Ford and Visteon UK Ltd

Stephen Metcalfe Excerpts

Thursday 12th December 2013 Commons Chamber

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

I beg to move,

That this House notes that, when Visteon UK Ltd was spun off from the Ford Motor Company, employees transferred from Ford’s pension scheme into the Visteon UK pension fund on the clear understanding that their pension rights would be unaffected; further notes that, when Visteon UK subsequently went into administration, now over four years ago, former Ford employees suffered a substantial reduction in their pension rights; regrets that the resolution of any court action is still some way off; believes that Ford should recognise a duty of care to its former employees and should make good the pension losses suffered by those worst affected without the need for legal action; and calls on the Government to use the power and influence at its disposal to help ensure that Ford recognises its obligations and accepts voluntarily its duty of care to former Visteon UK pensioners.

Thank you, Madam Deputy Speaker, for inviting me to open the debate. As chair of the all-party parliamentary group in support of Visteon pensioners, I thank the Backbench Business Committee for finding time in the schedule to allow us to discuss this important national issue.

I do not really want to be standing here, criticising one of Britain’s great institutions and highlighting publicly what I believe to be a scandal, but I must. I owe it to my constituents and to the thousands of former Ford employees who transferred their pensions from Ford to the new entity of Visteon to do so. An injustice has been done and it continues to be done. I therefore stand here more in sadness than in anger.

This is a truly national issue. The request for today’s debate was signed by more than 10% of Members of this House and by Members who represent all parts of the country and sit in all parts of the House. Although a good number of Members are in the Chamber, there are many others who unfortunately cannot be with us. I mention in particular my hon. Friends the Members for Enfield, Southgate (Mr Burrowes) and for Enfield North (Nick de Bois), who have Public Bill Committee duties.

[Huw Irranca-Davies (Ogmore) (Lab)]

I commend the hon. Gentleman and other hon. Members for securing the debate. There are other Members, like me, who were unable to put their names to that request, but who are here and who support the motion. He is right to say that Ford is a good company. It employs 2,000 people in the neighbouring constituency of Bridgend. However, people who transferred their pensions to Visteon are at a loss in trying to explain why, when they were given categorical assurances, time after time, that their pensions would be safe and protected, they have not been. All we are asking Ford to do is to step up to the mark and comply with its moral obligations as well as its legal obligations.

[Stephen Metcalfe]

I could not agree more, and the issue transcends any legal debates that might be in a court of law. This is about trust and moral responsibility, and a fine company such as Ford has unfortunately blemished its character by not living up to the expectations of its former employees. That is the nub of the matter, and why I will address my remarks not so much to Ford in the UK, but perhaps to Ford globally. This is a global issue, and ultimately its resolution lies in Dearborn in the United States. I hope that Ford executives in the States are watching this debate, because it is they who are able to solve the issue.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

I apologise for being unable to stay for the whole debate. Does my hon. Friend agree that restitution to the Visteon pensioners would be good not only for them but for the reputation of Ford?

[Stephen Metcalfe]

Absolutely. As I have said, this is a stain on Ford’s character and it does not live up to people’s expectations of a blue-chip brand that has been in this country for more than 100 years. That is why I have taken up the issue with such passion over the past three and a half years. Ford is damaging itself as well as its former employees. I want those executives in the States to watch this debate and listen loud and clear to the message that comes from this House. Indeed, I would be very disappointed if they were not watching—particularly Alan Mulally, the chief executive, and Bill Ford, the executive chairman—and I ask them to step up and sort the issue out once and for all.

I had hoped—as, no doubt, had many other Members—that our debate last year would have sparked some progress and provided the impetus needed to get justice done and see our constituents’ problems solved. Unfortunately, however, that was not the case and it is sad that we have had to come back a year later to rehearse many of the same arguments and ask Ford, again, to live up to its responsibilities. The Visteon pensioners find themselves in the same position; progress has been slow, and their fight for justice continues. Because of that, much of what I say today will sound similar to what I said last year, but it is worth repeating and I and colleagues will keep repeating the same message until Ford listens. To do anything else would be doing a great disservice to our constituents and to the Visteon pensioners, and I place on the record my total respect for the way they have conducted this campaign. Their dedication and commitment have been extraordinary, and that is one reason why I have been pleased to support their campaign.

For those who are new to this topic, I will provide a little history. Visteon was the global parts manufacturer of the Ford motor company, and in June 2000 it was spun off in an attempt to reduce supply chain costs. Visteon employees were actively advised by Ford to transfer their pensions to the new Visteon scheme, and they were promised that in transferring they would still

“receive the same benefits as at Ford, both now and in the future for all their pensionable service.”

They were told in no uncertain terms that their accrued pension rights would be protected, and they were given no new contracts of employment. On the contrary, the new entity continued to use Ford’s logo, it remained affiliated, and people used the same identity cards as previously and received loyalty awards on Ford paper—the list is endless. The two companies remained intertwined, even after the spin-off.

One thing that stands out after the spin-off is that Visteon UK never turned a profit after 2000—not in a single year. It ran up losses of approximately £800 million.

[Mike Freer (Finchley and Golders Green) (Con)]

I congratulate colleagues on securing this debate, and it is sad that we have to repeat the same arguments from last year. Does my hon. Friend remember reading the Detroit Free Press in November 2012, which I am sure is a common read in his office? Tim Leuliette was asked:

“Did Visteon have a chance when it was spun-off?”

He said:

“No. The labour 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”.

Does my hon. Friend agree that Visteon was simply set up to fail?

[Stephen Metcalfe]

With great sadness I must agree with my hon. Friend. When the chief executive of an entity the size of Visteon says that he could never work out how it was going to succeed, we can draw the conclusion that it was set up to fail. Someone somewhere must have known that the cost base was too high, and that Visteon did not have a bright future when it was spun off in 2000.

[Dr Hywel Francis (Aberavon) (Lab)]

In his research, has the hon. Gentleman come across any other company of Ford’s standing, large or small, that has done what Ford did and set up a company almost to ensure that it fails?

[Stephen Metcalfe]

I have not, but I have confined my research to this issue. There was a trend back in the late 1990s and early 2000s for large motor companies to spin off their parts manufacturer and create separate entities, but Visteon never had a chance, certainly in the UK, as demonstrated by its profit and loss. It never made a profit, and no company that never makes a profit can succeed. Inevitably, in March 2009 Visteon collapsed, shortly before the global corporation went into chapter 11 in the United States. Following the collapse in the UK, it emerged fairly quickly that the UK pension fund was underfunded to the tune of about £350 million. That required the pension fund to be placed in the Pension Protection Fund for assessment, which ultimately left former Ford employees with much reduced pensions. Some suffered cuts of up to 50% to a pension they had paid into and had earned. Indeed, my constituent Dennis Varney, who has been leading the campaign so vigorously with me in the past few years, told me his story and I would like to share it with the House.

Dennis joined Ford in 1967 as an apprentice toolmaker. He studied, worked, gained qualifications and got promoted. In 1973, he became a press toolmaker. In 1976, he transferred to the Basildon radiator plant and became responsible for maintaining press tools and related equipment in the manufacture of heat exchange components. In 1978, he was promoted again, with responsibility for the press shop. In 1986, he was promoted to senior manufacturing engineer and then to a management position in 1990. He went to university to study between September 1998 and 2000, and completed a degree course in engineering manufacturing. In 2000, he was transferred to Visteon UK after more than 32 years with Ford. At Visteon he held a management position in a simultaneous engineering group, and had 20 engineers reporting to him directly. In 2006, after 38 years of combined service, Dennis retired. He had worked a lifetime for a company he respected and trusted, and looked forward to a well-deserved and well-earned retirement. We can therefore imagine his dismay—I put it mildly—when Visteon collapsed and his pension was cut by almost 50%. What had he done to deserve this, other than provide decades of loyal service? This was Ford’s response to the plight of Dennis and the many others affected:

“While Ford recognises the severity of the situation for former Visteon UK employees, Visteon became an independent company in 2000 and was responsible for its own business decisions…Ford fully fulfilled both its legal and moral responsibilities to former Visteon UK employees.”

I, for one, do not think it did. I do not intend to comment on whether it fulfilled its legal obligations, as that matter may well go before the court. I remind Members of the words of Madam Deputy Speaker—to be cautious in what they say. Let me say, however, that in my view Ford has not met its moral obligations.

[Jackie Doyle-Price (Thurrock) (Con)]

I congratulate my hon. Friend on all the work he has done to try to secure justice for the Visteon pensioners. On that specific point and to avoid this situation in future, would he welcome the Government reflecting on the legal obligations of employers to employees who have their rights transferred to a spin-off company? One big weakness in this case is that the employees who transferred did not have access to good financial advice. We need to ensure that protections are in place for workers.

[Stephen Metcalfe]

My hon. Friend makes an excellent point. The root of the issue does not lie at the door of the Government, but the Government can do more to protect workers, particularly on how the Pension Protection Fund cap operates when long service is involved. The Government need to ensure that people receive proper, independent, sound financial advice when they are transferred to a new pension fund. That would be a good and sensible step forward.

This is not a personal issue and I have no particular beef with the individuals I have dealt with at Ford. I have great respect for those who have worked with me on this issue over the past three and a half years—the former Ford UK chairman, Joe Greenwall; Christophe Clarke from the government affairs team; and, most recently, the director of government affairs, Madeleine Hallward—but is time for Ford globally to face up to its responsibilities and to do the right thing. I, with colleagues across the House, have been campaigning on this issue for nearly four years and we want to see it resolved.

Some might argue, agreeing with Ford, that this has nothing to do with Ford, but I disagree. Yes, Visteon was an independent company, but as we have heard from my hon. Friend the Member for Finchley and Golders Green (Mike Freer), it never stood a chance, and someone somewhere knew it. I submit that Ford recognised it could source its parts cheaper from other companies around the world and needed to get rid of its expensive in-house manufacturing plants, so it spun them off. That is what Tim Leuliette said. He said it did not stand a chance: the cost base was too high, the overheads were too high, the labour costs were too high. It was totally out of sync with the running of a profitable motor business, so it was sent floating off on its own into the great blue yonder.

That is why I am calling on Ford to meet its moral responsibilities. It knew that Visteon had no long-term future and that among the casualties when it inevitably collapsed would be thousands of former employees who had given loyal service. Those employees have now suffered serious pension losses. They transferred their pensions from Ford to Visteon in good faith, on the basis of trust. People trusted Ford, so when it gave them its assurances, they took them at face value. Why wouldn’t they?

I would like to quote the words of John Hill, a former Ford employer, then Visteon pensioner, who unfortunately is no longer with us:

“I had absolute faith in Ford, and I trusted them. Although over the years we had our ups and downs, everybody had a great respect for the company and a degree of affection for being part of its traditional values and the ‘family of Ford’. A long heritage, and the fact that they had been around for so long formed part of that trust. I just cannot believe that this could happen, and we have been betrayed.”

Unfortunately, he is one of the pensioners who will never benefit, whatever the outcome of the court case and our campaign.

Trust is important, as is family, and Ford likes to talk about family. When Bill Ford celebrated Ford’s 100th anniversary in the UK in 2011, he said:

“I have always thought of Ford employees, dealers, suppliers and partners as members of our extended family. My visit here has confirmed that belief—it has felt like a homecoming.”

He also said:

“Ford of Britain has a proud heritage…The United Kingdom quickly became the most important market for our cars outside of the United States.”

There is no doubt that Ford UK is a vital cog in the global Ford machine and Ford family, yet “family” is probably not the word that Visteon pensioners would associate with their former employers any longer. Simply put, people trusted Ford, and now they wish they had not. That is sad. Ford is a great company and has the potential still to be great in the future, but it is allowing its reputation to be tarnished by not stepping up to the plate. I am asking, in all good faith and in recognition of Ford’s contribution to the UK, that Ford do what is right by its former employees and resolve this issue. Yes, times are tough for the motor industry, especially in Europe, but this goes further than just a financial transaction; it is about restoring trust in what should be a rock-solid brand and removing a stain from Ford’s rich history.

Finally, I can do no better than refer colleagues and the Government to the wording of the motion. That is why we are here and that is what we want—put simply: justice for our constituents.

--- Later in debate ---

[Nick de Bois]

I am grateful to the hon. Gentleman for his intervention and understand that he has to attend to pressing priorities, and rightly so.

I would like to highlight two points. We have talked about the possible lack of understanding at Ford in the US about the consequences of the decisions that were taken here in the UK. I have considerable experience—some might say that I have the scars on my back—of working in America, having worked with American businesses and set up my own business there. It is an extremely different culture, particularly when it comes to employee relations. I can speak only about my area, and of course the company was not a substantive corporation like Ford, but I know that the work force protection schemes in America are nothing like those in this country, and many say that we have some of the least onerous schemes, compared with the rest of Europe. In America, an employer can hire and fire almost at will without recompense. There are a limited set of protections for redundancy or sacking with or without cause, but it is a very different culture. We may speak the same language, but we are not necessarily united by it in our practices.

It may well be that people in the boardrooms in America do not understand the implications or the potential harm to their reputation of pressing ahead and distancing themselves from the issues facing the pensioners of Visteon. I urge them to listen carefully and to imagine themselves not in the boardrooms of America looking over here, but over here looking at it through the eyes of their UK allies and partners. They might then understand what has driven us to the Chamber today and what has driven the unrelenting cause of Visteon pensioners.

[Stephen Metcalfe]

Does my hon. Friend agree that had the situation occurred in the United States and 3,500 employees who had worked for such an iconic corporation were banging on Ford’s front door in Dearborn because they had had their pensions reduced so dramatically, the issue might have been solved long ago? It is out of sight and out of mind over here.

--- Later in debate ---

[James Duddridge]

My hon. Friend makes a very good point. Not only have I watched the film, but one of my constituents, Lesley Butcher, starred in it in a voiceover role. She is also an excellent parish councillor in Rochford, but that is her claim to fame. That goes to show what a close community we are. The community trusted Ford and was badly let down.

The motion has been signed by my right hon. Friend the Member for Chelmsford (Mr Burns). People who do not know his background might think that his speech verged on being anti-American. Given his strong passion for that country, I do not think it can be seen as anti-American. He will certainly be distraught that the project that allowed the supply chain to continue had the name Project Kennedy. My hon. Friend the Member for Castle Point (Rebecca Harris) made the very good point that this was clearly not an independent company. Project Kennedy allowed the continuity of the supply chain. Effectively, the directors and managers of Ford were shadow directors of Visteon. They were manipulating what went on in that separate company.

I hesitate to share with the House my ambitions as a young child.

[Stephen Metcalfe]

Oh, do.

[James Duddridge]

I am urged to do so, so I will. I wanted to be a Conservative Member of Parliament and I have achieved that. I wanted to have a purple pool table, and I hope that my wife reads Hansard tomorrow so that she knows what to get me as a Christmas present. I have always wanted a Ford Capri Mk II. It saddens me that, even if I had the space and the money, I would not be prepared to buy a Ford now. I am not irresponsible enough to call on my constituents, many of whom work at Ford, to boycott Ford in its entirety. However, I am sure that there are many people like me who are proud of Ford’s heritage, like Ford cars and like the Mustang that is coming out, but who would not think of buying a Ford car because of Visteon.

Every Saturday, I go to mini-football with my son and I sit alongside somebody who works at Ford. I have discussed the Visteon issue with him. I am fearful that an organisation that has made such a mistake with Visteon may very well make it again. Are the pension funds of Ford safe at the moment? If I were a Ford employee, I would be very fearful of that.

I do not know what Ford executives consider to be normal behaviour within a family, but this is no way to behave. If we follow the analogy, such behaviour would lead to divorce, family breakdown and great woes. Ford has let us down consistently. There is a small window of opportunity between now and the court case for it to do the right thing morally by our constituents, six of whom have made direct representations to me. If it does the right thing kicking and screaming, only when forced to by the courts, it deserves to take no credit whatever. It needs to act now, before the court case.

--- Later in debate ---

[Steve Webb]

It is not the Government who pay for the PPF, but the rest of British industry. It is funded partly by the assets of the schemes in the fund and the investment returns on them and partly by a levy on schemes with defined benefit pension liabilities. I realise it does not change the issue my hon. Friend raises, but it is not the taxpayer who funds the PPF; it is other firms with ongoing defined benefit pension liabilities. The PPF does not form a judgment on the rights and wrongs of a firm’s conduct leading up to insolvency. That is a separate matter that might come up during the court proceedings.

During the debate, we heard that Visteon was spun off from Ford in 2000, before the present architecture—the Pensions Regulator and the PPF—was in place. My hon. Friend the Member for Thurrock (Jackie Doyle-Price) asked whether these sorts of things could happen again and whether a hypothetical future firm could structure its affairs with a view to minimising its pensions liabilities and passing them on to the PPF. I can reassure her that part of the remit of the Pensions Regulator is to protect the PPF and hence other levy payers. For example, firms considering a corporate restructuring that would have implications for the covenant of their pensions scheme can seek pre-clearance from the Pensions Regulator, and the latter has powers to act if a corporate transaction has been undertaken with specific intent to weaken pension protection. The situation, therefore, is considerably different from the one pertaining in 2000.

The hon. Member for Ogmore (Huw Irranca-Davies) and my hon. Friend the Member for Castle Point (Rebecca Harris) described the workers who accepted the transfer from Ford to Visteon. The hon. Gentleman said they were not greedy or stupid, which of course they were not, and my hon. Friend said they were sensible and level-headed. It was the natural thing to do at the time: someone’s employment is transferred from one employer to another, they are given assurances about their pension and it is suggested they transfer it across. There are different accounts of exactly how the conversation went, but it was an entirely rational thing for people to do. There is no suggestion that people who made that decision acted inappropriately; they acted in good faith on the assurances given.

[Stephen Metcalfe]

One issue that arose about the point of transfer was that some were reaching the end of their careers within Ford but were still left obliged to transfer before—in one case, only three months before—they retired, only to find out later that they had been disadvantaged. Could the Government look at providing for those in the process of reaching retirement a buffer zone, whereby people do not have to transfer out of the fund into which they have put most of their earnings over their working lives?

[Steve Webb]

It is worth bearing in mind that, in all these cases, we are generally dealing with a trust—a pension fund set up as a trust has trustees—and with private companies, scheme rules and so forth. It is difficult to see how the Government could write a law that interacted with all those different aspects in a rational way. I take my hon. Friend’s point, as I, too, have heard about folk who worked only a few months for Visteon, yet transferred across their life’s pension rights with Ford—with very adverse consequences. I appreciate that that happened. It is quite clear that no blame or criticism could possibly attach to the workers whose pensions were transferred across; they are clearly the innocent parties in all this.

Prior to this debate, I re-read the transcript of our debate of a year ago. I was struck by the tone, which was slightly different. I do not know whether this was co-ordinated because I was not involved in those conversations, but I was struck that a number of hon. Members said that they did not want to drag Ford down, as they recognised that Ford was a key employer for this country and that many people who worked for the company were proud to do. As I say, I was struck that hon. Members were not trying to denigrate Ford, but were concerned that, if the matter remained unresolved, Ford’s reputation would suffer. I think this striking tone will have been noticed.

It was made clear during the debate that although Visteon was spun off as a separate company, there were close links between Visteon and Ford. My hon. Friend the Member for Enfield North (Nick de Bois) mentioned the nature of the relationship, drawing on his business expertise, while some hon. Members pointed out that new contracts were not signed. Reference was made to the fact that the long service award that Visteon workers received accumulated their Ford service, and there was Ford branding and all of that. Leaving aside the legalities, it is absolutely clear that the two companies were very closely interlinked; there can be no doubt about that.

During our discussions, the potential for Select Committees to look into this issue was raised. What Select Committees choose to investigate is obviously not a matter for the Government, but I am happy to repeat the assurance I gave a year ago that if any Select Committee—perhaps the Culture, Media and Sport Committee could find an obscure angle to get going on this—decided to take up this issue, we would be happy to put at its disposal the expertise of the Pensions Regulator, the Pension Protection Fund and my own officials to advise or guide in any such investigation.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) asked what the Government could do. At this point, I refer back to the motion, which “calls on the Government” to do what they can and use what influence they can to bring matters to a “resolution”. The court process is happening, so the legalities will be resolved one way or another through that.

Prompted by today’s debate, I asked my officials to contact Ford UK, which they have done. We have agreed that I shall meet Ford UK early in the UK and I shall take up the concerns that have been voiced. Ford and I have agreed that the spirit of that meeting will be one of constructive dialogue. I thought the best way I could reflect the spirit of today’s debate and the many excellent speeches we have heard would be to relay in person to senior executives of Ford UK the tenor of our debate and the views of the House. Almost uniquely, we have spoken with one voice. I hope that that reassures hon. Members. In addition to what they have done by properly putting their concerns on the record again, I hope that, with our proceedings being heard beyond this House, further steps will be taken on behalf of these pensioners.

--- Later in debate ---

[Stephen Metcalfe]

Thank you for the opportunity to wrap up the debate, Madam Deputy Speaker. I think that the relationship between Visteon and Ford has been very well explored, as has the reason for the belief of members of the all-party parliamentary group that Ford has a moral responsibility to make good the losses that have been suffered by our constituents.

We have heard from a number of Members today. The hon. Member for Aberavon (Dr Francis) drew comparisons with the way in which other companies have dealt with this issue. My right hon. Friend the Member for Chelmsford (Mr Burns) described the differences between the ways in which business is conducted on the two sides of the Atlantic. We also heard from my hon. Friend—and I do call him a friend—the Member for Swansea West (Geraint Davies), who is the vice-chairman of the all-party parliamentary group, and whom I thank for his invaluable help. My hon. Friend the Member for Maldon (Mr Whittingdale) expressed the hope that the issue would not go to court, and that is probably the feeling of the whole House. I think that if the issue did go to court and Ford were victorious, it would be a hollow victory anyway, because the company would still not have met its moral obligations.

My hon. Friend the Member for Enfield North (Nick de Bois) presented a strong argument about the links between Ford and Visteon and the continuity in the supply chain, and my hon. Friend the Member for Castle Point (Rebecca Harris) referred to Project Kennedy, which was intended to ensure that the supply chain was continuous. My hon. Friend the Member for Rochford and Southend East (James Duddridge) described Ford as a four-letter word behaving in a four-letter way. I am grateful to all of them, I am grateful to the shadow Minister, and I am especially grateful to the Minister for the efforts that he has made over the last three years. I am particularly impressed to learn that he has been in contact with Ford UK, and that a meeting is planned. That is a positive step.

The final message that I want to send to all who have listened to the debate, inside and outside the House, is that this fight will not go away. We see an injustice that has been done to our constituents, and we will carry on fighting until justice has been done.

Question put and agreed to.

Resolved,

That this House notes that, when Visteon UK Ltd was spun off from the Ford Motor Company, employees transferred from Ford’s pension scheme into the Visteon UK pension fund on the clear understanding that their pension rights would be unaffected; further notes that, when Visteon UK subsequently went into administration, now over four years ago, former Ford employees suffered a substantial reduction in their pension rights; regrets that the resolution of any court action is still some way off; believes that Ford should recognise a duty of care to its former employees and should make good the pension losses suffered by those worst affected without the need for legal action; and calls on the Government to use the power and influence at its disposal to help ensure that Ford recognises its obligations and accepts voluntarily its duty of care to former Visteon UK pensioners.