Ford UK (Duty of Care to Visteon Pensioners)
Debate between Mike Freer and Hywel Francis(12 years ago)
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Mike Freer
The hon. Gentleman makes a good point. A company being transferred away from its parent as a loss maker is, in itself, not the issue, but it is whether the management, on both sides of the spin-off, genuinely believed that the business recovery plan was viable. I shall go on to refer to a comment made by the then chief executive of Visteon about the viability of the business post spin-off. The comment suggests that they knew exactly what they were doing, and that this was simply an exercise of dumping a liability while cleaning up the main Ford balance sheet.
Dr Hywel Francis (Aberavon) (Lab)
I congratulate the hon. Gentleman on securing the debate. One key point that was made to me by trade unions at the time, 10 years ago, was that there was no serious engagement with the unions and the work force in new product development. The company was continually reminded of the need to do so, but refused.
Mike Freer
The hon. Gentleman makes a very good point, but it is worse than just that there was no engagement. All the evidence suggests that Ford Motor Company was engaged in underhand sourcing of new products from other suppliers at cheaper rates. Indeed, those new suppliers were asked—nay, forced—to sign confidentiality agreements. Therefore, although Ford knew that Visteon was not in a position to develop new products, it was actively sourcing new products from other, cheaper suppliers without telling Visteon or certainly without telling the work force of Visteon. I think that that is duplicitous. Visteon was immediately at a competitive disadvantage compared with other suppliers, not least in relation to securing new business from Ford. Of course, as it was a spin-off, one hope would have been that it would secure new business, but having inherited the overhead of the Ford system, it was unable to do so. As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) pointed out, Visteon’s trading losses were close to $1 billion before it went into administration in March 2009. It made a loss every single year.
The key issue is this: did Ford know what it was doing? This is where I want to refer to a comment made by Tim Leuliette, the chief executive of Visteon Corporation. He was interviewed by the Detroit Free Press in November 2012. He was asked:
“Did…Visteon…have a chance”
when it was spun off? He said quite clearly:
“No…The labor cost issues, and the burden and the overhead was…so out of line with reality that it was almost comical. It just wasn’t going to work. And it didn’t work.”
If the chief executive of Visteon knew that its business plan could not recover the company, I doubt that Ford did not know that as well.