An investigation into the company scams that lie behind the closure of the Visteon plants shines a light on the murky world of multinational companies and outsourcing.
The company that summarily sacked 600 workers, leading to occupations in Belfast, Basildon and Enfield, is called Visteon UK. It is a wholly-owned subsidiary of the US-based Visteon Corporation.
Ford outsourced work by creating Visteon in 2000.
At the time, documents given to workers – which Socialist Worker has seen – reassured the workers that their terms and conditions would not suffer.
The company said, “For the duration of your employment with Visteon UK, your terms and conditions... will mirror Ford conditions.
“This means lifetime protection while an employee of Visteon UK of all your contractual conditions of employment.”
The documents add, “Accrued seniority and all existing terms and conditions, in particular pension entitlements, will be transferred to the new employment contracts.”
They also read, “For the duration of their employment, terms and conditions will mirror Ford conditions (including discretionary pension in payment increases) in the respective countries (lifetime protection).”
The document noted that all collective agreements would be fully adopted by the new company.
Davy McMurray from the Unite union said the documents are proof that Ford has ongoing responsibilities to its former employees. “How it can say there were no guarantees is beyond me,” he said.
Ford has said it is under no “legal or moral” obligation to help Visteon UK workers.
The outsourcing had two immediate benefits for Ford. First, it moved its debts into another company.
Further, it set a procedure in motion which meant that the outsourced company was supposed to compete in order to get contracts. This drove down costs. And that enabled them to run the company into the ground.
Along the way another 400 staff, mainly those in Visteon’s engineering and administrative functions, were transferred to yet another new company, Visteon Engineering Services, in 2007.
The precise nature of all the inter-company relationships is hard to fathom.
For instance, the Visteon UK accounts state that, “The company has taken advantage of the exemption under Financial Reporting Standard 8 – Related party disclosures not to disclose related party transactions with Visteon Corporation or any of its wholly-owned group undertakings.”
In other words they’re not telling.
We do know that the administrators say that Visteon UK owes more than £400 million to Visteon Corp.
So the company owes money to itself, although the accounts show that the debt doesn’t have to be repaid until 2016.
Visteon UK’s pension fund is in deficit and workers are being told there is nothing that can be done about it.
Many are asking where the money in the pension fund went and how it ended up in deficit. It’s not because they haven’t worked for their pensions.
Meanwhile, Michael F Johnston, the then boss of Visteon, got a salary of $1,341,667 in 2007. This was topped up to a staggering $8,393,607 with shares and bonuses.
Donald J Stebbins, now chief executive of Visteon Corp, grabbed $1.48 million in cash and bonuses last year.
He was paid his annual bonus last month – but the company won’t reveal how much that was. Ford says the job cuts are not its problem.
But it was precisely its desire to cut costs that led to the outsourcing in the first place.