Michelin Factory: Ballymena

Danny Kinahan Excerpts

Tuesday 17th November 2015 Commons Chamber

[Ian Paisley]

I thank my hon. Friend, who shares my passion for the North Antrim constituency, given her roots in County Antrim. She will have been contacted by friends and family who have been affected by the closure. I appreciate the support and encouragement she regularly gives me to continue to fight for the interests of my constituents.

Michelin has identified three key reasons why it has to close the factory, and they are sad reasons. As I have said, I am glad that the Minister for Small Business, Industry and Enterprise is here and that the Government see that there is something that they can do for us nationally. The Michelin statement put three key reasons into the public domain.

The first reason was as follows:

“The proposal to run down the truck tyre factory in Ballymena has been made in the light of the significant downturn in demand for truck tyres in Europe since the financial crisis of 2007”.

That is beyond the control of anyone on these Benches. It is a fact of life that there has been an economic downturn. For 20 years, the factory in Ballymena made truck tyres for the north American market. That market was taken from it through an internal decision by Michelin and those truck tyres have since been made elsewhere in the Michelin portfolio. After losing that market, Ballymena was solely making truck tyres for Europe. The downturn then hit us with a vengeance and we are reaping the consequences. The demand for truck tyres has decreased by more than 5 million tyres a year. That has had a catastrophic effect on the business.

The second reason Michelin put into the public domain was

“the huge influx of tyres made in Asia, which have doubled in the last few years, and increased competition.”

Most of those have been made in Korea. The workers in my constituency never feared competition or the need to be competitive. They believed in the quality of their product, which was of award standard. However, when a cheap tyre comes in during an economic downturn, it has a devastating effect on business.

The third reason was that the tyre building machines at Ballymena were not capable of making the new standard of tyres. An investment of at least £50 million was needed to reappoint the factory. The company had to decide whether to make that investment or cut off the Northern Ireland arm and move everything to the mainland. That goes to the heart of the point that my hon. Friend the Member for East Antrim made. Energy costs are so astoundingly high in Northern Ireland that they forced the hand of the company when making that decision. I will come on to energy costs in a moment.

The Member for Vauxhall (Kate Hoey) said that if this had happened in any other part of the United Kingdom, there would be huge interest. I welcome the fact that there are 16 Members in the Chamber for this debate. I salute every one of them for being interested enough to turn up. Usually when we come to the Adjournment debate, apart from my hon. Friend the Member for Strangford (Jim Shannon), no other MP makes a contribution. I know that, at times, the Minister feels as if she is being stalked by the hon. Gentleman. I pay tribute to the fact that there is wide interest in this debate, and I am delighted that the hon. Member for Ealing North (Stephen Pound), who has visited my constituency, is also here.

[Danny Kinahan (South Antrim) (UUP)]

I congratulate the hon. Gentleman on securing this debate. Did we get any early indication that this cut was going to happen? Had the company spoken about the workings behind this move? Did the Minister in Northern Ireland know that it was happening, and was he able to offer any support? What was going on between the Minister and the company that allowed this to happen without any of us knowing? The hon. Gentleman has already indicated that there are many good reasons for why it was happening, but we did not seem to know when or exactly why at the time.

[Ian Paisley]

I want to be gentle in the way I respond to that. It would be easy to stand here and blame people. I could blame the local Minister, Invest Northern Ireland and everyone else but ourselves, but that is the coward’s way out, and we must make that clear. That is not the response that employees in Ballymena, North Antrim, South Antrim and East Antrim need. My constituents will not be bought off with the cheap excuse that this is someone else’s fault. They are intelligent people who understand the word “market”.

In the last year, my constituents have witnessed a Goodyear tyre factory close on mainland Britain, and they know the pressure that the industry was under. At one point they were reduced almost to a three-day week. This was not a shock; what was shocking was the fact that eventually the decision was made on the day it was made, but there was a lot leading up to that decision. What people want now is a comprehensive strategic response to get things moving again, and it is important that we hear that from the Minister.

The hon. Member for South Antrim (Danny Kinahan) made a number of points that it is important to address. The key issue behind why this factory has been under so much pressure is electricity prices in Northern Ireland—the underlying issue is energy costs. To give one stark statistic, it is 15% more costly to manufacture in Northern Ireland because our electricity costs are 15% higher. That point has been made to me over and over again, and it has driven the issue home.

The hon. Gentleman asks why this closure was such a shock and whether discussions were going on. I have an email that was sent to me in 2013 from the then Ballymena plant manager, Wilton Crawford. I raised this issue with him, and he said that the

“No.1 cost threat to our long-term sustainability”

for manufacturing in Ballymena was electricity prices. That issue must be urgently addressed.

--- Later in debate ---

[Ian Paisley]

The hon. Lady has read my mind. On 25 November 2013, the Secretary of State for Northern Ireland, the right hon. Member for Chipping Barnet (Mrs Villiers) visited the plant at my invitation. She met the plant owners and recognised the huge issue of electricity costs. The suggestion made at that meeting was that because Michelin has plants in Scotland and England, as well as Northern Ireland, a united front was needed from the Scottish Secretary, the Northern Ireland Secretary and the Business Secretary to ensure that some special pricing code was put in place to assist the company. I put that point in writing to the company, saying that

“we should make a very direct approach at Cabinet level with the help of the Secretary of State and our own Minister of Enterprise, Trade and Investment along with other Michelin Plants in the United Kingdom for a special case for a high energy user like Michelin to have some sort of special status when it comes to the cost of energy use.”

I am glad to say there was a response from central Government: the Energy Intensive Industries initiative, which the Prime Minister introduced a short while ago. In an answer to a question put by my right hon. Friend the Member for Belfast North (Mr Dodds) in Prime Minister’s Question Time just last week, the Prime Minister indicated that EII is something companies such as Michelin should look at. I seized on EII some time ago. I wish the Prime Minister had not used that argument, because Michelin, by its structure, is actually excluded from benefiting from EII. EII is framed so narrowly that one of the single largest energy users is actually excluded from using it.

Michelin has explained to me in some detail that it would have to go away and re-establish itself as a company, and go through a lot of red tape, to have a chance of qualifying for EII. That would be quite difficult. I think the Minister would accept that the legal due diligence alone for a plc would be costly and put it out of remit.

[Danny Kinahan]

Should we not also be concentrating on the supply of electricity to Northern Ireland? The Moyle interconnector is not working well at the moment. The underground cabling we were hoping to get for the new interconnector is not coming in due to differences of political opinion. Does the hon. Gentleman not realise that, on a bigger scale, we need to try to find ways to get these problems sorted out, and that we need the help of Westminster to do so?

[Ian Paisley]

I agree wholeheartedly and that is why I wanted this debate. I am delighted the Minister is here, because this is not just a matter for Northern Ireland but a matter for us all. The issue also faces our colleagues in England. It is why Tata Steel and SSI are closing and why there is such anger from Members, who are seeing the livelihoods of many people go.

Remember, the tough decisions have to be taken by us. This is what the tough decision is going to look like: ultimately, we will have to vote on whether we want jobs or cheap electricity prices for consumers. If we want to have jobs and cheaper electricity for the employer, consumer prices have to go up. That is a tough decision. Some of us are prepared to take it. Some of us have argued that if we want to keep jobs in Northern Ireland prices will have to go up for ordinary consumers. It is not a popular thing to say, but we have to face the reality.