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House of Commons

Wednesday 5 February 1997

The House met at half-past Nine o'clock


[Madam Speaker in the Chair]

Ford (Halewood)

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

9.34 am

Mr. Edward O'Hara (Knowsley, South): This debate, which I am grateful to have been granted, is about Government assistance to the Ford plant at Halewood. I welcome the impressive support of colleagues from Merseyside and beyond. I note the presence of my hon. Friends the Members for Liverpool, West Derby (Mr. Wareing), for Ellesmere Port and Neston (Mr. Miller), for Liverpool, Walton (Mr. Kilfoyle), for Swansea, East (Mr. Anderson), for Leigh (Mr. Cunliffe), for Birkenhead (Mr. Field), for Knowsley, North (Mr. Howarth), for West Lancashire (Mr. Pickthall), for Liverpool, Broadgreen (Mrs. Kennedy), for St. Helens, North (Mr. Evans) and for Warrington, North (Mr. Hoyle), and that of the hon. Member for Liverpool, Mossley Hill (Mr. Alton). I understand that others may be coming later to support me. I must also mention my hon. Friend the Member for Wallasey (Ms Eagle), who is here but subjected to enforced silence. Such support is indicative of the severity of the crisis now facing the Ford plant at Halewood.

Everyone knows Ford, but not everyone knows Halewood. Halewood is at the extreme south of Knowsley, abutting Liverpool to the west and Widnes to the east. It is situated conveniently on the motorway network--the M62 goes to east Lancashire and across the Pennines to the east coast ports, the M56 links it to Greater Manchester, Manchester airport and north Wales, and the M6 leads to the far north and the south.

Halewood is home to Ford (UK), which is by far the biggest employer on Merseyside. On Thursday 23 January 1997, Ford made an announcement that cast a shadow over the future of this important factory. I intend to spend a few minutes tracing the history of the factory and describing the detail of the announcement, the background to it and its severe implications for Merseyside and beyond. I shall question Ford's decision, draw some conclusions as to why it should be resisted, and seek Government support to persuade Ford to change its mind.

The plant was founded in 1960. Ford was attracted to the 346-acre site by the excellent communications that I have just described. Between 1960 and 1963, Ford spent £30 million on building what was then the world's biggest car factory under one roof. The official opening was on 8 March 1963. The first car off the

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assembly line was a 997 cc Ford Anglia, which is still in the Liverpool transport museum as part of the industrial heritage of Merseyside.

In 1968, another important event took place--the unveiling of the Escort Mark I, 1.1 litre. Six generations of this car have since been built at Halewood. The plant has also produced the Cortina, the Capri, the Corsair and the Orion, which are variants of the Escort. In 1969, the millionth car came off the production line.

In 1981, the Escort received the European Car of the Year award, and was the world's best-selling car. It retained the latter record in 1982 and 1983. Between 1986 and 1996, the Escort topped United Kingdom car sales for all but three years, and 129,000 Escorts were sold in the UK in 1996. Total world sales since 1968 have been nearly 18 million. Of course, the Escort is now made in Saarlouis in Germany and Valencia in Spain--names that will crop up numerous times in my speech.

Such sales owe much to excellent design and marketing, but they also owe much to the work force. Continuous improvements in productivity have been achieved not only through capital investment by the company, but through changing work practices and successive tranches of job losses at Halewood, from a peak of employing 14,500 people to its present level of 4,500 in the vehicle assembly plant. The company admits that the production costs per unit are better than those of the nearest comparable plant, in Saarlouis. Continuous improvements in quality have led to the award of Ford's Q1 standard in 1995--the cordon bleu in-house quality mark.

In addition to those 4,500 workers in the vehicle assembly plant are the 1,000 in the transmission factory on the same site, which makes transmission units for the Escort, the Fiesta, the Scorpio and the new Ka--those for the Scorpio and the Ka are for export--making Ford Halewood a key component in the industrial infrastructure of Merseyside and the wider region. High-volume family car production makes it by far the largest manufacturing employer in Merseyside, with a footprint of employment covering the whole of the Merseyside area--north, south, east and west--as well as Greater Manchester, Lancashire, Cheshire and north Wales.

In addition to those directly employed by Ford, the number of jobs provided in the supply of goods and services to the factory is unquantifiable but massive. Then there are the jobs provided in the local economy by the spending power of all those employees, from the local shops, large and small, to Halewood Labour club.

Mr. John Evans (St. Helens, North): My hon. Friend touches on the important issue of the wider spread of jobs in Merseyside. Is he aware that much of the glass installed in Escorts is produced at the Triplex factory in St. Helens, which has also struggled over the past few years? The potential loss of that valuable order could have a major impact on the employment prospects at Triplex in St. Helens.

Mr. O'Hara: Indeed. I thank my hon. Friend for that practical example. The effects that he describes could be repeated many times elsewhere.

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On Thursday 23 January 1997, the announcement hit Merseyside like a bomb. In round figures, 1,300 jobs were to go on the Escort production line at Halewood, reducing the work force from 4,500 to 3,200. The new Escort would not be made in Halewood, but would be produced solely at the German and Spanish plants. Production of the old Escort would continue at a scaled-down rate until the end of the century. Thereafter, a new multi-activity vehicle, which I shall refer to as MAV, would be built on the platform of the Escort, supplying the European niche market of people carriers--cars such as the Renault Megane Scenic. At the moment, the MAV is little more than a computer-generated schema.

The announcement had been extensively trailed against the background of declining sales of the Escort in this country and worldwide, and losses suffered by Ford across its European operation. The company announced a loss of $291 million on its European operations in 1996. However, it should be noted that those losses cover the whole European operation, not just production of the Escort, and were certainly not down to Halewood alone. The figures for any losses that may have been incurred at Halewood are not, as far as I am aware, available.

Within a fortnight of announcing 1,300 job losses at Halewood, Ford announced a profit of $39 million for the final quarter of published figures. The company claims that that is reduced to losses of $88 million after a one-off payment is taken into account. I wonder whether that one-off payment is the cost of writing down Halewood.

The declining sales of the Escort must be a factor. Halewood is currently dedicated to Escort production. However, the sales performance of the Escort must be taken in context. First, the United Kingdom sales figure of 129,000 is a serious decline from the 1990 peak, but all car sales declined during the recession. Those 129,000 sales still made the Escort the second best seller in the UK market in 1996.

Secondly, the UK is the Escort's best market. Comparisons with sales in Germany and Spain make interesting reading. United Kingdom sales between 1990 and 1995--remember that our recession was deeper than that in the rest of Europe--went down by 27 per cent. In Germany, sales went down by 37 per cent., and in Spain they went down by 24 per cent. The company's figures for sales in Germany are different, but they fail to make the adjustment for West German sales only in 1990 and sales in the unified Germany thereafter.

Even more interesting comparisons can be made between national production and national sales of the Escort in the three countries. United Kingdom sales are 85 per cent. of domestic production, according to figures that I have been given. That means that we are a net exporter. The figure for Germany is 132 per cent., and that for Spain is even higher. Germany and Spain are net importers of Escorts.

Thirdly--this is a crucial point--the new model Escort is designed to arrest the recent decline in sales across its markets. It is timed to ride the upsurge in the market as we emerge from recession.

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In spite of all this, production of the new model has been assigned to Saarlouis and Valencia, not to Halewood. The implications are serious. The loss of the new model Escort takes Halewood out of high-volume, two-shift family car production--the big stuff in the automotive industry. The concession that the old model Escort will be produced until 2000, concurrently with the new model coming off continental production lines, is meaningless. Old models do not sell when the new model is available. The only car that ever bucked that trend was the Fiesta. That was in the context of rising sales. The Escort would have to do so in the context of depressed sales.

The promise of the MAV as the basis of the future survival of the Halewood plant is to be treated with the utmost reservation. It is still at the earliest stage of development--little more than a gleam in the designer's eye. As of last Monday, when we met management, it had not been put to the board for approval of development costs. It appears that development may be dependent on a large grant from the UK Government. Even if it gets off the drawing board and into production, there are further reservations about the MAV, because it serves a niche market, with low-volume production and sales in comparison with those of family saloons such as the Escort.

Putting all that together, the prognosis for Halewood is difficult. It must struggle to buck the market trend, with the old Escort competing against the new, followed by dependency on the MAV in low-volume production. Make no mistake: we want the MAV and we want it to be a winner in its niche market, but we also want and need the high-volume production of the new Ford Escort. The two are not incompatible. If the MAV is based on the Escort platform, there is no reason why the two could not come off the production line.

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