Examination of Witnesses (Questions 379
THURSDAY 11 JANUARY 2001
379. Mr Woodley, could you introduce your colleagues
(Mr Woodley) Good afternoon. Simon Monks is the Luton
Convenor for the MSF Union. Alongside him is Terry Pye, the National
Secretary for MSF. To my immediate left is Duncan Simpson, the
National Officer for the AEEU responsible for the car industry.
I am Tony Woodley, from the Transport and General Workers' Union
responsible for the car industry. To my right is John Jack, Transport
and General Workers' Union Convenor at Luton. Last, but certainly
not least, is Michael Longley, and he is the AEEU Convenor for
the Luton plant.
380. Thank you. I realise you in different ways
represent different groups within the plant but the nature of
our questions will be such that while you may wish to complement
each other's answers, to use the words of the MC in the Social
Club, one singer, one song, please. To what do you attribute the
12th December decision?
(Mr Woodley) The decision on the 12th December came
as a bolt out of the blue. There was no prior consultation with
the Joint Negotiating Committee or indeed any of the unions which
led us to believe the plant was going to close. We believe the
decision had nothing whatsoever to do with surplus capacity in
General Motors, but was a simple case of cutting European losses,
cutting costs in the short-term at Britain's expense. We believe,
indeed we know, that General Motors have recorded losses in the
first two quarters in their European operations and will record
even higher losses in the third quarter of this year. We believe
it was a simple case of cutting those costs, returning Europe
to profit in the short-term, and there was no resemblance to an
over-capacity problem as has been indicated.
381. Is there any reason in your mind why Russelsheim
was preferred to Luton?
(Mr Woodley) The agreement we struck
with the company, the little pink booklet, by all the unions and
the workforce in 1997 took account of the fact that the new Vectra,
code name Epsilon, was going to Russelsheim. The argument was,
"Where else would it go?" The agreement we struck in
1998 clearly meant we would help to cut costs in a number of ways
but in return the plant would have confirmation that Epsilon,
the replacement Vectra, would go to Luton, and there would be
no enforced redundancies. Another element of that agreement was
that the replacement for Astra, code named Delta, would go to
Ellesmere Port, and that is why in 1998 the Government grant aid
referred to of approximately £11 million, some of which has
still not been paid, actually went to Ellesmere port, because
it was a company agreement.
382. How did the workforce discover the 12th
December decision? It seems to have trickled into the press as
well. Has anyone got any idea how it happened? What should the
formal procedure have been? Have you any idea where the whistle-blower
(Mr Simpson) No, we have not, and we registered most
forcibly with the company our dismay and disgust at the manner
in which our people learned of the decision. It was leaked to
the media, indeed I was on my way to the meeting with the company
when I heard it on the local radio myself. We registered that
most forcibly but, as Tony said, it came completely out of the
blue. Some four weeks previous to that, the national officersthat
is Terry Pye, Tony Woodley and myselfmet with Mr Reilly
and we were told, yes, they had made a 180 million dollar loss
in the third quarter of the year but he had successfully, not
for the first time, staved off plans by some people on the European
board to close one of the plants. He did go into some detail in
terms of the alternative to the closure he had put forward at
that meeting which had been bought off. So whilst we knew there
were difficulties for GME, we had some comfort inasmuch as he
told us, and we accepted it in good faith, that on behalf of the
UK operations he had fought off any moves or plans to close one
of the plants. Therefore, four weeks later, it came completely
out of the blue.
383. Would it be right to say that he thought
he had won the day and then, come the meeting on 8th December
in Zurich, the tables were turned on him?
(Mr Simpson) I did ask a question at a subsequent
meeting, "Why the double-back somersault and was the decision
made in Detroit?"
(Mr Pye) Could I explain to the Select Committee that
following those consultations with the three national officers,
there was indeed some discussion with the local representatives
of the type of discussions we have been having to mitigate the
problems the company was experiencing. At the national level meetings,
as an officer of MSF, I obviously enquired as to the impact of
the things we were discussing on the staff employees and was informed
there would be little if no impact. Therefore, as a consequence
of that, discussions took place with the daily paid operatives
but the staff operatives were not invited to join those discussions,
and I think that typifies the point which has been made. We believe
that certainly Mr Reilly was proceeding down that line and was
overturned in his decision.
384. Mr Reilly made great play of the fact there
had been on-going consultations and discussion but it became quickly
apparent that the crunch decision about the closure was something
which was never raised with you. That is correct, is it?
(Mr Woodley) No, that is not correct.
385. Could you clarify that for me?
(Mr Woodley) Mr Reilly made it clear that the hawks
were about and there was a danger to a plant, but his alternative
proposals for which he sought our support, which Duncan Simpson
has mentioned, appeared to be the best and only way forward. In
fairness, he was concerned that in spite of, if you like, the
European board efforts or, let's put it clearly, in spite of his
efforts, Detroit could overrule the alternative proposals and
therefore, if that was the case, we would be looking at plant
386. This is a hypothetical question but had
you been advised in advance, maybe only a few hours or whatever,
of the decision which had been taken to close Luton, what difference
do you think that would have meant to the overall consultation
and information and debate? Do you see it as a fait accompli?
(Mr Woodley) I think it boils down to the evidence
we have given on two previous occasions which the Chairman mentioned
himself, we have a situation here where we have very little notice
and certainly no consultation that the plant is down for closure
and 2,000 people at the moment could very well be made forcibly
redundant, and that could not happen anywhere else. So it boils
down to what we mentioned last time, it is still quick, cheap
and easy to sack our people and close our plants. What we are
looking at here is Vauxhall Motors who have made profits consistently
and regularly for 12 consecutive years, we have a car which is,
yes, on the run-down, but it is still selling well in this country
but not in Germany, so why is it the UK has been chosen to actually
cut the losses in the short-term? It is simply because it is cheap
and easy to do so. That is the answer. That is why the signed-up
consultation agreements which are in Europe at the moment are
so crucially important, to give us a level playing field for the
(Mr Pye) Had I learnt about it by proper consultation
and not on the radio as I drove down to the meeting, I would probably
have been in a better position to have thoughts about how we could
avoid the decision if consultation was taking place. In answer
to the question, certainly if we reflect back on the Rover and
the statement from Stephen Byers when he was asked on television,
had he been informed about the Rover sell-off by BMW a week earlier,
he said, "Had they told me they were going to announce ten
days or a week later they were going to break up Rover and were
going to dispose of Longbridge, what we would have done is we
would have engaged with the company to see if we could have changed
their minds, we would have had direct dialogue with the company
to see if they could reconsider that decision." That is what
we would probably have done had we been given proper consultation.
The difficulty was we were presented with a fait accompli
and I learnt about that fait accompli on the radio.
(Mr Woodley) John Jack, next to me, is the Vice Chairman
of the General Motors European Works Council and clearly one of
the things we have argued is that General Motors have broken European
law in failing to consult. Could I ask John to add something?
387. I was about to ask him. My understanding
was that prior to Christmas you would have attended the European
Works Council and one would have assumed that, if it had worked
as some people say the European Works Councils operate, you would
have had that discussion there.
(Mr Jack) In terms of the question, what could we
have done had we had four hours' notice, in view of the enormity
of the problem it would have been rather difficult, even if we
had four hours' notice, to be able to do much about it. The GM/Fiat
strategic alliance was actually notified to Europe via the newspapers,
and within a very short space of time there was an industrial
reaction within the German power train plants regarding the lack
of consultation and consequently the effects of such an alliance.
Having made the point in Europe that the agreement talks about
discussing such matters with the employee representatives and
not the media, you would believe that in this particular set of
circumstances General Motors would have learned the lesson. Clearly,
whether they learned the lesson or not, they elected to disregard
that experience. They had ample opportunity because as far as
I am concerned the agreement we have is about mitigating such
circumstances, it is about finding alternatives and so on and
so forth. Very much in line with the words used earlier on when
Mr Reilly was questioned, we found ourselves with a fait accompli.
Indeed, when I landed at Zurich Airport and switched my telephone
on, that is when I found out, before I had even met General Motors,
because it had actually been on the internet. So I had not even
got out of Zurich Airport before I knew. When we entered the GME
building in Zurich, we were ushered into a room, when the Germans
arrived I actually told them what they had come for was to be
told the plant in Luton was going to be closed, and they could
not believe it. That is how I found out. Clearly my view is that
there is a requirement for them to consult, it never happened,
and even in the local agreement if you want to call it that, the
company agreement of 1998, within the clauses which Mr Reilly
chooses to exercise, it also talks about discussions and they
never took place either. It is not about, in my view, telling
somebody there is a problem and latterly arguing that was the
consultation. Given the seriousness of what was behind this particular
agreement, that would not qualify in my mind for proper consultation.
What would qualify is that we have a serious problem, we had better
sit down and think of how to deal with it and not have a group
of workers going home on Christmas Eve almost with no job.
88. Have you taken legal advice? Are you going
to take them to court about it?
(Mr Woodley) We have taken legal advice and are still
awaiting a response from that. I would not like to pre-judge the
outcome of that. As Mr Warman indicated, labour agreements in
this country are not legally binding.
389. People have said to us that the UK has
adequate coverage for these issues and, in that case, maybe we
need to test it and find out whether that is happening.
(Mr Woodley)That is exactly what we are doing. Indeed
in fairness that is what our European counterparts are doing as
well because there is one thing for sure, they have definitely
broken European law.
390. Can I take you on to the draft Directive
on Informing and Consulting Employees. Looking at this from a
British perspective, not a European perspective, what practical
differences would it have made to you?
(Mr Woodley) Timing is of the essence. Many of these
decisions as to whether a plant closes or stays open, whether
a plant receives a model or does not, is the difference in a conversation.
It is as brutal and sometimes as simple as that. Therefore the
more time in which we can talk and propose alternatives, looking
at the problem to try and give assistance or whatever, the more
helpful it would be. But it is not just about consultation. We
want to be consulted on the business plans before they are laid
down. That is what it is all about. It is not just a case of consultation,
"Excuse me, can you help solve the problem? Here is the business
plan, here is the over-capacity, what can we do?" The reality
of what we are dealing with here is that they keep talking about
over-capacity but let me share some facts with the Committee.
It was mentioned that the J-car segment had drifted down by around
4 or 5 percentage points overall, and that is quite true, but
let us look at it in another way. General Motors actually predictand
these are factsthat this J-car segment will fall by 1 per
cent between 2000 and 2004 down to 14.8 per cent, and we believe
that is a fair assumption. But because of the overall growth expected
in the vehicle market as a whole, because Europe is still growing,
as you know, then the total fall equates to only 100,000 vehicles
out of a market segment of 3 million vehicles. Let us put it another
way, if GM meets their normal thoughts, if you like, for the new
model, which is the point the Chairman was making, the only loss
to General Motors is 20,000 vehicles. What does that mean? It
does mean Russelsheim will build the Vectra, it does mean that
Ellesmere Port effectively will be a flex, but in reality it is
nothing to do with Ellesmere Port, if Luton closes in the short-term
to cut costs, within two years, maybe 2½ years, with the
new model on stream, another plant in Europe will have to go to
three full shift working. Whilst they may not take on board more
employees because of flexibility and other things, it will be
another plant going to three shift working. So you have to ask
yourself the question, if the market is still there for two plants,
why is the second plant, Luton, not going to have a future? The
answer, as I have said already, Chairman, is that they have losses
in Europe, they want to balance the books in the short-term, they
have over-capacity in the Vectra right now in Europe because it
is an old model on the down-turn, so let us cut our cloth to suit
today and let us maximise our investments and maximise all the
plants' capacities in the future in Europe. A British solution
to a European problem. That is what we are dealing with here.
391. One of the things I was hoping you might
be able to give us some examples of, and perhaps you might want
to drop us a note afterwards, is the practicalities of the difference
having effective consultation in the UK would make.
(Mr Pye) It is difficult to give direct examples.
We have had examples where we have had proper consultation under
the European Works Councils which have been conducted properly
and they have resulted in successful de-merging. We have recently
dealt with Visteon which Ford spun off and that was dealt with
through the European Council and it was done in a proper way under
the Informing and Consulting Directive and it resulted in a successful
de-merging without massive job losses. So there are examples where,
when it is applied properly, it does have the correct results.
In this case, there was no attempt to apply any sort of consultation.
In fact I think they have even breached the UK directive, and
that would be an interesting case to test.
(Mr Simpson) We will endeavour to drop you a note
with some examples.
392. Could I clarify something here? You are
a member, Mr Jack, of the European Works Council, are you a member
of that as of right under the British law relating to Europe,
or are you there at the invitation of the GM Europe management
and the rest of your fellow workers within GM? Are you there as
a consequence of British law or a European undertaking? I am not
very clear about that.
(Mr Jack) As I understand it, and Tony can correct
me if I am wrong, it is a voluntary agreement drawn up prior to
the legislation in case the legislation contained matters that
General Motors were not too happy with.
393. It was a voluntary agreement but it is
now buttressed by the legal framework. Your presence there is
a consequence of the voluntary agreement?
(Mr Woodley) Yes.
394. Even when there have been instances where
the Directive on Informing and Consulting Employees has been applied,
it has been on a voluntary basis because it does not have the
effect of law in the UK because it has not been ratified by the
UK Parliament. Is that correct?
(Mr Pye) That is correct. That is my understanding.
Chairman: I just wanted to get that clear. I
think that sometimes we seem to be praying-in-aid directives which
are in fact being applied because there is a mutual voluntary
agreement but there is not a legislative requirement, and I wanted
to get that clear so we are all singing from the same hymn sheet.
395. We have covered quite a lot on this agreement.
What were the consequences for your members' earnings of signing
this 1998 agreement?
(Mr Woodley) The agreement is incredibly important,
Mr Chope, because, as you have pointed out yourself, the agreement
meant a number of things. It meant that new employees, 900 of
which have gone into Ellesmere Port, would start their employment
on 82 per cent of the basic rates of pay, a massive 18 per cent
reduction, a real saving for the company. It meant that people
would not have productivity bonuses for a period of years and
they would not have the same holidays for a period of time. They
are real sacrifices for real people. At the same time, everybody
in the companyat Luton, at Ellesmere Portagreed
a long-term wage settlement, three years in fact, where they took
moderate settlements to help facilitate this deal. The Government
put in British taxpayers' money, estimated to the best of my knowledge
at around about £11 million, also to facilitate this agreement.
What we are dealing with here now is a complete and total reneging
of that agreement. So it is millions of pounds which workers have
directly funded from within themselves to make sure Vectra went
to Luton, because that was the plant under threat at the time.
But we were pre-emptive and said we wanted a replacement for Astra
which was only three months old at the time, Delta, and, just
as important, there would be no enforced redundancies. There had
been no enforced redundancies in our industry, up until recently
of course, for 25 years. There have certainly been none in General
Motors. There is no doubt at all that the breaking of this agreement
could very well be illegal. It is not a similar agreement to that
at Dagenham, which was words on a piece of paper, this has really
affected people's wages and conditions and that is what we are
testing with our lawyers.
396. We have heard from Mr Reilly he was discussing
the inevitable, or trying to mitigate the consequences of the
inevitable, with the Government for some weeks before the day
in December without having raised it with you. Is that correct?
(Mr Longley) In the context of being allowed to consult,
et cetera, under British labour law, surely the normal process
when people are going to be made redundant is to issue an HR-1.
In respect of Vauxhall, none of us at this time have seen an HR-1.
It specifies the number of workers, what jobs are going to be
affected by said redundancies, and it gives you the opportunity
to mitigate against those job losses. None of the convenors in
Vauxhall Motors and to my knowledge none of the officials on the
JMC which governs, if you like, the negotiations for Vauxhall
Motors have received an HR-1 in respect of this particular issue.
So in respect of British labour law, as far as I am concerned,
not only have they really acted in a total cavalier fashion, they
have not even done justice to the very weak British labour laws
which already exist, which I think is tragic.
397. It seems as though the Government was told
more by the company as to what was happening or might be going
to happen than you were in the weeks prior to this announcement.
(Mr Woodley) I do not share that view. We had knowledge
this company was talking to the DTI about the Frontera going to
Ellesmere Port, and that was right, that was what they needed
to do then. There is no doubt at all that during this period,
prior to this disaster, that Mr Reilly had mentioned this alternative
proposal that people are well aware of now and I would presume,
and quite rightly so, Mr Byers would have been informed of that
as well. So as far as who knew what and when was concerned, we
might get to the 24 hours prior to the disastrous announcement
but until then I think we were all on an even keel.
398. Returning to the time of the awful leak
which was so distressing to people, to be informed in the way
they were and to hear things on the radio, Vauxhall have said
they did not make the announcement in that way, and there is no
reason to suppose they would have done, and the only other people
who knew all the information were the Government.
(Mr Woodley) Would you like an opinion?
399. We like facts if we can get them.
(Mr Woodley) The fact as I believe it to be, Chairman,
is that the leak came from Vauxhall and not the Government. My
belief is that it came from their Public Relations Department
when a BBC person rang them to clarify that there would be an
announcement later that day, and to the very best of my belief
and knowledge, that person allowed themselves to run away. That
is what I genuinely and truthfully believe.
Chairman: We will leave that fly to stick on
Mr Chope: Vauxhall absolutely deny that, Chairman.
I think we should put that on the record.
Chairman: They would, wouldn't they.