2. Urgent Question: Ford’s Bridgend Engine Plant

Part of the debate – in the Senedd at 2:29 pm on 13 September 2016.

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Photo of Ken Skates Ken Skates Labour 2:29, 13 September 2016

Can I thank the Member for her probing questions? First of all, in terms of guarantees, with regard to the Dragon engine, we’ve been clear, as part of the contract with Ford, that we will not release a penny until we’ve seen £90 million invested in the plant to develop the Dragon engine. So, our investment will follow their investment. Our criteria for supporting developments of this type are a minimum of five years’ sustainable and secure employment for a specific number of people. That number is matched to the degree to which we are supporting the plant. The Member identified, I think, it was £50 million. Actually, that’s not in one lump sum. Since 2003, we’ve invested something in the region of £57 million in the plant to support over 1,000 jobs. Indeed, at the moment, it’s around about 1,850.

The Member asks about new products and current products that support the workforce there. I’ll quickly give an overview of what products are there and how they support current employment numbers. Bridgend produces the AJ engine. It’s an excellent engine that’s used for Jaguar Land Rover—a V6, V8 engine. It’s one of the best available; that is going to continue production at the plant. At the moment, there are 145,000 units, there or thereabouts, being produced. Secondly, the Sigma engine, and the Member will have heard about the EcoBoost engine, which is proving to be immensely popular—at the moment, there are something in the region of 550,000 units of that type being produced.

As we approach 2018, the investment in the new Dragon engine will be introduced, and from 2018, that engine will be manufactured. It was aimed to have 250,000 units produced from year one. At the moment, Ford are saying that, because of global demand—and I’ll come on to the demand question—125,000 units are now planned to be built there. As I’ve identified, there is already dieselgate and the low relative cost of diesel against petrol that could lead to an increase in demand for petrol engines as we approach 2018. Nonetheless, from 2018, there will be, as Ford identifies right now, from year one, 125,000 units being produced.

In addition, there are machined components produced at Bridgend, which amount to something in the region of 100,000 units. They are exported. So, clearly, at the moment, we have a pretty unstable currency market. We hope that we will see stability return as soon as possible, but with the relative value of the pound against other currencies, we envisage those exported manufactured components to continue at that level, if not above that level. That’s the current and immediate future of the plant. In addition, we are looking, as I’ve already mentioned, at a whole range of new technologies that are emerging in the automotive sector. The advancement of the automotive sector is accelerating and we wish to make sure that, whether it is with electric engines or whether it’s with autonomous vehicles, we are at the forefront of development. So, we’re in discussions with Ford about what their aspirations are for their products and how we can invest in the innovation and the technology required to realise their ambition.

In terms of the demand, which is the reason right now why Ford have reduced the estimated number of engines being produced from year one—right now it’s demand. However, longer term, the concern that Ford has, the concern that we have, and surely that everybody should recognise, is that without tariff-free trading with our single biggest external market, we will see a number of manufacturers struggle. Ford, amongst many, have identified a tariff-free access to the single market as being of paramount importance in the Brexit discussions. We remain very clear that, as we discuss what Britain should look like, and how Britain should interact with Europe in the future, that unfettered access to the single market, without tariffs, and in a stable and secure regulatory environment, is of paramount importance.