Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 340 - 359)



  340. And you have sought regional assistance, RSA, for that purpose? You are yourself obviously pretty close to the Deputy Prime Minister, Mr Prescott, so you should be in a good position to do that. How is that discussion going?
  (Mr Reilly) Actually Mr Prescott would not have anything to do with it, it is the DTI. We have had discussions with the DTI.

  341. And that is going well?
  (Mr Reilly) They understand the situation and they are going through their normal, rather exhaustive, analysis, so I cannot tell you if it is going well yet, but we have told them the fact that we have not got too long before we know.

  342. But they would need to be shown it was going elsewhere, would they not?
  (Mr Reilly) Yes.

  343. So you are going to have to be able to convince them it was going somewhere else in order to be able to get that?
  (Mr Reilly) Correct.

  344. Are you actually in a position to be able to do that?
  (Mr Reilly) We have given them the detail we know about, and there clearly is an alternative—at least one alternative—for those tools to go to Ellesmere Port.

  345. So what is the balance of advantage for our bid in talking to the European Union? What strengths does the UK have to bid for this?
  (Mr Reilly) I cannot go into the financial details of that, obviously.


  346. Why not? Nissan have told us they need £40 million for the North East, why should you be so coy about your activities?
  (Mr Reilly) That was not the exact question I was being asked, I do not think. I thought I was being asked what the specific pros and cons of this country versus Antwerp were, and there are certain benefits and there are certain negatives. The negative is that it would appear we would have to spend more to put it in at Ellesmere Port than at another plant. On the other hand, we sell Vectras in this country, this is a good market for them, so there are some logistic savings if we produce them here.

Mr Butterfill

  347. It might help your suppliers as well.
  (Mr Reilly) It would certainly help our suppliers.

  348. So you will be personally pushing very hard for that?
  (Mr Reilly) I am pushing very hard.


  349. What I was interjecting for was that we know when there is a dispute between Washington and Tyne and Wear and the Continent there is a sum which might be of significance in winning for Nissan the deal for the UK, and there is a sum in terms of re-training and regional assistance of the order of £40 million. How much would you be looking for to get the Vectra into Ellesmere Port in RSA in your applications and in your discussions with the DTI?
  (Mr Reilly) My understanding of the Nissan situation is that they have not said that if they get £40 million they will put the Micra into Sunderland.

  350. No, they have not said they would do that, but it is a not insignificant piece of detail. What I am saying is, is there a figure you could put on Ellesmere Port you would expect to reasonably ask for? It was 20 per cent of £200 million which is the £40 million which is spoken of in relation to Nissan. What would be your 20 per cent, say? What would be the figure you would require to spend at Ellesmere Port to secure the Vectra? How much would you need to get from the Government to achieve that?
  (Mr Reilly) I can give you two answers. One is that we had an indication from Government they would be prepared to help us with a £5 million grant to move the Frontera there, and the argument was a very similar one. We have indicated we would expect at least that. However, we are having to invest more for the Vectra, significantly more, and therefore we have indicated we would hope it would be higher. But there are a lot of rules which they operate to and I do not know those rules exactly, so they are going to come back and tell us what they can offer.

Mr Butterfill

  351. How much cheaper would it be for you to go to Antwerp?
  (Mr Reilly) The last I heard it was approximately £14 million, I think, £14 to £15 million.

  352. But there is absolutely no question of you going to Russelsheim?
  (Mr Reilly) That is not being considered.

  353. You said one of your stated aims was to make Luton a centre of excellence in commercial van manufacturing. Is there anything you want from local government or central government to assist you in achieving that?
  (Mr Reilly) We have set up an engineering centre to support that commercial vehicle operation in Luton, quite close by. We obviously need the people to populate that but I do not think there is anything specific, other than buying the vans, which central government can do.

  354. There is nothing you would like us to say to them? There is nothing they can do to help?
  (Mr Reilly) The investment decision has already been made, we won that decision before Luton became eligible for requesting funds, so that decision has already been taken. If the van is a success, which we hope it will be, then there might be a possibility of extending capacity at IBC, in which case it might well be that we could do that with help. We would not be able to do that without help, but that time has not come yet.

  Mr Butterfill: That sounds a little ray of hope for the future.

Helen Southworth

  355. Can I take you back to Russelsheim? What production is actually being reduced there?
  (Mr Reilly) The Vectra and the Omega and the various components.

  356. So what about the new Vectra?
  (Mr Reilly) That will be produced there.

  357. I am thinking of your one plus a flexible half.
  (Mr Reilly) Yes.

  358. What amount of that is actually going to be in Germany? Are we going to see a real reduction there or a phasing-out of an old car which is being replaced with a new one? Is there going to be a flexible half up for grabs or a full plant?
  (Mr Reilly) No, not a full plant, it is a flex-plant we have available. What it means is that when the Vectra comes into that flex-plant, whether it be Ellesmere Port or Antwerp, that would produce significant numbers of that car, but as the cycle of that car progresses and it gets older and it comes towards the end, it goes into the other vehicle it produces which is the Astra.

  359. What is happening in Germany then? What reduction is happening? What total reduction is happening?
  (Mr Reilly) From 470 to 270.

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