BAE Systems

Alan Johnson Excerpts

Thursday 24th November 2011 Commons Chamber

[Alan Johnson (Kingston upon Hull West and Hessle) (Lab)]

It is a pleasure to follow the right hon. Member for Haltemprice and Howden (Mr Davis). As he said, for the past 14 years we have worked together to try to protect the interests of BAE workers at Brough. We have been joined in that by other Members who represent constituencies in Hull and the east riding, many of whom are here today, but he and I have been working together on it the longest.

Three consistent themes have run through all our discussions with BAE and its work force. First, there is a superb work force at Brough, as BAE has stated over and over again. Indeed, Allan Cook, who heads the Government’s talent retention unit and has a long history in the aerospace industry, having worked for Marconi, Cobham, BAE and Marshalls, told us a few days ago that he had never encountered such a talented group of workers in his entire engineering career. Secondly, there is the success of the Hawk. Since its first flight in 1976, 900 Hawk aircraft have been sold around the world. It is an iconic British product that is still in great demand, as I will show later. Thirdly, the work force have shown remarkable loyalty to, and respect for, the company. On the several occasions when the plant has been downsized, I have found the work force’s enormous respect for the company incredible.

Since the announcement on 27 September, only one of those three consistent themes has changed; I am afraid that the company has lost the respect of its work force. One long-serving employee who wrote to me—I am sure that colleagues have received similar letters—said, “Until this week I was proud to wear BAE Systems’ name but now find myself appalled by the actions of the senior management.” That kind of sentiment has been repeated by people who feel utterly betrayed by the announcement and by the way it was made.

BAE is seeking to end 100 years of aerospace manufacturing on the Humber not because of any problems with the staff or the product they produce, but because in difficult times it would rather impress shareholders with how tough it can be than impress the work force with how honourable it can be. The decision of the four Typhoon countries to slow deliveries of the aircraft was of course a blow, but the European Aeronautic Defence and Space Company and Finmeccanica are slowing production of the Typhoon in Germany, Spain and Italy without losing any highly skilled manufacturing jobs.

[James Wharton (Stockton South) (Con)]

The right hon. Gentleman makes the important point that this might appear to be a short-term decision that benefits shareholders in the immediate future, but does he agree that in the long term shareholders would probably rather see the retention of an important skills base that will allow BAE to compete effectively in future and secure contracts?

[Alan Johnson]

That is absolutely right. That is why we wanted a debate in the House with a motion setting that out, because that is precisely the message we need to put out. As I will say later, that is precisely what other serious manufacturing companies are doing.

Four countries are affected by the decision to slow delivery of the Typhoon, but only BAE in the UK has reacted by throwing highly skilled engineers out of work and abolishing a manufacturing plant. Although the company says that its announcement was forced by the slow-down in orders for the Typhoon, almost a third of the job losses are for the Hawk, an aircraft that remains popular around the world. Orders are imminent from Saudi Arabia, Oman, Iraq and the United States, and potential orders are imminent from Poland, Kuwait and the RAF in a few years’ time. When we and others, including the unions, have asked the company what will happen if they get an order for 10, 50,100 or 150 Hawks next week—this relates closely to the point that the right hon. Member for Haltemprice and Howden made about the 90-day process—its reaction has been that nothing would change. Our suspicion is that is because there is a view that it will not be the other side of the Pennines that benefits from extra Hawk orders, but Texas, India and manufacturing plants abroad.

When the unions have berated BAE on the effects on British manufacturing and pointed out that it is an important British manufacturing company, it has replied that it is not a manufacturing company, but an engineering company that chooses to manufacture, the implication being that that is the choice it has made at the moment but might not make in future. In no other major industrialised country in Europe would a company that has spent much of the past decade moaning about skills shortages be getting rid of some of the most highly skilled people in the country. In no other major industrialised country would a company whose biggest customer is the Government and whose biggest investor historically has been the taxpayer be causing such damage to a precious sector of the economy.

There is an alternative approach. Andrew Witty, the chief executive of GlaxoSmithKline, another British manufacturer that sells its products abroad, lambasts British businesses that turn themselves into “mid-Atlantic floating entities” with no connection to society. He says that his company has given a lot to Britain, but that Britain has given a lot to his company and that it would not exist without the work of British people and the support of the British Government. He is busy returning manufacturing jobs from abroad to this country. He says that his objective is to give more jobs, provide more skills and pay more taxes in Britain. It is a shame that other iconic international British companies do not follow the same philosophy.

[Mark Hendrick (Preston) (Lab/Co-op)]

I am well acquainted with Andrew Witty, having met him at GlaxoSmithKline’s research and development centre in China. It is now a global business that employs thousands of Chinese people, and although the company returns a lot to the UK, it also has major investments abroad in the same way as BAE Systems will have when it is employing people in India.

[Alan Johnson]

My hon. Friend is absolutely right. That is precisely the point. We can compare those two British companies. Around 96% of GlaxoSmithKline’s sales are abroad, but it is making a decision as a British company to invest in Britain and open manufacturing plants at a difficult time, and it is of course helped by the patent box that was agreed by the Labour and Conservative parties. It is an example that BAE should follow.

As thousands of highly skilled BAE employees contemplate a miserable Christmas, it is time for the company to engage properly with its work force in order to ensure that their important skills are retained in aerospace manufacturing and that aerospace manufacturing is retained on the Humber. We are 58 days into the statutory 90-day process, but there is no sign whatsoever that BAE is doing anything other than going through the motions. Indeed, the site director at Brough told my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) only last week that nothing would change during this consultation process. He told her that they were going though the motions. When the 90 days end on Boxing day, it will still be 27 September as far as BAE’s plans are concerned.

The unions are working hard to hold the company to its statutory obligations. The union representatives involved are very good and need no advice from me, but if I was a union rep involved in the case, I would seriously consider seeking a protective order against BAE for its lack of engagement.

We believe that BAE’s three manufacturing sites should be retained. The company should stand by its loyal work force in difficult times, so that when the good times return it has sufficient manufacturing capacity in this country to deal with the extra work.

All the signs are that military aerospace will expand dramatically from about 2016. At the very least, BAE should adopt the intelligent proposals put forward by its own executive group at Brough in order to mitigate the significant risk inherent in the company’s plans by retaining crucial assembly and sub-assembly at Brough for the duration of the next Hawk acquisition contract, thereby saving about one third of the jobs until 2016.

[Mr Ellwood]

The right hon. Gentleman is making a powerful speech, but will he elaborate on his statement that the defence industry expects to expand with orders in 2016? From the angle that I see the issue, the United States, NATO countries and so forth are doing exactly the opposite: this is the area in which budgets are being cut; defence is being affected.

[Alan Johnson]

That is true, and I will turn to civil aerospace in a moment, but all the experts in the area, including the unions handling the situation, expect that from 2016 there will be an increase, particularly in Hawk orders. We are looking at the home of Hawk in Brough, and it is going through a difficult time, but most expect that, if we can get to 2016 and through the next difficult period in this country and throughout the world, there will be significant opportunities in military engineering.

The executive group at Brough has put forward a proposal to safeguard what is probably the Saudi Arabia contract, to ensure that there are no dangers to it and, therefore, to save about one third of the work force until 2016. There is a desperate shortage of necessary skills to meet booming demand in the commercial aerospace sector by companies such as Rolls-Royce and EADS, so the retention of some Hawk work should be combined with facilitating and incentivising the transfer of packages of commercial aerospace work to Brough. It is an attractive site, with exceptional access by air, sea and land. It has the machinery, the layout and the work force that commercial aerospace companies need, and it can be utilised without causing job cuts elsewhere.

It is time for fresh thinking. As the right hon. Member for Haltemprice and Howden has pointed out, we are in the crazy position of using taxpayers’ money to destroy skilled jobs in an economy that is desperate for high-value manufacturing to expand. It is time for an ethical and, even, patriotic approach by big profitable international companies, such as BAE, to the problems that this country faces. The Government have an important role to play in such a strategy, but the prime responsibility rests with the company.

I have a final quotation from Andrew Witty. He says:

“I…believe one of the reasons we have seen an erosion of trust…in big companies is they’ve allowed themselves to be seen as detached from society…They’ve allowed it to be perceived that it’s all about money.”

BAE needs to avoid being a “mid-Atlantic floating entity” and to demonstrate that it is a British company that cares about British society and British jobs. The work force at Brough have been loyal to BAE in difficult times. BAE needs to reciprocate that loyalty now.

[Several hon. Members]

rose—

--- Later in debate ---

[Peter Luff]

I agree that when overseas production becomes a source of rival manufacture for export purposes, there is an issue for us. We have to accept, however, that the success of the Typhoon contract in India will depend on significant participation by Indian aerospace industries in the manufacture and upgrading of the aircraft. That is the price for winning the contract, and it is a price that we have to be prepared to pay.

Additionally on the subject of support for those who are sadly affected by these decisions, last month the Chancellor invited strong and viable proposals for enterprise zones in the areas surrounding the sites, with a view to enabling those zones to be up and running by April next year. As the right hon. Member for Kingston upon Hull West and Hessle said, attracting new industry to these existing manufacturing hubs could soften the impact of BAE’s change in structure without undermining the lives of these highly skilled workers.

[Alan Johnson]

We are pleased to get an enterprise zone, but we need to look at other work that these skilled workers can do; many companies would be pleased to get them. Our point is that this requires a new way of thinking. There is no reason why we cannot bring packages of civil aviation work to Brough, where there is a fabulous site and a really good work force. The alternative is that these workers have to move, which is very difficult given the housing market and all the other problems that they face with schools, families and so on. We then find very highly skilled workers ending up as taxi drivers or dropping out because they have to stay in their local area. Will the Minister consider, with Allan Cook, attracting these packages, given that there is such a skills shortage in commercial aviation?

[Peter Luff]

I will do precisely that with the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey); it is very good to see him in his place today supporting this debate and showing the concern for the issues raised that is felt across Government more widely. Of course, I do not have responsibility for civil aerospace. Although I happen to agree with my right hon. Friend the Member for Haltemprice and Howden about the wisdom of selling the share in Airbus, that is a personal, not a ministerial, view. I believe that there are significant opportunities for the wider civil aerospace sector resulting particularly from what has happened at Brough, and I entirely agree that BAE Systems should be creative, thoughtful and active in making those opportunities come to fruition exactly as suggested by my right hon. Friend the Member for Haltemprice and Howden and the right hon. Member for Kingston upon Hull West and Hessle.

--- Later in debate ---

[Andrew Percy]

The point is that this has not been a political debate.

I want to discuss the impact on east Yorkshire and my constituents in north Lincolnshire, a number of whom work at BAE Systems. It was brought home to me on the day of the announcement when my secretary, whose husband works at BAE, contacted me distraught about what was happening. Practically everyone who lives in east Yorkshire knows somebody who works at, or is connected to, the factory. As my colleague and near neighbour, the hon. Member for Kingston upon Hull East will attest—we were two boys at Hull comprehensives—when we went to school in the ’80s and ’90s if someone wanted an apprenticeship, they got one either at BAE Systems or at Saltend with BP. The vast majority of my compatriots and friends at school did not go to university but, like their parents, worked—and continue to work—at BAE Systems.

As Members have said on both sides, the company is rooted in east Yorkshire, and the impact of its leaving will be indescribable not just on the work force but because of the work it does in local schools and through pairing with universities and colleges. As the hon. Member for Kingston upon Hull North (Diana Johnson) said, the Humber economy is in a pretty poor state, and has been for a long time. Over the past 10 years, we have lost private sector jobs along the Humber at a time when the rest of the country was growing private sector jobs. We are in a bad state, and the consequences of losing these 800 jobs will be indescribable.

The Minister used the word “disingenuous”. That is what we all feel about BAE Systems’ actions. As the hon. Member for Kingston upon Hull East said, when we met BAE Systems in July—the unions and everyone who has spoken have attested to this—we were told that although things were tough, the company was expecting Hawk contracts and that the most recent round of redundancies had secured the site and the business for the future. We expected those contracts to be landed and those jobs to be secured.

[Alan Johnson]

Does the hon. Gentleman recall that the specific criterion on which BAE let staff go in the last round of redundancies to which we agreed was that it would retain those with the capability to build Hawk? That was as recently as this summer. Would it not be strange for BAE not to be aware at that time of the decision it announced in September?

[Andrew Percy]

Absolutely. None of us can explain how in just six weeks the whole world was turned on its head. We have sat through BAE presentations and been shown projections going years into the future—although oddly the line always ends about 2016 and we never get to see the line beyond. Despite these predictions, however, in six weeks the world was turned on its head. Members and people watching can read into that what they wish.

We have talked about the legacy issues. It is unacceptable for BAE to think that its role is simply to secure work for the Brough workers elsewhere in the country. Constituents of mine who work at BAE Systems, including the former mayor of Goole, do not want to leave the local area or uproot themselves from their families; they want to stay working in east Yorkshire. After all, along with north Lincolnshire, it is the best part of the country to live in—so why would they wish to leave? They want to remain on that site.

I say to BAE—I hope that the Minister will listen to this message and take it forward—that it has a duty to do everything in its power, even if it hits it in the pocket, to ensure that manufacturing remains on that site, if not through the production of Hawk and other aircraft, through securing other companies and third parties on the site. It cannot walk away from Brough. It cannot say, “Well, we’ve done everything we want to do. We’ll help to find them jobs.” It has a duty to secure that site, and we, as local Members of Parliament—and, I hope, with the support of the Government—will do everything that we can to ensure just that.