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Car industry bosses lay off hundreds to protect profits

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Issue 2630
Bosses say demand has dropped

Hundreds of workers were left fearing for their jobs last week after two car industry giants announced plans to close factories.

Tyre-maker Michelin said it would close its factory in Dundee, meaning 845 jobs will go by mid-2020.

It was followed by Shaeffler, which makes car parts at factories in Plymouth and South Wales. The firm said over 500 jobs would go.

Many commentators are keen to blame Brexit fears for the move.

But it’s actually more about long-term trend of overproduction in the car industry that threatens bosses’ profits.

The Michelin announcement is a huge blow for Dundee.

Its factory is one of the biggest workplaces in the city, which has the lowest rate of employment in Britain.

It’s not as if the company is short of cash—it recorded a net profit of £1.4 billion in 2017.

And Michelin also received a £43 million handout from the Scottish government this year through the “Scottish Enterprise” scheme.

But bosses say demand has dropped for smaller tyres—which the factory in Scotland specialised in.


Michelin Dundee manager John Reid said “major structural changes” in the industry mean more products are now being imported from Asia.

China is a huge producer of tyres. Reid said these factors made “the business case very difficult” for ­keeping the factory open.

Some trade union leaders like to pit the interests of workers in Dundee against those in China.

But the “business case” for production in either in Scotland or China relies on bosses’ attempts to maximise profits at workers’ expense.

Reid added, “The proposals are nothing to do with the UK’s decision to leave the EU”. But others, such as Herald Scotland newspaper columnist Iain Macwhirter, were quick to draw conclusions.

He said Dundee Michelin “underlines the kind of economic environment into which Britain is headed post-Brexit.

“Brexit is isolating the UK from EU supply chains and hastening ­deindustrialisation”, he wrote.

Gloom spread to the Shaeffler plants. There are 350 workers at the Plymouth factory and 220 at the Llanelli plant in South Wales.

Regional chief Jurgen Ziegler said the closures would “make us more efficient by relocating parts of our production closer to where our ­products are used”.

Some 85 percent of Shaeffler’s products are exported and the firm is going to move production to China, South Korea and Germany.

Ziegler hinted that Brexit was part of the reason for the closures.

“Brexit is clearly not the single decisive factor behind our decision-making for the UK market,” he said. “But the need to plan for various complex scenarios has brought ­forward the timing.”


Meanwhile in Devon, bosses at Appledore shipyard announced its set to close by March 2019.

Babcock International—which manufactures warships at the site—said all of the 199-strong workforce would be offered a job at another site.

But with the Devonport yard some 60 miles away, the transfer will be impossible for many workers.

The rich are using Brexit as a pretext for attacking ordinary people.

For instance, car company Nissan is delaying pay negotiations with workers until it has “better clarity on the future business outlook”.

That’s the same Nissan which threatened to leave Britain until it got a promise of government cash if it incurred extra tariffs after Brexit.

So bosses are blackmailing ­workers and the government in order to fight for a Brexit in the interests of the rich. Workers should fight for the right to work.

The layoffs show the need for a socialist system where ordinary people make decisions about what is ­produced, not a rich minority.

Overproduction led to worldwide car industry crisis

Britain’s car industry is big business with a turnover of £82 billion in 2017. It’s highly profitable, so why is everyone so worried?

Some trade union leaders joined the bosses in hyping up Brexit fears.

They feel this gives them an alibi if they don’t fight the bosses’ attacks.

So Unite union assistant general secretary Tony Burke said Shaeffler’s announcement should “leave no one in doubt of what was in store if the UK crashes out of the EU without a deal that secures tariff-free frictionless trade”.

Burke is worried bosses will lose their ability to transfer goods within the EU if Britain doesn’t maintain access to the single market.

The way the manufacturing process is organised means parts can travel several times across the Channel before final assembly.

But the real problem is falling demand. There has been a raft of plant closures in Australia and the US in the last year.

And factories are running at a lower scale of production.

For instance, in the US General Motors runs its plants at 37 percent capacity. It’s also why Jaguar Land Rover reduced car workers in the West Midlands to a three-day week.

Bosses attacks on workers in the car industry pre-date the vote to Leave in 2016. In 2009, Nissan slashed 1,200 jobs from its factory in Sunderland.

And Jaguar Land Rover cut 1,450 jobs and Ford made 850 workers redundant.

Occupy plants to save jobs

The car industry has shifted towards “just in time” production to save on storage costs.

Components are delivered hours or even minutes before they’re needed on the assembly line.

Any interruption slows down the whole supply chain, which makes it particularly vulnerable to workers’ actions.

But union leaders have tried to build partnership with bosses.

The Unite union boasted it’s been working on a “flexibility agreement” with Michelin management for two months.

But its two-year plan would mean job cuts and shorter shifts in the first year.


And bosses proposed a further raft of redundancies and axing hours if “market conditions had not improved” by year two.

Workers at Michelin, Shaeffler and Babcock should mount a fightback, occupy their factories and demand that they are nationalised to save jobs.

They even have the potential to win—like the Visteon car workers did in 2009.

Sacked with no notice or redundancy pay hundreds of workers occupied factories in Belfast, Basildon and Enfield.

Workers’ action won them significant redundancy packages, and dealt a humiliating blow to the bosses.

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