the Government had a good look at their industrial strategy. Indeed, some weeks ago, we from the west midlands raised the issue of manufacturing with the Prime Minister. He suggested that he would be having a discussion with the Trade and Industry Secretary to look at the Government’s industrial strategy, particularly in relation to the west midlands, and at what has been happening in the region. Although lots of people tend to forget this, the west midlands is this country’s economic engine. West midlands MPs will therefore agree with me that we cannot just sit back and watch these jobs haemorrhaging without trying to bring the job losses to an end.

As regards Peugeot, this is one of the few occasions that I know of when a company has pulled out when it was profitable. Labour costs in this country are on a par with anything in Europe and the United States, so all the misnomers and red herrings that get drawn into this issue do not really stand up. The situation can be put quite simply: the company is going to the former Czechoslovakia, where wages are a lot lower than in this country.

We must also remember that the work force have done everything that they were asked to do, as the work force at Jaguar did: they were asked to improve quality, and they did; they were asked to run four shifts, and they did; they were asked to take on temporary labour, and they did.

In general terms, the trade unions have a proposal. Again, we must draw attention to how the company has performed, because it has not seriously sat down and looked at alternatives. The trade unions have been quite reasonable and have looked at the possibility of running one shift for the next two or three years to buy time and get a new model into the Coventry plant. Again, however, the company has refused to discuss the alternatives. Instead, it has been through the motions, as we have seen time and time again with employers.

It is not that many weeks since the company pulled out and made its announcement; indeed, it was the week when I introduced a ten-minute Bill on labour rights. I introduced it because we cannot go along with companies arbitrarily deciding that they are going to have a closure, giving people 90 days’ notice and saying that that is it. For some companies in this country, consultation seems to mean, “We’re going to tell you what to do, and that’s that.” Some people think that when a company says that it is going to have a consultation it is all about negotiation, but it is not. The company is just going to tell people what it is going to do, and although they can make representations, the decision has actually been taken.

About two years ago, Peugeot was offered a £14 million grant to modernise the factory in Coventry, but it delayed its decision. Then, just over 12 months ago, we had a debate about Jaguar in the House. I said that it was peculiar that a company that had been trying to get a grant to modernise its factory did not seem to be taking it up. The company gave all sorts of excuses about hold-ups in Europe so on, but the real test was whether it took up the grant. If it did, we knew that it was going to stay in Coventry; if it declined to, we knew that it was not. We then had a statement from one of the executives, who said, “We’ll draw the grant down as we need it,” but that was one of the company’s red herrings, and I remember the articles in the local newspaper.

Now, however, we have had the company’s answer—it never intended to stay in the first place. It has played ducks and drakes with the Department of Trade and Industry. I am sure that the Minister has had discussions with her officials and that they will tell her what I am telling her—that it was always difficult to have any meetings with the company. It is only recently that any dialogue has taken place, and that was about the closures, so we can see the company’s record.

The company still has a presence in Britain, but the point is that it will not be making motor cars here.

I congratulate my hon. Friend on securing the debate. He mentioned the other jobs that Peugeot provides in this country, and many of them are in the franchises in and around my constituency. It beggars belief that there is a campaign suggesting that British workers should completely boycott Peugeot. What is my hon. Friend’s attitude to that?

I am not the trade union or its negotiator, and it is not for me to tell the trade union how to organise itself. It is purely for the trade union to decide what sanctions, if any, it will put on the company. It is not wise for MPs to try to tell the labour force how to react, and nor can we negotiate for them—that is the trade union’s job. What we can do, and what we have been trying to do in parliamentary terms, is raise the issues when we can. Ministers are perfectly well aware of that, and I gave some instances, including our meeting with the Prime Minister and my ten-minute Bill.

We are doing what we can to assist the labour force because the closure will have a devastating effect on the workers and their families. People should bear it in mind that, at the end of the day, it is the families who suffer. When Rolls-Royce collapsed in 1971, people did not know whether they were going to have a job, and the families were worried about paying mortgages. Those are the things that drive the problem home to us.

In about 2001, we had the initial problems with Rover. Anybody who went there, as I did with the Trade and Industry Committee, would have been struck by the emotion and by the fact that whole generations of families worked at the factory. Some people ran small businesses, and we could see, five or six years ago, what the devastation was going to be. Eventually, the taskforce was set up to deal with the situation, and it is a useful instrument, but it cannot be a substitute for jobs. Although it finds people employment, we must remember that some of the jobs that might be available will bring in £2,000 or £3,000 less than the jobs that employees have at Peugeot now. That should be borne in mind when people say that there are alternative jobs.

We should also bear it in mind that the company produces about 280,000 vehicles a year, and it certainly has about a third of the market in Britain. We should not lose track of that. The problem, of course, is that the cars will not be made in Britain any more.

Informed opinion suggests that many years ago the company took over what used to be Chrysler only to get a toehold in the British market. Well, it has its toehold now; essentially, it has said, “We’re going to make these vehicles in Czechoslovakia. We want the right both to come into your country and sell them and to treat your labour force in an abysmal manner.” It is also asking the Government to stand back and accept it all. Ministers should look seriously at the situation in the west midlands. Over the years, a number of manufacturing companies, to say the least, have gone to the wall.

We in Coventry are also interested in another issue, on which the Minister could be very helpful. We had a meeting with the Chancellor about the closure and made some suggestions. For the longer term, there is the site near Walsgrave hospital. We have to look for the potential for new industries, and that site certainly has potential for developing what we would call a medical technological park.

People are familiar with the idea that medical science will create new jobs and technologies. We are seeing vast changes in the health service; I shall not go down that road, but there is that potential for new jobs. I am not an expert, but some who are reckon that 5,000 jobs might be created, and that gives us a clue about where we should be looking to create new jobs. Obviously, we have to diversify, and we should look at that area. We hope that Advantage West Midlands will, to use the proverbial phrase, get its finger out and get something done about that site.

I am most grateful to my hon. Friend, whom I congratulate on securing this important debate. He has spoken about the effects on his city, as other Members who represent Coventry would. However, will he bear it in mind also that in the black country area—certainly in Walsall—we have suffered a great number of redundancies in manufacturing? That has continued. In Willenhall—not the Willenhall in my hon. Friend’s city, but the one in my constituency—the lock industry has been substantially reduced for all kinds of reasons; obviously, losses in the motor industry have had an effect on that industry. I hope that my hon. Friend shares my hope that the Minister will speak about the larger and wider aspect of manufacturing in the west midlands.

I totally agree, and that is why I did not confine the debate to Peugeot. I have referred to the west midlands in general terms and said that we should have an industrial strategy and look towards the creation of new industries.

We have to look from a manufacturing point of view at the whole situation in the west midlands. We also have to look at the alternatives to manufacturing and what the new manufacturing industries are going to be. I have given a clue on that today. We must also consider labour law. For a long time, the trade unions have been agitating about how employees in this country are treated totally differently from those in Europe. Those are some of the issues that the Minister should consider. Like my hon. Friend the Member for Coventry, North-West (Mr. Robinson), who is about to speak, I hope that she can give us encouragement.

I do, Mrs. Anderson; I am grateful to have been called to speak by your good self.

I congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing this debate, as we all do, and thank Mr. Speaker for making it possible. This debate is important, and as my hon. Friend the Member for Walsall, North (Mr. Winnick) made it clear in his intervention, it is about the whole of the west midlands, although my hon. Friend the Member for Coventry, South has talked and I will talk more specifically about the situation in Coventry.

This debate takes place against the background of the Massey Ferguson closure, when all the manufacturing was moved to France. The Jaguar closure followed, although fortunately we retained the bulk of the activity in the west midlands, and we are very pleased as Coventry people to see that it remains with us. Most recent, and still a matter of great current concern, is the Peugeot closure, with the work going to the Czech Republic.

We are realists, of course, and recognise the impact of globalisation, which is felt throughout the country and Europe, but on the whole we feel that we do not always do as well as we could, and that is the concern that impelled my hon. Friend to secure this debate.

I have three specific matters of great concern to Coventry to bring to the Government’s attention; I am sure that the Minister will take them on board and that we shall pursue them subsequently through her. Before I come to them, however, I should mention that we should not feel that all is doom and gloom or that all is lost in manufacturing in the country as a whole.

We accept, of course, that those Jaguar, Massey Ferguson and probably Peugeot jobs—although that issue has not been finally decided—will not come back to Coventry and that we shall have to seek newer and different manufacturing outlets. However, in the nation as a whole, manufacturing is 20 per cent. higher than in 1975, despite the dramatic falls in 1979-81 and 1991 under successive Conservative Governments, when it dropped by 25 per cent. and 8 per cent. respectively.

In the past 10 years, despite the impact and the pressures of globalisation, we have broadly sustained our level of manufacturing output. However, in Coventry we have felt the pinch very badly, and we welcome this debate to make it clear to the Minister how we think the Government could help. We are not looking for subsidies, handouts or anything like that, but for what the Chancellor in person has always committed himself to: competitive new ventures with high added value, through which we can be resistant to the pressures of globalisation.

I should like to bring three specific issues to the Minister’s attention. First, I mention investment in the Browns Lane plant, which happens to be in my constituency and with which we have had long-standing good relations. Mr. Peter de la Marche, an entrepreneur of great vision and energy, has taken over the site with a big investment of £50 million and I am sure that the whole House, as well as those in the Chamber today, wish him well in the bold, exciting venture that he is bringing to Coventry. He has a brilliant new idea for modular building, and his company name is pretty eponymous: Delamar Construction.

I understand that some of that project’s issues are yet to be finalised with the Government; there is an application for support of one sort or another, and it would not be appropriate for me to go into the details of that. However, may I lodge with the Minister and, through her, the Department, a request for an early meeting on the matter? I am sure that my hon. Friend the Member for Coventry, South and my right hon. Friend the Member for Coventry, North-East (Mr. Ainsworth), who I am delighted to see are both present today, wish to join me in that, because we see a huge opportunity for the Government to play a key, unlocking role. Again, I pay tribute to Peter de la Marche himself.

I should also like to raise the issue of the Ansty site, already referred to by my hon. Friend the Member for Coventry, South, which is an extremely important potential development. The hospital trust there has made it clear that it is immensely interested; Yvonne Carter, the dean of Warwick university medical school, and Mr. David Roberts, of the trust, have both made it clear that they see it as something through which we can really play to the inherent strengths of the city.

As far as the trust is concerned, a huge contract is out with General Electric Medical Systems; on the back of that, we hope to build the first investments in the new medical equipment centre that we would like to establish on the Ansty site. I am pleased to say that we have had an initial meeting with Sir William Castell, chairman of the Wellcome Trust. Previously, as I am sure my right hon. Friend the Minister will know, he was chief executive of General Electric Medical Systems and a board member of General Electric. I am pleased to say that he has agreed to visit the hospital and look at the site in August to see what we have in mind and to make key contacts for us with the company.

As my hon. Friend the Member for Coventry, South said, the project clearly will need support from the Government and from Advantage West Midlands. Most encouraging is that when a delegation of us saw the Chancellor and were briefed on the meeting, he said that he would take a personal interest in it. That would be a great help to us in pushing the matter forward.

We have fixed other meetings with GEMS, and I have also arranged a meeting with the Advantage West Midlands managing director. As my hon. Friend said, that organisation will be vital in getting the project off the ground. Again, would my right hon. Friend the Minister ensure that we secure maximum support from the Department?

The third area—again, it happens to be in my constituency but none of us makes any apology for that—is London Taxis International, which makes all the cabs in London. As my right hon. Friend is aware, it also has various matters outstanding with the Government and is looking for support on key areas of innovation and new development. If she would take those three matters on board—perhaps we could set up a meeting with her, with officials or with whoever is most appropriate—my colleagues and I would be most grateful.

I have only nine minutes to talk about an important issue that is of concern to the many Members who are present here. The best I can do is also to offer the courtesy of a meeting as soon as possible to take forward some of the issues that I know are of real concern. I congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing this debate, short as it is. I can probably make only four or five points, and I shall try to make them briefly.

First, the importance of manufacturing to this country is unquestioned. It contributes one sixth of our gross domestic product, one half of our exports and about three quarters of the money that we put into research and development. It is hugely important, particularly for the west midlands, where it is at the heart of the economy. According to figures that I have been given, there are 23,000 manufacturing enterprises in the region. Most of them are small and medium-sized enterprises, but it is still the case that one in five people working in the west midlands works in manufacturing. One of my jobs as the new Minister for Industry and the Regions is to determine what initiatives we can take to strengthen manufacturing at a time when there are losses in manufacturing jobs, although as my hon. Friend the Member for Coventry, North-West (Mr. Robinson) said, there is also an increase in output from those jobs.

I know that my right hon. Friend is short of time, so I shall be brief and simply say that several points raised by hon. Friends have echoed with me because of what happened at Longbridge. While she is setting up meetings to examine things in greater depth, may I ask her also to meet interested colleagues to review progress since the final report of the taskforce? Economic regeneration of the area around the Longbridge site, building human capital in the area, overcoming training barriers and so on require further discussion.

From my time wearing my previous ministerial hat, I know that my hon. Friend played a key role in these matters. I was able to work with him on all aspects of the Longbridge closure, and I know that he has a particular interest in how the site will now be employed. Of course I will be happy to discuss with him and others our plans for the site.

I want to say a little about the car industry, as there is a tendency to get the bad news in the press and to forget the good news. In the early 1970s, the United Kingdom produced some 1.9 million cars. By the early 1980s, that had gone down to 900,000, but the figure for 2005, which is the latest year for which we have statistics, is up again at 1.6 million. We should be proud of that.

Of course, closures are devastating for the individual families involved, the local communities and the work force, but equally, there is a growing number of good stories. I do not have time to go through them now, but one just has to look at Toyota in Burnaston, Nissan in Sunderland, BMW in Oxford and Honda to realise that we are bringing into the UK manufacturing that was done in the past in places such as Japan and Brazil. There are some good news stories as well.

As far as Peugeot is concerned, I understand entirely what my hon. Friend the Member for Coventry, South said about the devastation that losing those 2,300 jobs will create and the impact that it will have on the work force and their families. He drew attention to the fact that the Government did what they could to support production of the new 207 model by allocating £14.4 million, which was never taken up by Peugeot. We are in close contact with the company and will ensure that it meets its legal obligations.

I am sure that my hon. Friend will join me in paying tribute to the chairman of the Coventry, Solihull and Warwickshire Partnership, Brian Woods-Scawen, who brings together all the local stakeholders to ensure that proper support is provided for the workers through the learning and skills council and job centre, for local communities through local authorities and for the suppliers. He works with all the key local partners and has said that he will come to us if he requires more assistance.

My hon. Friend was asked about the boycott, and I would add only one thing to his remarks. We must remember the dealerships, which employ some 5,000 people, and that 73 per cent. of cars produced in the UK are exported. It is a good export industry, and we depend on that world trade.

In the final moments, I shall discuss briefly the Ansty development site, which I know is of great interest to local Members of Parliament. It is a complicated site, and I am told that it must go through complex reclassification and planning consultation, which will take time. According to the time frame that I have been given, it is unlikely that the process will be completed until 2008. Difficult planning and commercial considerations are involved, but I am aware of the interest in that site of my hon. Friends the Members for Coventry, South and for Coventry, North-West and others who are present for this debate, and I would like to have further discussions about it.

I, too, congratulate Delamar Construction on the work that it is doing on the Browns Lane site. It could employ up to 2,000 people, which would be a welcome change. To be honest, I am not totally aware of the funding application, but I will try to take it up and review it. Again, perhaps we could discuss it at our meeting.

On that point and the others, it would be most useful if my right hon. Friend would agree to a meeting where we could table these concerns, get a full background briefing and urge her as to their importance.

Similarly, I shall also take up the situation in respect of London Taxis International.

May I say one further thing on trade union rights, which were raised by my hon. Friend the Member for Coventry, South? My previous role as Minister for Employment and Welfare Reform and my current responsibilities as Minister for Industry and the Regions have led me genuinely to believe that the more liberal labour market environment in which we operate has brought huge benefits and many jobs to the UK. Inward investment is as important in attracting jobs as the fear that people have about whether we have rather looser trade union rights. I would challenge people’s fears about looser rights. I do not believe that that is the case. The work that we did in 2000 on the recognition of trade unions and on collective bargaining and in our 2004 legislation to ensure continuous consultation and information, and the trade union rights that exist around redundancies, are all good. I hope that the unions will use the European works councils, which are a new facility open to multinational companies.

We should never forget the benefit of inward investment. The UK is now considered the best place in Europe for inward investment, and with that comes jobs. According to the latest figures, which are for 2004, we had more than 560 new inward investment plans. That was more than any other European Union country. France, which is topical at present, had fewer than 500 new projects for inward investment.

In the brief time available, I have not done justice to the important issues that were raised in the speeches and through interventions. I would be happy to have a meeting—