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Benefit Payments

10 pm

Mr. Paul Tyler (North Cornwall): I am pleased to present a petition signed by some 25,000 Cornish people--even more than threatened to march on behalf of my Cornish ancestor Bishop Trelawney. The signatures come from residents in my constituency of North Cornwall, and from residents of the constituency of my hon. Friend the Member for St. Ives (Mr. George). My hon. Friend is a member of a parliamentary deputation to Canada and is unable to be here today.

The petition states:

To lie upon the Table.

10.1 pm

Mr. Matthew Taylor (Truro and St. Austell): I am very pleased to present this petition from residents of Truro and St. Austell, expressing their concern about changes in the method of benefit payments. The changes will prevent people from collecting their pensions at post offices, with the result that the post office network in my constituency is under severe threat. The petitioners request the House of Commons to urge the Secretary of State for Social Security to reconsider the proposals.

Some 12,000 of my constituents have signed the petition. It was collected across the breadth of my constituency, not by political activists but by ordinary people, and especially by those who run the post offices, who are extremely concerned about the loss of the service to the general public and, of course, about the potential loss of their own livelihoods.

To lie upon the Table.

22 Mar 2000 : Column 1085

Motor Components Industry

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

10.2 pm

Mr. Peter L. Pike (Burnley): I am pleased to have the opportunity to hold this Adjournment debate on the Government's policy on the motor components industry, and I am glad that my hon. Friend the Member for Pendle (Mr. Prentice) is able to attend. Although the normal conventions and the restricted time available mean that he will not speak in the debate, my hon. Friend is concerned about the principal issue--the redundancies earlier this month at TRW--that has caused me to raise the matter. I shall speak about TRW first, and then about the industry in general.

Although I am sorry to have dragged my hon. Friend the Under-Secretary here this evening, I am sure that on his desk there is a letter from Burnley borough council, asking him to meet a joint delegation to discuss the redundancies. The council is worried about the effect that those redundnacies will have, and about the loss of objective 2 status, in Burnley and in most of north-east Lancashire.

Most people in Burnley still know the firm now called TRW as Lucas. During the war, the Lucas firm was relocated to Burnley, which was a safe industrial area. In only a few years, it had become a major employer: it ran several different factories and employed several thousand people in the separate sections devoted to aerospace and to motor components. The name changed first to LucasVarity and then, in May last year, TRW Automotive Electronics, whose headquarters are in Farmington Hills, Michigan, acquired the factory.

I am sad to say that there is almost nothing left of what used to be a major local employer, as the last of the aerospace factories was sold last year. When I became the Member for Burnley, that company was the largest employer in the constituency, with several thousand employees working in the town.

Earlier this month I received a notification from TRW that it was making 450 redundancies. The notice was sent to my Burnley office by hand at the moment that the company was making the announcement on 2 March. It was faxed to my office at the House at the very moment when I was asking a question in the Chamber about the aerospace industry. Little did I know that I would rise a few minutes later during business questions to ask for an urgent debate on the issue. That intervention resulted in this debate.

TRW's press release on 2 March was accompanied by a letter to me saying that it had announced that it would reduce

The letter continues:

    "Our intent is to build a solid and profitable foundation for the Burnley facility," said Gerd Kleinert, vice president and general manager, Body Control Systems, TRW Automotive Electronics. "Like our competitors, we are facing manufacturing overcapacity and feeling pressure from increasing customer demand for lower prices. We shall be transferring some products and processes to other plants to better utilize our total manufacturing capacity and lower costs at Burnley."

22 Mar 2000 : Column 1086

It must be noted that work is available and that the company is transferring work from the order book elsewhere. The letter continues:

    "We appreciate the efforts of our employees at Burnley," said Kleinert. "The reduction certainly is not a reflection on them. TRW will do what it can to help them with the transition."

That sounds very nice but the work force does not think too kindly of that comment.

I immediately arranged a meeting with TRW. Peter Bagshaw, the personnel manager, arranged it for the following morning, Friday 3 March. Brian Nadel, the director of operations, was present at the meeting, plus union and council representatives. We went through the situation and discussed several options.

The following day was the regional conference of the north-west regional Labour party. The GMB, my union, moved an emergency motion, which was carried unanimously. That was at Southport on Saturday 4 March. The conference condemned overseas firms buying United Kingdom plants and order books and transferring that work to other places. It urged similar protection for our manufacturing industrial base to that which is given in France and Germany.

It must be said that the unions on site, the GMB and the Amalgamated Engineering and Electrical Union, remain committed, understandably, to the principal objective, which I would also support, of trying to eliminate the need for the redundancies, or at worst reducing the number of redundancies and saving the maximum possible number of jobs.

A letter to me from Burnley council on 6 March reads:

A press release was issued after the meeting that was held on the Friday. It reads:

    Councillor Tony Harrison, Chair of the Council's Economic and Property Committee, said "It is clearly not the fault of a loyal and hard working work force, although some of them will have to pay the ultimate price."

TRW supplies a number of car manufacturers and assemblers both in the UK and in Europe. We need to have a meeting because commercial confidentiality means that it would not be possible or appropriate to debate some of the points at issue in an Adjournment debate.

The switch gear that TRW makes is highly sophisticated. Switch gears on cars now operate so many things. They are not simple systems; they are expensive and complex, and TRW, formerly Lucas, has considerable expertise in manufacturing them.

The value of the pound is a problem, as is the fact that we have not joined the euro. Companies can go to other manufacturers to source the components elsewhere. It is a highly competitive industry and there is overcapacity. All of us who watched television at the weekend following the announcement about Rover last week--Rover is one of TRW's customers--will know about its massive overcapacity and the stocks of cars to be sold.

22 Mar 2000 : Column 1087

We have to remember that problems selling cars have ramifications further along the line for the manufacturers of the components.

Enterprise, a company formerly known as Lancashire Enterprise, which does a good job in the area and outside in helping to secure jobs, wrote to me on 21 March, saying:

This is not just about TRW, although that is the immediate problem. I have other car component manufacturers in my constituency. TRW has 949 employees, and 450 of them are under threat of redundancy. Michelin, which makes heavy vehicle tyres, has 545 workers. Tenneco Walker, which makes exhaust systems, has 210 employees and Viktor Achter has 600 workers. In a letter to me of 20 March, Burnley borough council said:

    Despite doing everything possible for themselves, these firms face a difficult future. This is in the context of local wage levels being 83 per cent. of national levels.

That is an important, because a lot of people are employed in manufacturing in the area--the percentage is particularly high in Pendle, Burnley and Hyndburn. We are not a high wage area, however. Many of our people benefited from the introduction of the national minimum wage, and TRW certainly paid wages above the national minimum wage. It paid very reasonable and respectable wages but, overall, we are not a high wage area so we are not pricing ourselves out of the market. The letter from Burnley borough council continues:

    If employment is going abroad from this area, it is difficult to see the rest of the country competing successfully.

    The only way we can compete more successfully is if interest rates were lowered to European levels, the pound's strength tackled to help exporters or Britain joins the Euro. Additionally, more assistance could possibly be given to support firms' investment in higher levels of automation and leading edge technologies to counter the attraction of moving work to areas of low labour costs.

    I have to say that as things stand at present, it is very difficult to see a move away from the accelerating trend towards Britain exporting lower skilled employment to low wage areas.

That letter is signed by Hugh Simpson, head of economic development. So this is not a problem just for TRW but for industry in general, and the motor components industry in particular.

The East Lancashire chamber of commerce says in a letter of 21 March:

The Minister will know that MPs representing north-west constituencies--indeed, people throughout the whole region--are extremely disappointed that investment in the synchrotron development went to Oxford instead of to Daresbury. That went down badly in the north-west.

22 Mar 2000 : Column 1088

Discussions between unions and management are now under way at TRW about which lines are to go and when; and about comparative costs and labour rates. The company is already considering where much of the work will go--comparing the wage rates of more than £60 a week in the Czech Republic with those in Slovakia where they are slightly more than £45 a week. Slovakia is likely to be biggest gainer. Rates in Russia are even less.

Those matters worry people who work in the industry. They ask where the line should be drawn and how we are to save jobs in our industry. The workers and the unions contacted me when they knew that I would be initiating this debate. They asked me a series of simple but important questions.

Will the Government do more to ensure that sourcing is from within the UK wherever possible, within EU rules? Do the Government accept that the high exchange rate and our non-membership of the euro are severe problems for the manufacturing sector?

At times, France and Germany must be laughing all the way to the bank, because their euro rate is fixed, while most of our exporting companies have to fix their euro prices at the beginning of the year and take a risk about what will happen. Europe is our biggest market. In many cases, we are Europe's biggest market. European countries can sell cheaply to us, but we have to sell dear to them because of the present balance in exchange rates. The workers and the unions ask what can be done to remedy those problems as soon as possible.

The regional development agencies introduced regional supply offices to encourage large companies to source locally. Both Enterprise and the East Lancashire chamber of commerce already encourage that. The TRW workers ask why the RDAs cannot do more in that regard.

The workers at TRW have every sympathy with the Rover workers. The effect on individual workers at TRW is just the same--redundancy is redundancy whether it affects thousands or hundreds. The proportionate impact of 450 redundancies in Burnley and the ripple effect over a small area is not so different from the impact on the west midlands of the BMW-Rover decision. Will Burnley receive a proportionate response from the Government to repel that blow?

I hope that we receive some positive answers from my hon. Friend the Minister and that we shall do everything possible to assure those people that the Government are concerned about their position and about the motor components industry.

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