Opel-Vauxhall: Sale to PSA Group — House of Lords, 2017-03-06
Topic: Mixed Topics
Jonathan Mendelsohn (Labour, Centre-left): I am obliged to the Minister for repeating the Statement from the Business Secretary. GM has shown great resilience over the years with the Opel and Vauxhall brands, and reported a loss of $257 million from its European operations in 2016. That is the 16th consecutive loss-making year for GM in Europe, bringing losses on the continent since 2000 to more than $15 billion GM chairman and chief executive Mary Barra said that the business would have broken even in 2016 had it not been for the UK’s vote to leave the European Union, which caused a sharp drop in the value of sterling. We should congratulate the excellent workers in the UK who have done a great job to turn around GM’s performance, but unfortunately they will gain little credit for it. The factories at Ellesmere Port and Luton employ about 4,500 people, and a supply chain of at least another 7,000. We hope that this transaction provides them with a secure future, restores growth to these brands and creates a long-term and growing future for Ellesmere Port and Luton I would be grateful if the Minister told us a little more about the nature of the assurances the Government received from the PSA group during their discussions. What specifically have they learned about safeguarding the plants? What have they learned about the PSA group’s plans to invest to upgrade capability to meet the specifications and scale of the facilities they have been committed to over recent times? What assurances have they received about the development of the Vauxhall brand and its sales in overseas markets beyond the EU? What assurances have they received about investment to retool the plants in the UK to develop other brands? Does the PSA group remain committed to the current Astra model in Ellesmere Port up to 2020-21 and the production of a new model there, and will Luton be able to fulfil its plans deep into the 2020s Secondly, I would be grateful if the Minister addressed the problem of the scale of the UK supply chain. Speaking after the announcement, the chairman of the PSA’s management board, Carlos Tavares said that tough terms for leaving the EU could be an opportunity for Vauxhall and PSA to develop a supplier base in the UK to give the whole operation a "pound cost structure". Not only do they harbour concerns about the general state of the UK parts ecosystem; it is clear—and Vauxhall sales are 80% EU—that their consideration of how we handle not just the negotiation of withdrawal, the single market and the customs union but the industrial strategy will play a very important part This is a wider concern. In evidence to a Select Committee in the other place, Colin Lawther, Nissan’s senior vice-president of manufacturing supply chain, denied that the Government had agreed to any deal or received any particular assurances. He said that Nissan and the automotive industry had made a "strong request" for government support for £100 million to £140 million of investment for a supply development fund to "repower the supply base" and build an indigenous, high-tech car components sector in the UK. Nissan, too, is looking to increase content from British suppliers and says that this opportunity alone is worth £2 billion The future of PSA’s investment in Vauxhall and other parts of the car industry is about the importance of developing the supply chain, in addition to the measures the Government are already implementing. It is clear that the Government’s current approach is inadequate, so I would be grateful if the Minister assured us that a meaningful new strategy to develop the UK supply chain is under way.