Manufacturing and Engineering

Jim Sheridan Excerpts

Tuesday 6th March 2012 Westminster Hall

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I congratulate the hon. Member for Stroud (Neil Carmichael) on securing this debate, which is crucial, given the stage we are at in the manufacturing cycle.

Let me start with an apology. I will be extremely brief because I have to attend a Select Committee at 10.15 am. I am extremely disappointed by the Opposition’s lack of interest in manufacturing, which is, I think, a result of the political selection processes in our party. We do not have enough people with a manufacturing background sitting on these Benches—not just the Opposition Benches, but the Government Benches. That has manifested itself in the attendance here today. I welcome the Minister to his new position and wish him every success for the future.

I have spent almost all my working life in manufacturing, whether it be in the shipyards of Glasgow, or working for the defence company, Barr and Stroud, which is now Thales, so I understand the importance of engineering and manufacturing. I take the simple view that we in this country will not survive by cutting hair alone. We need a strong manufacturing and engineering base.

The hon. Member for Stroud touched on the importance of apprenticeships. The previous Labour Government rightly focused on the need for education, and the need to get people into university. We have now reached a level where we need the same resources put into non-vocational skills, and we need to get people back into manufacturing.

Manufacturing is not seen as a sexy industry. In my time working with Thales, I saw many examples of young people coming into engineering as, say, lathe turners only to be seduced into the collar-and-tie side of the section—the buying section, the materials section, or whatever. They would not stay on the engineering side of the business, getting their hands dirty. However, I must say that I am greatly encouraged by the number of young women coming forward to become involved in high-tech engineering. Apprenticeships are extremely important if we are to survive as a country.

The other issue that I want to raise is procurement. Successive Governments have been dismal in using their procurement muscle to secure contracts and jobs. There is no worse example than the contract for the recently announced MARS project, for which, apparently, no British tenders were received. For the sake of Hansard, I should say that MARS is the military afloat reach and sustainability programme. I genuinely believe that there must be an inquiry into why British companies are not tendering for such contracts. I believe that, these days, some of our defence companies are becoming rather snobbish, in that they only want certain defence contracts on the high-tech side—contracts to build ships or whatever. The MARS ships will be massive supply carriers. As I have said before, when I was a shipyard worker, when I woke up in the morning I did not really care what I was building as long as I was building something, keeping myself employed and looking after my family.

I am extremely disappointed that we are losing the MARS contract to South Korea, a country that almost destroyed British shipbuilding in the 1960s and 1970s. Here we are again, going back down the road of giving contracts to foreign competition, such as South Korea. That could seriously damage our shipyards, because there are gaps coming up between the contracts for aircraft carriers that could have been filled by the MARS project contract. For us to surrender that contract and for none of our major defence contractors to have tendered for it is disgraceful; questions should be asked.

[Jeremy Lefroy]

Does the hon. Gentleman agree that it is absolutely vital that this country maintains a major shipbuilding capacity, and that we cannot simply let it go?

[Jim Sheridan]

The reality is that we live on an island; we therefore depend on ships, not just to supply us, but to defend us. It is important that we invest in skills in shipyards, and that we get people back into working in shipyards. I was there when the shipyards were almost closed in Glasgow and Govan; if it was not for Government intervention, they would have closed. I am pleased that they are now thriving, but there is still some work to be done. The hon. Gentleman is absolutely right that we need to invest in shipbuilding.

I want to touch on the issue of Europe. My other experience is of a situation that I found myself in with regard to the Ferguson shipyard, a very small shipyard at the tail of the bank on the River Clyde. That shipyard almost went out of business because of European legislation. Ferguson plays by the rules, as most British companies do; it listens to the civil servants who tell them what to do, while the French, Germans, Polish and others find ways—including by being economical with the truth—of getting shipbuilding contracts at prices that British companies such as Ferguson just cannot compete with. That is something that, from a European perspective, we need to find out about.

I spoke to the management of Ferguson at the time, who said quite clearly that bids for contracts were being tendered by Polish companies that were clearly using European objective 1 funding, and that under no circumstances could Ferguson compete for them; even if Ferguson would not make a profit from the contract, it could never have had any impact on the contract process at all. Again, we need to look at the legislation surrounding Europe, and see how we—and everybody else—compete within Europe, to make sure that we are operating on a level base and are not being sidetracked by people who are being economical with the truth.

The other issue that concerns me greatly—it has already been referred to—is the supply chain. Big multinational companies can survive, but the supply chain to those companies is crucial. I have found that small and medium-sized enterprises experience problems not just with banks—although the banks are important, in terms of lending money to make sure that companies survive—but with the paying of invoices by big companies. Those companies would hold money back from SMEs; the SMEs could not get paid. They therefore could not pay their bills and struggled to survive, or even went out of business. There is a responsibility on major defence contractors to treat the supply chain properly and pay their bills on time, so that we keep these small companies in business.

Rolls-Royce is an absolutely first-class company, and it is well organised, but unfortunately it has just announced, in my patch, that it is not taking on apprentices. That is somewhat disappointing, and we need to look at that, as do the Government. All of us have to consider why companies such as Rolls-Royce, which has an operation in Inchinnan, are not taking on apprentices. After all, Rolls-Royce is one of the leading companies in this country, and if it is struggling to take on apprentices, we need to find out why.

It would be remiss of me, as a Labour Member, not to mention employment legislation. I know that Government Members might disagree with me, but it is somewhat disappointing that a number of major companies left our island simply because it was cheaper to manufacture in the Czech Republic, China or wherever. A classic example from my patch is Hewlett Packard, which basically surrendered all its manufacturing base in Scotland and gave it to the Czech Republic. The workers in Scotland did nothing wrong. They were told, as we were all told, that if they worked hard, delivered on time, delivered quality, and so on, their jobs would be safe. That was what they did. That was the deal: “We, the workers, will work hard and deliver on time, to make sure that the product gets there on time, and on cost.” As for Hewlett Packard, some director sitting somewhere in Texas decided, “No, we can get this work done in the Czech Republic,” and that is what the company has done.

That story takes me back to my point about employment legislation. I know that people have different views on employment legislation, but it is far too easy for companies, particularly multinational companies, to say, “I’m sorry, we can get it done in another country”—wherever that country is—“far cheaper,” and exploit the labour in that country. That is why we have lost, and are still losing, a lot of our manufacturing base. Putting politics aside, we need to understand why manufacturing companies can easily up sticks and move.

It is annoying that after Hewlett Packard transferred that manufacturing base to the Czech Republic from Scotland, the company applied to the Scottish Government for a £7 million grant—and got it, which was rather foolish of the Scottish Government, in my view—to set up a call centre in exactly the place where the manufacturing operation had been. I disagreed with that at the time. The company was transferring manufacturing and we were losing all those skills, and then we as taxpayers gave a multimillion-pound company £7 million of taxpayers’ money to set up a call centre in exactly the place where its manufacturing operation had been.

Those are just some of the issues that I feel strongly about. I am passionate about manufacturing. I genuinely believe that if we do not have a strong manufacturing base, this country will be in a serious state. Again, I must say that I am somewhat disappointed in the turnout for this debate. I had hoped that there would be a lot more people interested in manufacturing. Perhaps we politicians need to look at how best we can get people with a manufacturing background, or a sense of manufacturing, involved in politics. I do not want to be discourteous, but I do not just mean business people in manufacturing; I mean people who have actually worked in manufacturing, and who have a feel for it. That will help to ensure that we go forward as a manufacturing nation.

[Katy Clark (in the Chair)]

I remind Members that if they wish to speak in a debate, they should stand up when a Member has finished his speech. I call Chris White.