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Jaguar

Mr. Jim Cunningham (Coventry, South): I am grateful to have the opportunity to discuss the issue of Jaguar. Looking around me, I have to say that I did not realise that I was so popular. There are often only two or three people present for Adjournment debates. My colleagues from the west midlands—in particular, the other two Members from Coventry—and I appreciate the fact that our right hon. Friends the Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Trade and Industry took the time to meet representatives of Jaguar workers. That was a big thing, and it reflected the degree of concern on the Government's part to try to sort out the problem that we have with Jaguar.

I also appreciate the fact that colleagues from the west midlands are in their places tonight. They have been staunch in their support for what the three Coventry Members have tried to do throughout and they have been ready to do anything that we have asked them to do. Some of my colleagues will be interested to learn that the Trade and Industry Committee has agreed to take evidence, on 2 and 17 November provisionally, from both sides. The shop stewards and the work force at Jaguar have wanted that for a long time, certainly since this problem arose. That announcement is a positive step.

I have some questions for my right hon. Friend the Minister, which I shall ask now, in case I lose track of what I have said later in the debate. What contacts have been made between the trade unions and Jaguar by her Department to start discussions or negotiations? If that has happened, what will the terms of reference be and at what level will the negotiations take place? We have the convenor from Peugeot at Ryton in the Public Gallery this evening. Workers at Ryton are concerned that the company has not yet confirmed whether it will take up the European grant. If it does so, it will give us a good indication that it is committed to staying in Coventry; if it delays, there is a question over that, but if it says no, it may be moving out. I hope that the Minister will be able to respond to those serious questions.

Mr. Bill Olner (Nuneaton) (Lab): I congratulate my hon. Friend on obtaining this debate, which is extremely important not only for Coventry but for the surrounding west midlands area. Employment prospects in my constituency are heavily dependent on Jaguar. I remind my hon. Friend, however, that we have been here before: we can remember when the engine plant went to Bridgend, when the paint plant and the body plant went to Castle Bromwich and when one platform was sent to Speke. But at least all those places were in the United Kingdom. If Jaguar moves its production and its platforms out of the UK, there will no longer be a Jaguar car.

Mr. Cunningham: That is why the debate is about Jaguar and west midlands manufacturing. I know that many of my west midlands colleagues are concerned about Ford's future intentions. I do not want to start any hares running, but it is right to be concerned about the future, and I am positive that the trade union side will raise such issues with Jaguar if, as we hope, a meeting takes place.

I pay special tribute to my two colleagues from Coventry, who have been putting in a tremendous effort, although I was fortunate enough to secure the debate. The House will understand that one of them, the hon. Member for Coventry, North-East (Mr. Ainsworth), as the Deputy Chief Whip cannot speak in the debate—he is often on the receiving end from people outside who do not understand the procedures of the House.

Over the last 20 years, in Coventry, we have seen the closure of some famous plants. I am sure that my west midlands colleagues will remember the Standard Motor Company. They will also remember that Rolls-Royce closed the Parkside plant where a considerable number of people were employed. Within the last two years, we have seen the closure of Massey Ferguson in Coventry. As I said, there is now concern about the intentions of Peugeot.

The situation is serious, and we must be concerned about these big issues. Recently, Ford announced the closure of the Browns Lane production plant in Coventry, giving us the sop, which we do not believe, that its headquarters and its wood veneering section would remain on the site. However, if the company is prepared to tear up a signed agreement, how can we believe what it says about the future of that site and of Whitley? When Ford moves from the Browns Lane site, we shall lose 1,300 jobs, no matter how the company dresses it up. To put it another way, there could be 1,300 new jobs that will not be created.

In 1998, a written agreement was made between the trade unions and the company, which stated that for increases in productivity, efficiency and quality the company would guarantee future products and investments—note those words. Only last February, in a letter signed by senior executives at Coventry, the company congratulated the work force on delivering their part of the agreement and their promises. There were vast improvements in productivity and quality; indeed, the work force were held up to the rest of Ford, especially Land Rover at Solihull, as an example of what could be achieved. I am sure that example was used throughout the Ford combine, yet by September, although the workers had clearly delivered their part of the bargain, the company's response was to close the plant. After congratulating the labour force and telling the Secretary of State for Trade and Industry that things were okay in February, the management were prepared to tear up an agreement by September. They blatantly told my colleagues and I that, yes, the agreement had come to an end and they were tearing it up because they wanted to close that plant.

I have been in the trade union movement a long time and I know one thing: with relationships between the labour force and the company, the most important thing is that people keep the word that they have given across the table. If people break their word, it is one of the biggest crimes that can be committed in industrial relations because no one will ever trust their word again. Yet Ford wonders why my colleagues, who are sitting beside me, and I have grave doubts about any guarantees that it has given for the future of the Whitley site.

This is the thin edge of the wedge in relation to the future of Ford. That is why we need to consider something like the legislation in Europe so that nothing can happen until the workers are fully informed and agreement is reached. It is about time that we looked at that. Only two or three years ago, the same thing happened when BMW told its labour force in Germany that it would close Rover in the west midlands, yet the labour force in the west midlands were told nothing about it. We can remember the demonstrations that were held throughout the west midlands and the Select Committee on Trade and Industry taking evidence. An asset stripper was lined up to take over the company, but that was stopped by the sheer pressure of public opinion and Members, with the support of the Select Committee. The then Secretary of State for Trade and Industry—my right hon. Friend the Member for Tyneside, North (Mr. Byers)—did a magnificent job. No one who knows anything about it would quarrel with the way in which he handled that situation.

Ford has broken an agreement—that cannot be said too often—and it is important that it comes clean, puts its proposals on the table and offers them up to scrutiny, while being prepared to talk to the trade unions about alternative proposals. If the company thinks that its proposals are right, it should be prepared to have them tested and to say why it cannot accept the proposals that the trade union makes on behalf of the work force. Unless the company is prepared to do that, no one will take anything that it says very seriously. That must be said.

My time is up now because I promised my hon. Friend the Member for Coventry, North-West (Mr. Robinson) that he could have 10 minutes, but I hope that the Minister will respond to the questions that I asked initially. They are serious questions, and we need some serious answers.

Mr. Geoffrey Robinson (Coventry, North-West) (Lab): I join my hon. Friend the Member for Coventry, South (Mr. Cunningham) in thanking Mr. Speaker for granting the debate, and I congratulate my hon. Friend on securing it. It is a pleasure to have such a good turnout on the Labour Benches and, to some extent, even on the Conservative Benches. [Hon. Members: "What about the Liberals?"] We do not expect anything from that lot. When there is a serious matter, they are usually not to be found. From our point of view, this is a serious matter and it shows that, in proposing the closure, Ford has touched a raw nerve in the House and throughout the country. Browns Lane is the historic, original centre for Jaguar. Moreover, since Ford took over, it is a highly productive, highly efficient, high-quality assembly plant.

David Winnick (Walsall, North) (Lab): Does my hon. Friend accept that the closure will have an effect on many factories in the wider area, certainly in my constituency and throughout the black country, which undertake contracting and subcontracting work? We view what has been happening in Coventry with grave concern.

Mr. Robinson: I am grateful to my hon. Friend for making that point. It is usually calculated that, for every job in manufacturing lost directly, another two can be counted in the supply chain and more widely in the surrounding industries. The concerns go even wider than jobs lost, and I shall come to that in a moment.

As my hon. Friend the Member for Coventry, South said, this comes down to the credibility of a major global company that operates in this country and throughout the world. But, to be fair to Ford, I want to pay two personal tributes. In the 15 years in which Ford has owned Jaguar, it has done many good things. We should put on record that when Bill Hayden moved to Jaguar, he made an inestimable contribution towards putting right what had been wrong with it for many years. He got the quality right and broke the back of the problem. Nick Scheele took over from him and was a fine chief executive. In those 15 years, Ford invested heavily in, and did a lot of good for, Jaguar. However, the results thus far have not lived up to its expectations, which is why we believe that the erroneous, sudden and inexplicable decision to go back on its previous policy has been taken.

The opening of Jaguar at Castle Bromwich happened under Ford and led to hundreds of millions of pounds of investment, and the huge investment in Halewood was due to Ford. However, it was clearly understood when those decisions were made that neither would occur at the cost of not investing in Browns Lane. Such investment could easily have been made at Browns Lane.
The situation led to the signing of a comprehensive agreement in 1998 between the trade unions—Keith White, who signed the agreement, is still the convenor at Browns Lane for the unions—and representatives of the Ford Motor Company at the highest level. Jacques Nasser, the then chief executive officer, and Nick Scheele, the chairman and chief executive of Jaguar, signed the agreement. The agreement was not circumscribed, or made conditional on circumstances or time. It was a commitment made by Ford that if the unions did what was expected of them and met targets for high productivity and quality standards, there would be no question but that the Jaguar large saloon and replacement models would go to Browns Lane, as would the sports car. The present management subsequently confirmed that clear-cut written agreement.

I know that the Minister for Energy and E-Commerce is a lawyer, as is the hon. Member for Solihull (Mr. Taylor)—they are both in the Chamber. Such people might have better knowledge of the matter than me. However, it seems to me that although the written agreement was not legally binding—we all know that the unions have never wanted to enter into such agreements for other reasons—a question of estoppel could arise due to the fact that on the basis of the representations made by the company, the unions undertook to accept onerous conditions in their working practices. I do not know whether estoppel could apply in that situation, but given the serious nature of the matter, that could and should be considered because it might mean that the company would take the agreement more seriously than it seems to want to at present.

My hon. Friend the Member for Coventry, South was right to say that the debate is about not only Jaguar, but manufacturing, although Jaguar and Browns Lane are the main focus of my remarks. There are other large concerns in the west midlands, especially regarding Peugeot. I do not expect a response to this point today, but it is extraordinarily unclear why the application for regional selective assistance has not been agreed at the European level. We are beginning to doubt whether Peugeot is serious about pursuing that.

Brian White (Milton Keynes, North-East) (Lab): Does my hon. Friend agree that decisions made regarding Jaguar in my constituency and Cosworth have a knock-on effect on the general motor industry? Innovations that come from motor sport are critical.

Mr. Robinson: I take my hon. Friend's point. The situation at Cosworth should be highlighted, so I hope that he will try to secure a similar debate to raise the matter. We would wish him well and support him in that.

I said that the 1998 agreement had been subsequently confirmed. On Tuesday 3 February, the present chairman and chief executive of Jaguar, Joe Greenwell—he is a fine and long-standing Jaguar employee—had lunch with my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth). He told my hon. Friend that it had been agreed at the head office in Detroit that Browns Lane was safe. He told him that the 1998 agreement had been confirmed and that the successor model to the large saloon and the sports car would continue to be produced at Browns Lane. Joe Greenwell took my hon. Friend out to lunch here in the Commons—

Mr. Bob Ainsworth (Coventry, North-East) (Lab): I paid for it.

Mr. Robinson: So my hon. Friend made his own modest contribution, which no doubt found its way into his modest declaration of expenses in the year that recently featured in the Coventry Evening Telegraph.

We did not seek the meeting. Mr. Joe Greenwell volunteered the information and came down here to tell us about it. Having seen my hon. Friend he went off to see the Secretary of State, where he said something interesting. He said, "Look. We're not doing this because we are sentimentally attached to Browns Lane. We're not doing this because we care deeply about Coventry, the employees or even the 1998 agreement. We're doing this because we showed Ford Motor Company that it is more expensive to close Browns Lane than to keep it going."

In addition to responding to the points raised by my hon. Friend the Member for Coventry, South, I should like the Minister to address the following, either now or later because this will not go away and must be answered by the Secretary of State's Department. Was a minute taken of Jaguar's view, as proven to the head board of Ford Motor Company in Detroit, that it would cost more to close Browns Lane than to keep it open? If that is the case, what has changed? We know that sales are down and that the exchange rate is adverse, but those factors were known at the time, so they cannot explain the difference between a situation in which it costs more to close Browns Lane and the situation now in which, allegedly, out of the blue, a saving of £80 million a year has materialised. I do not think that Joe Greenwell could explain that. I know that the unions have written to the Secretary of State and we need clarification.

If it is the case that there is no strong economic reason—no cash reason—for closing Browns Lane, why is Ford Motor Company taking that action now, with all the difficulties that that involves, because it is doing that with no regard for the serious solemn undertakings it entered into with the unions? I honestly cannot believe that the Ford Motor Company will reject the concept of good faith and resile from commitments by rejecting its undertakings. I do not believe that the Ford Motor Company that I know, which has always gone out of its way to honour its word and ensure that its credibility remains intact, has said its last word on the matter.

The Minister for Industry and the Regions (Jacqui Smith): I congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham) on gaining the debate. The attendance, as noted by other hon. Members, shows the significance of Jaguar for Coventry and the motor industry for the west midlands more generally.

The Government have great sympathy with the people of Coventry in the wake of Jaguar's announcement. The decision to halt trim and assembly operations at Browns Lane has been a heavy blow to the work force and their families. I acknowledge too, as my hon. Friends pointed out, that it was particularly hard to bear in view of the great efforts that the work force of Browns Lane put in over the years to improve quality and productivity at the plant.

On behalf of the Government, I reiterate our disappointment, especially in relation to the points made by my hon. Friend the Member for Coventry, North-West (Mr. Robinson), that the company has not delivered on assurances that it gave to the trade unions on Browns Lane and the three-plant strategy. I share the concern that the trade unions and local MPs have yet to be given a detailed explanation of the reasons for that decision. However, I am pleased to report that the company and trade unions have agreed to meet shortly to discuss the way ahead. I cannot supply details of the specific terms of reference and the level at which the meeting should happen, but it is an important step. As for more general points about legislation, such an initiative would be in the spirit of the new information and consultation arrangements that the Government will introduce next spring.

As my hon. Friends pointed out, my right hon. Friends the Prime Minister, the Chancellor and the Secretary of State have taken part in meetings, and I can assure them that the Prime Minister and the Chancellor have spoken forcefully and directly about the closure to Ford's senior management in the United States. My right hon. Friend the Secretary of State has repeated those arguments to Jaguar's management in the UK as part of her ongoing dialogue with Joe Greenwell, Jaguar's chairman and chief executive, on the issue. I hope that my hon. Friends are reassured that concern and disappointment have been expressed at the highest levels of Government to Ford's senior management. My hon. Friends in the region have conducted important lobbying and made significant contributions, including in today's debate, as many of them, as we heard, have constituents who are directly affected by the news.

Action clearly had to be taken for Jaguar to address its financial difficulties and remain a sustainable part of the automotive industry in the UK. Ford's Premier Automotive Group, of which Jaguar is a part, has lost more than $521 million in the past six months alone. Many of the global auto-industry markets, including Jaguar's key markets in the USA and Europe, have experienced savage price cuts as manufacturers strive to maintain market share, and that has hit Jaguar hard. If Ford had not taken steps to improve competitiveness, the long-term viability of the Jaguar business could have been at risk by those pressures. I share my hon. Friends' concerns, however, that the actions the company will now take in consultation with its union representatives must ultimately generate the ability to make profits, without which there can be no reinvestment for the future. While I welcome the fact that Jaguar has come up with a plan that requires no compulsory job losses, and that it has not decided to close Browns Lane entirely, none the less I accept my hon. Friends' concerns. Many functions will continue at the site. Jaguar's headquarters and administrative centre will remain in Coventry, as will the company's wood veneer manufacturing operation and the Jaguar heritage centre.

Mr. Geoffrey Robinson: Not only will Ford's credibility be shot if it goes ahead with the removal of assembly operations, but no one will pay the slightest attention to undertakings on headquarters or the wood veneer operation remaining at Browns Lane. Once the assembly goes it is inconceivable that anything will remain there.

Jacqui Smith: My hon. Friend is right. Ford must consider that argument extremely carefully, which is why I began by reiterating our disappointment at its decisions, given the assurances that it made to the work force.

It is important that Jaguar retains its world-leading research and development centre at nearby Whitley. R and D is recognised by the Government in our manufacturing strategy as one of the key enablers for manufacturing success, so it is crucial that those efforts continue. Many people affected by Jaguar's restructuring may well find new employment opportunities at Gaydon, where 300 new jobs will be created directly as a result of the growth and success of Aston Martin, Jaguar's sister company within Ford's Premier Automotive Group. But I share the concern of my hon. Friends that what needs to emerge is a viable future and a more robust business footing that will ultimately benefit not only the workers remaining at Browns Lane, but those at Castle Bromwich and at Halewood. That is the result that must ensue from the painful decision being taken. We must ensure that we secure a sustainable long-term future for the company, its products and its work force here in the UK.

Let me address some of the wider comments that have been made in the debate and more broadly about the erosion of the west midlands industrial base. My hon. Friend the Member for Nuneaton (Mr. Olner) made an important point about the removal of Jaguar production abroad. I suppose we can be reassured that that is not what we are discussing. Final assembly of the XJ and XK models is not being removed from the UK to some foreign country, but it is crucial that we find a way to maintain that facility and that production in the west midlands.

On Peugeot, I am delighted to confirm that the European Commission has approved our application to give regional selective assistance to the company for further investment in its plant at Ryton. We fully recognise the significance of the plant to the economy of the west midlands and to the automotive sector in the UK more generally. It employs about 3,000 people directly and many more in the supply chain. By offering a grant to support further investment at the plant, the Government are doing everything in our power to secure its future. It is now for the company to decide how to proceed.

Mr. Cunningham: That is what is causing concern. The company seems reluctant to confirm whether it will accept that grant. That is why those in the Gallery will beat us up tonight. It is important that the Government try to get the company to make up its mind.

Jacqui Smith: I hope the company responds positively to the considerable efforts that the Government have made to assist it in gaining the grant and to ensure that the European Commission approved the application.

Question put and agreed to.

Adjourned accordingly at eighteen minutes to Eight o'clock.

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