APPENDIX 15
Memorandum submitted by Luton Borough
Council
We take the opportunity to submit a short memorandum
to the Committee to set out clearly the Council's position on
the recent announcements by Vauxhall Motors.
You will be aware from the submission on behalf
of the Luton Vauxhall Partnership that this Council is fully engaged
in the partnership and its efforts to tackle the consequences
of the threatened closure of the Luton car plant. We welcome government
initiatives focused on this effort and the enthusiastic engagement
of all the partners.
However our primary task is to seek a review
of the decision of GM Europe and to have it reversed. This approach
not only has the support of all political parties on the Council,
it has been endorsed by Members of Parliament and Council Leaders
throughout Bedfordshire.
The campaign is not based on the view that nothing
should ever change. This town and the surrounding conurbation
has experienced and embraced significant change in recent years
especially in respect of the local economy. The background papers
to the partnership evidence the shift in the local economy and
the relative decline of manufacturing employment.
We base our case on the following key points:
1. Evidence given to this Committee by Vauxhall
in June of last year recognised that, as Bedfordshire's largest
private employer, it made a valuable contribution to the economic
and social welfare of the area and that the resulting prosperity
was heavily dependent on the company's ability to compete with
GM's European sister plants. The submission evidenced that the
ability of the plants to compete was proven by the confirmation
of the investment into the Luton Vectra plant, as well as IBC
and Ellesmere Port. The revolutionary "pay deal" entered
into in 1998 (see point 2 below) was cited as an important component
in maximising productivity and flexibility.
2. The 1998 Wages and Conditions Agreement
entered into by Vauxhall and the Trade Unions included a commitment
that the replacement model for the Vectra would be built at Luton.
Whilst this was qualified in the event of "exceptionally
adverse changes to the economic environment" it is also stated
that these circumstances would require discussions with trade
union representatives to consider what alternative actions should
be taken. Given that the announcement confirming the investment
for the new model in Luton was made just seven months ago it is
difficult to see what intervening exceptionally adverse changes
have arisen.
It is accepted that market conditions change
and have to be addressed but these should be addressed taking
accounting of commitments made, not ignoring them. The company
has and is receiving the benefit of the agreement and should honour
its commitment.
3. The evidence before you in June also
highlighted the significant programmes undertaken in training
employees and collaborative approaches with suppliers helping
to drive efficiencies in the supply base. Further information
is given on this in the company's 1999 Report with reference in
particular to workshop programmes "designed to improve relationships,
enhance quality and encourage new ideas to improve the mutual
business environment". It is difficult to square all of this
with Vauxhall's activity in the last couple of weeks where there
have been apparently scuttling around the region issuing purchase
order cancellations. Engaging the supply chain in this approach
should surely carry with it some obligation on Vauxhall not to
just cut and run when it suited them.
4. More generally, the 1999 Report (issued
mid 2000—just six months ago) is commendably strong on sustainability—environmental,
social and economic sustainability. This is evidenced throughout
the report in terms of approaches to technology, suppliers and
employees. If the company is truly committed to this approach,
this must imply some commitment from it to take a longer term
view and, even if it could justify a future disengagement, doesn't
a sustainable approach inevitably entail that this is done on
a planned basis? If a sustainable approach to manufacturing is
about encouraging investment, training, and partnership, then
the days when any company committed to this can take precipitate
action to close a plant should surely be over. The company either
supports sustainability or it doesn't.
If this closure is to proceed it will have a
profoundly adverse impact on the local community, and local economy
and more widely. We believe employees, suppliers and the community
have responded to the prior challenges set by Vauxhall and deserve
to be treated fairly. The promised investment should proceed.
11 January 2001
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