Politics rev up motor industry debate

Ford’s plans for Halewood and Toyota’s comments on its future in Europe, have sparked huge controversy about car manufacture in the UK

The motor industry last week took centre stage as both main political parties looked for point scoring opportunities in the run up to the General Election. Actions by Ford, Nissan and Toyota were seized upon to support pro and anti European Union stances with Ford’s plans for Halewood sparking off a parliamentary debate yesterday.

Japanese car maker Toyota took last week’s starring role following comments by its president Hiroshi Okuda. He indicated that the company would reconsider its future European investment strategy if the UK stayed out of the single currency. Although he qualified his comments later, saying announced spending in the UK – a further £200m on top of its existing investment of £840m at Burnaston, Derby – would go ahead as planned, Eurosceptics and Europhiles had a field day.

Fellow Japanese manufacturers Nissan and Honda were quick to distance themselves from the comments. Honda said it remained committed to the UK. Its investment plans, which include increasing production at its Swindon plant to 150,000 units in 1998 and the workforce to 2,500, were unchanged. It will add a third model at the plant next year, on top of the existing Civic and Accord models.

A spokesman said UK membership of European monetary union would not have an impact on its UK strategy and that as a global company it was used to dealing with currency fluctuations between countries.

This week, Ford was expected to enter the political arena stage left, as unions took their protest against the closure of Halewood to Parliament.

Unions and Labour politicians say Ford’s decision to slash a third of its workforce at Halewood – cutting 1,300 jobs – and to curtail production of the Escort by 2000, is due to expediency. Market share for the vehicle made at Halewood, Saarlouis in Germany and Valencia in Spain, has fallen from 10.8% to 6%. They claim that Ford decided to cut production of the Escort and the jobs in the UK because it was cheaper to do so. They argue that there is no other explanation for the move.

The Escort is the second best selling car in Europe, and the UK the single largest market. It is also cheaper and quicker to make the car in the UK, claim the unions.

The unions’ argument was summed up in a parliamentary early day motion, tabled on 24 January by 26 Labour MPs: `That this House deplores the decision of Ford to transfer Escort production from its Halewood plant in Merseyside to Germany; notes that British Escorts are up to £1,000 cheaper to build than the German equivalent and that the UK is Ford’s largest Escort market in Europe with 129,000 sold here last year; further notes that the import of this number of German-made Escorts would put a £2.8bn hole in Britain’s balance of payments and therefore “urges the Government to hold urgent talks with Ford with a view to preventing it abandoning its largest European market for reasons of expediency”.’

The unions fear the cuts at Halewood could be followed by job losses at Ford’s Southampton plant which makes the Transit and Dagenham which makes the Fiesta.

Ford has vehemently denied the accusations. A spokesman said the reduction in staffing levels would allow Halewood to work a consistent five-day week and to minimise down days. He also said that Ford did not intend to close down Halewood once Escort production stopped in 2000, and that it hoped to produce a new Escort-based model there from 2000.

A shadow has been hanging over Halewood since the autumn when Ford managers warned of falling market share and profitability, particularly in the UK. Last week it revealed European losses of $213m (£180m) in 1996, compared with profits of $116m in 1995.

Ford chief Alex Trotman said at the end of 1996 that Ford’s fightback in Europe would be spearheaded by improved quality and an all-out attack on costs. The workers at Halewood now know what he meant.

As the Conservatives’ spotlight on the success in attracting inward investment was beginning to flicker, Nissan came to its rescue. It plans to invest £215m at its Sunderland plant, creating 800 jobs and another 2,700 jobs at more than 100 component companies across the UK.

Ian Gibson, chief executive of Nissan Motor Manufacturing UK, said the plant had seen off competition from Japan and Europe and praised the efforts and flexibility of the workforce.

Nissan has not asked for state aid to support its investment plans, and its 4,300 workers in Sunderland were in a buoyant mood. They also received salary increases of 4.5% last month, the first of a two-year deal negotiatied with the union AEEU, on top of last year’s 4%. Salaries for manufacturing staff now range from £14,243 to £16,459. Next year salaries will rise 3.75%.

Staff at Halewood are facing a more uncertain future, and the contrasting fortunes of the two manufacturing sites will be uppermost in the minds of union officials who were hoping to meet Jac Nasser, Ford’s president of European operations today. Ford would not confirm when or where the meeting was going to take place.

Tony Woodley, national official of union the T&G, will tell Nasser the proposals to close Halewood are unacceptable and unjustified. `We accept that reductions in output may be necessary but production cutbacks should be spread across Ford’s European operations. We want to see an agreement which treats Ford of Britain fairly.

`There is no justification for the decision other than weak labour protection in this country.’

Woodley said the offer of a potential new model at Halewood for 2000 `was a sham’ and an attempt to soften the blow of the closure and head off any industrial action. `There is no new model and Ford has admitted that it is not part of their planned production range.’ If a new model is developed Woodley said it would obviously be welcomed.

Ford has said a niche vehicle, a multi-purpose version based on the new-generation Escort, could involve at least 120,000 units a year, and would go into production from 2000. But it has also said that it would depend on financial aid from the Government – as did its decision to go ahead with the Jaguar X200 project in the UK – and an agreement with workers on flexible working practices and increased productivity.

The unions are already balloting 30,000 workers across Ford’s 20 manufacturing sites over industrial action and the result is due by the end of the month.

The meeting with Nasser and the unions could influence the outcome of the strike ballot. A vote in favour of industrial action would certainly keep the motor industry at the centre of the political stage.