Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Memorandum submitted by Ford Motor Company Ltd

  Follow up to oral evidence given by Ian McAllister and John Crew, Wednesday 24 May.

Q. What are the differences in labour law in Germany and the UK? Could you set out what the statutory requirements would be for Ford in Cologne?

  Attachment A summarises the statutory separation requirements in the UK, Germany and Belgium (Ford Genk is part of Ford Werke AG) and outlines our legal obligations when operating separation programmes in the respective countries. Also included in the summary are the separation terms that we have announced to the Unions in the UK and that we will apply at Dagenham in 2001-02.

  In order to illustrate the different payments an employee would receive under each scenario, we have applied the different terms to a typical semi-skilled Wage Grade 3 employee (Attachment B). There are four example calculations reflecting different age/service periods. These examples clearly illustrate that the Ford Britain separation terms are financially far more beneficial to employees separating from the Company than the statutory terms applying generally in the UK, Germany or Belgium.

Q. Was there an investment security contract agreement with Ford established in 1993 and reaffirmed in 1997, that there would be no redundancies in Germany and does it contain clauses which put special protection on Ford German workers. What was the penalty clause and how could it be used should Ford renege on the agreement?

  In 1994 (not 1993 as stated in the question) and 1997 the Company reached Agreements with the Ford Germany Central Works Council on "innovative improvements to manufacturing costs, quality, efficiency as well as flexibility of production in German locations in order to strengthen the position of Ford-Werke AG and its German plants and to secure employment." The Agreements provided commitments on future investment on product in a number of locations. As part of these Agreements employees made pay and benefit concessions in order to assist the Company in the funding of the commitments contained in them.

  In 1997, a Ford Britain Employment Security and Investment Statement was agreed with the Unions. The Company made statements on a number of product sourcing actions and confirmed its on-going and long-term commitments to its Manufacturing and Product Development activities in Ford Britain.

  Neither the Ford Germany Agreements nor the Ford Britain Statement contains commitments to no redundancies. In Germany, there is a supplement to the 1994 Agreement (incorporated in 1998), which states that there will be no compulsory redundancies as a consequence of the cessation of Scorpio production at Cologne (occurred end June 1998). Ford has not operated a compulsory redundancy programme in Britain for over 30 years.

  There are no penalty clauses in the Ford Germany Agreements (or in the Ford Britain Statement).

Q. Would you supply a copy of expected figures to be employed in the pressing plant, wheel plant and tool shop on the Dagenham Estate. Details of any further jobs to be created in these areas?

  We are yet to determine precise numbers. The Press Shop has around 670 employees today. If we expand capacity by introducing a weekend type fourth shift for production, we may create around another 20-30 Press Shop jobs. In Group Tooling we expect employment to remain at around the same levels as it is today (480 employees). There is likely to be an increase, by ten, in the number of Wheel Plant employees (from 25 to 35 employees).

  In addition, there is the potential for around an additional 230 Hourly Paid jobs in the Dagenham Engine Plant in order to manage the increased diesel engine manufacturing capacity planned between 2000 and 2004.

Q. There was some confusion about the movement of engineers from the US to Dunton and from Dunton to Dagenham. Can you be clear on how many are new recruits and how many are transfers?

  The following actions are planned in respect of engineering:

    —  The transfer of the Commercial Vehicle Engineering activity from the US to Britain. This will include the engineering responsibility for the Transit and will create around 360 new jobs in our UK based engineering activities (probably located in Dunton).

    —  Further permanent hiring of around 100 engineers is anticipated over the next 12-18 months for Product Development in Britain (probably located in Dunton).

    —  In addition, 240 Diesel engineers, presently Dunton based, will be transferred to Dagenham. This will co-locate engineering resources with the Diesel engine manufacturing plant and strengthen the design/manufacturing process for Diesel engines.

  In total around 460 new engineering jobs will be created as a result of these actions.


Q. Could you give an indication of the UK content of the various engines which are produced in the Dagenham engine plant?

What is the UK content of components in engines produced at Bridgend? (UK sourced means companies based in the UK)

  Ford record the data requested above against the Business Units which incur the expense, ie customer plant such as Bridgend and Dagenham. We do not however, collect the data for sourcing in the UK per engine line.

  We are therefore unable to break down the sourcing of components to individual engine types. The figures for the plants should give an approximate guide as to the respective expenditure in UK and overseas suppliers.

  The figures for the two plants are as follows:

    —  UK content for Dagenham Engine Plant is 50.7 per cent

    —  UK content for Bridgend Engine Plant is 59.9 per cent

  The percentages value is derived from comparing the total turnover with that part of it incurred in Pounds Sterling. It is Ford policy to denote the order in the currency of manufacture. However, in the unlikely event, for example, that a UK supplier has chosen to bill a UK plant in Euros, this will not be included in the UK content of the above figures as they will not be recorded in Pounds Sterling.

Q. Could you let us know the UK component content on the old Transit as opposed to the new Transit which will be built at Southampton?

  The breakdown of data between UK supplied verses overseas supplied components for the Old and New versions of Transit production at the Southampton Plant is calculated in the same way as for Engines.

  Old transit current manufacture 53 per cent GBP sourcing.

  New transit average mix 43 per cent GBP sourcing.


Q. Further information on the agreement to purchase Land Rover and the future of the Solihull and Gaydon facilities.

  Ford Motor Company officially acquired Land Rover on July 1, from the BMW Group. Ford paid 3 billion euros (US$2.7 billion) for the Land Rover business, which includes its full line-up of four-wheel-drive vehicles—Range Rover, Discovery, Freelander and Defender. Ford Motor Company has acquired the rights to the Land Rover brand, the Land Rover plant in Solihull (Birmingham), as well as the Gaydon Research and Development Centre, the Land Rover dealer network, the British Motor Industry Heritage Centre (Gaydon), and a total workforce of approximately 13,000 employees.

  Land Rover's new chairman and chief executive officer is Bob Dover. Mr Dover has worked in the British motor industry for 32 years. He has a background in engineering and manufacturing and, from 1984 to 1987, served as director of manufacturing for Land Rover.

  Mr Dover has pledged the new management team's commitment to Solihull as a manufacturing and assembly centre, and to Gaydon as the company's design and engineering base. Gaydon will also become the new corporate headquarters for Land Rover.

  Currently making a loss, Land Rover is expected to move into profit during 2002. Land Rover becomes a member of Ford Motor Company's Premier Automotive Group, joining Jaguar, Aston Martin, Volvo and Lincoln. Its chairman is Dr Wolfgang Reitzle.


Q. What will the weight of production between the three different transmission plants (Bordeaux, Cologne, Halewood) be? Will they, in future, be able to stop production at a site without reference to Ford?

  We do not anticipate any changes in the immediate future. This is a 50:50 joint venture, which means that control has not been ceded to Getrag and they will not have any undue influence on the balance of sourcing between the three plants.

  Future decisions on investment and product sourcing will be made on normal business grounds: competitiveness, efficiency and willingness to change being key factors. Halewood will have to be in a competitive position to win its share of future investment in the same way as the other two plants.

2 October 2000

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