Manufacturing (West Midlands)

Richard Burden Excerpts

Tuesday 15th January 2013 Westminster Hall

[Richard Burden (Birmingham, Northfield) (Lab)]

I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate. I agree with a lot of what he said. He was right to emphasise the importance of continuity. I am pleased that he began his speech by mentioning the 800 new jobs that have been created at Jaguar Land Rover. That is a tribute to many people, including Jaguar Land Rover itself, under the ownership of Tata, which has really put its money where its mouth is. Tata understands the importance of investment in plant, skills and product, and in the supply chain to back that up. I will say more about that, but it is important to recognise the importance of JLR these days as a corporate citizen of the west midlands.

That said, the markets where Jaguar Land Rover is expanding are the far east and elsewhere. If it were as dependent on the European market as some other manufacturers are, however good a corporate citizen it is, the story would be different. We heard about Honda shedding 800 jobs last week—just outside the west midlands, admittedly—Ford announcing plans in October to cut 1,400 jobs at plants in southern England, and Vauxhall moving to a four-day week for more than 2,000 workers in Ellesmere Port. Only last week General Motors forecast that European car sales would weaken still further this year. I say that because the UK exports 82% of its cars, and the European market is vital to that. In all seriousness, going down the road of knee-jerk anti-Europeanism will not help. What happens in the eurozone will affect us, whether we like it or not. I hope that that big picture will be remembered on Friday.

The automotive industry is doing well. The west midlands is a key part of that, but the Government could do more to back it up. I want to say something about the supply chain. There has been £6 billion of major investment by the big manufacturers, but if we look at who supplies them, we see that, all too often, the parts come from abroad. Most of the big first-tier suppliers are not UK-owned, but there is no reason why more products could not be manufactured here and supplied to them through our second, third and fourth-tier suppliers. The UK could get a lot more benefit out of that if it ensured that the myriad often specialist companies in the west midlands and elsewhere got a greater piece of the action. The Society of Motor Manufacturers and Traders has estimated that there could be £3 billion of extra opportunities if we could get more coherent support for the supply chain.

Some good things have happened under the present and previous Governments. The regional growth fund, which has been mentioned, and the advanced manufacturing supply chain initiative are good, but we need to do more, and that is the message coming from the automotive industry. It is a bit of a cliché, but it is true none the less, that the Government need to be consistent and joined-up, and to work on industry’s time scale, not the glacial pace at which too often they work. They also need to do more about access to finance. For small and medium-sized firms in the supply chain, access to finance is still an issue, and many such firms continue to tell me either that banks do not understand how they operate, or that they do understand but work at a glacial pace or make credit so conditional, so prohibitive, that only firms that probably do not need the credit in the first place can get it.

[Mr Spellar]

Does my hon. Friend agree that there is an absurd situation for suppliers who have long-term contracts with major companies such as Jaguar Land Rover or, indeed, Rolls-Royce, which has a massive order book stretching out 10 years? Rolls-Royce is having to fund them because the banks will not lend against that very predictable order book. Is not that madness?

[Richard Burden]

My right hon. Friend is absolutely right. We are all a bit like cracked records when we say this. I chaired the Regional Select Committee on the West Midlands, and our first report was on that issue. We highlight it time and again, and if we are to make the step change that is needed, we must deal with it.

I have already taken five minutes, but I want briefly to mention two things, beginning with local involvement. Bringing banks and industry closer requires mechanisms that will allow that and encourage it to happen. Often, such mechanisms are the most successful when they are born out of crisis. I know that from my experience of the kind of work that was done after the collapse of MG Rover and partly in preparation for what eventually happened there. The regional development agencies were starting to do some good work on that. They have gone now, but a glue to stick things together—finance sector and industry co-operation, reaching out to SMEs and understanding the needs of manufacturing—remains vital. That is why Lord Heseltine’s report is so important and why I welcome the pilot scheme being mounted in the Greater Birmingham and Solihull area, but there is a need for follow-up. I hope that when the Government consider the bid submitted in relation to the pilot, they will see the huge potential for the local enterprise partnership and, more importantly, for the broader west midlands and beyond.

I acknowledge and support what has been said about procurement and skills, but I will not elaborate on that. My last comment is on technologies and the future. I have spoken entirely about the automotive industry, but when I do that, I am not talking simply about cars, or even commercial vehicles and so on. I am talking about an industry at the heart of manufacturing, which is often a catalyst for the development of other industries, whether in defence, in composites, in other advanced manufacturing, or in medical technology. That is why messages of the kind that are coming from the Automotive Council are so important and why we should understand the contribution made to manufacturing by Britain’s motor sport industry, many of whose companies are based in the west midlands. For those benefits to be developed, there must be a consistent Government approach. It is also vital to have mechanisms in our region that are controlled and run by people in the west midlands who understand manufacturing, who can decide local priorities and, just as importantly, who can mobilise and lever in the resources needed to increase our manufacturing industries’ potential and translate it into reality.