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Coty Manufacturing Plant (Seaton Delaval)

Volume 624: debated on Thursday 20 April 2017

Motion made, and Question proposed, That this House do now adjourn.—(Graham Stuart.)

I should have had this debate on the day of the terrorist attack, but unfortunately it was cancelled and I have had to wait three or four weeks for this replacement debate. That is a long time and things have developed in the factory since then.

It is always sad when a Member comes to Parliament to say that a lot of jobs have been lost in their constituency—in this case at least 450 and a lot of part-time jobs. The factory was built in 1962 by Shulton, which made beauty products and whose famous line at the time was Old Spice, which anyone who is as old as me will remember. To this day, it still does a line now and again, so it is still going. The factory’s big product is Hugo Boss. I am told by some of the workers that they make it for 36p and sell it for about 40 quid, so there is a big profit to be made in this game.

But that was then. The factory has been a good employer. It was taken over in 1990 by Procter & Gamble, which made another success of it, and then came the merger—it is not a takeover—with Coty, an American company that does the same thing. It makes hair things for women and that sort of thing. I don’t know everything it does, but it’s all beauty stuff anyway. I think some of us need a bit of that as well.

I wonder why the merger was not a takeover, because as MPs we see takeovers all the time. With every takeover—no matter where the company is from, but especially if it is American—something happens to our companies. In the case of this merger, we have lost a factory. Then I was given a hint about reverse Morris trusts; I had never heard of them, but they are an American thing that can be used when an American company takes over a British one. In this case, we are talking about a merger, not a takeover. I have got the figures here, which show that the existing Coty shareholders own 48% of the combined company, while the Procter & Gamble shareholders own 52%. I gather from that information that Procter & Gamble is still the bigger shareholder. So this is a merger. I understand that the reverse Morris trust is a tax fiddle in America—not here, although we have got them—and it has something to do with a tax rebate on a factory that is going to shut. Of course, the factory that I am talking about is going to shut, so the company will get a tax rebate. I am a bit out of my depth, really, but there is information about it on Wikipedia, and some people might want to study it.

I am talking about a takeover—in my book—in the north-east of England, where unemployment is highest. The company has factories in Germany, France and Spain, and one in Ashford in Kent, but it has decided to shut the one in the north-east, in Seaton Delaval. That used to be a little village, but it has grown, and like the north-east it has a high unemployment rate. The workforce have argued that that decision has been made because it is cheaper to sack British workers than it is to sack German, French or Spanish ones, and the figures show that that is true. It is 20% more expensive to close a factory in Germany and 7% more expensive to close one in France. I know that the factory in Ireland—it was in Tipperary, I believe—has been closed, but I do not know the figures for that. That is gone, and the factory in Seaton Delaval will go next year.

As far as I am concerned, this all boils down to the capitalist system and globalisation. Globalisation works for “them”; it does not work for the people. Globalisation has never worked for the people. The people are secondary, especially in a place such as Seaton Delaval, which has high unemployment. It is a question of balancing the books, I suppose. Coty is saying that now that it has merged with Procter & Gamble, it does not need the factory any more. So Coty has shut the factory, and 450 people are on the dole or looking for other work, just like that—with just a snap of the fingers. Fair enough, it will take a year to shut the factory, so people have a year to look for other work, but they have to wait to get their redundancy. They will be entitled to that, I suppose.

That brings me to the redundancy. There is a bit of con going on with the redundancy, and I wonder whether it is another way of making it cheaper to close the factory. When the factory in Ireland closed, the top earners—the ones who had been there the longest—were getting about £12,000, and they got a bonus of £5,000. That brought the average amount received by everybody in the factory to £9,500. I understand from the information from the Seaton Delaval factory that those who are made redundant might not get anywhere near that amount. Someone from the Coty factory in Seaton Delaval came to my surgery and said that he was quite satisfied with his redundancy—he had been there 18 years—but quite a few others have contacted me to say that they are not.

I wonder whether that is another chink in the armour that allows a company to close a British factory because it is cheap to do so, while they would not be able to do that in Germany or France. It is not a question of the European Union, although I did ask whether that had anything to do with it. The company said, “We export worldwide, so it is not a question of that,” and I am pleased about that.

The factory is run on a lot of workers on temporary and zero-hour contracts. We have to look at that as well. Factories in this country can be closed because they have temporary workers and workers on zero-hour contracts who are cheaper to get rid of. They are not employed by the factory but through agencies that will not give them any redundancy pay whatsoever. I believe that two agencies have been bringing people in. Anyone who has been working for them will receive nothing at all. It is all a bit of a mess as far as that is concerned.

It is always sad when these things are announced. It is always terrible when people lose their jobs. I went through it myself: I was at the coalmine before it shut in 1986. I got lucky a year later and got a better job—the one I am in now. I suppose I was one of the lucky ones.

I think it is a fait accompli that the plant will close. Coty has made up its mind to get rid of the factory in the north-east, an area with the highest levels of unemployment. It is not worried about the workers; it is just worried about balancing its books and making a profit. I hope the Minister can take a look at the factory. It is a big factory—it is not small—and it is going to be empty. The Germans do this better than us. When a factory is closed, they invest in it again. The first thing they do is invest in the factory and reopen it. They provide incentives.

I do not know what incentives the Government have to give when the factory eventually becomes empty—I cannot imagine it will be making Old Spice again—but it could be used and it could employ people. If the Government gave someone a big incentive, and I would like to hear what the Minister has to say on what incentives are available, if any, the factory could be started up again and reopened, giving back to the people working in Seaton Delaval their employment rights.

I congratulate the hon. Member for Blyth Valley (Mr Campbell) on securing a debate on this important issue. I recognise the importance of the Coty manufacturing plant to his constituency and to the region as a whole. It has been part of the industrial fabric of the north-east, and the culture of this country, since the factory was opened by Shulton some 55 years ago. The announcement on 15 March that the company proposed to close the plant before the end of 2018 has clearly come as a bitter blow to the employees concerned, their families and the communities in which they live. I fully appreciate the uncertainty this will cause and its potential implications for the region.

The proposed closure is a commercial matter for Coty, but if the decision is confirmed at the end of the statutory consultation period the Government will ensure that those employees affected receive all available government assistance to help them get back into work as soon as possible. We will encourage the company to contact Jobcentre Plus as soon as possible to discuss appropriate support that can be delivered locally. The Jobcentre Plus rapid response service is delivered in partnership with a range of national and local partners. Where no partner support is available, there is dedicated funding that may be used to fill gaps in provision.

Decisions about appropriate support are made locally. This is because a decision that is based on the specific redundancy situation, an individual’s own transferable skills and experience and the availability of jobs in the local area is far more likely to be the right decision. Typical support for an individual might include matching to local known job vacancies, or helping to construct or improve CVs. Where there is scope to do so, support might be delivered on a group basis, for example by bringing redundant workers and employers together at a jobs fair.

My officials are part of a locally arranged and organised taskforce to ensure that the potential for continuing manufacturing on this site is maintained. The taskforce will be led by Northumberland’s economic development company, Arch. We will work with it to explore opportunities for retaining manufacturing at this site. We will highlight the economic strengths and opportunities of the site and the workforce, as well as how to support economic growth opportunities. If closure is confirmed, I would expect the taskforce, working with the Department for Work and Pensions, Northumberland County Council and the North East local enterprise partnership, to support any affected workers to enable them to transfer as smoothly as possible into local growth sectors.

The Government are supporting the economy of the north-east by providing £380 million of local growth funding and improving infrastructure, skills, innovation and transport. That funding will lever in £300 million of public and private investment, and will create about 8,000 jobs. It forms a critical part of the newly refreshed strategic economic plan for the north-east, published by the local enterprise partnership last month.

We are also providing funding for the growth hub in the north-east in order to identify, target and support scale-up businesses more effectively. That will include the creation of a scale-up development model and the introduction of new systems to ensure robust measurement of impact on economic growth and productivity. It will have a significant impact in enabling companies that are ready to grow to expand quickly, and will ensure that there are more opportunities for those affected by Coty’s decision.

Question put and agreed to.

House adjourned.