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12 Dec 2007 : Column 82WH—continued
I also appreciated the speech of my hon. Friend the Member for Chorley (Mr. Hoyle), who is chuntering away at the moment. He is a good friend of mine, and over the years he has consistently been at the forefront of maintaining the case for British manufacturing and the car industry. At times, the climate has been quite cold. A few years ago, before the collapse of WorldCom and Enron, our Government tended to be preoccupied with what we thought of as the new economy, at the expense of the manufacturing industry,
which tended to fall off the edge in terms of debates, but the then Department of Trade and Industry later changed its thinking on that dramatically. Throughout all that, my hon. Friend has been at the forefront in maintaining the case for British manufacturing, and I applaud his work.
I also applaud my hon. Friend’s speech, especially some of his comments about agency workers and factors such as the downward pressures in the labour market. We in Dagenham have been at the hard end of that, because despite the protestations that people made throughout the protracted struggle to maintain car assembly in the Ford plant, which we lost, the outstanding factor was the ease with which jobs could be cut in this country because of labour market conditions. I still abide by that view, because I saw it happen at close hand.
One thing that my hon. Friend missed out of his tour de force, which focused on manufacturing and the car industry across the whole country, was the role of manufacturing in London. It also seems to be omitted from debates about the capital, in which we become preoccupied with financial services, arguably at the expense of the role of manufacturing. I know that the Minister, as the MP for East Ham, has a working knowledge of the Ford Dagenham plant—indeed, some of his constituents work there—so he will not be one of those who overlook the role of manufacturing in the London economy, or the east London economy, but there is a tendency to do so in debates on future economic strategy. Today’s debate gives us an opportunity to overcome that.
As I have said, before I was elected I was involved in attempts to save car assembly at the Ford Dagenham plant. Unfortunately, we did not manage to do that, but, contrary to the belief that the car plant at Dagenham has closed, we did manage to diversify into engine production. Compared with the somewhat darker days between 1997 and 2000, the plant is now thriving as a result of that diversification into diesel engine manufacturing and technology. Since 2003, Ford has invested £800 million in the Ford Dagenham plant, thus confirming its strategic importance as Ford’s European diesel engine manufacturing centre. Today, it manufactures engines for Ford, Jaguar, Land Rover and Volvo, and the latest investment will mean that output increases to more than 1 million units by 2009, and that the plant will supply more than 50 per cent. of Ford’s global diesel demand. Between them, the Dagenham plant and the Ford Bridgend plant, which manufactures petrol engines for Ford, Jaguar, Land Rover and Volvo, supply about 25 per cent. of Ford’s global engine requirement. In any debate on the car industry in this country, we should acknowledge that role in relation to diesel and engine technology and production.
Since 1999 and 2000, when the plant ended car assembly, there has been a massive economic transformation. It has been very bumpy and difficult at times and it has taken a lot of hard work by all parties, but we now sit in a very different place from where we sat then. I should put on record the tireless work of the Mayor of London, his advisers, successive DTI Ministers and advisers, and, indeed, a couple of Prime Ministers in maintaining that investment and working strategically with the Ford Motor Company. At times,
the whole plant was threatened, but there has been a major transformation in recent years that will, I hope, provide a platform for further investment and production.
In total, the Ford Motor Company employs about 30,000 people in this country—approximately one third of its employees in Europe—of whom 15,500 are employees of Jaguar and Land Rover. I have a few points to make against that general backdrop about the sale of Jaguar and Land Rover and about R and D, which my hon. Friends have already discussed. There is also a question about the future of the supply chain, which has direct relevance to the Ford Dagenham plant and the future production of diesel engines. The debate about the future of Jaguar and Land Rover is not an isolated debate: the consequences will be felt throughout the British economy.
Research and development is an important part of Ford’s UK work, and accounts for up to 80 per cent. of automotive industry R and D in Britain. About 9,500 people are employed at its three main technical centres at Dunton, Gaydon and Whitley, responsible for Jaguar and Land Rover engineering development. Spending in the UK on R and D for Ford brands is around £800 million annually. We need to maintain those investments. It is clear from discussions with Ford that it believes that environmental technology development provides an economic opportunity for the UK. However, the UK cost equation presents a significant challenge to investment, given the growth in technical capability in India and China. Funds are available for R and D activity and investment, but they need to be maintained and, arguably, increased to maintain our current competitive position, especially within the context of the global market, and to maintain and boost employment for UK workers.
Secondly, I want to touch on a couple of points that my hon. Friend the Member for Birmingham, Northfield made about CO2 emissions legislation. Any new EU legislation on CO2 emissions needs to ensure that premium manufacturers such as Jaguar and Land Rover are protected. That point was made earlier. The legislation will impose challenging targets for the entire industry, but it is likely that vehicle manufacturer groups will be able to offset their smaller, higher volume vehicles against the lower volume, higher CO2-emitting vehicles. But if and when Jaguar Land Rover becomes a separate company, it will not be possible to offset emissions in that way, despite the fact that Jaguar Land Rover plans to reduce CO2 emissions by more than the industry’s expected average reduction of 18 per cent. I would appreciate the Minister’s comments on that. Do we need provision in the legislation for niche producers? It would mean that companies such as Jaguar and Land Rover, which do not produce a full range of vehicles and whose sales volumes in Europe are relatively low, would have a separate target still expected to be in excess of the average overall reduction for the industry.
Lorely Burt:
I have had a number of discussions in Brussels about the targets. My understanding is that the problem is appreciated, and that there is willingness to be flexible in the application. Everyone wants CO2 levels to decrease—indeed, Land Rover and Jaguar are committed to making huge strides in decreasing
emissions to below the industry average. That seems to resonate well with the people who will eventually make the decisions on targets.
Jon Cruddas: I appreciate that intervention, because that is my understanding as well. I made the point to give the Minister an opportunity to comment on it. That is why this debate, initiated by my hon. Friend the Member for Chorley, is timely.
The objective of any sale should be to provide Jaguar Land Rover with the ownership, technology and investment structure that it needs to allow it to reach its full potential, while enabling Ford Motor Company to concentrate on its core business strategy.
Mr. Hoyle: We must guarantee that any takeover or buy-out keeps not only the same powertrain going, but the rest of the component sector that feeds into Land Rover and Jaguar, because, unfortunately, people have to take the cost out to pay the bill for buying them. Let us hope that there will be guarantees for everybody.
Jon Cruddas: Funnily enough, that is exactly the point that I was about to make, as there is a direct interest for my east London constituency. The changes would ricochet throughout other parts of the British economy as well, which is the primary reason for having this debate today.
As the largest employer in the UK auto industry, Ford has responsibilities not only to its employees but to its local communities. There would be significant connections between Ford Motor Company and Jaguar Land Rover in terms of component supply, engineering and manufacturing, and any potential sale would need to take full account of that, not least in terms of the consequences for diesel engine production in my Dagenham constituency. The company has selected several bidders to proceed to more detailed discussions. The successful bidder must be a strong owner for the business going forward.
Overall, I very much welcome this debate. It has allowed us to put several points on the agenda in a short time. I look forward to the Minister’s response and commend my hon. Friend the Member for Chorley for initiating it.
10.23 am
Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): It is a great pleasure to follow the hon. Member for Dagenham (Jon Cruddas). I strongly agree that our Labour Government neglected manufacturing during their first term. We did not do enough—we were relying too much on dotcom culture. I remember telling Peter Mandelson that that would blow up, and that is exactly what happened. I agree with my hon. Friend’s sentiments that we should have done more in the first term.
However, much more has been done for manufacturing in the second term and this one. I am happy that the Minister is here, because he takes manufacturing seriously. In all the discussions that I have had with him on different occasions and in different Departments, he has been a great champion
of manufacturing. He is honest and realistic about globalisation, and I have agreed with nearly everything that he has said at different times about manufacturing and the direction that the Government are taking. I am happy that he is on stream for this debate.
I congratulate my very dear hon. Friend the Member for Chorley (Mr. Hoyle) on initiating this debate. As other Members said, it has become an annual event, and long may it continue. It is vital that we discuss manufacturing and car production, which is an important sector. May my hon. Friend carry on applying for these debates, and may Mr. Speaker always grant them in the years to come.
I want to tell the House a success story. My hon. Friend focused on the depressing end, but I want to talk about the north-east and the great success of Nissan. The car production sector is important to us in the north-east. It makes up 10 per cent. of the UK’s gross value added in this area of the engineering sector. I ask nothing from the Minister, but just want to put on the record a success story in the north-east.
The car production sector employs 15,000 people in the north-east. The region is home to Nissan’s manufacturing base, and the plant and its supply chain lie at the heart of the region’s activity. There are, of course, companies other than Nissan, and in the original equipment manufacturers I would include Caterpillar, which runs a thriving plant in my constituency and enjoys a mutually productive partnership with Corus Special Sections. They share a common site at Carlin How at Skinningrove in east Cleveland. I also want to mention ElringKlinger Gaskets, a major employer in the Teesside area that employs a large number of my constituents.
The efforts of the car production sector are recognised by development interest in the region. Support from the regional development agency One NorthEast, the Government office and the region’s local councils has helped the sector to generate profitable growth, to provide focused business support, to promote the regional car manufacturing capability and to provide a management service that reflects the strategic importance of the sector in the north-east.
A key challenge has been to encourage good practice in training for an industry that is still relatively new to the region and to encourage similar good practice in production techniques. The key driver in the sector is, of course, Nissan Motors, which has had its UK manufacturing base in Sunderland since 1986. It has been identified as the most productive car plant in Europe for the past seven years running, and here I want to thank the Government for their financial support. Millions of pounds have been allocated to Nissan, and it was appreciated. I appreciate the Government’s support.
With nearly one third of a million Micra, Almera and Primera models produced each year, Nissan now accounts for one in five of all cars produced in the UK. Sunderland was selected for the production of a new sports utility vehicle range, with £500 million of investment creating a further 400 jobs.
Nissan’s plant is highly technically advanced. A total of 435 functioning robots provide for nearly 80 per cent. automation of the assembly process at the plant. About 75 per cent. of production is exported to
markets in 45 countries, including the Nissan home nation of Japan. Nissan contributes some £500 million to the local economy each year and has 240 suppliers in the region. Its total investment exceeds £2 billion, and some 5,000 people are employed at the plant.
Nissan has also been the agency for creating a large supply base in the region. Significant suppliers include Hashimoto, Magna Kansei, Calsonic Kansei, TRW Automotive and Johnson Controls. Much of the work is concentrated around Sunderland, and the city continues to build on its worldwide reputation as a centre of car manufacturing. The sector employs 12,000 people in the city alone. There is potential for further growth of the sector throughout the region through the development of local supply chains and the adoption of advanced manufacturing practices. That will help to maintain global competitiveness.
Hon. Members have mentioned training, support, and research and development. In commenting on one aspect of training, I commend an institution: the Institute for Automotive and Manufacturing Advanced Practice, which is based at the university of Sunderland and which provides consultancy, training and industry-led research, including design and process solutions delivered through the computer-aided engineering centre. Its expertise covers a broad range of industrial applications with particular strengths in the car manufacturing sector. It can provide a range of valuable services to manufacturers with the added weight of its existing expertise as a leading group in niche international research. Its services can be applied equally to smaller companies of 100 or fewer employees through to major corporations. They can also be applied to individuals who are looking to upskill their engineering expertise through education and professional development.
My time has run out, but I again congratulate my hon. Friend the Member for Chorley on securing this debate. I wanted to put on record the great success story in my constituency because it is important. I hope that the Minister will take that success forward, and I thank the Government for their support in my constituency.
10.31 am
Lorely Burt (Solihull) (LD): I add my congratulations to the hon. Member for Chorley (Mr. Hoyle). I requested this debate on 28 June following the announcement of the proposed sell-off of Jaguar and Land Rover. To misquote Mark Twain, the report of the car industry’s death in Britain is somewhat premature, and I am fed up with the nay-sayers who say that the industry is on its knees. However, there is a bad side with 6,000 jobs lost at Land Rover at Longbridge, and 2,300 lost at Peugeot Citroen just round the corner from Solihull at Ryton. Vauxhall has had job losses at Ellesmere Port; Ford has had £6 billion of losses worldwide, and is selling the classic marques of Jaguar and Land Rover to try to balance its books.
The hon. Members for Chorley and for Dagenham (Jon Cruddas) bemoan the fact that it is cheaper to close a factory in the United Kingdom than in other parts of Europe, but the UK is also a more attractive place in which to set up a car factory, because of our flexible working practices.
Mr. Hoyle: Although I agree with the hon. Lady, the last plant to be set up here was Toyota, and we have not had that success. In fact, during 10 years of this Government, no major car plant has been established in the UK, but there have been closures, and the hon. Lady should think carefully about that.
Lorely Burt: I am grateful for that intervention, because the hon. Gentleman makes a good point, but our flexibility is a huge selling point for retaining our existing manufacturing industry, as is the attractiveness of the UK as a destination for manufacturers. I shall talk about that later.
Let us look at the success side. During the past decade, Japanese car giants have invested £5 billion in the UK, and created 10,000 jobs. The hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar) gave a delightful description of the stunning success of Nissan’s car plant. BMW now employs 55,000 people in the UK, following the Mini’s tremendous success, with 200,000 cars built at Cowley last year, as the right hon. Member for Oxford, East (Mr. Smith) said. The United Kingdom builds more cars today than ever before—1.8 million last year, 74 per cent. of which were exported.
Richard Burden: We have paid credit to a number of companies, and it would be remiss if the debate concluded without a mention of Honda and its expansion at Swindon. Indeed, it has added a third shift, and we must publicly acknowledge that.
Lorely Burt: I am grateful to the hon. Gentleman for mentioning Honda. I totally concur with his point.
Jaguar and Land Rover are being sold not because they are so-called basket cases, but because they will fetch a good price. The hon. Member for Chorley said that Ford is selling off the family silver, and that is regrettable, but I recall the earlier point that that will involve large investment in the company. That investment is necessary, although Ford has invested £1 billion in new technology and fighting carbon emissions to make their vehicles more environmentally friendly and competitive.
Land Rover is a success story, and well known to me as it is in my constituency. It is a unique, iconic brand, and is revered around the world for its ability to keep going on any terrain. When I was in Dallas in the autumn I visited a Land Rover dealer. In America, the Land Rover is dwarfed by some 4x4 vehicles, but there is great love and respect for the brand, which is borne out of a history that the Americans have grown up with. Global sales rose by 27 per cent. last year up to November. Land Rover, which is coming up to its 60th birthday, is enjoying its third record sales year, and 70 per cent. of those sales contribute to our export balance of payments.
I mentioned Ford’s investment in low-carbon technology, which includes the e-terrain technology concept vehicle that will have CO2 emissions of 150 g/per km. Ford is making great strides in reducing carbon emissions and developing new technology.
Interest in buying the Land Rover and Jaguar marques has been very keen. The announcement of the preferred bidder is expected soon. I acknowledge the points made by the hon. Member for Chorley about the uncertainty and worry for families, particularly in
the west midlands. We can only accept the assurances that Ford has given that it is a good, corporately responsible employer and that it is looking for long-term continuity for both marques. That has been a major consideration in its evaluation of the bids. We do not know who the preferred bidder will be, but we hope that it will give similar commitments.
The elephant in the room, which I have not mentioned, is ownership. Apart from classic, niche marques, such as Morgan and Bristol, the UK car manufacturing industry has no ownership worth speaking of, but that is a fact of life. We have had to come to terms with the death by a 1,000 cuts of an industry’s ownership, but we are where we are, and there is more to be hopeful about in the industry’s future.
Another cause for optimism in car manufacturing is global warming, which seems to be posing a great threat. Foreign manufacturers flock to the UK because of our skills base and expertise, as the hon. Member for Birmingham, Northfield (Richard Burden) said. Our innovative design and technology is cutting edge. Why else would all the formula one teams have engineering resources here? We are simply the best at automotive engineering and we are putting our energies into meeting the climate change challenge. As the hon. Gentleman said, we can export that technology, as well as the vehicles that we manufacture.
I want to leave hon. Members with just a couple of examples. The British-owned electric Smart car is produced by Zytek in Lichfield, and hon. Members will see the G-Wiz on the streets of London any day. For those who want the ultimate sports car, there is the Tesla Roadster. The company is American-owned, but has a British subsidiary. The car does 0 to 60mph in under four seconds. It also does 135 mpg and 245 miles per charge—yes, it is electric. It costs less than 1p per mile to run and it is beautiful—it is a car to drool over.
So the future is bright—the future is electric. We have the ability to meet market and global warming challenges. Not all change is welcome, but change does give British engineers and workers the opportunity to take full advantage of their skills and to lead the world.
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