McGill and Co Ltd (Redundancies)

– in the Scottish Parliament on 5th February 2019.

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Photo of Jenny Marra Jenny Marra Labour

1. To ask the Scottish Government what action it is taking to assist the Dundee-based firm McGill, which has entered administration and announced an initial 374 redundancies. (S5T-01470)

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

The Scottish Government is concerned that McGill and Co Ltd has gone into administration. Since being made aware of the company’s cash-flow problems, Scottish Enterprise engaged closely with it and offered it assistance with a turnaround plan. However, McGill did not provide the required financial information in time for the appropriate due diligence to be undertaken.

I also spoke with McGill’s managing director throughout the process and offered my full support. McGill responded to my offer to speak with any of its major debtors, and I spoke with the one that it asked me to on two occasions. Unfortunately, McGill’s trading situation declined, and a positive outcome was not possible.

Our partnership action for continuing employment—PACE—team was present on 1 February when McGill informed staff that it was appointing an administrator. A PACE event to support employees will be held on 7 February in Dundee. I spoke with the administrator and Unite the union yesterday. The administrator is exploring all options for a sale of the business, and Scottish Enterprise will maintain contact with the administrator and look to introduce and assist any viable interested parties.

We will continue to offer support to those employees who have been made redundant, to support them back into employment.

Photo of Jenny Marra Jenny Marra Labour

That is possibly the most inadequate answer that I have ever heard in the Parliament. That is not my understanding of the situation at all. I understand on very good authority from McGill that it provided all that was asked for in a timely way.

Some 450 workers will lose their jobs, and our thoughts today are with them and their families. They know, however, that this should not have happened. McGill is a company with a £40 million order book. It is profitable, but it had a cash-flow situation. It went to the Government on 9 November, in the same week in which we heard that Michelin was closing, and asked for a loan. On 30 January, 12 weeks later, Scottish Enterprise went back to McGill and said no to that £2 million loan to cover cash flow.

When Prestwick airport received £46 million of Scottish Government loans, with no indication of when they will be paid back, when Burntisland Fabrications can secure £35 million and Ferguson Marine Engineering can secure £45 million, why could McGill not get just £2 million to save 450 jobs, when Dundee is reeling from the Michelin and HM Revenue and Customs closures?

Who made the decision not to give McGill the loan? Why, given the scale of job losses in Dundee, did the minister not instruct Scottish Enterprise to make that loan available and save those jobs?

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

I am sorry that Ms Marra feels that the answer was inadequate. She may have thought that she had it on good authority, but my answer is entirely accurate. The issue is that McGill had no historical link with Scottish Enterprise. It is not an account managed company—the first time that it approached Scottish Enterprise or had any interaction with it was to say that it was in financial difficulty.

At that stage, Scottish Enterprise offered to support the company through funding KPMG to review the cash position and evaluate options, and it asked for a business plan. On 18 December 2018, Scottish Enterprise emphasised the need for a revised business and turnaround plan at that juncture. Unfortunately, the revised business plan did not come until some time after we were first approached and not in time for it to be given proper consideration through due diligence.

I would regret turning the issue into some form of political knockabout. At the end of her contribution, Jenny Marra said that her primary thoughts were with the workforce at this time. I hope that that would be the case for anyone in the chamber. That is exactly where my thoughts and priorities are.

Our PACE initiative has intervened quickly. We will have an event on 7 February, less than a week since the company went into administration. The task for us all now is to unite to support the workforce to get back into employment, not to engage in political knockabout on this most important issue.

Photo of Jenny Marra Jenny Marra Labour

This is utter complacency. PACE is for continuing in employment. Does Jamie Hepburn not realise the state of the Dundee economy? The jobs toll is running into the thousands.

Is the minister telling us that companies have to be account managed to approach Scottish Enterprise to save 450 jobs? All that McGill was told, throughout the whole process, was that it did not fit the Government’s model. The minister had 12 weeks to sort this out and to get his people in Scottish Enterprise to help McGill to save those jobs. He had 12 weeks.

What kind of timescale is it when, in a commercial environment, the Government takes 12 weeks but then decides not to grant the loan? Why can millions and millions of pounds go to other parts of the country when Dundee cannot get one penny for McGill? Four hundred and fifty people are losing their jobs. The minister who failed to act should consider his position, given that utter negligence.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

Ms Marra should have listened a little more closely to the answers that I gave. At no juncture did I say—and it is not the case—that a company has to be account managed if it is to approach Scottish Enterprise for assistance. The point is that, if a company has that prior engagement, it might be better placed to get earlier intervention if it is having financial difficulties. I am sure that Ms Marra understood that that was my point.

Ms Marra said that no investment is going to Dundee. We have just announced a £150 million city region deal, so the idea that we are not investing in Dundee does not bear scrutiny.

The immediate circumstances that are before us are that we have a company that, unfortunately, is not able to continue to trade, despite the best efforts of Scottish Enterprise and my officials and—let me tell Ms Marra right now—despite my best efforts in engaging directly with the company and some of its major debtors, both at my offer and at their request for intervention. Unfortunately, we have not been able to ensure that the company can sustain itself.

We will do everything that we can to get the workforce back into employment. That is our priority. We will do everything that we can to support the administrator in getting a buyer. I hope that everyone in Parliament welcomes that action and will collectively commit to it.

Photo of Shona Robison Shona Robison Scottish National Party

I think that all members acknowledge what a difficult time it is for the people who have lost their jobs at McGill, and for their families.

Yesterday, Joe FitzPatrick and I spoke to the administrator, KPMG, and received assurances that it is actively looking for a buyer for the company. It should be possible to find a buyer, given McGill’s extensive order book. Does the minister agree that that would be the best outcome for local jobs? What communication has he had with KPMG about the options?

Finally, what support can be offered to the many apprentices at McGill—I understand that there are about 75—to ensure that they can continue their apprenticeships with alternative local employers? We need to focus on the workforce and the people who absolutely need our support at the moment. I hope that the minister can give some assurances in that regard.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

I thank the member and her colleague Joe FitzPatrick, who are the city’s constituency representatives in the Scottish Parliament, for taking the time to meet me earlier today, at their request. I will be happy to speak to any member who wants to speak to me about the issue.

I agree that our immediate priority is to support the workforce—we have the PACE event on 7 February—which, of course, includes apprentices. The adopt an apprentice scheme, which is administered by Skills Development Scotland, is a successful initiative whereby funding is provided to enable employers to take on an apprentice who has been made redundant, with a range of support for the employer and the apprentice. We will make every effort to ensure that apprentices are redeployed and can continue and complete their apprenticeships.

As I said, I spoke with the administrator yesterday. KPMG’s priority on Friday was, rightly, to support the workforce—that should be everyone’s priority—and we are at an early juncture in terms of the prospects going forward. Given that there is an order book, I think that we can find another buyer. We should set ourselves that task, and this Government is willing to do everything that it can to assist the administrator in that effort.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I will follow up Jenny Marra’s point. The minister indicated that there was a lack of time for due diligence to be conducted. Why was that the case if there was a 12-week process after the business first approached the Government? For what specific reasons was the request for support rejected?

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

As I have at least attempted to set out, there was a particular request at the time of the initial contact. There was some engagement with KPMG that was, I re-emphasise, paid for by Scottish Enterprise, not by McGill. At that stage, it was clearly indicated that a full business plan had to be made, but that was not provided until some time later. At that stage, according to the company, there was not the time for due diligence to be undertaken in the timescale in which it had to operate. That is unfortunate. If there had been time, full diligence would, of course, have been provided.

I recognise that Mr Rennie probably has constituents who are affected by what has happened—as will my colleague Graeme Dey. Mr Rennie will not have had the update from me, as I have written to the constituency representatives for the three sites and to the regional MSPs for North East Scotland, Lothian and Glasgow. I would be delighted—that is the wrong word because of the circumstances; rather, I would be very willing to provide him with an update and to send him any information that he requires in order to update his constituents accordingly.

Photo of Bill Bowman Bill Bowman Conservative

I refer to my entry in the register of interests. I was a partner in KPMG in the past, but I have no connection with it now.

The Scottish National Party Government and the SNP-run council seem to be content to sleepwalk into a Dundee jobs crisis. It appears that the minister knew about difficulties at that vital local employer and did not act effectively. That follows the inaction on Michelin Tyre plc before its bombshell news about its intention to withdraw from Dundee. Rather than form a coherent jobs-first strategy for the city armed with early notice of difficulties at major local employers, the SNP seems to be content to cry crocodile tears after the fact. How is the minister arming the construction and manufacturing sectors in Dundee to avoid a repeat of these unfortunate circumstances?

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

My point about early notification has been made before. When we are in dialogue with a particular company, it will have approached us to look for our assistance. We offer every assistance that we can. There will be many situations that members will not learn about because the assistance has been successful and has allowed the company to continue. It would be entirely wrong for us to flag concerns publicly at that early juncture, because that would breach trust and cause further problems.

On support for the Dundee economy, I reiterate that the £150 million Tay cities deal will support up to 6,000 jobs and lever over £400 million into the city-region economy over the next 10 to 15 years. That is a serious commitment to Dundee and the wider area. We also have a significant pipeline of billions of pounds’ worth of investment in construction through our infrastructure investment plan, which will support the construction sector. However, with the specific circumstances with McGill, my commitment right now is to do everything that we can—and my clear effort is on that—to support the workforce, which has been badly impacted.