GKN: Proposed Takeover by Melrose

Wayne David Excerpts

Thursday 15th March 2018 Westminster Hall

[Wayne David (Caerphilly) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey) on securing this vital debate. As has already been said, GKN has a long and proud history dating back to 1759, when Guest established the ironworks in Dowlais, in Merthyr, south Wales. I suggest that there is no better pedigree than that. Today, the company has developed and expanded so that it operates in 30 countries and employs 6,000 people in the United Kingdom, many in well-paid jobs.

Let us be clear about the nature and the intent of this takeover bid. Melrose is a hedge fund operator, despite what it might say, and an asset stripper, despite its protestations. As other hon. Members have said, that was clearly laid bare by the statement made by Airbus, which has been widely reported and quoted today. The response of the GKN chairman, Mike Turner is interesting. He said:

“The comments from Airbus that stress the need for long-term investment and strategic vision in our industry emphasise our firmly held belief that Melrose is not an appropriate owner of GKN. Its management lacks the relevant experience and its short-term business model”—

he is being very polite—

“is inappropriate for GKN’s customers and investors.”

That sets out the situation very clearly and succinctly.

I want to focus on the implications for the defence sector in this country. There is a very genuine and real concern about the defence implications of this takeover. GKN is a major defence partner to Boeing and to Airbus, and it supplies and maintains UK defence equipment for the RAF and the Army. Importantly, GKN is very involved with the Typhoon aircraft production; the Chinook and Black Hawk helicopter programmes; the very important F-35 joint fighter aircraft programme, which is coming on-stream now in this country; and the A400M aircraft produced by Airbus. If the GKN takeover comes about, we are likely to see a big question mark over the nature of the successor company’s involvement. Make no mistake: Melrose’s track record shows clearly that it has no interest whatever and no expertise at all in anything related to defence. We are likely to see sell-offs of its defence interests, and that would have major defence implications for this country.

I welcome the Chair of the Defence Committee, the right hon. Member for New Forest East (Dr Lewis), to the debate. He has said that the takeover puts a question mark over the ownership of intellectual property. If that section of GKN is sold to another firm that is located in another country, the intellectual property goes with it. Who knows what country it may end up in? More than theoretically, it is quite possible that some of the intellectual property rights will go to countries that are not friendly to the United Kingdom.

The Secretary of State for Business, Energy and Industrial Strategy has a moral reason to be very concerned about the situation, and he has the practical means to intervene. As has been said, under section 42 of the 2002 Act, he can intervene on the grounds of public interest and in section 58 of the Act, public interest in these circumstances can be defined as placing in jeopardy our national security. If the Secretary of State chooses not to intervene now, it may be too late to ever intervene again. The Secretary of State can intervene only if the turnover of a business that is threatened by takeover is greater than £75 million, or the business has more than 25% of market share. It is possible that once the sale of the company takes place, the sale of the company’s assets through downsizing will mean that the Government do not have the legal base to intervene to protect our national interest. That is why I believe that the Government must act.

The Secretary of State for Defence indicated in his evidence to the Defence Committee that he is very concerned about the situation. On 6 March he put his concerns in writing to the shadow Secretary of State for Defence, my hon. Friend the Member for Llanelli (Nia Griffith). He said:

“Both GKN’s existing Board and Melrose have publicly indicated their intentions to restructure, and potentially sell, some elements of the business. I recognise that this will be unsettling for staff who might be affected but the impact of either of these proposals on defence and aerospace jobs is currently unclear.”

It may be unclear to him, but it is not unclear to many others.

I urgently ask that the concerns are delved into in some detail and depth as then they will be apparent for all to see. I hope the Government will bite the bullet and necessarily intervene, to stop this hugely damaging takeover.

Mineworkers’ Pension Scheme

Wayne David Excerpts

Tuesday 5th December 2017 Westminster Hall

[Nick Smith]

My hon. Friend and neighbour really captures what has happened.

[Wayne David (Caerphilly) (Lab)]

As my hon. Friend has said, the surplus gets to the heart of the issue. Does he accept that the surplus the Government have received is far in excess of their own expectations for what could have happened?

[Nick Smith]

My hon. Friend and neighbour, like my hon. Friend the Member for Islwyn (Chris Evans), gets right to the bone. Nearly £2.7 billion has come from the scheme to the Government as their share of the subsequent surpluses. That means that the Government have taken the same share as the people who earned the pensions in the first place.

Instead of paying in, the Government act as a guarantor in case things go wrong. That is a good thing and has been helpful—the trustees say that. The Government say that they take the money because they will step in and protect the value of pensions if the fund encounters difficulties. The trustees accept that this protection has enabled them to pursue more lucrative investments than might otherwise have been the case. I would like to be clear: we are glad that the Government guarantee is there. It has made a difference and helped to lead to better returns.

Tesco House, Cardiff: Job Losses

Wayne David Excerpts

Wednesday 19th July 2017 Commons Chamber

[Anna McMorrin (Cardiff North) (Lab)]

I am grateful for the opportunity to raise the issue of the closure of the Tesco customer operations centre in my constituency of Cardiff North with the loss of up to 1,100 jobs. If you will allow me, Madam Deputy Speaker, I shall do three things: first, highlight the way in which Tesco has acted; secondly, describe the human impact of these actions; and finally, explore how we respond to these things and the next steps.

On Wednesday 21 June, without any warning or consultation with either the Welsh or the UK Governments, Tesco announced it would be closing its customer contact centre in Cardiff in February next year, leading to the loss of up to 1,100 jobs, with the possible relocation of 150 of those jobs to Dundee. The centre deals with inquiries from consumers all over the UK, including those made via social media. It has a highly motivated and skilled workforce who take great pride in their work.

On the morning of 21 June, staff went to work as usual. On arrival, some were told by visiting management to clear the top floor and find somewhere else in the building to work. An events management company had been brought in to install a PA system. Staff then received an email inviting them to a meeting on the top floor at 1 pm. To those crowded into that room on the top floor, an official statement was read out telling them they would all be made redundant. There was no opportunity for questions. This shock announcement has inevitably had a huge impact on the dedicated staff, some of whom have worked there for over 20 years. In some cases, two or three members of the same family work there.

[Wayne David (Caerphilly) (Lab)]

Does my hon. Friend share my disgust at the fact that many of the employees, including constituents of mine in Caerphilly, only learned about the closure on social media?

[Anna McMorrin]

Yes. Some staff members who were not there that day only actually found out that they had lost their jobs through social media. There also seems to have been no formal means of contacting them or managing their concerns.

Following the announcement, I met Tesco executives to press them on their reasons for the job losses and why jobs in Dundee have seemingly been prioritised over jobs in Cardiff. We were told that there is more space in Dundee and that the company had already taken the decision to have one site where customer relations staff would be based. They were unable to provide any reason why they had not entered into discussions with either the UK Government or the Welsh Government.