Ford Motor Manufacturing

Debate between Caroline Nokes and Mark Field

Tuesday 6th November 2012 Westminster Hall

[Caroline Nokes (Romsey and Southampton North) (Con)]

It is, as ever, a pleasure to serve under your chairmanship, Sir Roger. I thank Mr Speaker for his assistance in securing this important and timely debate, as well as the many right hon. and hon. Members present today from the immediate Southampton area and further afield. I am conscious that several other colleagues would also have been present if not for ill health and delegations to other parts of the world.

Two weeks ago, Ford announced a major restructuring of its operations in Europe and confirmed that it would be closing its assembly plant at Swaythling, the factory where the iconic Transit, the world’s most famous van, is assembled. I am sure that the Transit needs no introduction; the name is now synonymous with light industrial vehicles in the same way that the name Hoover is synonymous with vacuum cleaners.

The first Transit, sold in 1965, was manufactured at Langley in Berkshire, before the plant moved to Southampton 40 years ago. The Southampton plant, much bigger than Langley, was able to handle the considerable growth in demand that the Transit enjoyed among tradesmen—and, if Jeremy Clarkson is to be believed, armed robbers. Over the years, the Transit has been made at plants in Belgium and the Netherlands, which, along with the Swaythling plant, have either closed or will now close. The Transit continues to be manufactured in Turkey and China.

I am tempted to focus on the bigger macro-economic issues that have brought about this situation, including globalisation and large corporations’ ability to shift production to countries where the cost base is lower. I could also concentrate on the granting of a European Investment Bank loan in June to the Ford factory at Kocaeli, Turkey, which will now benefit directly from the closure of Swaythling. That £80 million loan, which EIB documents state was for the modernisation of the factory, is guaranteed by the British taxpayer.

I remind hon. Members that the decision does not merely have political implications; nor does it solely impact on the profit and loss forecast. It is not just an accounting decision or an issue simply of where a vehicle is assembled. As community leaders have emphasised, it is a human issue, especially for the approximately 2,000 people in the Southampton area who depend on Ford in one way or another for their livelihoods.

[Mark Field (Cities of London and Westminster) (Con)]

Does my hon. Friend recognise that it also affects the London economy? The hon. Member for Dagenham and Rainham (Jon Cruddas) will undoubtedly want to speak later. The stamping and tooling operations plant at Dagenham, where Ford began its UK operations in the 1920s, will close next July. Does my hon. Friend agree that we need to work across parties, support the Mayor of London in his plans and, in particular, consolidate all the Ford activities at Dagenham south of the London-Southend railway line to ensure proper regeneration north of that area? I hope that Ford will play an active role in fulfilling its community obligations in the months and years ahead.

[Caroline Nokes]

My hon. Friend makes an excellent point. I have consistently called for a cross-party, as well as a cross-country, effort. I am conscious of the efforts that the Mayor of London is already making.

The news is devastating to those employed by Ford, especially contractors and those active in the supply chain, who cannot benefit from the redundancy payments available to direct employees. I am thinking particularly of the residents of Mansbridge, in the shadow of the Ford plant. As well as losing a significant economic driver and employer, they now face uncertainty about what will happen to the plant when Ford ceases production. Wherever this debate leads, we must bring ourselves back to the heart of the matter: how can we in the House give practical support to those who have just lost their jobs?

We must be forward-looking and find solutions to the immediate problems faced by the community. Although the decision has been made and will not be reversed, Ford none the less has questions to answer. I am sure that Opposition Members will also pick up on that theme. The fact that Ford is developing a plant in Turkey that will benefit from UK redundancies with a loan guaranteed by the UK taxpayer has caused concern and anger.

It is imperative that Ministers seek to establish from Ford when the decision was made to close Swaythling. Was it before the loan was signed off on 27 June this year? If so, did anyone in Government know of the decision to move production to Turkey before the announcement the week before last? If it is shown that Ford decided to close Swaythling before accepting the loan, serious questions must be asked about the company’s conduct. Indeed, if Ford accepted the loan knowing that it would be used to consign Swaythling to history, then I, like many in my local community, expect Ford either to repay the loan or, better still, make a corresponding payment to the Solent local enterprise partnership that could be used to regenerate Southampton’s economy. Ford had a moral duty to declare its hand before asking UK taxpayers to fund their own redundancies. I seek the Minister’s assistance in helping Ford to understand that and account for its actions.

As I argued last week, the issue is of national significance. Although the net impact of the closure is the loss of 500 direct jobs at the factory and further jobs in the supply chain, Southampton is a key economic driver in the south and south-east and has an important part to play in the national economy. What hits Mansbridge and Swaythling, like a stone thrown into a pond, will send waves across Southampton, the region and the whole country.

This debate should therefore touch on three key issues. First, why and when was Ford’s decision reached? Secondly, what impact will it have? Thirdly and most importantly, what can be done to minimise negative effects on the city and the wider region?

On the first question, the people of Southampton have a right to know whether there was anything the Government could have done to prevent the decision. I look to the Minister for assistance, particularly on the question of the EIB loan, which needs explanation and justification. However, I suspect that the answers can only come from Detroit, not from Ministers.

To some extent, however, it is a moot point. Whether the money signed off in June was granted before or after Ford decided to close Swaythling, the money loaned to assist the Turkish plant could only have disadvantaged Southampton and would never have benefited it. By guaranteeing the loan, the UK taxpayer has helped Turkey to import British jobs at the undoubted expense of the UK taxpayer. It is therefore up to Ford to show some moral responsibility toward those who have just subsidised their own redundancy. The UK taxpayer should not be supporting the dividends of Ford’s shareholders. I could not help but notice that in the hours following Ford’s announcement, its share price jumped from £10.36, itself a considerable improvement on the immediate past, to £11.16. The markets may have reacted well to job losses in Hampshire, but Ford now has a duty to those on whose P45s its future profitability has been built.

We must be assured that another loan granted to Ford—from the regional growth fund, and intended for research and development of low-carbon technologies—did not prejudice the operation in Swaythling or represent Ford’s reneging on any previous commitments to Southampton. It is in Ford’s best interests to demonstrate good faith in both those matters.

Of course Ford’s financial performance must be considered. It is in no one’s interest for a company to risk insolvency that, even after the redundancies in Southampton and Dagenham, employs nearly 14,000 people in the UK. Undoubtedly, there has been a huge fall in demand for the Transit. Sales are down 20% since 2007, and so far this year, Ford Europe has lost $468 million on the back of a 26% decline in revenue. Sales are down 17% from last year.

Ford also states that the Turkish factory offers labour costs that are one third of those in Southampton, and the excess capacity there means that Southampton’s production can easily be absorbed in Turkey. On the face of it, even taking into account the costs of redundancies and site amelioration and disposal, the closure of the Southampton factory may seem a rational, commercially sound decision; but if adopted, that position must be balanced against the fact that Ford globally made an enormous $2.2 billion profit last year, $200 million more than the previous year. Although Ford wishes to act to preserve its commercial viability and profitability, and some of that profit will undoubtedly have been reinvested in plant, research and development and product development, I struggle to see why a subsidiary of a company making $2.2 billion needs cheap loans from UK taxpayers to export UK jobs to a country that is still outside the EU.

Ford has a moral and social responsibility to both the city it is leaving behind, which it once called the home of the Transit, and the supply chain, which will now be broken, to ensure that the economic hole it is creating is filled with sustainable employment and economic activity. Ford should not look to the Government or the taxpayer to subsidise its moral and social responsibilities. It should step up to the plate and work with Government, local business and other agencies to ensure that its exit does not harm the local and regional economy, but benefits it by fuelling economic growth and sustainable, high-skilled, quality jobs, thereby ensuring that Turkey’s gain in the long term might also be Southampton’s gain.

Secondly, on the impact of the decision, Southampton has some of the south-east’s most deprived areas in terms of employment, health, housing and education. It is ranked 81st out of 326 local authorities for deprivation. It has some of the region’s highest levels of young people not in education, employment or training, levels that are comparable to parts of the north-east—a problem that this decision will make worse, given that Ford is my constituency’s single biggest employer. That is why community groups are so concerned and why I am so keen that Ford face up to its responsibilities to the community in which it has co-existed for so long. Rather as Ghandi wished the British to retreat from India as friends, the legacy of Ford’s time in Southampton could be both ongoing and positive for the city and Ford’s reputation.

Thirdly, and for me, most importantly, we must look ahead. This debate must highlight the need for the business community to expand and create new jobs. I have emphasised the need for the Solent region to be successful in its bid for city deal funding, but there are other ways in which the Government can provide support. Hampshire already has a local enterprise zone at HMS Daedalus, but I cannot think of a better location for a second one than at Swaythling, adjacent to the M27 motorway, where significant junction improvements are scheduled to make access to the major road network easier. Additionally, the Government’s Growing Places fund has already provided money to the LEP, but in this situation further specifically targeted support is needed.

I seek Government help in encouraging Ford to augment existing help, particularly for those in the supply chain who will not benefit from generous redundancy payments. Ford must not merely aim to meet its legal minimum requirements; it has a wider responsibility. I was heartened to learn that Ford has a trust fund which, with some modification of its limits, could be used for this purpose. Although the fund makes relatively small grants aimed at education, the trust also aims to

“develop a skilled workforce committed to improving the business whilst maintaining employment opportunities now and for the future “.

Therefore, in line with its own stated social responsibility aims, I call upon Ford to outline how it will fund and work with the local business community, the city and county councils, neighbouring local authorities, and national Government to ensure that the legacy of Ford’s time in Southampton is a highly skilled work force filling high-skilled jobs. The Ford trust states:

“Being a good corporate citizen is an essential part of how we do business. Both globally and locally, we have an ongoing commitment to helping and supporting the communities we operate in “.

I hope that this commitment to communities in which Ford operates is also extended to the communities in which it used to operate.

Ford can do a number of things immediately. It can create a rescue fund to which suppliers can apply for funding to help them develop new markets, and announce how it intends to dispose of a critical 52-acre employment site on the edge of the city. Perhaps Ford will even consider donating an ameliorated site to the city council for the establishment of a business park and local enterprise zone. Much of this could be funded by the reallocation of money received from the European Investment Bank to modernise the factory that will be building the Transit vans once built in Southampton.

This House is where the country looks to in times of trouble. It is where, in times past, some of the greatest words of encouragement have been uttered and where worried people have historically looked for answers. At this sad and worrying time for the people of Southampton, the country will once again be looking to this House to debate their concerns and fears, and for new optimism. I hope that Ford will join with other agencies and heed the calls in this debate for it to leave a legacy that will endure and be a testament to excellent corporate and social responsibility, not one that reflects the unacceptable face of global capitalism.

It is important—I look forward to the Minister’s response on this point particularly—that the local enterprise partnership, BIS Local and other local agencies work together to ensure that retraining opportunities are maximised. I know the Minister is currently looking at that with the local growth White Paper, which sets out the Government’s aspiration for growth to be driven by local communities and businesses. This will, I hope, focus on retraining, which Ford should be a partner in and providing funds for.

Finally, I ask the Minister urgently to consider creating a Southampton local enterprise zone, which would be an engine of growth, job creation and retraining in Southampton. As Ford’s decision to close its factory illustrates, that is now more urgently needed than ever.