It’s said you should “prepare for the worse; hope for the best”, but as you probably all know by now the news coming out of Bridgend today isn’t good.
Trade union officials are claiming – via a leaked internal document – that Ford intend to slash the workforce at its Bridgend engine plant from the current ~1,760 to around 600 by 2021 – a net loss of at least 1,160 jobs.
There are also concerns, revealed by BBC Wales, that the Bridgend plant is less efficient than other factories due to “restrictive working practices” like excessive overtime and unwarranted allowances being paid to staff, which reportedly increases the cost of engines by 6%. Relations between unions and managers are also described as “poor”.
In February 2016 Ford announced they were seeking £138 million in efficiency savings from its European operations, and last Septemberthey cut £81million from an investment at the Bridgend plant, halving production of the new fuel-efficient “Dragon” engine. This new engine line has been backed by the Welsh Government to the tune of £15million in addition to the tens of millions of public funds provided down the years.
While the Dragon line starts, some key contracts like the Jaguar Sigma engine and Land Rover will end or shift production, with no idea what will happen to workers on those lines beyond 2020. The unions now believe that, unless new contracts can be found, those jobs will disappear instead of (what Ford said would be) a “re-deployment of staff”.
Ford maintain job levels and output at Bridgend will continue as is for at least three years, but accept that after that there’s uncertainty. They’re seeking to work with the unions to find new work, as long as the plant improves its efficiency.
The Unite and GMB unions – two of those representing Ford workers – tabled an ultimatum to Ford a few weeks ago that mass meetings would be held at the plant today (March 1st) if the management failed to draw up a long-term plan for Bridgend. The Glamorgan Gazette headline story this week also suggests unions are close to holding a strike ballot.
Although the union ultimatum was already public knowledge, the scale of the news seems to have caught politicians on the hop.
As mentioned yesterday, the First Minister (and AM for Bridgend) is currently in the United States on a trade visit. There’ve been demands from Plaid Cymru and the Conservatives that he undertakes an urgent meeting with Ford’s management in Detroit. Carwyn Jones told BBC Walesthat would be “pointless” as decisions are made at Ford Europe HQ in Cologne.
An urgent question was also asked in the Senedd this afternoon. Here’s the jist of what was said.
Adam Price AM (Plaid, Carms. E & Dinefwr):
- The situation could turn into an economic crisis as serious as the one recently facing steel, with the prospect of Wales’ third largest manufacturer losing two-thirds of its workforce.
- When did the Secretary first hear about the plans? Did he hear overnight like everyone else?
- Is he satisfied there’s the right engagement with Ford at the right time, in the right place and with the right people? He repeated a request for the First Minister to go to Detroit.
- Has there been any evaluation of the prospects for new technologies at Bridgend?
- Has Brexit been a factor in Ford seeking efficiencies throughout its European division?
Russell George AM (Con, Montgomery):
- Repeated calls for the First Minister to meet Ford executives in the US.
- What specific support would the Welsh Government be prepared to contribute?
Caroline Jones AM (UKIP, South West Wales):
- Questioned the legitimacy of the leaked document and believed it was “whipping up hysteria”. Ford are still making a multi-million pound investment and it’s far too early to talk of strike action; Caroline will oppose job losses but the situation needs to be calmed down.
- Asked for an update on discussions with the UK Government on joint action to secure the plant.
Huw Irranca-Davies AM (Lab, Ogmore):
- There are big tasks in improving the efficiency of the plant. The workforce, unions and management need to work together to make it the “go to plant” in Europe. What can Welsh Government do to bring such talks forward?
- Did the Secretary agree those talks need to start now to secure the future of the plant beyond 2020-21?
- What do we know about the UK Government’s guarantees to Nissan in Sunderland on post-Brexit insecurities? Will those same guarantees be extended to Bridgend? They “damned well should be”.
Bethan Jenkins AM (Plaid, South West Wales):
- It’s “nice to trust Ford’s word” but the Visteon closure in Swansea proves their words may not be reflected in their actions. If Ford aren’t put under pressure they won’t hesitate to move jobs elsewhere.
- Asked again, “When did you find out?” No answer.
- Called for a Welsh industrial strategy to put everything together in a single document.
- What are companies in the supply chain thinking? Has investment been redirected to the West Midlands since Tata took over Jaguar Land Rover?
Suzy Davies AM (Con, South Wales West):
- The report suggests Ford have failed to find alternative products for now, and it’s worrying the company think working practices aren’t as efficient as other plants like Dagenham – it’s the first time she’s heard that about Bridgend. Ford shouldn’t be allowed to point at the workforce in threatening the plant’s future.
- Repeated, “When did you hear about this ‘worst case scenario’?” Still didn’t get an answer.
- Has the First Minister attempted to change his schedule to meet someone from Ford?
Economy & Infrastructure Secretary, Ken Skates (Lab, Clwyd South):
- He spoke with Ford Europe’s Vice-President who confirmed there’s no risk to jobs until at least 2021. If there’s anyone else who needs to be engaged with he’ll talk with them, but ultimately it’s the Vice-President who will make the decisions, so there’s no need for the First Minister to travel to Detroit. He accused opposition AMs of “mischief making” in pressing the question of the First Minister’s US trip.
- The details released this morning are a “worse case scenario” if no new products are built in Bridgend. The Welsh Government stands ready to do all they can to secure new products and improve the plant’s efficiency, but he wants greater detail on what products could be brought there – including possible joint ventures with other car manufacturers on things like electric and hybrid engines.
- He wants to reinstate a “Team Ford ethic” at Bridgend to retain its position as the most efficient and productive plant in Europe, and he’s been told they’re already on the way towards doing that.
- The time is right to build trust, not undermine it, but he accepts Ford need to better communicate to their employees their long-term objectives for Bridgend.
- Brexit poses a significant challenge to Ford and other car manufacturers. The First Minister has been consistent that the UK must retain free and unfettered access to the EU single market. “What’s good enough for Nissan is good enough for Ford” in terms of UK Government guarantees.
- In terms of Welsh Government support, they’ve already provided skills training, capital expenditure and infrastructure support and are ready to do so again. He also wants to draw down UK research and development funding for new engines.
Is Brexit to blame?
As last time, I’m not convinced this is entirely to do with Brexit. However, the situation’s changed.We now know the UK Government intend to pursue a “Hard Brexit”. That means no membership or access to the EU single market. Instead, the UK’s trading relationship with the EU will depend on an EU-UK free trade agreement which could take up to ten years to negotiate; we have to leave the EU in two years. See the problem?
All of Bridgend’s output is exported, with most of it going to the EU tariff-free. Any trade barriers (such as tariffs applied to car products) in the period between EU withdrawal and the signing of a UK-EU trade deal makes it more difficult and expensive.
Plus, the slump in the value of the pound since the referendum is making importing parts from other EU states to Bridgend more expensive, and at the same time reducing the value of exported engines – meaning Ford lose money. Add that to the aforementioned concerns on the plant’s efficiency and it’s not looking good.
So, yes it’s safe to say Brexit (or, more accurately, the economic uncertainty) is having an impact but other, just as important, factors include:
- Ford seeking to make cuts to its European operations.
- Automation and the resulting increased factory efficiency meaning large workforces aren’t required in “big box” factories anymore.
- Less demand for Ford’s cars due to increased competition from car makers in eastern Europe and Asia.
- Uncertainty around American protectionism since the election of Donald Trump (even if Ford Europe is a separate entity, they’re still an American company).
- A cynic (not me of course) may suggest it could also be an attempt by Ford to create a situation similar to Tata Steel in order to re-negotiate pensions and/or working practices to save money. They have form in that area (Visteon in Swansea, as mentioned).
It’s also worth reminding everyone that all indications are that the Bridgend parliamentary constituency (as opposed to Bridgend county) voted Remain last June.