Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 400 - 418)



Ms Perham

  400. Mr Longley referred to the conditions for redundancy, so presumably that has not been discussed, or are you thinking it will be the ones in the agreement—the so-called agreement—with you and Vauxhall? Were redundancy terms mentioned in the agreement in 1998?
  (Mr Woodley) As far as we are concerned you would expect us to say that we do not accept the decision and our general secretaries are having meetings on Monday of next week and no doubt thereafter will go to Detroit to try and influence this decision. So we are not accepting the plant closure, so sitting here today there are no enforced redundancies or redundancies of any type hopefully going to take place. The agreement we have means there should not be any enforced redundancies, and certainly our thoughts in trying to limit the damage from this disaster will be to try and make sure this plant maintains its vehicle production, to try and make sure that the new Vectra does go into this plant as opposed to another plant in Europe going to three shifts within two years, but also it does make business logic that some employees will move through the wall, as we say, into IBC where they need labour immediately. That is a better overall financial position for everybody than that which is presently on the table. We certainly do not intend to see our people, our plant, our community, treated as mugs.

  401. We did cover that with Mr Reilly and his colleague. With the Luton Vauxhall Partnership being set up on the 13th, the day after, and our understanding is that 70 per cent of the Luton assembly plant employees live in Luton itself, what expectations have you got for the working of the Partnership, or is that a step you do not really want to think about before you can try and save the plant?
  (Mr Woodley) You would have to be insane not to accept that in really difficult circumstances like these any task forces, any partnerships, which can lead to re-training for jobs would be welcome, but nothing could compensate obviously for the loss of this massive manufacturing site with its knock-on effects in components and the rest of the economy. That is why we believe we have to convince this company it is not in their interests, because we believe consumers will react, it could very well be nobody wants to work because people have worked so hard in recent years to make sure this company has a profit year on year, but at the end of the day what do we do? Do we sit back and do nothing and allow our agreements to be broken, our country to be treated poorly, or do we turn round and do something? Therefore we have no choice, we have to try and work with this company now to try and minimise their losses which are clearly there in Europe at the moment, although not in Britain. Let's try and help by some employees going through into IBC, but let's make sure that the fabric of this plant is maintained with the agreement that Epsilon should come into Luton. That is the best thing we can do, rather than worry ourselves about redundancies which we are not going to accept.
  (Mr Pye) Of course these are all measures we would have done if we had had proper consultation right from the start. We are doing it now against the back cloth that the company has made this decision. If we had been consulted as we were two weeks before the events about the difficulties, we would have been engaged in a dialogue to resolve those difficulties.

  402. You said at the beginning, Mr Woodley, that you were given to understand by Mr Reilly several weeks before there was a problem that he had fought that off?
  (Mr Woodley) That is right.

  403. So your next step is to go to Detroit and follow the legal action path?
  (Mr Woodley) As you know, there are many meetings and of course there is to be a town rally in Luton. Our task is to galvanise political and public and industrial support to pressurise General Motors into honouring their agreement. We think it makes good business logic and economic sense for them and some of our arguments cannot be refuted. I keep going back to this over-capacity, it is not about bad workers, bad quality, about profit, what is all this about? It is not about over-capacity, it is not. For the record again, if we talk about capacity utilisation across all the European plants, the total capacity utilisation for General Motors for all plants is 74 per cent, that is incredibly high. To put it into perspective, Ford's capacity utilisation across Europe is 60 per cent. Fiat's capacity utilisation is 54 per cent. This is what we are dealing with here. I am repeating myself here but they have a need to reduce capacity in the short-term, reduce losses in the short-term, but somebody is going to benefit from the Luton closure in 2? years and our task is to make sure that benefit and that agreement leaves jobs in this country, because that is the agreement.

Mr Butterfill

  404. There are a lot of similarities here it seems to me between the pre-emptory decision BMW made over Rover and that announcement and the behaviour by General Motors where they made a sudden announcement which nobody apparently expected. Would you agree with that?
  (Mr Woodley) I would agree the decision was sudden, but I think the needs were completely different.

  405. The other parallel is this, BMW said, "Well, Stephen Byers ought to have known, we were telling him for ages beforehand, we were flagging up we were in trouble, there were things he could and should have done before hand but he said no he could not." Is it not the same situation here? The DTI knew at least a month beforehand there was real trouble and serious decisions were going to be made by the company and yet, as far as I can see, no proposals were being actively put forward by the DTI, or did they come to you and say, "Is there anything we can do? What can we do together to stop an adverse decision being made by the GM board?"
  (Mr Woodley) I think this is the same question which was asked earlier, Chairman. I am not a politician, I am a trade union leader and I think it would be inappropriate for anyone to make politics. This Government, with respect, is not to blame. We have General Motors who are breaking the agreement. If I may say this, I am disappointed that not one single MP—other than the two local MPs possibly—senior MPs, ministers, of any party, of any party—

  406. You are seeing them today.
  (Mr Woodley)—is condemning what General Motors has done. They have broken European law, they have broken their agreement with British workers, having taken British taxpayers' money. So, with respect, do you not think it is time that everyone joined together and said, "This just is not good enough." That is what I believe as a trade union person.

  407. We also have a situation where we seem to be in a situation where the DTI is always finding out about these things at the last minute, even though it is suggested by the companies they were given lots of warnings.
  (Mr Woodley) I have no comment to make.

  408. Can I turn to the Frontera and the Vivaro proposals? How much confidence do you have in the company's plans for Frontera production continuing and for the long-term prospects for the Vivaro?
  (Mr Woodley) What we are dealing with here is very clear. The Frontera has a life span of about 3 years, they are going to cap the production of that vehicle to a maximum of 40,000 units, and they are presently selling 25,000, therefore irrespective of how many people will work on that vehicle, these are short-term jobs. 500 jobs, irrespective of today, will eventually disappear. There are no plans by General Motors at the moment to replace that vehicle, wherever it is built. With regard to the possibility and problems for the other plants, our people at IBC and all of us, but particularly the people at IBC, worked hard for that Renault joint venture to be the only plant in Europe building those vehicles. Unfortunately, late on, they lost that battle. Therefore there is a second Renault plant in Europe which not only will build their vehicles but will build all of the derivatives for that particular van.

  409. You will not be building the high-sided van, for example?
  (Mr Woodley) Correct. So that is not good news but my concern and why we must continue to win this battle with General Motors is this, two years ago Mr Reilly came to us and said, "We have a problem at Luton, we need Ellesmere Port's help." We bought into that, not because we are naive or wanted to keel over and have our bellies tickled, we bought it because we accepted his argument. His argument was that if Luton goes down, there will be what he described as a halo effect, a domino effect, on Ellesmere Port, because the overall costs of running this giant company would be out of kilter and therefore there would be a threat to the other plant. I truthfully believe that in the medium to long-term if Luton is allowed to close, that could be a big problem for our country and for our second plant. I also believe that that Renault plant, which literally sits alongside Luton—it used to be the Luton van plant and it is all one plant really—if Luton itself closes, it must affect everyone and everything, surely. So we are very, very concerned. It is not just a Luton problem, it is a Vauxhall worker problem in Britain.

  410. n terms of those of your members who transfer to IBC, and there will be a reasonable number who do that, one hopes, are their terms and conditions going to be as good?
  (Mr Woodley) The terms and conditions vary. Some things are good, some things are not quite so good. It is just a pity really that General Motors, which of course wholly own IBC, did not re-integrate this company back into the family some years ago. What they did was they left it standing alone because of helpful tax burdens—I am not sure that is the right word—from the past; they could claim tax on it. If they had not done that, we would not be having this discussion, they would have just transferred people through from one plant to another with the minimum of consultation.

  411.  It is strange you have two plants on the same site owned by the same company with different terms and conditions.
  (Mr Woodley) There is a history with respect to that. That was an Isuzu Bedford plant, a joint venture, with a Japanese company, about a decade and a half ago. That is the reason for that.


  412. Just to clarify one point. There was a meeting which you held with Mr Reilly four weeks before the announcement, and at that meeting am I right in saying he said to you, "A deal has been done, there are going to have to be savings but Luton has been saved"? Is that correct?
  (Mr Simpson) That was on 2nd November and that is when he told us of the 180 million dollar loss and also he did say that the strength of the pound against the euro had put the focus once again on the UK operations. That is why some people—the hawks, as Mr Woodley referred to them—were talking about closing one of our plants. One of the arguments he told us he had used in response to the currency argument was that it was his opinion that in the next 12 to 18 months the euro would strengthen and that would obviously be helpful to us. He did go on to say that by adjusting production lines, by the utilisation of the 4 to 500 people required at IBC—and indeed at one juncture he spoke about the possibility of people being transferred from Ellesmere Port down to the Luton site—by a combination of those things, he did say he had staved off the attempts and moves by some people on the board to close one of the plants. We reported that back in good faith and indeed our local committees were given the same information, again by Mr Reilly.
  (Mr Woodley) There was a caveat, there was always a caveat. "That is what we believe we can achieve, but if Detroit over-ruled people, it is out of our hands."

  413. The implication is that perhaps Mr Reilly was telling the Department of Trade & Industry something different from what he was telling you over that four week period between early November and the 8th December when the final decision was taken, that somehow the Government had known about it over that period in the context of conversations which seem to occur between the DTI or whoever and GM in the UK. I am trying to establish that in your view, you were told one thing in early November, you were tragically told something in very unfortunate circumstances in early December, but in the intervening period there is nothing to suggest Mr Reilly had any alternative information which he was sharing with the Department of Trade & Industry. Is that correct?
  (Mr Simpson) I did ask the question at a subsequent meeting with the general secretaries in attendance, "Is it a double-back somersault by the European board, or has the matter been taken out of your hands? Was the decision made in Detroit?" His answer was it was a decision made by the European board. We suspect the other.

  414. You said the "general secretaries"—?
  (Mr Simpson) Our general secretaries were in attendance at the meeting when I asked him the question, "Was it a double-back somersault by the GM European board or was the decision taken out of their hands?", because it was such a contradiction to what we had been told four weeks earlier. That is why it came completely out of the blue, completely unexpected. I asked him the question, "Was it a double-back somersault and why, or was it a decision made elsewhere?" The response I got was that the decision was made by the European board.
  (Mr Pye) The things Mr Reilly was telling us four weeks prior to dropping the bombshell, he was also telling the DTI. Certainly I listened very carefully when Mr Reilly was giving his evidence and if you look back, he actually confirms his evidence.

  Chairman: I just wanted to clarify that because there seemed to be a misunderstanding on this side of the table.

Mr Hoyle

  415. Following the disgraceful way that the workers in Luton have been treated, what faith do you think your colleagues in Ellesmere Port should have in the successor for the Astra being assembled there?
  (Mr Woodley) Ironically that is my old plant. I was 20 years there. I have the same view of Ellesmere Port as I have for Luton, for Dagenham, for Halewood and indeed for Longbridge. The labour laws are poor, globalisation has affected us that severely that governments of any country cannot come to grips with the problems of it, and the only way in which Ellesmere Port or indeed Luton can guarantee agreements are made and honoured is for them to be able to affect the company in such a way that they will not want to break those agreements. I am sorry to have to say it but the reality of life is that these companies at the moment are ignoring governments, they are ignoring labour, they are ignoring their commitments, and their only goal appears to be shareholder value while the stakeholders pay the price. It is not good enough.

  416. Is there any credibility in the word of GM Management any more?
  (Mr Woodley)When we reverse the decision, I hope the answer is yes.

  Mr Hoyle: I will leave it at that, Chairman.


  417. On that note, I thank you for your forbearance and also thank you for your frankness in both sessions we have had today, gentlemen. As always, if there is additional information we require, we know where to come to get it.
  (Mr Woodley) Chairman, we have a package of agreements, some of which you have got, but I did pass you a letter from my general secretary today

  418. We have looked at it and the letter will be put in the evidence. We will consider what action to take once we have had an opportunity to discuss it. I was not sure if the general secretary's letter was for publication at this meeting.
  (Mr Woodley) It is.

  Chairman: We have raised the issue with Mr Reilly, you probably heard me raising it in the conversations we had with him, but I will discuss with my colleagues what course of action we will take on the letter. It may well be that we will decide to send some questions to the Detroit people to secure responses from them. Whether or not they will be asked to appear before us is a different matter and there are practicalities involved in that which, frankly, at this stage I have to share with my colleagues. I have had the letter, it will be included along with what we have received today in the evidence we put in. Whether or not we will act upon the suggestion, remains to be seen at this stage. Thank you very much.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 8 February 2001