Naive politicians duped by the asset-strippers
The naivety of supposedly business-savvy political leaders when it comes to accepting the jobs, pensions and investment pledges made by corporate marauders knows no bounds. In February the Business Secretary Greg Clark accepted the assurances of Peugeot bosses that if they were allowed to take over American-owned Vauxhall in Britain, ‘commitments to the UK plants would be honoured’.
eight months on we know the truth. Just a few weeks after finalising the £1.8billion deal in August, the new owners in Paris are taking an axe to the workforce at Vauxhall’s ellesmere Port plant in Cheshire, cutting 400 jobs.
ellesmere Port is home to Vauxhall’s Astra marque. Some 120,000 cars rolled off the production line there last year when the company celebrated production of four million motor vehicles.
I have been reliably told by a former director of General Motors, which had owned Vauxhall since 1925, that when it conducted an efficiency analysis of all its plants, ellesmere Port was among the most productive.
Now Peugeot says consumers are more interested in sports utility vehicles than the five-door saloons made in Cheshire and it is concerned by Brexit. If that was the case, why did it buy Vauxhall when everyone knew Britain had voted to leave the eU?
In allowing Peugeot to buy Vauxhall, Clark and the Government ignored a basic principle. When it comes to cutting jobs and making new investments, foreign owners always place their national interest first.
This is particularly true in the case of Peugeot where a French government agency still owns 12.7 per cent of the shares, having rescued it from collapse a few years earlier.
We should not be surprised by the perfidy of Vauxhall’s new owners. Recent corporate history is strewn with the remnants of companies which reneged on promises. As the new owners of Cadbury, the American processed cheese group Kraft (partly renamed Mondelez) vowed faithfully to keep Wispa bar production at the Somer dale plant near Bristol.
Within weeks it had closed it down and moved the jobs to Poland. The headquarters shutdown in Slough rapidly followed as Cadbury’s tax domicile was shifted to Switzerland. Faced with immediate plant closures and manufacturing losses, successive governments too often sell to unsuitable and sometimes unscrupulous buyers so as to avoid the immediate political hit. But as is the case with Peugeot, the quick and easy sale often comes back to embarrass government soon afterwards.
The authorities seem to have accepted that the best way of preserving steel jobs at Port Talbot in South Wales is for Tata Steel (part of the former British Steel) to throw in its lot with Germany’s Thyssenkrupp. In effect this makes the livelihood of 130,000 British Steel pension scheme members dependent on a German-based super steel producer with little loyalty to Britain.
The politicians will argue that they have little choice in a free market economy which prides itself on steering clear of 1970s style bailouts. But it is already evident that the market problems which have forced Tata Steel to sell already are over and the company is making thumping great profits again. When it comes to making jobs safe, guaranteeing future investment in the UK and protecting pensions overseas, corporations have shown how easy it is to pull the wool over the eyes of government.
As the recent Commission on economic Justice found, overseas owners of British companies have proved poor stewards. It is far easier to slough off obligations made to British workers and authorities than in their home markets. The asset-stripping and exploitation of British employees has gone on for far too long. Owners who fail to live up to their responsibilities must be punished by regulators and in the courts.