Panic at GM triggered Luton closure, MPs claim

Commons report suggests dark future for UK’s single-model plants.

General Motors’ decision to close the Luton Vauxhall plant shows that no single model car plant in the UK is safe, an influential House of Commons committee has said.

GM was ‘panicked’ into closing Luton plant with no economic rationale, the Trade and Industry select committee says in a report on vehicle manufacturing in the UK published last week.

The committee also concludes that ‘the suggestion that it is easier and cheaper to dispose of employees in the UK than elsewhere’ is ‘factually correct’.

The report says that the model replacement cycle of the big car makers means ‘every year the future of one or two UK-manufactured models, and by extension that of the plants where they are assembled, is called into question’.

Any plant making a single model, like Luton, is vulnerable when demand for that model falls. ‘The implications are grave for older plants, those with geographical constraints or limitations, and those whose internal configuration cannot readily be adapted,’ it says.

Noting that Dagenham, where production of the Ford Fiesta is to end next year, is a single model plant, the committee says: ‘It is a matter of some concern that a number of the remaining UK car assembly plants are also single-model plants’ — notably Ryton (which, although working at full capacity only produces the Peugeot 206) and BMW Oxford (the Mini).

GM justified its decision to close Luton by saying it needed to cut overcapacity in Europe. But the committee says it is aware of ‘no dramatic market change’ to prompt the sudden move. ‘We can only conclude that GM was panicked into taking out capacity from its European operations in the face of poor trading results, and in the absence of any more considered long-term strategy.’

The committee said that the proposed review of redundancy legislation, involving the DTI, the TUC and the CBI, must explicitly address the issue of effective consultation with the workforce over alternatives to closure. It also called for a review of company law ‘to see how changes in the legal duties of directors might have led to a different outcome’.

A spokeswoman for Vauxhall said: ‘We’re perfectly happy that the decision to close Luton on the grounds of overcapacity was correct.’