Memorandum submitted by the Luton Vauxhall
Abbreviations used in this brief:
EEDAEast of England Development Agency
EEIAEast of England Investment Agency
LVPLuton Vauxhall Partnership
RSNRegional Supply Network
General Motors (GM) announced on 12 December
2000 it was closing its Vauxhall car plant in Luton in March 2002
with the loss of approximately 2,500 jobs. About 500 of the workers
are expected to be transferred to the neighbouring GM factory,
IBC Vehicles, making vans in partnership with Renault and the
Frontera. Around 70 per cent of the hourly paid workforce are
resident in Luton with a significant ethnic minority element.
The Luton plant makes the Vectra and GM propose
to concentrate production of the replacement (codenamed "Epsilon")
either on the continent or at Ellesmere Port on Merseyside. GM
is due to make a decision around middle January 2001.
Effect on suppliers is being researched but
could be closely linked with closure of Fords at Dagenham, sale
of Rover in the West Midlands and review of Nissan in Sunderland.
Vauxhall Motors have already cancelled 600 purchase orders for
the Epsilon which they acknowledge will affect 800/1000 local
people. Vauxhall Motors are negotiating with suppliers who have
committed investment affected by the cancellation.
The automotive industry is a significant source
of employment in the Region: although the motor vehicles sector
accounts for only around 1 per cent of total jobsan estimated
23,000 peoplethere are three major local concentrations
in the East of England: at Luton (Vauxhall), Dagenham (Ford) and
Manufacturers are taking advantage of international
sourcing to remain cost competitive. While these changes are noticeable
at the top of the supply chain, secondary and tertiary suppliers
are also feeling the impact. In the Luton/Dunstable area some
1,200/1,400 jobs are being lost in components suppliers like BTR
Sealants and Trico.
RSN, as part of the Essex Economic Partnership,
are already engaged in mapping the impact of the Dagenham closure.
Under additional Competitiveness Development
Fund allocations, EEDA is providing financial support for a study
of the economic impact of the closure of Dagenham. The scope of
the study will be widened to include the whole Automotive supply
chain as it relates to Vauxhall and Ford.
The employment effect of the automotive sector
in Luton (and across the region) can be looked at as an aggregation
of those employed directly in manufacturing, those employed by
components manufacturers and suppliers; those involved in car
retail and distribution; and those local companies which depend
on the spending power of automotive sector employees for their
The region's R&D expertise in the automotive
field is a strength and we are keen to retain the know-how at
such centres as the independent Millbrook Proving Ground at Ampthill,
Nissan's Technical Centre for Europe at Cranfield, and at Ford's
technical centre at Dunton where some 5,000 are employed.
Luton & Dunstable have also started to attract
inward investment from sectors other than automotive manufacturing
including Amazon, Softco, FS Boeing and Astra Zeneca. This diversification
could be assisted if InvestUK make the area a priority for inward
Further detail of the economic impact is detailed
in the paper at Annex B prepared by Luton Borough Council
Current unemployment statistics (claimant count
at 9 November)
|East of England||57,452
The East of England accounts for approximately 10 per cent
of the total UK employment in motor vehicles and generates 11
per cent of the total UK motor vehicle industry GVA. Around 7
per cent of the workforce in Luton is employed in the car manufacturing
Employment trends and prospects based on survey of 6,700
employers in the region last year:
The Bedfordshire economy is growing more slowly
than regionally due to the low level of growing service sector
activities. Bedfordshire has a heavy dependence upon engineering.
The long-term prospects for the Bedfordshire economy
remain weaker than regionally. Therefore, employment prospects
are also weaker.
Bedfordshire's manufacturing sector is forecast
to perform better than regionally, but job losses are still anticipated,
particularly in craft occupations.
Employment growth will be in the service sector.
Gross employment recruitment (allowing for staff
turnover) will be 35,800 per annum. Over 6,000 of these will be
in skilled and semi-skilled manual occupations
Regionally, manufacturing will also shed jobs.
9,000 job losses (30 per cent) in transport and equipment manufacture
are projected over the period 2000-2010.
Skills shortages: regionally, 12.6 per cent of
manufacturing companies (2,700) have vacancies. Half of these
have hard to fill vacancies (about 2,500 vacancies).
Many of the vacancies are in skilled/SOC (Standard
Occupational Classification) 5 (29 per cent) and semi-skilled/SOC
8 (26 per cent) occupations.
Hard to fill vacancies are lowest within Bedfordshire.
They are highest within Hertfordshire, Cambridgeshire and Norfolk.
Employers believe that the main reasons for these
difficulties is a shortage of appropriately skilled applicants.
Established 13 December 2000 and includes EEDA, Vauxhall
Motors, GO-East, RSN, ES, Benefits Agency, EEIA, Bedfordshire
& Luton Chamber, Bedfordshire CC, Luton BC, South Bedfordshire
DC, Chaired by Neville Reyner, Deputy Chairman EEDA, who reports
directly to Stephen Byers, Secretary of State for Trade &
LVP is not set up as a lobbying group although it recognises
that individual partners may need to lobby. Its purpose is to
identify key issues and problems, identify solutions and co-ordinate
activities including applications for funding to Government and
Actions to date:
initial meeting on 13 December 2000 setting up
partnership. Covered information from Vauxhall, initial actions
by agencies, lessons from Dagenham, identify key issues and problems,
media contact and agree next steps;
meeting 20 December 2000 to receive update from
Vauxhall Motors and agencies, agree media strategy and set up
four working groups.
Supply Chain led by Simon Ash (RSN) to consider
all aspects of supply chain issues.
Retraining led by David Sutherland (ES) to consider
all issues relating to re-training and re-skilling. Will also
prepare bid to Rapid Response Fund.
Development opportunities led by Cllr Roy Davis
(Luton BC) to consider all issues connected with inward investment
and development opportunities.
External funding led by Kate Phillips (EEDA) to
consider all issues connected with opportunities through Assisted
Area Status/Objective 2/European Social Fund.
Luton has been recognised as an area of high need in the
Index of Local Deprivation being one of the 50 most deprived areas
in England. Significant resources have been allocated to Luton
which are detailed at Annex A. However these resources do not
address the further problems arising from the Vauxhall closure.
Regional Selective Assistance (RSA) to provide direct financial
assistance to business through GO-East assisted by Business Links.
Discretionary grants to projects with fixed capital expenditure
over £500k that creates or safeguards jobs. Assistance (generally
within the range of 5-15 per cent) to establish new business,
expand existing business, set up R&D and proceed from development
Eligible areas in LutonBiscot, Challney, Crawley,
Dallow, Farley, High Town, Lewsey, Saints, South and Stopsley.
Eligible areas in DunstableHoughton South, Icknield
The whole of Luton, Dunstable and South Bedfordshire are
Enterprise Grant Areas. SMEs in EGAs are eligible to apply for
help with the investment costs of projects with capital expenditure
of less than £½ million. There is a regional budget
(£300,000 in 2000-01) for this scheme. However, GO-East is
willing to consider applications from the Luton/Dunstable area
for special support outside the regional limit.
European Objective 2 (ERDF)
Support between 30 per cent and 50 per cent for areas with
structural problems. Activities include creation of SMEs growth
and development, improving access to capital, developing key locations
and clusters, developing key sectors, building community capacity
and building the economic base to support sustainable communities.
Regional allocation £85 million over six years.
Eligible areas in LutonBiscot, Challney, Crawley,
Dallow, Farley, High Town, Leagrave, Lewsey, Limbury, Saints,
South, Stopsley and Sundon Park.
European Social Fund (ESF)
Support up to 45 per cent for the adaptation of systems of
education, training and employment. Activities include guidance
to obtain jobs, improve employability, promote equal opportunities,
promote lifelong learning, upgrading vocational skills and improving
the position of women in the labour market. Regional allocation
around £24 million per annum.
Redefining the eligible areas for RSA and ERDF is not considered
a feasible option.
EEDA Land and Property
A major role in redevelopment subject to resource allocations
construction of Innovation Centre/Managed Workspace
to maximise the establishment and survival rates for new businesses;
acquisition and refurbishment/new build to provide
an early first phase of redevelopment on Vauxhall sites.
Unemployment in Luton will increase significantly due to
the proposed closure. The actual level will not be apparent until
the effect on suppliers to Vauxhall is known.
Luton has long been recognised as an area of high needs and
has been allocated significant public funding to overcome high
levels of deprivation including unemployment. However these resources
are insufficient to deal with the additional problems arising
from the closure and further Government support will be required
in the short, medium and longer term if we are to provide a solution
that is sustainable.