Adjournment Debate – GE Lighting Closure

Posted on June 14th, 2011 in Local News

On the 19th December 2006, in the last Parliamentary debate of the year, Keith secured an adjournment debate with the Minister of State for Industry and the Regions to ask for any assistance the Government could provide to stop the proposed closure of the GE Lighting Factory at Melton Road, Leicester.

Excerpt from Hansard’s Official Report:

GE Lights

Motion made, and Question proposed, That this House do now adjourn. —[Claire Ward.]

7 pm

Keith Vaz (Leicester, East) (Lab): I am grateful for the opportunity to bring to the House’s attention the matter of the proposed closure in December 2007 of the General Electric lighting factory in Leicester. This is our last debate of 2006 and it really is an eleventh hour appeal to get the factory’s corporate management to reconsider its proposals.

I would like to thank the Minister for Industry and the Regions, whom I have known for the past 30 years and who is, in my view, one of the best and most accessible Ministers in the Government. I also welcome the hundreds of hon. Members who are watching this debate on their television monitors. This is, of course, the last parliamentary day of 2006.

The GE Lighting factory on Melton road in my constituency employs in the region of 400 people, many in skilled and irreplaceable jobs. However, merely citing the number of job losses does not properly project how devastating the closure of the factory would be to the community and the local economy. The factory has been in the same location for 60 years and many of its employees have worked there all their adult lives. Those are not just statistics; they are men and women with husbands, wives and children to support. Many have given their all to the company—people such as Stuart Will, the plant manager, Mike Flay, the human resources manager, Eustace Richardson, the Amicus union representative, Aruna Patel, Linda Haulett, Rafiq Lohar and Bipin Misby. They are all hard working, honest, loyal and dedicated people, whose employers have given them the worst Christmas present imaginable. Their hard work is rewarded not by the mega-bonuses that their bosses in New York will be receiving, but by potential unemployment and a very uncertain future.

My objective in the debate is to present the case that General Electric, in proposing to shut down the factory, is making a huge mistake, and that the Government and other relevant stakeholders such as the East Midlands Development Agency must mobilise all their resources and efforts to fight this decision and encourage GE to reconsider its drastic and callous action.

I would like briefly to outline the history of the factory in order to inform the Minister and the House of the background to the closure. Following conversion from a wartime plane parts factory, production originally started there in 1947. In 1967, Thorn Lighting bought the firm and turned it into Europe’s biggest lamp and bulb making plant. The lights of Europe were literally made in Rushey Mead in Leicester. As well as providing Europe and the world with lighting products manufactured on site, the factory has been involved in some of the biggest scientific breakthroughs in lighting technology in the past 60 years, including inventing the first mass-production fluorescent bulb.

Only 12 years ago, in 1994, GE Lighting bought Thorn Lighting and since then has, sadly, instigated several rounds of redundancies at the factory, with the latest round in April this year. In November, GE Lighting announced that it was considering plans to close the Leicester factory and move production to Hungary at the end of 2007.

I feel it is the ultimate duty of a local Member of Parliament to do all they can to help constituents when their jobs and livelihoods are put at risk. I have assisted employees at the factory when they faced problems before and I will do so gladly again on this occasion. It has been a centre of excellence in design, distribution and production for 60 years; with the necessary vision and investment, it could remain as such.

The factory and its committed staff can, given the chance, meet the challenges of globalisation head-on. One has only to look at the success of foreign car makers in Britain to see that manufacturing in this country is not some relic of the 19th and 20th centuries, but one of the key sectors that will drive Britain’s economy forward in the 21st century.

The UK is one of the most competitive economies in Europe, coming fourth out of 27 in the most recent Lisbon league table for economic competitiveness. We have low interest rates, low inflation and one of the longest periods of sustained growth ever known. The infrastructure for moving goods around the country and into mainland Europe is first class, and I believe that our skills base for research and development is the best in the world. That is why it is so surprising and illogical that GE Lighting is looking to close its Leicester factory now.

The company has given three main reasons for the closure of the plant. First, it cites high manufacturing costs; secondly, declining volume; and, thirdly, the pending discontinuation of a product made at the Leicester factory. Although it is true that manufacturing costs in the newer EU countries are lower than those in the older member states, I feel it prudent to point out that, as standards of living rise in the newer member countries, so will their wage rates. One has only to look at the case of Portugal—a weak economy on entry to the EU in 1986, and now a thriving one, with living standards very similar to the rest of western Europe and wage levels to match. Therefore, I believe that it is extremely short-sighted for GE Lighting to abandon its skills base and loyal employees in Leicester for a relatively short period of cost advantage.

As for the declining volume of production and the pending discontinuation of a product made at Leicester, those arguments are so weak that I am surprised that they are advanced. The reason for the decline in production is that round after round of redundancies have been made by the company—not any decline in worker productivity. In the lighting industry, innovations and new products are constantly becoming available; the Leicester plant has produced them and, in fact, often provided the research and development to do so. What GE Lighting actually means when it says

“a key product made at the Leicester factory is being discontinued”

is that it is unwilling to continue investing in the factory and updating the production lines, as has been done for the past 60 years.

Leicester is renowned as a manufacturing hub, and huge investments have been made in recent years by other companies that are keen to take advantage of Leicester’s excellent strategic location, superb transport links and skilled work force. For example, in 1999, International Radiators opened a new £6 million factory in Leicester, which represents the biggest investment that that company has ever made.

As the Minister may be aware, I am one of the most vocal supporters of the European Union’s expansion eastwards. I believe that free trade and the Common Market are key to Europe’s continuing prosperity. However, one of the negatives of the expansion is that it has encouraged a certain herd mentality among employers, whereby production is moved simply because doing so is in vogue with other companies, without a more holistic consideration of other factors, such as skills, infrastructure and a country’s overall economic competitiveness. It is quite ironic that, as hundreds of thousands of eastern European workers move to the UK because of our economic competitiveness—a movement that I wholeheartedly welcome—GE Lighting is proposing to move in the opposite direction by taking production to eastern Europe.

I visited the factory on 24 November this year, together with Councillor Kuldipp Bhatti, and met the employers, employees and trade union representatives. It was made clear to me while I was there that the work force were not prepared to accept the proposed closure and that they plan to do everything that they can to fight it. I promised them my full support. Since then, I have been in active communication with the head of manufacturing in Europe, Mr. Istavan Salekovics. I have asked in business questions for this Adjournment debate and have tabled a number of motions, including early-day motion 307, which has been signed by many right hon. and hon. Members and which calls for GE to reconsider its plans to close the Leicester factory at the end of 2007.

I spoke to Mr. Salekovics only yesterday and I listened carefully to what he had to say about the impact that globalisation was having on his business in Europe and the United Kingdom. I have heard all the arguments before—when they have been put by Ministers—about the rising power of India and China and the issue of labour costs. However, I put to him the fact that GE is a worldwide company that manufactures at a number of bases all over Europe and the world. If the proposal to close is going to go ahead, surely there must be something else that can be produced on the Leicester site that will benefit the company. I am delighted to tell the House that Mr. Salekovics has agreed to meet me in London when he comes here at the end of January, which is within the consultation period. Is my right hon. Friend the Minister also prepared to meet him to hear what he has to say about the reasons why the company felt that the closure was necessary?

Unfortunately, I have had little success in arranging a phone call with Mr. Jeffrey Immelt, the chief executive officer of General Electric, the second largest company in the world. My office has telephoned to New York on a number of occasions to speak to him. That culminated in a rather bizarre call between my office and the head of public affairs for GE in New York. He informed us that he was in the middle of eating his Thanksgiving turkey and therefore unable to take the conversation forward. There will be no turkey eaten with relish by my constituents in Rushey Mead this Christmas, because of the tragic news of the proposals.

The Amicus representatives from the factory have met with the management in Hungary. I am disappointed to have to inform the House that they felt that, despite making the trip to Hungary to meet the management, they were given only a rushed meeting in which the proposals were treated more as a definite plan than a possibility. Alternative plans put forward by the union were not really given much time and the company did not really pay much heed to them. Unfortunately, as I have said, that attitude reflects what—prior to the call that I had with Mr. Salekovics—I have felt has been the way in which the company wishes to discuss these matters.

The company has not consulted broadly or deeply, as it should have done, and has not shown the necessary duty of care to its hard-working staff in Leicester. It has not taken into consideration the effect on the local economy. It has not had any discussions with the east midlands development board. It has not approached Leicester city council to talk about the cost of the council tax on its business. There have been no discussions of any kind. I would like to see proper and full consultation and I would like alternative plans to be given serious consideration. I want to see substantial talks with the relevant stakeholders that show genuine concern for the contribution that our city has made to the manufacturing success of GE and before that Thorn. Genuine concern should be shown to the employees for their lifelong commitment to the company.

Mr. Salekovics’s visit to London may be the opportunity to do that, but I have made it clear to him that I am prepared to travel to Hungary or the United States to assist my constituents in trying to save their jobs. Will the Minister, even at the eleventh hour on the last day before the Christmas recess, join me and call on General Electric to re-examine its proposals and instead invest in the historic factory that has so long provided lighting for the whole of Europe and whose workers are so skilled?

The factory has a long and wonderful tradition of displaying Christmas lights. Every year, children expect to see the tradition upheld. Anyone who travels from Nottingham on the M1—if they can manage to get through the M1, given all the traffic that is on it these days—and comes off at junction 21A and then goes into Leicester will see the General Electric factory with a wonderful display of lights all around it. In this spirit, will my right hon. Friend the Minister consider turning on the GE Christmas lights at the factory next year? Hopefully, it would not be the last time that anyone would do so. I also urge her help and that of other hon. Members so that the lights might not go out over Leicester after all.

7.15 pm

The Minister for Industry and the Regions (Margaret Hodge): I congratulate my right hon. Friend the Member for Leicester, East (Keith Vaz) on securing the last debate before we adjourn for Christmas. I know from my discussions with him on the issues that he has raised that he is working extremely hard on behalf of his constituents to represent them and to try to save their jobs. It is somewhat poignant and distressing that at a time when families throughout the country are turning on their Christmas lights for celebration and joy, there are plans to switch off the lights at GE in Leicester. The facility has produced lights for more than 60 years and provided stability and prosperity for those who have worked in the factory.

I completely understand the distress described by my right hon. Friend that is caused to individuals when they lose their jobs because a facility in which they have been working for a long time closes down. My right hon. Friend was right to draw our attention to the context in which the decision has been taken. The UK economy has been very successful over the past decade or so. We have had consistent macro-economic stability and 57 consecutive quarters in which there has been growth, which is unprecedented for any country in post-war times. That puts us at the top of the Organisation for Economic Co-operation and Development league for prosperity and economic success.

We have also been one of the fastest growing economies in the G7, according to the latest statistics that I have read. The latest “European Investment Monitor” statistics show us that in 2005, the most recent year for which we have statistics, the UK was the top inward investment destination in Europe. GE is thus slightly bucking the trend. We had 559 investment projects in 2005 compared with 538 in France, which is next on the list.

The recent World Bank report “Doing Business in 2007” examined where it is best to do business throughout the world. Again, the UK emerges in that survey as the best place in Europe in which companies could choose to invest. We are one of the top two EU countries on simplicity benchmarks for employment law. We are joint second in the EU for ease of paying taxes, and we are in the top two countries in which investors get the best protection. Overall, we come out top, so it is odd that a large company that will want to access the European market is choosing to relocate its business for what my right hon. Friend rightly described as short-term advantages.

I travelled to China, Japan and Korea in September, and I talked to people in key manufacturing industries and growing sectors, such as information and communications technology, aerospace and car manufacturing. One of the really interesting thingsthat came out of that was how many of those manufacturers see the UK as the location of choice when they are trying to find a base for a manufacturing facility that will allow them to do business in Europe and access the European market.

I do not know whether discussions with General Electric will take us further, but I think that we should lay out the enormous advantages of locating here in the UK. Simply looking at short-term wage costs, which strike me as the only factor that the company has examined, is not a sensible way to plan the long-term business prosperity of a successful enterprise.

The UK is often said to be a country that is not very good at manufacturing. That belies the truth. It isstill an important part of our overall productivity, accounting for 14 per cent. of GDP. We have 3.7 million jobs in manufacturing and half of UK exports come from the sector. Three quarters of business investment in research and development is in manufacturing, so the sector plays a key role.

One thing that has pleased me in the months for which I have been in this job is seeing success in areas in which, if one read the newspapers on any given day, one would think we were no good. For example, we are producing as many cars today as we were at the height of the car manufacturing age of the 1970s, with 1.6 million being produced now compared to 1.7 million in the ’70s. Aerospace, which is often portrayed as an industry in trouble, still produces £22 billion of wealth for this country and nearly £3 billion of investment in research and development, which means that we can stay at that higher added-value level. In biosciences, a real industry of the future, we have the largest manufacturing capacity in the whole of Europe.

The other thing that I hope my right hon. Friend will be able to convey to the company is that the Government give manufacturing enormous support in every area that we can, trying always to compete by adding value, making sure that we are at the high value-added end of the sector. We set up the manufacturing advisory service to give peer-to-peer support, and in the couple of years for which it has been operating it has added nearly £250 million of value to the companies that have been assisted. There is enormous investment in research and development through the technology strategy, in which we are spending nearly £400 million a year, through the money that comes from the regional development agencies, through the R and D tax credit and through the research councils.

We have a range of growth teams and sector councils, and I attended the electronics council not so long ago. Indeed, the future of light bulbs was, interestingly enough, part of our agenda. We were discussing climate change and how greater energy efficiency could be achieved by having long-life light bulbs. So there is support given by the Government there. We also spent about £30 million on setting up a number of industry forums, and their purpose is to help with lean production processes to drive down costs.

Keith Vaz: My right hon. Friend paints a very positive picture of what is happening in the UK economy. It may well be that GE is unaware of all those initiatives. Will she agree to meet Mr. Salekovics when he comes to London to meet me?

Margaret Hodge: Indeed. I was just about to come to my right hon. Friend’s remarks, but the final point that I wanted to spell out was that the Secretary of State for Education and Skills recently announcedthe establishment of a national skills academy for manufacturing, to ensure that we maintain the skills that we require for the sector.

To respond to the specific issues raised by my right hon. Friend, of course I am happy to meet Mr. Salekovics when he comes over, and I will certainly lay out for him some of the ways in which we can benefit the company. It has a long history in the UK, and I will work with my right hon. Friend to see what we in government can do to keep it here. The East Midlands Development Agency met GE on 12 December to discuss ways of reducing relative costs, and to consider productivity levels. I understand that GE is considering those suggestions, and will come back to EMDA on the issue shortly.

Clearly, if the talks and the attempts to keep the company open are not successful, we must look tothe future for the individuals who will be affected by the closure. In that regard, we have a well-established mechanism that we will want to bring into play, which will bring together the regional development agency, the local learning and skills council, Jobcentre Plus and the Leicestershire economic partnership. They will see what they can do to support individuals during that extremely difficult time, either by linking them to new job opportunities or by providing the appropriate training to help them to get another job.

Of course, those actions are being taken in the context of a very successful macro-economic climate. Since 1997, when we first came into Government, we have created some 2.5 million extra jobs, so although the individuals will feel very low and worried as we come up to Christmas, they should be reassured by the health of the UK economy and the economy in my right hon. Friend’s area, and by the Government’s determination to put all resources into play, so that we provide the very best support for individuals.

As for my main message to my right hon. Friend, I hope that in his discussions with GE—I am happy to support him as best I can in those—he will stress that outsourcing production as planned may well not be in the long-term best interests of that company, if it wants to maintain a good market share and a vibrant industrial capacity in Europe. What the Government are offering includes access to research and development resources, access to macro-economic stability, access to a highly skilled work force, and access to a liberal labour market. Those are all features of the UK’s economy that make us an attractive location for inward investment. I hope that my right hon. Friend’s efforts will help to save the company for the future of Britain.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Seven o’clock.