Examination of witnesses (Questions 20
WEDNESDAY 14 FEBRUARY 2001
20. Can you tell us when it was first made public
that it was intended as a temporary arrangement? Do not tell us
now, but if you can drop us a note.
(Mr Hill) My staff will make a note.
21. What will DARA look like five years from
now and what sites will be doing what sort of work?
(Mr Hill) It is our intention to turn DARA into a
world-class production organisation and that is measured against
benchmarks that are accepted worldwide and put in place by Oliver
Wight Production Specialists. We are already at Class B at our
Almondbank site, driving toward Class B at Fleetlands, and it
is our plan over the next two years to shape the Agency and get
it to world-class measurement. That means looking at all our processes
right across the business, everything from finance to production,
to make sure that they are as lean and competitive as we can make
them in the market-place.
22. What do you anticipate is going to be either
at St Athan or Rhoose five years from now?
(Mr Hill) We have made an absolutely solid commitment,
and this has been publicly stated by our Minister, to remain in
the Vale of Glamorgan either at St Athan or at Cardiff Airport.
Our Aircraft Business Unit, plus all the supporting functions
like manufacturing and structures, will all be part of that entity
which is the largest slice of the business in the Agency and that
will remain in the Vale of Glamorgan. The other areas I have already
outlined which are under study it is too soon to make a conclusion
on, but in avionics we have already created a centre of excellence
at Sealand, on engines within two years we will have one centre
which I believe will be very competitive in the market place at
Fleetlands. Almondbank specialises in helicopter transmissions
and mechanical components and the key area for us now to work
out is what we are going to do with mechanical components. That
is completely open in terms of do we migrate work south or north.
23. Will the Vale of Glamorgan site be designated
as a centre of excellence?
(Mr Hill) Yes, indeed it will. We have every intention
and some of the work we have been doing in the past couple of
years has significantly reduced turn round times and the manpower
content, and we believe we are getting more and more competitive,
so the fixed wing Aircraft Business Unit based at St Athan is
the jewel in the crown of the organisation.
24. Obviously you have not worked out which
option you are going for if you decide to move away from St Athan,
the status quo, new build at St Athan, the refurbishment of St
Athan, or Cardiff Airport. Do you have any ball-park figures as
to what the workforce is likely to be at each of the sites?
(Mr Hill) It is difficult to say until the studies
are worked through but Sealand will remain as it currently is
at around about 1,300 people, Fleetlands around about 1,100, Almondbank
is currently at 350 but depending on how we go forward with components
it could increase in size or it could decrease depending on where
we find it most cost-effective to place the work. As far as St
Athan is concerned, clearly with all its disparate functions,
if we were able to weld those into a single entity there will
be some cost savings in terms of manpower but we will handle that
through natural wastage. In terms of numbers we are talking about
at least 1,400 people in the Aircraft Business Unit and perhaps
25. We were taken past Rhoose Airport when we
left St Athan and we looked at the British Airways hangar. Would
it be possible to put something like that somewhere in a large
corner of St Athan? It is such a vast site of 1,000 acres and
unless there are pressing reasons to move there must be more than
enough room to consolidate on site?
(Mr Hill) And that is going to be looked at in the
evaluation of the options, but there are some other key issues
associated with remaining at St Athan. The runway is not wide
enough or long enough to take all aircraft types whereas Cardiff
Airport is. We cannot take AWACs, wide-bodied jets or Tristar
which is currently in service with the Royal Air Force. The other
Chairman: Sorry to interrupt but would
you construct a building like BA's that would be large enough
to take all of these aircraft types?
26. Maybe at Cardiff Airport?
(Mr Hill) It would depend on the way the market goes.
Currently we have got the VC10 at St Athan. That is planned to
go out of service in a few years' time and we have no plans to
stay in the large aircraft market unless a business opportunity
comes up because obviously the costs of providing a large aircraft
facility are very high indeed. Our core excellence is with fast
jets and that is the lion's share of the aircraft business at
27. So, say, if you vacated the St Athan site
it might be used by some other MoD user or it could be surplus
to requirements and sold off and, if so, the MoD will gain the
money from the sale?
(Mr Hill) Yes indeed. There are a couple of other
issues associated with staying at St Athan. Of course, DARA will
be likely to become the only user of the airfield in which case
we will have to bear all the overheads associated with operations.
If we move to Cardiff Airport there is an alternative to share
the costs with other users. The other fundamental problem we have
found from survey at St Athan is that the site sewage and water
systems have broken down over the years and they need considerable
investment as does the main runway. Clearly if DARA is the only
or major user at St Athan we are going to have to bear the cost.
28. Will there be any planning approval difficulties
if you move to Rhoose?
(Mr Hill) We are working very closely with the Welsh
Development Agency and the Welsh Assembly and their planning people
and we do not believe there will be any significant problems associated
with moving to Cardiff Airport, if that option is taken forward.
29. In terms of timing, would you have to get
planning permission before you make a final decision?
(Mr Hill) Yes, and that work is underway as an option.
We are looking at that so that we do not have to do everything
consecutively. We are doing a number of things in parallel so
we have a well-informed business case to present to the Minister.
30. It would be really helpful even though this
Committee will fall in the Election, if when you do complete your
study, again on the basis of the previous material, if we could
have a look at it. Just a couple more questions, if I may. In
your Annual Report it lists the cost of consultancies which was
(Mr Hill) Yes.
31. I think I am in the wrong job and you are!
(Mr Hill) No, no.
Chairman: I cannot say about you, I can
only say about me.
32. £12 million, Chairman.
(Mr Hill) The problem is that the convention is that
you put all sorts of things into the consultancy bucket. If you
take the £12 million, £4.3 million of it is the contractors'
working party with BAE Systems working on our VC10s, so a third
of it is associated with CWP, actual physical work on aircraft.
Then if you look at other areas that are included within that
it includes interim managers and we have had to use a number of
interim managers both for expertise and because of a lack of capacity
within our own workforce in order to get us towards trading fund.
So that bucket does contain a number of elements that are not
associated with paying the big five like KPMG their excellent
33. You could not decide to move into accountancy,
could you, as that would certainly sort out your financial problems
because obviously that profession is far more lucrative than engine
(Mr Hill) This is why we have recruited David Rutherford
who is expert in that area.
34. Spending that sort of money it is important
what terms of reference you set. How do you decide the terms of
(Mr Hill) The terms of reference were very clearly
mapped out in the competition that we ran and KPMG came in with
the best price against that specification and statement of work.
They also only got paid if they delivered against the milestones,
so there was periodic review of their performance to make sure
they delivered. We have given you the enterprise transformation
paper findings and you will see that for the investment that went
into KPMG that we have had a significant return on investment
in terms of savings, something like £33 million once they
are all worked through, so it has been a good investment.
35. A last question from me and then I will
hand over the chairmanship to Mr Hood. We have had quite a lot
of correspondence, some of it even with their names and addresses
on them, so there are disgruntled workers, Mr Hill, you obviously
know that, and we have actually spoken to some of them.
(Mr Hill) Yes.
36. May I have your assurance that there will
be no disciplinary action taken against anyone who has contacted
us, and no bars on any promotion? I am sure, as an honourable
man you would recognise even though you believe you have a master
plan you have to take large numbers of people along with you and
certainly you have not done that entirely as of this point in
time, even though you do have quite a remarkable consultation
process that in many ways should be emulated not just within the
public sector but in much of the private sector too.
(Mr Hill) I do believe that we are doing everything
we possibly can to try to carry the entire workforce with us.
We do have nearly 6,000 people and you will always have some people
who are uncomfortable with change. It is up to us to try to manage
and that is why myself and my board are spending a huge amount
of effort in consultation and particularly in communication and
participation so that we get as many people involved in the change
process as we can. You are always going to get some people who
will be unhappy with that.
37. There will be no disciplinary action of
any kind or penalties for people who came into contact with us
by writing or personal contact outside the structure of the meetings
that you arranged?
(Mr Hill) I do not know what documents have been put
in front of you.
38. They were not classified, I can assure you;
it was opinion.
(Mr Hill) There has been some correspondence that
has been libelous against me personally. I do not know who has
put that out but I could not give an absolute undertaking that
if somebody libelled me in public I would not take action. I might
have to do that just like any other citizen is allowed to do in
39. I can absolutely assure you that although
they do not all regard you as the perfect employer, I could see
nothing whatsoever that was actionable and nothing whatsoever
that was classified, and in those circumstances we will accept
(Mr Hill) I will give an absolute undertaking, subject
to libellous material not being put into the open domain.