50. The decision to end car production at Luton
was not made because of any perceived inefficiencies or failings
of the Luton plant. Mr Reilly told us in January "the plant
has performed very well over the last two years...the workforce,
frankly, I do not think could have done anything more to make
the decision different ....".
He assured us that relative productivity had played no part in
the decision, and agreed that even if Luton had been the Group's
most efficient and profitable plant it would not have helped.
51. We have been quoted various figures on the relative
productivity of Luton. There are doubts about their accuracy.
The figures published in the trade press apparently include only
those directly employed, thus making those plants who have outsourced
extensively seem more productive than they really are. We assume
that GME have a rather more sophisticated way of measuring productivity
and efficiency, for purposes of internal management audit. There
must, for example, be ways of comparing Luton with the other principal
Vectra plant at Rüsselsheim, which produced broadly the same
numbers of Vectras in 1999 as Luton. The general consensus seems
to be that, once currency issues are stripped out, and taking
account of GM transfer pricing, Luton is at least as efficient
and productive as comparable GM plants.
52. We sought to discover if Luton was a profitable
operation for GM. We were told that Vauxhall as a whole was a
profit centre, while Luton was a cost centre, so that it was not
possible to say if Luton was profitable or not.
We appreciate that it is difficult to separate out profit centres
down to individual plant level. It does however seem to us
an anomaly that, in the absence of such simple information being
available to management, unprofitable plants may be retained at
the expense of profitable plants.
53. The obvious alternative might have been to remove
the new Vectra from Russelsheim, and leave Luton as the principal
new Vectra plant. Many factors militated against such a course
of action. Labour laws apart, the effective ending of vehicle
assembly at GM's largest German plant and the centre of its car
engineering and design operations would have been a blow to GM's
image in its principal market which would have been insupportable.
Evidence to us from Mr Reilly suggested that it would have been
impossible to move the tools going into Russelsheim to a potential
flex plant because they were specific for German "notch back"
and estate Vectra and Omega production.
Closure would thus have led to a significant waste of money spent
on retooling. Luton was the plant producing the wrong model
at the wrong time. It was the only way General Motors Europe could
take out a significant amount of capacity in the short-term.
54. The allegation has again been made that the UK's
labour laws have allowed a multinational company to embark on
large-scale cuts without prior consultation with the workforce.
The leaking of the announcement on 12 December 2000 so that the
first that most employees heard of it was on the local radio station,
added insult to injury.
As the Secretary of State said
"That is no way, at
the beginning of the 21st century and in a spirit of
partnership in the workplace, to treat dedicated and hard-working
Mr Reilly denied that labour laws had been a consideration,
citing the company's willingness to make fresh investments in
the UK. That is of
course not a rebuttal of the thesis. We can only speculate whether
General Motors might have come to a different decision if they
had been advised that the breach of the 1998 Agreement could lead
to vast sums in compensation, or if they were obliged to pay out
large sums of social finance if they closed Luton, as they would
in similar circumstances in Germany.