Garment Manufacturing (Wales)

– in the House of Commons at 7:52 pm on 18 July 2002.

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Motion made, and Question proposed, That this House do now adjourn.—[Joan Ryan.]

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion 7:58, 18 July 2002

I was fortunate in securing the Adjournment debate tonight on an issue of great importance to my constituency and west Wales. I did not realise how prescient it would be, but just three hours ago it was announced that the Dewhirst factory, which manufactures ladieswear, was going to close. That has left 350 workers in Cardigan feeling utter despair. I share their despair and, as their Member of Parliament, I also feel helpless.

It is a private company that has decided, for profit reasons, to relocate outside the European Union. There is little that I or the Minister can do. Indeed, there is little that the National Assembly Executive can do. However, the closure raises wider issues that relate to manufacturing in Wales, especially the garment manufacturing industry, and to how we can provide a future for the skilled work force at Dewhirst in Cardigan. That is where I, as the constituency Member for Ceredigion, want to turn my attention. I hope to receive some words of comfort and support from the Minister.

As I have said, the announcement was made about three hours ago. The first inklings that we had that the Cardigan factory might be under serious threat came when Dewhirst shut its Fforest Fach, Swansea, operations a couple months ago. I immediately requested a meeting with the managing director of the Dewhirst factory in Cardigan to explore with him what the future would be there. That meeting took place on 14 June with Mr. Stan Liptrot, who is the managing director, and Mike Jones, who is the financial director.

At that meeting, I was told how dark and bleak the future for Dewhirst in Cardigan would be. It should be put on the record that this is no reflection on the workers, who have been magnificent in responding to the challenges placed on them. Mr. Liptrot told me that they were the best work force in the Dewhirst group—the most hard working, efficient, effective, flexible and adaptable, as well as the most skilled and the least wasteful.

One of the great ironies—a horrid and grotesque irony—is that many members of the Cardigan work force have been travelling to Morocco to help Dewhirst set up its factory there and to help train the workers, only to see their jobs being transferred wholesale to factories in Morocco and Turkey. We have exported our technology, as we might expect, and the knowledge of the work force to those countries outside the European Union, only to see our jobs being exported likewise, with the company coming face to face with the fact that it is cheaper to employ people in factories in places such as Morocco and Turkey.

I thought at the time that perhaps something could be said about this—something about the strength of the pound, investment, requests for guarantees; perhaps something that the National Assembly could do, or something on the wider political scale that I could do as a Member. But it seems not. The strength of the pound affects manufacturing, but in this instance it would make no difference if we went into the euro tomorrow.

The manufacturing of jeans, which is what happens at Cardigan for Marks and Spencer, has changed because fashions change. Fashions come and go. Unfortunately, in fashion at the moment are jeans that are painted by hand, cut in a certain way, ripped in a certain way or decorated with sequins, stars or whatever. They are attractive, popular and trendy, but it takes time to make jeans of that sort. It involves not only machine cutting but adding things, and that is a hand job; and a hand job can be done very effectively and efficiently in Cardigan, but not cost-effectively for the company. It is cheaper to do it in Morocco. That is despite the fact that I was assured that the waste and lack of standards in Morocco and Turkey were much greater. Wastefulness is to be seen in those countries. Nevertheless, that has not helped the Cardigan work force.

I wish to put on record my sympathy and deep understanding of the future that the workers and their families in Cardigan face, especially given that the factory employs many women. The jobs are reasonably well paid for the low-wage economy that we have in Cardigan. Many of the women are the main breadwinners for their families. Many of them have family members who are engaged in agriculture or tourism, areas of work that do not have secure futures at the moment.

The factory was put on a weekly review, and I am sorry to see that that review has revealed Dewhirst's decision to close the factory. When I met the trade unions and the representatives, including Bridget Campbell of the GMB, on Monday, I was struck by their spirit and determination. However, they also knew that an announcement would be coming soon, but I do not think that anyone expected it this week. The announcement was couched in these words:

"The group has today regrettable announced the proposed closure of its Cardigan factory with the loss of approximately 325 jobs in Cardigan and 10 supporting jobs elsewhere . . . This is a direct result of continued consumer pressure on prices that has led to insufficient profitable business being available to maintain UK manufacturing at current levels."

In many respects, that bald and bleak statement has ended 250 years of garment manufacturing in the Teifi valley. The Teifi valley was once known as the Huddersfield of Wales and was the centre of the Welsh woollens manufacturing industry. Dewhirst was the main inheritor of that tradition of manufacturing. The impact of the closure would be similar to the closure of a steelworks or a coal mine. Cardigan is a one-factory town in many respects.

The history of woollens and clothes manufacturing in the Teifi valley is even longer than the history of steelmaking or coal. It predates the industrial revolution, driven by steel and coal; it came from the earliest industrial revolution, driven by the water power of the river Teifi.

Some small niche manufacturers remain in the Teifi valley and some important museums remain there. I am sure that one or two jobs will be found for skilled machinists with those niche manufacturers. However, the vast majority of the 350 workers—I think it is slightly more than the 325 mentioned in the statement; until recently, 380 people were employed at Dewhirst—will go straight to the jobcentre.

Current unemployment in the Cardigan travel-to-work area is 297, representing 3.2 per cent. That is the claimant count, not the measure of the non-employed or non- working part of the population. However, the loss of what I estimate to be up to 380 jobs—not including the knock-on effects—will mean that overnight the claimant count will rise to 677, a 7.3 per cent unemployment rate according to the claimant count. In other words, unemployment in the Cardigan travel-to-work area, which straddles both sides of the Teifi valley, will virtually double overnight.

I do not think that there are many jobs available. I heard a story on Monday about a young man who was made redundant by Dewhirst. For four days, he went to the jobcentre in Cardigan, only to be offered one job, working at night in a bar. That was all that was available to him in Cardigan at that time. What will happen when more than 300 people go to the jobcentre and make similar requests?

On Monday, I heard a story that indicates the shock that will come to the town shortly. The union rep, Bridget Campbell, was at the hairdressers in Cardigan, and was talking about the difficulties with Dewhirst and her fears for the future. The hairdressers blithely said that it would not affect her business. Bridget Campbell looked around and saw several ladies in the hairdressers, all of whom were employed by Dewhirst. She told me that one of the first things to go when one loses one's job is the luxury items, such as having one's hair done every week or month. Many businesses will see the effects of that shortly.

Mortgages will be difficult to pay, and hairdressers and travel agents will be affected. The factory is about to shut down for its fortnight's holiday and many people have committed themselves—perhaps through borrowing—to go away for the fortnight. They will face an uncertain future when they come back from holiday.

The Minister, who is from the south Wales valleys, does not need me to tell him how quickly some of our towns can die when a major manufacturer leaves. The flower shops, hairdressers and other upmarket shops close first. Grocery stores will experience difficulties next. I wonder what will happen to Tesco, the main store in Cardigan. Will the sort of goods that it sells get a receptive audience now with so many people reliant on benefits—if only for a short period of time, I hope? We can foresee our town entering a distressing spiral into difficulty with so many jobs being lost so quickly.

Having accepted the devastation in Cardigan, we must find a way forward to create and secure new jobs for those skilled workers. I am not asking for some sort of intervention to help a private company that was clearly going to go. It is a bit late to do that anyway because of the announcement, but I would not have asked for such intervention. The company decided that £23 million of profit last year was not good enough and that it wanted to make even more profits. What distresses me is that the company will still be listed as a UK company, even though the vast majority of its manufacturing will be done abroad. It also distresses me that Marks and Spencer—which has done so much to support UK businesses over many years—now makes as little as 20 per cent. of its goods in the UK. Marks and Spencer's profits have soared, but on the back of exporting jobs out of the United Kingdom.

The Minister knows that I have described only the latest blow to garment manufacturing in Wales. The trouble started in 1998, when Dewhirst cut 300 jobs in Ystalyfera. Last year, 165 jobs were lost in Lampeter in my constituency. We barely managed to cope with that. Some of those affected in Lampeter came to Cardigan to work, and they face redundancy for the second time in two years. Recently, 435 jobs were recently lost in Fforest Fach in Swansea, and now the decision has been made to cut 350 to 380 jobs in Cardigan.

One company accounts for the loss of 1,200 jobs in the garment manufacturing sector in Wales in the past three years. That is disastrous. A sector that was once so important for manufacturing—one of the few genuine success stories of manufacturing in mid and rural Wales—is on its uppers and has almost ceased to exist.

Given that the Dewhirst decision is based on access to much lower labour costs, it is unlikely that the clothing sector will provide new employment opportunities. We should aim for that, and try to support companies that are involved in garment manufacturing. However, when I met the Welsh Development Agency to discuss what we could do for the skilled workers at Dewhirst, it said that it did not expect to place more than a handful of people with local garment manufacturers because the jobs were simply not there.

I want to conclude with some wider points. First, what are the Government doing to secure a UK procurement policy? It is a pity that we are running away from placing contracts with UK companies, such as garment manufacturers. For example, there was a recent outcry about placing Ministry of Defence contracts for boots and uniforms with a German manufacturer. What has been done to tighten up and improve access for our companies in procurement policy? I understand the European Community directive, but I also note that other companies, especially in France, get around that.

The Government will doubtless point to the taskforce approach that has been used in Fforest Fach to date. Although I would welcome the presence of a taskforce to help Dewhirst workers who have been made redundant to find new jobs, the position in Cardigan is different from that in Swansea, where there are other employment opportunities, manufacturers and large employers. There is no other single employer in the Cardigan area. Indeed, there is no other large manufacturer in my constituency. We have Aberporth, but that project is taking on no new people at the moment.

I should like the Minister to explore with Andrew Davies, the Assembly Minister for Economic Development, the possibility of adapting an idea from England to Wales. In Prime Minister's questions, we hear much about urban regeneration companies. I understand that the experiment has been successful and that the companies have been a good vehicle for regeneration in England. There is now talk in England of rural regeneration companies. Perhaps it is time for us to consider useful vehicles to regenerate the town of Cardigan and create new jobs for the workers who are now being made unemployed. We need a better vehicle for investment in the town than a piecemeal, agency-based approach.

The Minister has visited the Aberporth development and he knows that the proposals are exciting. However, he also knows that they are some way down in the line and that planning permission will not be determined till September. Objective 1 is a long process. I therefore hope that the Minister will give us some comfort by saying that, as a matter of urgency, he will work with the WDA and the Minister for Economic Development in the National Assembly to put a taskforce and resources in place to create the new job opportunities that are needed in Cardigan.

The union representative whom I met on Monday said, "As an Englishman, I say that your language is going to die unless you can get jobs in this area for your young people." That problem faces both me as a constituency Member of Parliament and the Minister as someone who represents the Welsh government.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. Has the hon. Lady informed the occupant of the Chair that she has the permission of Mr. Thomas and the Minister to contribute to the debate?

Photo of Mrs Jackie Lawrence Mrs Jackie Lawrence Labour, Preseli Pembrokeshire

Indeed I have, Mr. Deputy Speaker.

I should like to thank Mr. Thomas for allowing me to take two minutes of his debate, as I have a constituency interest. The factory at Cardigan to which he referred employs many of my constituents from north Pembrokeshire. He spoke comprehensively about the effect that the closure will have in his constituency and I shall not repeat any of the details that he raised; but I have another concern, as the company has another outlet in Fishguard in my constituency that employs a further 120 people.

Like the hon. Gentleman, who has been in contact with the factory in Cardigan, I have been in touch with Fishguard, which was under monthly review only 18 months ago, when Marks and Spencer was having difficulties. It got out of those difficulties, the reviews stopped and we thought that things could be looking better. However, the fact that the plants at Cardigan, Lampeter and Swansea have closed is of concern to my constituents, many of whose families have worked for Dewhirst for generations—their fathers, grandfathers and grandmothers have worked for the company.

As the hon. Gentleman said, the Minister can probably do very little in terms of the commercial considerations that are involved. I spoke today to Terry Jones from the company, who made it clear that Cardigan and Fishguard are highly efficient and have been well invested in. That is not the problem, however. The difficulty relates to market prices, competition, the fact that a pair of jeans costs less now then 15 years ago, and competitors outsourcing abroad.

The company is left with a choice and we are seeing the human consequences. The Government can probably do little about that, but on behalf of my constituents in Fishguard, in addition to those who worked in the Ceredigion factory, I ask the Minister please to ensure that Team Wales is immediately involved. It was put in in respect of ITV Digital in the south of our county. Can it be put in posthaste not only to look at Ceredigion, but with regard to my fears about the potential knock-on effect for Fishguard in my constituency?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales 8:17, 18 July 2002

It is usual on these occasions to congratulate an hon. Member on securing the debate, but I am sure I share with Mr. Thomas the wish that we were not having this debate at all. I very much regret the fact that Dewhirst this afternoon gave its staff at Cardigan notice that the plant would be closing in the autumn. That is a heavy blow to the community and in excess of 300 jobs will be lost as a consequence. He made clear the knock-on effects in the wider Cardigan community, and not only for the families of those involved.

I can tell the hon. Gentleman that my officials have already been in touch with Assembly officials. I know that the Assembly, working together with the Welsh Development Agency, Education and Learning Wales, the Employment Service and other key agencies, will do everything that it possibly can to mitigate the effects of the closure and the job losses. Today's announcement also raises fears for the future of the Dewhirst plant in Fishguard, to which my hon. Friend Mrs. Lawrence referred. I sincerely hope that the management of the company will find a way to retain its presence there and retain the jobs.

It might be helpful for me to tell the House what steps were taken when Dewhirst closed its plant at Swansea, when a very effective Team Wales approach helped to mitigate some of the problems. Following the announcement, a meeting was immediately set up, including representatives of the Welsh Development Agency, the city and county of Swansea, ELWa, the Employment Service and the Assembly. A strategic overview of the Dewhirst situation was issued by the company and a response in terms of what various parties could do to assist matters was then provided to Dewhirst. The main thrust of the group to which I referred was the setting up of a human resource action group, which first met to discuss the ongoing skills audit and the demographic information that is emanating from Dewhirst. That is of key importance; when jobs were lost in my constituency, one of the key things that helped us to find replacements was a skilled audit carried out by the local employment agency. We found that most helpful in getting people into work.

It is worth mentioning that Swansea college and ELWa are working together to provide basic IT skill provision and detailed job search. A matching exercise is currently under way to ensure that the redundant Dewhirst workers are given every opportunity to find alternative work. ELWa is working very hard to prepare user-friendly packs relating to the redundancy action plan, and the city and county of Swansea are currently preparing a presentation on local learning provision in order to share that information with the work force. I would hope that we will be able to persuade them; I am sure that we will, because I have met the hon. Gentleman and representatives of Ceredigion council, and I know how proactive they will be in response to this blow. Now that further redundancies have been announced, I believe that the effective Team Wales approach that has already been developed will help to mitigate some of the consequences of these job losses.

The hon. Gentleman referred to the urban regeneration companies that have been set up in other parts of the country. He makes a good point, and I certainly undertake to raise the matter with my colleague, the Assembly Minister responsible for economic development. The hon. Gentleman and I were at Aberporth recently, and if anything makes this issue more vital, it is this news today, because there is great potential for regenerating that part of west Wales and Ceredigion and helping to find work for those who have lost their jobs today.

The Government and the WDA are working together to support the garment industry. Since 1997, the Government have made £80 million available to the industry across the UK in the form of capital investment, export promotion, research and development, innovation support, retraining, and regional support. In 2000–01, the Department of Trade and Industry invested about £8 million, which was focused principally on the technical textiles market, employment and training opportunities, help for the supply chain, design skills, the benefits of e-commerce, and export support. On support for exports, Trade Partners UK has relaxed its rules so as to allow textile industries to receive assistance to participate in more than three events.

The WDA has two major initiatives to support the garment and textile industry. The first is the WDA's garment and textile sourcing programme, in which Welsh manufacturers are introduced to new supply opportunities and encouraged to develop new customers. Since the sourcing programme was piloted in 1995, Welsh suppliers have been introduced to new sales opportunities valued at more than £60 million, which is most welcome. A wide range of companies have benefited from the programme, ranging from one-person, designer-based businesses, through cut, make and trim companies, to larger manufacturers. The service is completely free to both buyer and supplier.

The second initiative is the WDA's company development programme. The WDA recognised, as far back as 1997, that some companies required assistance to improve their competitiveness. This programme provides participating businesses with new skills, and with knowledge and experience of management, manufacturing and marketing processes. It is important to recognise that the garment industry in Wales is important; there are more than 30 companies in this sector in Ceredigion and Pembrokeshire alone. The hon. Gentleman referred to some of them in his speech. They are small and medium-sized companies, ranging from those engaged in the traditional woollen industry through those that focus on bridalwear, sportswear, knitwear and home furnishings, to specialist suppliers of naturally coloured rare breed wool, luxury mohair wool, silk blends and organic wools. There is a whole range of small companies there.

The Government recognise that it has been particularly tough for manufacturers in the last year or so, owing to the economic slowdown in the world economy and weakness of the euro. That, of course, is not confined to Wales; it hits the whole of the UK. There are signs, however, that manufacturing industry is becoming more confident. The latest Confederation of British Industry and Engineering Employers Federation surveys point to stabilisation in manufacturing output over the next three to four months, and only today I noticed that the South Wales Chamber Group has said that a number of companies are predicting an increase in profits and showing greater confidence for the next year.

The hon. Gentleman is looking for help from the Government for the immediate problems in his constituency, and I will certainly take on board the issue of procurement policy. I shall make some inquiries on that matter and write back to him as quickly as I possibly can. I would also commend the work done by the all-party clothing, textiles and footwear group, which has had the opportunity to study the "Making it Happen" report issued by DTI Ministers a while ago.

I am pointing these things out because it is important to recognise that, although we have had this awful blow today, not everything is bleak in the economy in Wales. There are opportunities, and I see Aberporth in the hon. Gentleman's constituency as an exciting opportunity. It is right to point out that some good things are happening, and we must ensure that the people who are losing their jobs at Aberporth can benefit from new job opportunities. Our first thoughts must be with those people who are faced with redundancy today. That is what I believe Team Wales will take on board. I shall certainly take on board the remarks of the hon. Gentleman and my hon. Friend Mrs. Lawrence and follow them up.

We must seek new job opportunities for those who are losing their jobs and we must find opportunities for them to retrain and upskill. I sense the sadness in the hon. Gentleman's remarks, and he is desperately keen to get back to his constituency to do whatever he can to help, but I want him to know that the Secretary of State and I will do everything we can to help in any way possible. Please be assured that we are just at the end of a telephone line. If there is anything he comes across in the next day or so that he thinks the Wales Office can help with, we will certainly do all we can.

I want the hon. Gentleman to convey this to his constituents, because there is nothing lonelier for an individual, a family or a community than job losses and, perhaps, despair over where they should turn to, especially as there is high unemployment in the town of Cardigan. I want to ensure that we send that message out to people: we as the Government, the hon. Gentleman as the constituency Member of Parliament, and all the agencies will do everything they possibly can to help those people to get back into a job as quickly as possible. We face a difficult time in parts of our economy in Wales, and this is a blow to an area of Wales where we have high hopes for a brighter economic future.

The hon. Gentleman also touched on an important issue, which I know is close to his heart: the impact that the closure might have on the language. He and I discussed the Aberporth project when I was down there, and we agreed that the investment in Aberporth and the realisation of the project would help to deal with some worries that he, I and other Members have about how we protect Welsh-speaking communities by ensuring that there are jobs, good services and affordable housing.

The hon. Gentleman should be assured that we will do everything we can to help in this difficult time for him and his constituents. We will leave no stone unturned in trying to ensure that the people in Cardigan get back into a job as quickly as possible.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Eight o'clock.