GKN Automotive Plant: Birmingham — [Dame Angela Eagle in the Chair]

Part of the debate – in Westminster Hall at 9:51 am on 28th April 2021.

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Photo of Grahame Morris Grahame Morris Labour, Easington 9:51 am, 28th April 2021

Thank you for accommodating me and allowing me to be here in person, Dame Angela. I congratulate my good and hon. Friend Jack Dromey on securing this debate, which is not just important for Birmingham and the west midlands, but is of national significance because of the nature of the issues. I declare an interest as a long-standing member of Unite the union and chair of the Unite group in Parliament.

My hon. Friend has described what Melrose is doing to the GKN automotive factory in Birmingham. Frankly, it is an absolute disgrace. Out of deference to the procedures of the House, we do not curse and use foul language, but what is happening to the loyal workforce at this plant is an outrage. Over 500 jobs—my hon. Friend says 519—many thousands of jobs in the supply chain, and more than 50 years of proud history at the site are in the firing line. If this plant is allowed to close, and I am looking here at the Minister—we do not want just warm words but definite actions—it will be a nail in the coffin of UK manufacturing. We look to the Government for a response and a reaction.

GKN is a living, breathing symbol of a great British company. It has been building critical equipment, including for the defence of the realm, for over 260 years. My hon. Friend mentioned that it was involved in building Spitfires, and cannon balls that were used by the British artillery at Waterloo. Surely that is a history worth defending and a future worth saving.

I express solidarity with Steve Turner, assistant general secretary of Unite, who has been involved in plans to save jobs at the plant and Frank Duffy, Unite convener there, and his members, who have fought valiantly and continue to fight. Despite company promises to build a “British manufacturing powerhouse”, many Members of Parliament, including my hon. Friend and others present, and the trade unions, warned what would happen when Melrose launched its hostile takeover bid three years ago. Sadly, despite the comments, made I am sure in good faith, of Mark Pawsey, those predictions have proved correct. I do not accept the argument that the plant is not viable. Melrose’s directors have been heavily criticised for excessive bonuses and profits. I will not quote a figure, but it is eye-watering.

It strikes me that there are some parallels with what has happened with the European super league, where an elite wring out value from an organisation—in this case, GKN. As we have heard, Melrose is already closing one factory in Birmingham, and now it wants to throw the other, on Chester Road, on the scrapheap with the intention of stripping it of its assets, because that is what asset strippers do: they buy companies cheap, break them up and sell them off, and they throw away what is left. I had some experience of it in the north-east many years ago with Helical Bar, a property company that bought up the capital assets that were sold off cheap from Aycliffe and Peterlee Development Corporation, then sold them off, making a huge profit for Michael Slade, the chief executive, and walked away without adding any value to the community or to the local economy.

The more than 500 skilled engineering jobs under threat at Birmingham are good jobs and part of the backbone of British manufacturing, but apparently they are not valuable to Melrose, because the company just wants to throw them away. However, these jobs are valuable to the workforce themselves—of course they are. They are valuable to the families who the workers support. They are valuable to the communities in the west midlands where the people live. They are valuable to the trade union. They are also valuable to the economy, to us here in this room; well, I hope they are. The question I put to the Minister is: if they are valuable, what are Ministers going to do to save them? What are they going to do to save British manufacturing, especially the automotive sector, as we shift rapidly to electric vehicles? I look forward to the Minister’s comments later in the debate.

The key issue with the GKN plant in Birmingham is whether it is viable, as my hon. Friend the Member for Birmingham, Erdington touched on. Unite the union has worked through the figures and looked at the numbers with independent experts that have been recognised by the company. They looked at whether it is viable, and at Melrose’s claim that, in fact, the plant has been losing money for several years. According to the information I have seen, this seems to be a case of what we would call creative accounting. It is called transfer pricing, where large companies that operate over several sites, often based in different countries, pretend the different sites are buying and selling from each other while building a product. In that way, they can say that some sites are theoretically profitable while others are loss-making, depending on what prices the company chooses to charge itself or elements of itself.

It seems to me that that is a fiction, and it is often used to reduce the tax paid in some countries because the profits made in another are higher. In reality, all the sites contribute to the value of the product made, and that is certainly the case with GKN in Birmingham. Melrose bosses think they can just get the work done cheaper in Poland and France, an appalling attitude for a company that promised the Business, Energy and Industrial Strategy Committee only a short time ago to build a British manufacturing powerhouse.

Unite has developed an alternative plan with the independent experts, and they make it clear that it is possible not only to make a profit on the site but to increase capacity by 50% and deliver annual savings of up to £8 million for GKN. Most importantly, this will save those valuable jobs and create more jobs for the future, but it seems that Melrose is only interested in short-term profit. We need the Government to make Melrose see that this is an offer it cannot refuse. That will mean support for the rapid shift to electric vehicles, which the factory is perfectly placed to take advantage of, as my hon. Friend said.

GKN Birmingham Chester Road produces Driveline components, including side shafts and prop shafts; small, specialist components. According to Unite, the e-axle, known as the eDrive, which is an existing GKN technology that was developed at its UK innovation centre, is a key product that can secure the Birmingham site’s long-term future, as well as the UK’s critical manufacturing capability. The demand for that product will only increase as we move towards full electrification, but Melrose must get serious about supporting its manufacturing base, and so must the Government.

When the company’s chief executive, Simon Peckham, gave evidence to the Business, Energy and Industrial Strategy Committee in February, he put the blame squarely on electric vehicles. He claimed that

“electrification is a threat to jobs as well as an opportunity to grow jobs.”

He also said:

“For GKN Automotive as a whole, electrification is an opportunity;
unfortunately, for” the Birmingham plant “it is not.” We do not accept that. The workers do not accept that, and nor does Unite.

The question is: do the Government accept that electrification will not be an opportunity for those highly skilled engineers, who make parts for top brands, including Jaguar Land Rover, Toyota, and Nissan in my part of the country? Are Ministers, who promised a British manufacturing powerhouse, prepared to let Melrose throw those jobs on the scrapheap? Are they giving up on those skilled workers at a time when they need support most of all? I hope the Minister will let us know when she responds to the debate, because we will not give up on them, and neither will their union. We will fight all the way, because we are fighting for the future of British manufacturing. It is a fight that we are determined to win, even if it takes strikes, protests and other ways to disrupt Melrose’s disgraceful plans. The battle for the Birmingham plant has only just begun.

It would be useful if the Minister let us know which side she is on. Is she on the side of the skilled, productive workers, or that of the short-term, greedy bosses? I imagine the whole country would like to know the answer, especially as we go into the local elections in May. I hope the Minister will tell us.