Boeing-McDonnell Douglas Merger

Oral Answers to Questions — Trade and Industry – in the House of Commons at 1:47 pm on 22nd January 1997.

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Photo of Mr Peter Pike Mr Peter Pike , Burnley 1:47 pm, 22nd January 1997

To ask the President of the Board of Trade what assessment his Department has made of the implications of the Boeing-MDD merger for the British aerospace industry. [10589]

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

The proposed merger would be of great significance to our aerospace industry, which competes with Boeing and McDonnell Douglas, mainly through participation in the airbus consortium, but also works with them, notably in supplying equipment. The proposal is being considered by the United States competition authorities, and may also be considered by the European Commission. My Department is currently examining the implications with United Kingdom industry.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Does the Minister recognise that the merger will be a dominant feature in the aerospace industry for both civil and military aircraft and that the Government must ensure that the airbus consortium and our aerospace industry as a whole are able to compete, so that a monopoly is not created? Aerospace is crucial to Lancashire and to the country and we must ensure that it can survive.

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

The hon. Gentleman has had a long interest in the matter, and of course I take note of, and will bear in mind, what he says. The European Commission has not yet been notified by Boeing; when it is, we expect to play a part in the consultations and discussions, and we shall take account of what UK industry has to say. Indeed, if the Consortium of Lancashire Aerospace, with which I know that the hon. Gentleman is associated, wants to make any representations, I shall be delighted to hear from it.

Photo of Sir John Cope Sir John Cope , Northavon

This announcement, together with Boeing's cancellation of its work on its very large aircraft, makes it important that the Government should back our aerospace industry, and especially Airbus Industrie, with its plans for the stretch A340 and a large aircraft. Launch aid—or more properly launch loans—is extremely important to those two projects, and the recent announcements from America make it essential for the Government to back them.

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

I hear what my right hon. Friend says; he is right. I have every confidence in the British aerospace industry. To recap for the benefit of the House, since 1979 we have given about £1.25 billion in launch aid to help the industry and we shall certainly continue to consider projects that are brought to our attention, including projects involving research and development under CARAD—the civil aviation research and development programme.

Photo of Mr Barry Jones Mr Barry Jones , Alyn and Deeside

Does the Minister appreciate the fact that 2,300 of my constituents have a strong interest in the response of the Government and of Airbus Industrie to the merger to which he has referred? What chances do my constituents, who make the wings for airbus, have of making the wings of the new jumbo jet that Airbus Industrie has planned?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

That must be a matter for Airbus Industrie. We have been in the forefront of trying to persuade the consortium to convert to a company—in effect, a limited company—so that it is better able to compete with Boeing. It has been doing well and it needs to continue improving; we shall give every encouragement to ensure that that happens.

Photo of Mr Robert Atkins Mr Robert Atkins , South Ribble

Has my right hon. Friend considered the implications of the proposals of the right hon. Member for Dunfermline, East (Mr. Brown) for the military and civil projects of the British aerospace industry, which the Government have supported through thick and thin? They would be prejudiced, if not terminated, if there were a Labour Government.

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

My right hon. Friend makes a valid point. If Britain had the misfortune to elect a Government whose spending proposals exceeded the taxation that they imposed, where would they get the money? Perhaps they would get it by cancelling projects such as Eurofighter.