Vauxhall Factory, Ellesmere Port

Justin Madders Excerpts

Tuesday 20th March 2018 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I beg to move,

That this House has considered the future of the Vauxhall factory in Ellesmere Port.

It is a pleasure to serve under your chairmanship, Mr Rosindell. When I am at home in my constituency, I get up to go to work and I head off in my Astra, of course. I go past many houses where Vauxhall employees and pensioners live, and many houses where the family and friends of people who work at Vauxhall live—and that is before I get to the end of my street. At the end of the street, I drive past a newsagent that relies on trade from Vauxhall employees, like many other local businesses. As hon. Members will understand from what I am saying, Ellesmere Port is synonymous with Vauxhall Motors.

The first Vauxhall Viva rolled off the production line in 1964. As the plant grew, so did the town. There is virtually nobody who lives in Ellesmere Port who does not have some connection with the plant. At its height, it employed around 12,000 people. Sadly, with recent job losses, the number is about a tenth of that today, but it is still substantial. We also have to take into account the fact that for every person employed at the plant, three other people are employed in the local economy. There is also the potential for greater numbers should we increase from single-shift production again in the future.

Vauxhall remains a big part of the local economy. We should build our future success on such jobs: highly skilled, permanent jobs that manufacture something of national and local pride. Vauxhall’s advertising material makes much of the significance of its being a UK manufacturer, but this is about more than being a UK manufacturer, or a key part of the local economy.

[John Spellar (Warley) (Lab)]

My hon. Friend is right to stress that Vauxhall is a UK manufacturer. Is it not absurd, and frankly disgraceful, that so many public bodies—including police forces—buy vehicles from abroad? Some use Astras, but many others buy from companies that do not even have a presence in the UK. Should we not take that issue on?

[Justin Madders]

My right hon. Friend is absolutely right. We have had debates about that before. He reminds me of the time when we talked about the police in France using Citroëns and Renaults; the police in Germany using Mercedes and BMWs; and the police in Spain using SEAT vehicles. As a nation and as an economy, we should do much more to take advantage of our procurement power.

[Ms Angela Eagle (Wallasey) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he recognise that my constituency contains Vauxhall workers as well? Their economic future is reliant on the Government’s decisions in the Brexit negotiations, particularly given that they have decided to leave the single market, which puts those jobs at risk.

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[Justin Madders]

My hon. Friend is absolutely right that the footprint is much wider than Ellesmere Port—it goes into north Wales, and hon. Friends from that part of the world are present. Brexit is key to the plant’s future, and I will go on to address that shortly.

It is not just about economic impact. The plant is a big part of the town’s local identity. From the 30 kids’ football teams that play under the name “Vauxhall’s”, to the sports and social club that has had huge investment in new 3G pitches and the kids at school who see working at the plant as part of their family tradition, it is a major part of our community, and we do not want to lose it.

The plant has regular fights for survival. Every five years or so, when the next model is being discussed, plants across Europe are effectively pitted against one another to bid for the next job. In the past, the productivity and co-operation of the local workforce, combined with the tremendous leadership of Unite the Union, of which I am a member, in its work with management, have put us in the best possible position to secure future work. That partnership is an exemplar of how to conduct employee relations for the benefit of everyone.

[Ian C. Lucas (Wrexham) (Lab)]

My hon. Friend is making a powerful case. Is that partnership of unions, employers and Government working together not the reason why the UK has been effective in beating off competition from mainland Europe to secure jobs in the past? That is what we need to do in the future.

[Justin Madders]

My hon. Friend is absolutely right. Initiatives such as the Automotive Council have seen the UK car industry go from strength to strength. As we know, however, every time a model comes up for renewal, it gets a little harder, the demands are greater and the workforce have to sacrifice a little more. It is a challenge we have always been equal to in the past, but the convergence of factors undoubtedly makes securing the next model our biggest challenge yet.

The latest edition of the Astra became European car of the year in 2016. It enjoyed great success, particularly in the sports tourer model, which led to 80% of the vehicles built in Ellesmere Port being exported to Europe. Despite that, in recent months, tastes have changed and there has been a dramatic slowdown in sales for that type of vehicle.

[Mike Amesbury (Weaver Vale) (Lab)]

Does my hon. Friend agree that our Vauxhall plants, including Ellesmere Port, are among the most productive in the PSA Group family?

[Justin Madders]

Yes, I would like to say that they are, but we are now being judged by a new benchmark. I will go into some detail about how things are being counted against the workforce’s excellent productivity.

The cuts in sales have led to cuts in the workforce, with 400 jobs going in October and another 250 earlier this year. In the past, a downturn has led to agreements between the unions and management about reduced hours to protect jobs, but the new owner, the PSA Group, has shown a different approach. That must act as a warning that we cannot expect any sentimentality from it, and that, as it has said consistently from the day it took over, plants will be judged on their efficiency.

History tells us that the local unions and management are well capable of meeting that challenge, but numerous factors are at play that will impede their ability to do that. It is our job—not just the job of the Opposition, but of the Government—to help them to overcome those obstacles in a highly competitive market.

Let us start with the big challenge: Brexit. Uncertainty across a sector can have a real impact on investment decisions. As we know, investment decisions in the automotive sector are traditionally made three to five years in advance, so decisions about investment in the post-Brexit world will begin to be made shortly.

In that respect, the timing could not be worse, as the current model in production in Ellesmere Port is due to be discontinued around the same time, in 2021. The chief executive of the PSA Group recently said:

“We cannot invest in a world of uncertainty.”

Some might say that is an excuse. Some might call it a distraction. I do not mind what it is called, as long as we do not ignore it.

After the Prime Minister’s Mansion House speech, the PSA Group and other manufacturers in the sector made similar points about the lack of the clarity, so I asked her to provide certainty by confirming that the trading arrangements in the automotive sector will be no less favourable than they are now. I am sorry to say that her answer did not give any clarity and there was certainly no unequivocal guarantee.

[Frank Field (Birkenhead) (Lab)]

Might I put on record what we have spoken about in private, that we should go to see the Secretary of State for Exiting the European Union and push for a sectional deal, particularly for Vauxhall and other companies producing cars and vans in this country? A second stage could be that we get unions and management in France and Germany to effectively lobby their Governments.

[Justin Madders]

My right hon. Friend is absolutely right to say that the sector is too important to be left on its own. It directly or indirectly employs around 800,000 people and generates almost 10% of the country’s manufacturing output. Half of all the UK’s car production is exported to the EU, and that figure goes up to between 70% and 80% for the Vauxhall plant in my constituency.

[Matt Western (Warwick and Leamington) (Lab)]

I concur with my right hon. Friend the Member for Birkenhead (Frank Field). Does my hon. Friend agree that the statement made by the CEO of the PSA Group, Carlos Tavares, is a canary in the mine? It is the first warning about Brexit and the serious impact it will have on our economy.

[Justin Madders]

That is certainly a huge concern locally. We do not want to get into a game of pointing fingers; we want action, certainty and investment in the plant, but it will be a challenge. A report by the Business, Energy and Industrial Strategy Committee recently concluded that

“leaving the EU without a deal would undoubtedly be hugely damaging to the UK automotive sector, more so than to other European countries… Overall, no-one has argued there are advantages to be gained from Brexit for the automotive industry for the foreseeable future.”

Now that we are leaving the EU, it is important to recognise that there is no upside for one of our most vulnerable and important sectors. We must do everything possible to safeguard jobs and investment, because history shows us that once manufacturing jobs are lost, they very rarely come back.

So far, the Government’s response has been denial. We need them to work tirelessly to reassure major international companies that their future competitiveness will not be fatally undermined by tariffs or regulatory divergence, and that they can invest with confidence. I want us to get into a position in which Brexit cannot be used as an excuse not to invest in UK manufacturing. A clear and unequivocal commitment to a customs union would help, so that the many parts that travel back and forth across the continent can do so without impediment and without the final product becoming uncompetitive. The Society of Motor Manufacturers and Traders has estimated that failure to properly cater for such issues in the negotiations could result in an increase of more than £1,500 in the average cost of a vehicle. What business can absorb that without a massive impact?

There is a school of thought that says that some sort of customs union will prevent us from striking up trade deals on our own, but as the BEIS Committee said, the reality is that there are no advantages for the automotive sector from Brexit. If asked to choose between preserving trade with up to 80% of existing customers or knowingly jeopardising existing trade in exchange for the chance of some new business with unspecified countries at an unspecified future time, I believe most people would go for the former and protect existing jobs.

All I have seen from Cabinet Ministers who have been pressed on the issue is bluffing, complacency and dangerous fantasies about a green and pleasant land. The automotive industry will survive and flourish only if we protect it now. I do not expect the Minister’s reply to provide the laser-like clarity that has been missing so far, so I will focus instead on matters that are wholly within the Government’s gift, that are not down to negotiations, that can make a real difference now, and that would still be key to securing the plant’s future even if a new model were announced tomorrow.

The first such matter is business rates, which can have a deterrent effect on investment and can mean that efficiencies have to be sought in alternative areas. Some 60% of the total property tax bill of the former Opel group came from the UK, even though the UK accounted for only 8% of the group’s total footprint. In Germany, significant rate reductions are provided to large companies that are intensive energy users.

[Alison McGovern (Wirral South) (Lab)]

rose—

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[Justin Madders]

My hon. Friend is absolutely right. The motor industry has been pressing on the business rates issue for several years, and it pressed again this year; I know that hon. Members with an interest in the subject have pressed on it, too. The case argues itself. An EY study has demonstrated that de-rating certain types of plant and machinery, not just in the automotive sector but across manufacturing, could stimulate additional investment of more than £8.7 billion and support an additional 33,000 jobs per annum. That is something we can do, and the argument for doing it is clear.

Let me give another example that relates to Brexit. If Vauxhall invested in solar panels on the site in the attempt to save on energy costs, it would attract a higher business rate. That does not seem in tune with much of what the Government are trying to achieve. Vauxhall has learned that its energy costs per MWh are twice those of plants in France. That has a massive impact on the competitiveness of the vehicles that it manufactures. I am grateful to the council and the local enterprise partnership for their work to address the issue by helping to source a local low-carbon supply for the plant. That will inevitably require some infrastructure investment, so I urge the Minister to keep in close contact with the LEP to ensure that everything possible is done to facilitate the proposal.

The final piece of the jigsaw is about taking a challenging part of the current set-up and reusing it to enhance the site’s overall viability. A good deal of land on site is surplus to requirements; as the number of people employed there has shrunk, so has the need for the land that the plant sits on. At the moment, only about a quarter of the Astra’s parts are sourced from the UK supply chain, and there has long been an ambition to increase that substantially. Given the uncertainties over future customs arrangements, the opportunity to utilise spare land to help local automotive suppliers to base themselves closer to the manufacturing site has many benefits. It will reduce transportation costs, improve productivity by providing more certainty about delivery, and benefit the wider community and environment by reducing lorry miles and thus emissions. Most of all, it will be a bulwark against a disadvantageous future customs arrangement.

[David Hanson (Delyn) (Lab)]

My hon. Friend will know that approximately 400 people from north Wales work at the plant. I urge him, along with the Minister, to contact the National Assembly for Wales. The Welsh Assembly Government, in co-operation with the UK Government, can help with infrastructure and with many of the issues that he raises.

[Justin Madders]

I thank my right hon. Friend for his intervention. He and I work with many other hon. Members in the all-party group on Mersey Dee North Wales. We recognise the symbiotic relationship in the north-west between Cheshire, Wirral and north Wales, and the interchange of people who move between those areas’ economies. I will certainly work with him and his Welsh Assembly colleagues on the matter.

Reshoring the supply chain is a clear element of the Government’s industrial strategy, although so far I have seen no financial or practical steps taken to deliver it. We need the Government to designate the area around the plant as a local enterprise zone to incentivise suppliers to relocate there. That would benefit the local supply chain, boost the local economy, provide more jobs and raise productivity. It would be a tremendous vote of confidence in the plant, so I urge the Minister to come back with a positive response as soon as possible. It would not only help Vauxhall, but help to improve the competitiveness of other motor manufacturers in the region.

The Vauxhall plants in Luton and in Ellesmere Port are among the most productive in the PSA family, and some of the most popular vehicles in the country are made there. We know that we are in a time of uncertainty and enormous challenge, but I do not see decline and closure as inevitable. We need to build on the positives. There can be no doubt that the ability to say that it supports British manufacturing boosts the company’s sales. Nor can there can be any doubt that the local management and workforce are committed to delivering the best. That commitment must be matched by the Government, ideally in the ways I have set out today, so that the owners are in no doubt that this is a community and a country that they want to invest in. When I go home, I want to be able to tell my friends and neighbours that Parliament is united and determined to give them all the backing they need to enjoy another half-century of production at Vauxhall Motors.

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[Justin Madders]

rose—

[Richard Harrington]

I will not take the intervention, but only because of the time; under normal circumstances, I would be happy to take it. I do not want to annoy Mr Rosindell on this subject, and I am determined to do as much as I can. We as a Government are certainly determined to ensure that the UK continues to be one of the most competitive locations in the world for automotive and other advanced manufacturing.

Our vision is of a UK that is a

“champion of free trade based on high standards”,

not on low standards, and we hope that global Britain will forge

“a bold and comprehensive economic partnership with our neighbours in the EU, and reaches out beyond to foster trade”,

which I hope will help Ellesmere Port.

The right hon. Member for Delyn (David Hanson) said that we should be involved with the Welsh Assembly and others; I am very happy to meet Welsh Assembly Members. I have heard very good reports about the local enterprise partnership and it seems a very sensible idea to work with it. I would be happy to include the Welsh Assembly within any discussions on this matter.

To conclude, we are absolutely committed to a successful Vauxhall, so that it remains and thrives in the UK, both at Ellesmere Port and at the company’s plant in Luton. We have made our strong commitment absolutely clear to the company and it has full access to the support available through our industrial strategy. We want Vauxhall to be successful and—