Jaguar plant closure is latest blow to UK automotive sector

In September 2004, Ford announced that it would cease manufacturing Jaguar vehicles at its historic Coventry site in the UK, with the loss of over 1,100 jobs. The move has been strongly opposed by trade unions within the company, but in December members affected by the proposed closure voted against industrial action on the issue.

On 17 September 2004, senior management at the Ford-owned prestige car manufacturer Jaguar informed trade union representatives of the closure of one of the company’s three manufacturing sites. Production at the Browns Lane plant in Coventry would cease in the summer of 2005, with assembly work transferred to Jaguar’s operations in Castle Bromwich, near Birmingham.

Closure of Browns Lane

The closure of the Browns Lane site will see around 400 manufacturing jobs lost and around 425 production workers transferred to Castle Bromwich. A further 750 administrative jobs will be lost as a result of proposals to consolidate office work with Land Rover, which is also owned by the US-based Ford. Some 300 workers will remain at Browns Lane to produce wood finishes for Jaguar models, and a number of headquarters functions and customer service roles will also be based at the site.

The move to end half a century of Jaguar production in Coventry came after sustained heavy losses. Ford reported a second-quarter 2004 pre-tax loss for its Premier Automotive Group of USD 362 million, with an estimated USD 178 million attributed to Jaguar. The company’s troubles reflect heavy competition in the premium car market and the weakness of the US dollar, which has compounded problems of overcapacity. The USA accounts for half of Jaguar’s market though, unlike major competitors, the company has no assembly operations there.

The closure of the Browns Lane facility forms a major element of a Jaguar recovery plan drawn up by senior management with a view to cutting capacity and returning the company to profitability. Mark Fields, Ford’s most senior executive based in Europe, said: 'Decisive action was needed to get Jaguar back on track and to ensure a viable future … We have faced and tackled the fundamental reality, that Jaguar simply cannot support three assembly plants with annual sales of 125,000 cars.' Joe Greenwell, chair and chief executive of Jaguar and Land Rover, pledged that the company would seek voluntary redundancies on favourable terms to manage the job losses. Mr Greenwell added: 'I can give everyone my personal assurance that we will do everything we can to support those affected.'

Trade union response

The announcement was greeted with anger and dismay by the trade unions. Dave Osborne, national secretary of the Transport and General Workers’ Union (TGWU). denounced the decision effectively to close 'the spiritual home of Jaguar. In reality we are dealing with a company whose promises are false and who cannot be trusted. It’s no surprise that this company has taken GBP 80 million of taxpayers’ money since 1995 and that money has not been used to strengthen employment. It has been used for the sacking of 1,150 workers.' The company’s three unions, the TGWU, Amicus and the GMB, mounted a joint campaign opposing the end of car production at the Browns Lane site. The unions were angry not just at the decision itself, which they also felt threatened research and development jobs at nearby Whitley, but because it was allegedly made without consultation and in breach of an understanding that the plant was safe. When Ford began producing Jaguars at the Halewood plant in Merseyside in 1998 (UK9801197N), the company reassured the unions that Browns Lane would remain open, reinforcing an earlier job security agreement made in 1994 (UK9810153F). This was reportedly confirmed informally to the unions in 2004 (UK0403106F).

Nevertheless, despite a strongly supported march and rally in Coventry in late November 2004, the unions’ campaign effectively ended on 13 December when the outcome of a ballot over strike action among workers at the plant was announced: 453 union members voted in favour and 555 against, with a turnout of 78%. Tony Murphy, national officer of Amicus, said: 'Obviously we are disappointed with the result but people have been offered lot of money to take the redundancy package and are concerned that may be withdrawn.' Workers had been briefed in August about the scale of the company’s losses, and older long-service workers in particular were attracted by an offer that included an option to retire with an immediate unreduced pension from the age of 50 and with a special lump-sum payment of nine months’ pay (three months for salaried staff).

Wider troubles in the automotive sector

The Jaguar announcement followed other difficult news in the sector. In October 2004, GM Vauxhall Motors announced a loss of more than GBP 115 million in the preceding year, more than double that of the year before. The company is to cut more than 300 jobs at its Ellesmere Port factory as part of a Europe-wide rationalisation plan, with the bulk of the cuts falling at Opel in Germany. Earlier in the year the company also closed an engine plant on the Ellesmere Port site, with the loss of 170 jobs. The Ellesmere Port site is now the company’s only UK production facility following the closure of its Luton plant in 2002 - an announcement which, like Ford’s Browns Lane decision, was also reportedly made without union consultation and in breach of an earlier agreement on the future of the site (UK0012104F).

Ford, which bought Land Rover in 2000, had also threatened to close its Solihull site, currently Land Rover’s only manufacturing plant, with the loss of 8,000 jobs. It had already decided to transfer production of the Freelander model to Halewood from 2006. However in September 2004 the workforce agreed to a 'road map' to improve quality and productivity at the site, lifting the immediate threat. Ford’s commitment to Land Rover depends on it becoming as competitive as Jaguar within three years and reaching 'world-class' standards in five years. The company also suggested that disputes at Land Rover (UK0403102N) could have an adverse effect on future investment plans.

Finally, in November 2004 the Court of Appeal ruled that a 1997 collective agreement between Rover and its unions that precluded recourse to compulsory redundancies was 'not enforceable' (UK0012104F). The court rejected the TGWU’s case that the deal was effectively incorporated into individual contracts of employment. So far, only a few dozen employees have been threatened with compulsory redundancy, but the company is entering an uncertain time as it negotiates a joint venture with Shanghai Automotive Industry Corp, a Chinese state-owned company, to secure its future. The union said that it was 'disappointed' with the outcome, but welcomed a statement from MG Rover that the car-maker would continue to work with the unions and avoid compulsory redundancies wherever possible.

Commentary

The announcement of the closure of Jaguar’s Browns Lane production facility says much about the business context and state of industrial relations in the UK’s manufacturing sector, and automotive in particular. First, intense competition continues to drive rationalisation. In this sense, efforts to consolidate production to reduce the problems of overcapacity are perfectly understandable from a business point of view. What is notable, however, is the reluctance on the part of senior management to inform, consult and involve employee representatives meaningfully in the rationalisation planning process. As with General Motors’ decision to close Vauxhall’s Luton operations a few years ago, the announcement to cease Jaguar production in Coventry came as a shock to the workforce and trade unions, not least since they had had reassurances over the continued viability of the site. However, in both cases, it seems that much of the pressure was applied by the US parent company as part of wider restructuring plans.

The UK’s forthcoming Information and Consultation of Employees Regulations, intended to transpose the 2002 EU information and consultation Directive (2002/14/EC) (EU0204207F), might go some way to plugging the gaps in how employers proceed with closures and job losses (UK0407104F). The new legislation will come into force in spring 2005. However there are few signs that companies will view this as an opportunity to develop a more active dialogue with employees and their representatives. Instead, workers will most likely continue to be asked to become more and more 'flexible' in return for promises of employment security of doubtful long-term viability. (James Arrowsmith, IRRU)

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