Memorandum by Amicus-AEEU
Amicus-AEEU has over one million members principally
employed in manufacturing as well as construction, power generation,
utilities and servicing. It has pioneered the partnership approach,
advocating that both management and workforce share responsibility
for ensuring the success of the enterprise and for facing up to
business challenges. The AEEU was formed out of a merger of two
unions the EETPU and the AEU and merged with sister union MSF
on 1 January 2002 to form a new super union, Amicus.
The EETPU was born out of the earlier merger
of two unions, the ETU (electricians) and the PTU (plumbers).
In 1971, EESA (Electrical and Engineering Staff Association) was
created as the white collar section of the Union. By 1989, a number
of other professional associations had joined the Union and reorganised
themselves under the umbrella organisation, the Federation of
1852 saw the birth of the Amalgamated Society
of Engineers (ASE), which by the turn of the century had nearly
90,000 members. In 1899 work started on a head office in Peckham,
south London, which remained the headquarters until the merger
with the EETPU in 1992.
In July 1920 the ASE and nine other unions merged
to form the Amalgamated Engineering Union. In 1967 foundry workers
joined the AEEU, followed by the draughtsmen and construction
engineers. In 1971 the federation became known as the Amalgamated
Union of Engineering Workers.
2. THE CASE
We firmly believe that there is a strong case
for manufacturing and for ensuring its future through improved
productivity and greater competitiveness. Although manufacturing
industry has suffered a massive decline in the UK (since 1950,
there are five million fewer manufacturing jobs compared with
an extra eight million in services), the strength of the sector
is still fundamental to the health of the economy as a whole.
There is no doubt that service sector cannot
alone fill the UK's increasing trade gap. We must ensure that
manufacturing is recognised as a significant wealth creator. Although
it makes up just over 20 per cent of GDP, it accounts for 60 per
cent of exports. Economists estimate that there is an "employment
effect" of 2.5, ie for every job lost in manufacturing, 2.5
service sector jobs are hit as well. There has been evidence of
this recently as the recession in manufacturing spreads into the
service sector. The following submission highlights areas that
we feel need to be addressed and also gives practical examples
of workplace initiatives that have improved productivity.
3. THE CURRENT
We have used the example of aerospace, as an
industry hit hard by the events of 11 September, to highlight
some of the problems faced and possible solutions to these problems.
Amicus is the largest trade union in the Aerospace industry and
hence a major stakeholder. The Society of British Aerospace Companies
(SBAC) and Amicus have a history of working together for the benefit
of the industry. Last year we commissioned a report looking at
the long-term future of the Aerospace Industry.
This study "World ClassA Blueprint
for the Future of the Aerospace Industry" was well received
by the Government. The report highlighted the contribution made
to the economy by the UK Aerospace Industry.
Last year that contribution was in excess of
£18 million. 60 per cent of this was made up of exports,
creating a positive trade balance of £3.8 billion. The UK
is the world's second largest exporter of Aerospace and military
equipment after the USA. The aerospace sector employs over 150,000
directly with a further 300,000 employed indirectly.
Naturally the effects of 11 September are badly
hurting the British aerospace industry, with 11,000 job losses
already announced, with a further 18,000 in the immediate supply
chain. It has estimated that a total of 40,000 jobs are vulnerable.
This represents 10 per cent of Britain's aerospace workforce.
Our economy cannot afford to lose these highly skilled jobs.
For every job lost in leading companies,
three are lost in the supply chain.
All the indications are that these numbers are
just the tip of the iceberg with job losses expected to double
in the next six months if no action is taken. Aerospace is an
industry where British skills, British companies and factories
have been at the leading edge of developing better, quieter and
more fuel-efficient engines and aircraft.
These developments ensure that Aerospace is
one of Britain's last remaining world class, high technology manufacturing
industries. The long-term success of the British Aerospace Industry
is reliant on the UK's ability to continue to develop new technologies
through Research and Development.
As a first step it is essential for government
to increase the share of GDP devoted to worthwhile public investments.
Public infrastructure improvements produce returns across the
economy and can influence the future investment and location decisions
of multinationals. We agree with the joint TUC/CBI study into
productivity that it is imperative that the 10-year transport
plan, published in 2000 is turned into reality.
Government, industry and academia must decide
jointly on a technology strategy for the UK. The Government needs
to provide leadership and initiative to key high technology industries
such as Aerospace and Electronics more directly into the national
For this to succeed we must look towards diverse
funding options. We believe that a greater level of public funding
and resource needs to be allocated to long-term aerospace research
and technology to match the spending levels of other countries.
Not only will more funding be needed, but greater co-ordination
of resources would also help. This will help to stop the fragmentation
of research and development.
For example, the US currently spends three times
as much as Europe on Research and Development in Aerospace. In
2000 the European Aerospace Industry spent 14.5 per cent of its
annual turnover on research and development with the UK spending
10 per cent of its turnover.
A good model of innovative funding comes from
Canada where since Government support was provided for research
and development the Canadian industry has risen from seventh largest
supplier to fifth largest in the world.
The Canadian Government views Aerospace as an
innovation leader, a critical incubator of technologies that find
applications in almost every other sector of Canada's economy.
Canada's Aerospace and defence industries are
a key area for investment by Technology Partnerships Canada (TPC),
a technology investment fund established to contribute to the
achievement of Canada's objectives: increasing economic growth,
creating jobs and wealth, and supporting sustainable development.
Aerospace and defence are knowledge intensive
industries that account for some 15 per cent of all Research and
Development performed in Canada. Investments by Technology Partnerships
Canada (TPC) leverage increased innovation spending in Canada's
aerospace and defence industries, helping this vital part of the
Canadian economy maintain and expend its position of technological
The fiscal year 1998-99 included the following
approval of more than $214 million
in repayable investments for 22 Canadian research and development
additional investment commitments
of $1.78 billion in innovation and spending; and
creation of 4,426 high quality jobs.
Based on company forecasts these 22 projects
if successful are estimated to generate sales of $16 billion.
In three years of operation TPC collective achievements
approval of more than $775 million
in repayable investments for 79 research and development projects;
creation of 18,200 jobs, including
6,500 jobs over project R&D phases; and
based on company forecasts these
79 projects if successful will generate $78.8 billion.
In 1999 the TPC Fund will be increased to $50
TPC investments are fully repayable if the products
are successful, with the Government collecting a royalty on sales,
recouping original investments plus a share of profits.
We recognise that companies need direct support
to undertake research and development (R&D) if they are fully
to exploit the results. The government should consider funding
options such as the TPC initiative from Canada and develop an
R&D tax credit, available to all companies and set at a rate
that would have a significant impact on their R&D plans.
A lot of the R&D costs are currently being
met by suppliers in partnership with primary contractors and we
believe that it would make sense for the government to look at
the possibility of extending credits available to primary contractors
to the supply chain also.
5. LACK OF
Many employers see training as a cost rather
than investment, it is essential that we create a culture of workforce
development right across industry. There are obviously issues
surrounding low skilled employment. Where low skills and minimal
workplace development due to the needs of the business creates
a "low skills equilibrium". It is more difficult to
make the positive link between improved productivity and skills
in workplaces like this. We have experienced, on occasion, employers
arguing that there is no need to develop their workforce as giving
their employees new skills would lead to retention problems as
there are no promotion opportunities for higher skilled employees
in their business.
It is essential to foster a responsible attitude
to the provision of skills across the many sectors in manufacturing.
Employers are key to the provision of skills in manufacturing.
Notwithstanding this fact, because there is a perception that
training is costly, there are skill gaps across industry.
We believe that in this case trade unions have
a role to play in promoting workplace development. Trade unions
have fully embraced the learning agenda with some quite spectacular
results. The Union Learning Fund (ULF), Ufi and ILA's prior to
their suspension gave a baseline from which trade unions could
organise. With the statutory provision for learner reps working
its way through parliament presently, vocational learning in unionised
workplaces can consolidate and grow.
There is an obvious fear that some employers
may be excluded from the benefits of having representatives promoting
learning to their fellow employees. Amicus-AEEU facilitated a
recent ULF project in Derbyshire that took the trade union led
learning culture from large employers, such as Rolls-Royce, and
championed it in SME's in the supply chain.
In his 2001 budget speech Chancellor Gordon
"Individuals should take more responsibility
for their own development, especially with higher and transferable
We fully agree with this statement, and as a
union we always make clear the link between learning, employability
and job security. It must be stressed however, that employers
also have a responsibility to up-skill their employees, as the
clear link in this case is between a good collective skill base
and the viability of manufacturing.
Amicus-AEEU has a policy that promotes employee
development in our recognised workplaces. Some of our learning
projects have concentrated on the promotion of vocational skills
that are not directly relevant to the needs of the company's business.
Employers appreciate this type of advocacy as it has a clear knock-on
effect to have a workforce that is prepared to engage in training.
Employers and trade unions must look to address
the basic skills problems of individuals, increase the proportion
of adults with level two qualifications and increase the take
up of Investors in People by small organisations.
We agree with the TUC and CBI that the Government
should introduce a training tax credit for employers that are
involved in basic skills training or supporting employees working
to gain initial qualifications. It should also provide incentives
for individuals to work at raising their own skill levels.
Amicus-AEEU has for a long time been the foremost
exponent of the partnership approach. Many sectors in the UK economy
are experiencing the challenges and opportunities being presented
by globalisation. Intense competition forces companies to constantly
adapt just to survive. We believe that in order to effectively
cope with change, companies will need more than ever to rely upon
their most precious resourcehuman capital.
We will always reason that it makes sense for
companies to work more closely with their employees, to consult
them and involve them in key decisions and ensure that they see
the point of radical changes in the organisation.
We believe that partnership must be transparent
and equitable and as a union we would never turn a blind eye to
partnership being used as a cynical ploy to drive change through
a reticent workforce. Unfortunately, this has happened in a small
number of instances. Partnership is not a quick fix. It's a journey
without end. It is not easyit is hard work. It does not
end all differences at workit often intensifies the level
of debate as to the way forward. But by working together, in the
spirit of partnership, we are certain that companies and workers
can improve and survive and manage change in a way that benefits
all stakeholdersmutual reward based on mutual respect.
It is our opinion that partnership in the workplace is fundamental
to improving the competitiveness of the UK workforce.
Two good examples of partnership are the recent
achievements at Airbus and Perkins Engines. The Airbus agreement
ensured that our members played their part in helping their company
galvanise their competitiveness, post 11 September, while the
initiative at Perkins Engines improved the competitive position
of the company through waste production.
6.1 A Partnership Case StudyAirbus
As part of the 2002 and 2003 pay award, the
trade unions and the company agreed to support the reduction of
production costs in line with reduced customer demand. Additionally,
the agreed new process improvement methods which will provide
them, both in the sort-term and the long-term, with the ability
to meet immediate and future changes to their programmes, thereby
further strengthening our long-term competitiveness.
Crucially, both the company and the trade unions
recognised that these measures were vital to maintain the skill
base they need now and in the future.
Examples of measures taken include:
a revision of a pending pay award
to help stabilise the company's financial position;
a joint company/TU feasibility study
within an agreed timescale to achieve process improvements vital
to the future of the business. As part of their commitment, the
company agreed to explore every opportunity of insourcing new
work in line with it's industrial strategy, thereby providing
increased employment security in the medium to long-term;
a reduction in the working week,
to assist with the introduction of the Airbus Production System
and required manning levels;
redundancy support for employees
wishing to volunteer for redundancy and utilise their skills in
other areas of manufacturing. Additionally, the company agreed
to offer a full and comprehensive package of support to any employee,
that despite efforts to meet the current challenges facing the
business found themselves in a compulsory redundancy situation;
greater flexibility through agreement
with and promotion by the trade unions;
fixed holidays, a four-day working
week, and a time in lieu arrangement for overtime to help the
business better manage peaks in the work programme and start up
A large part of the unions' vision for the future
involved a greater emphasis on training and the unions successfully
argued that a greater investment in skills would lead to better
work content and more satisfying jobs for employees as well as
improved productivity and competitiveness of the company. Four
hundred staff have completed NVQ level 3. Sixty on site assessors
have been trained to help continue to develop the workforce.
This is a good example of partnership being
sufficiently flexible enough to react quickly to a situation.
We believe without a constructive dialogue with the employer initiatives
like this would not even get off the ground. The employees in
this situation, after the company had shared information with
them, sacrificed a number of conditions of their employment to
ensure that their workplace has a chance for the future. We are
in no doubt that a proactive partnership is fundamental to increased
productivity in the global marketplace.
Too many employers in the aftermath of 11 September
did not believe that they could achieve rationalisation on this
scale to sustain their competitive position. It was only because
of the existing partnership at Airbus that this dialogue could
even take place.
6.2 A Partnership Case StudyProject
Supersavers, Perkins Engines
Two AEEU convenors pioneered an environmental
project that has saved their company thousands of pounds, the
project was initiated and run on partnership principles.
Tony Ellingford and Paul O'Hearn designed Project
Supersavers in 1996 inspired by attending a "Workplace Change"
seminar organised by the AEEU. As the company had begun improving
its environmental performance and there was a need for a fresh
approach to industrial relations Tony and Paul decided to grasp
They approached the management with ambitious
plans to involve the entire company in eliminating waste and conserving
energy. The company was responsive realising the project could
yield benefits in terms of finance, health and safety and naturally,
The convenors assembled a team, which would
focus on spreading environmental best practice throughout the
plant. It was felt that a "bottom up" approach was key
to achieving success. A survey had revealed enthusiasm for environmental
improvements amongst the workforce but little awareness of the
By providing every employee with an explanatory
book and plastering the factory with information posters the projects
message was advertised widely. The booklet contained practical
suggestions on energy saving and environmental responsibility.
In addition, employees were asked to provide suggestions on waste
education, these ideas were then compiled on a database.
The project has heralded radical improvements.
It has been estimated that £100,000 a year has been saved
through waste reduction, awareness of environmental issues has
been raised and annual carbon emissions have been trimmed by 1,600
Once the project became familiar new concepts
were introduced. For instance, every now and then production will
cease for a day in one area of plant to review equipment, identify
links and locate where waste can be reduced. This process is called
The success of Project Supersavers has been
outstanding, so much so that the two convenors have visited Perkins
parent company, Caterpillar in the US to convey the ideas to senior
Based on simple principles and achieved through
patient and committed work inspired by a clear vision, Project
Supersavers demonstrates that partnership unleashes the input
of employees and delivers tangible benefits for employees and
employer alike, an excellent example of employees delivering change
to maintain the competitive position of their company.
We firmly believe that it is essential
that the Government appoint a Minister for Manufacturing with
a clear responsibility for manufacturing issues.
Government and companies need to
take a more pro-active attitude to investing in essential skills
needed across manufacturing. We welcome the Chancellor's recent
moves in the pre-budget statement on this matter and look forward
to the development of the Sector Skills Councils.
The Government must continue to actively
encourage inward investment in UK manufacturing and explore other
funding methods such as the TPC programme in Canada.
We would encourage the Government
to vigorously seek entry into the Euro at a manageable level.
We welcome its recent profile in the Prime Minister's and Chancellor's
speeches but believe the case needs to be made more explicitly
to the British public.
We call for the partnership approach
to be taken more seriously in industry. It is key to fostering
good industrial relations, addressing skills shortages and boosting
productivity. Trade Union's have a vital role in delivering these
goals. However, the process is a two-way street, recent high-profile
plant closures have been handled in an appalling manner breaching
this spirit of partnership.
There requirement for the wider dissemination
of best practice throughout the economy. Formal structures would
ensure that this could be achieved jointly by trade unions and
A tax credit for employee development
that encourages employers to up-skill and continuously develop
their workforce. This could be extended to capture SME's through
dissemination of beat practice.