BAE Systems

Debate between Tobias Ellwood and Alan Johnson

Thursday 24th November 2011 Commons Chamber

[Alan Johnson]

My hon. Friend is absolutely right. That is precisely the point. We can compare those two British companies. Around 96% of GlaxoSmithKline’s sales are abroad, but it is making a decision as a British company to invest in Britain and open manufacturing plants at a difficult time, and it is of course helped by the patent box that was agreed by the Labour and Conservative parties. It is an example that BAE should follow.

As thousands of highly skilled BAE employees contemplate a miserable Christmas, it is time for the company to engage properly with its work force in order to ensure that their important skills are retained in aerospace manufacturing and that aerospace manufacturing is retained on the Humber. We are 58 days into the statutory 90-day process, but there is no sign whatsoever that BAE is doing anything other than going through the motions. Indeed, the site director at Brough told my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) only last week that nothing would change during this consultation process. He told her that they were going though the motions. When the 90 days end on Boxing day, it will still be 27 September as far as BAE’s plans are concerned.

The unions are working hard to hold the company to its statutory obligations. The union representatives involved are very good and need no advice from me, but if I was a union rep involved in the case, I would seriously consider seeking a protective order against BAE for its lack of engagement.

We believe that BAE’s three manufacturing sites should be retained. The company should stand by its loyal work force in difficult times, so that when the good times return it has sufficient manufacturing capacity in this country to deal with the extra work.

All the signs are that military aerospace will expand dramatically from about 2016. At the very least, BAE should adopt the intelligent proposals put forward by its own executive group at Brough in order to mitigate the significant risk inherent in the company’s plans by retaining crucial assembly and sub-assembly at Brough for the duration of the next Hawk acquisition contract, thereby saving about one third of the jobs until 2016.

[Mr Ellwood]

The right hon. Gentleman is making a powerful speech, but will he elaborate on his statement that the defence industry expects to expand with orders in 2016? From the angle that I see the issue, the United States, NATO countries and so forth are doing exactly the opposite: this is the area in which budgets are being cut; defence is being affected.

[Alan Johnson]

That is true, and I will turn to civil aerospace in a moment, but all the experts in the area, including the unions handling the situation, expect that from 2016 there will be an increase, particularly in Hawk orders. We are looking at the home of Hawk in Brough, and it is going through a difficult time, but most expect that, if we can get to 2016 and through the next difficult period in this country and throughout the world, there will be significant opportunities in military engineering.

The executive group at Brough has put forward a proposal to safeguard what is probably the Saudi Arabia contract, to ensure that there are no dangers to it and, therefore, to save about one third of the work force until 2016. There is a desperate shortage of necessary skills to meet booming demand in the commercial aerospace sector by companies such as Rolls-Royce and EADS, so the retention of some Hawk work should be combined with facilitating and incentivising the transfer of packages of commercial aerospace work to Brough. It is an attractive site, with exceptional access by air, sea and land. It has the machinery, the layout and the work force that commercial aerospace companies need, and it can be utilised without causing job cuts elsewhere.

It is time for fresh thinking. As the right hon. Member for Haltemprice and Howden has pointed out, we are in the crazy position of using taxpayers’ money to destroy skilled jobs in an economy that is desperate for high-value manufacturing to expand. It is time for an ethical and, even, patriotic approach by big profitable international companies, such as BAE, to the problems that this country faces. The Government have an important role to play in such a strategy, but the prime responsibility rests with the company.

I have a final quotation from Andrew Witty. He says:

“I…believe one of the reasons we have seen an erosion of trust…in big companies is they’ve allowed themselves to be seen as detached from society…They’ve allowed it to be perceived that it’s all about money.”

BAE needs to avoid being a “mid-Atlantic floating entity” and to demonstrate that it is a British company that cares about British society and British jobs. The work force at Brough have been loyal to BAE in difficult times. BAE needs to reciprocate that loyalty now.