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


Memorandum submitted by Luton Borough Council

  We take the opportunity to submit a short memorandum to the Committee to set out clearly the Council's position on the recent announcements by Vauxhall Motors.

  You will be aware from the submission on behalf of the Luton Vauxhall Partnership that this Council is fully engaged in the partnership and its efforts to tackle the consequences of the threatened closure of the Luton car plant. We welcome government initiatives focused on this effort and the enthusiastic engagement of all the partners.

  However our primary task is to seek a review of the decision of GM Europe and to have it reversed. This approach not only has the support of all political parties on the Council, it has been endorsed by Members of Parliament and Council Leaders throughout Bedfordshire.

  The campaign is not based on the view that nothing should ever change. This town and the surrounding conurbation has experienced and embraced significant change in recent years especially in respect of the local economy. The background papers to the partnership evidence the shift in the local economy and the relative decline of manufacturing employment.

  We base our case on the following key points:

  1.  Evidence given to this Committee by Vauxhall in June of last year recognised that, as Bedfordshire's largest private employer, it made a valuable contribution to the economic and social welfare of the area and that the resulting prosperity was heavily dependent on the company's ability to compete with GM's European sister plants. The submission evidenced that the ability of the plants to compete was proven by the confirmation of the investment into the Luton Vectra plant, as well as IBC and Ellesmere Port. The revolutionary "pay deal" entered into in 1998 (see point 2 below) was cited as an important component in maximising productivity and flexibility.

  2.  The 1998 Wages and Conditions Agreement entered into by Vauxhall and the Trade Unions included a commitment that the replacement model for the Vectra would be built at Luton. Whilst this was qualified in the event of "exceptionally adverse changes to the economic environment" it is also stated that these circumstances would require discussions with trade union representatives to consider what alternative actions should be taken. Given that the announcement confirming the investment for the new model in Luton was made just seven months ago it is difficult to see what intervening exceptionally adverse changes have arisen.

  It is accepted that market conditions change and have to be addressed but these should be addressed taking accounting of commitments made, not ignoring them. The company has and is receiving the benefit of the agreement and should honour its commitment.

  3.  The evidence before you in June also highlighted the significant programmes undertaken in training employees and collaborative approaches with suppliers helping to drive efficiencies in the supply base. Further information is given on this in the company's 1999 Report with reference in particular to workshop programmes "designed to improve relationships, enhance quality and encourage new ideas to improve the mutual business environment". It is difficult to square all of this with Vauxhall's activity in the last couple of weeks where there have been apparently scuttling around the region issuing purchase order cancellations. Engaging the supply chain in this approach should surely carry with it some obligation on Vauxhall not to just cut and run when it suited them.

  4.  More generally, the 1999 Report (issued mid 2000—just six months ago) is commendably strong on sustainability—environmental, social and economic sustainability. This is evidenced throughout the report in terms of approaches to technology, suppliers and employees. If the company is truly committed to this approach, this must imply some commitment from it to take a longer term view and, even if it could justify a future disengagement, doesn't a sustainable approach inevitably entail that this is done on a planned basis? If a sustainable approach to manufacturing is about encouraging investment, training, and partnership, then the days when any company committed to this can take precipitate action to close a plant should surely be over. The company either supports sustainability or it doesn't.

  If this closure is to proceed it will have a profoundly adverse impact on the local community, and local economy and more widely. We believe employees, suppliers and the community have responded to the prior challenges set by Vauxhall and deserve to be treated fairly. The promised investment should proceed.

11 January 2001

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