Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 379 - 399)




  379. Mr Woodley, could you introduce your colleagues to us?
  (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 came from?
  (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 officers—that is Terry Pye, Tony Woodley and myself—met 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.

Mr Laxton

  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 closure.

  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 future.
  (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.

Helen Southworth

  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 predict—and these are facts—that 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.

Mr Chope

  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 company—at Luton, at Ellesmere Port—agreed 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 the wall.

  Mr Chope: Vauxhall absolutely deny that, Chairman. I think we should put that on the record.

  Chairman: They would, wouldn't they.

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