PUBLIC OWNERSHIP UNDER WORKERS CONTROL

Closing GKN plant 'difficult but necessary', says Melrose boss

Alan Tovey
Tue, February 23, 2021

GKN takeover protest

Melrose has defended its plan to close a Birmingham car parts plant with the loss of 500 jobs, saying it was “one of the difficult things we have to do to make GKN a better business”.

Simon Peckham, chief executive of the company that bought GKN three years ago after a bitter £8bn takeover battle, told MPs that shutting the Erdington site was necessary to improve the “troubled business”.

Giving evidence to the Business Select Committee on the impact of Britain leaving the EU and the industry’s readiness for it, Mr Peckham said Brexit was not a factor in the decision.

“Let's be entirely clear, Brexit has no influence over the decision," he said. "Erdington is one of the difficult decisions as well as the good stuff we do. We inherited GKN, which basically was a troubled business.”

During the takeover, unions raised fears about the new owners asset-stripping the business and closing down British factories.

Melrose gave a series of undertakings to the Government to protect the business, including not selling the sensitive aerospace business and maintaining investment in R&D.

Mr Peckham said his company had “complied with the spirit and the word of every undertaking we gave, but we also said we would make difficult decisions from time to time - unfortunately, Erdington is one of those”.

He added that “it might shock” MPs on the committee to learn the Birmingham drivetrain assembly plant “lost money every single year for the past 10 years, with losses now totalling £100m”.

Mr Peckham added that over the past decade executives “have tried to improve the business, but they've failed”.

He added that Erdington - one of only two GKN automotive plants in the UK - lost a quarter of its market between 2016 and 2019, and that 40pc of its sales would “disappear through electrification”.

This is thought to be partly due to Jaguar Land Rover, a major customer, taking its cars all electric.

Work at Erdington is expected to be sent to the company’s European plants, and Mr Peckham said this was a consequence of decisions by previous management regimes.

“Unfortunately, before we turned up, past management of GKN placed the manufacturing [elsewhere], Erdington's not a manufacturing site, it’s purely an assembly plant. It doesn't have manufacturing equipment," he said.

“They chose to put the manufacturing for EV manufacture in Italy, we didn't make that choice, they did. Now we have capacity in that plant. There's nothing we can do about it. It's a legacy we inherited.”

Unions have vowed to fight the closure, with Unite labelling pledges to protect the business as “at best misleading, or at worst a direct lie”.