Emergency Question: Bridgend Engine Plant

– in the Senedd at 2:00 pm on 15 January 2019.

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Photo of Elin Jones Elin Jones Plaid Cymru 2:00, 15 January 2019

(Translated)

I call Members to order. The first item will be an emergency question. I've accepted that question under Standing Order 12.67, and I call on Carwyn Jones to ask that emergency question. 

Photo of Carwyn Jones Carwyn Jones Labour 15 January 2019

(Translated)

What assessment has the Minister made of the current situation in Ford Europe and its potential effect on the Bridgend Engine Plant? (EAQ0003)

Photo of Ken Skates Ken Skates Labour 2:00, 15 January 2019

Thank you. I've spoken with Ford UK and also with UK Government Ministers, pressing the case for the Bridgend plant. We'll continue to work closely with Ford to protect the highly skilled jobs and supply chain, as well as look for other high-tech opportunities for the Bridgend site. 

Photo of Carwyn Jones Carwyn Jones Labour

Could I thank the Minister for his answer? He will understand, of course, that the announcement has caused great uncertainty amongst workers at the Ford plant and their families. Minister, will you commit to monitoring the situation closely, and to work with Ford Europe, with the management and unions at the Bridgend plant, and also with those who represent Bridgend to secure the future of the plant and, of course, its dedicated workforce? 

Photo of Ken Skates Ken Skates Labour 2:01, 15 January 2019

Yes, indeed. Can I thank the Member for his question and for his keen interest in this matter, and for the dedication that he's shown to the Bridgend Ford plant? I do commit to monitoring the situation across Europe, but particularly in the UK and at Bridgend. The First Minister will be joining unions tomorrow morning at the Bridgend plant, and following my discussion today with Ford UK, I'm arranging to meet with Graham Hoare, the director of global vehicle evaluation and verification for Ford, to discuss the situation at the Bridgend plant. 

I think what is clear is that the automotive sector is undergoing dramatic and rapid change, and, in the last week, we've seen the impact of that on Ford's decisions in terms of a Europe-wide review, with various decisions to be made over whether to reduce lines in Germany, whether to close a plant in Bordeaux, whether to cease the joint venture agreement in Russia. What makes the Bridgend plant strong in regards to future considerations is that the productivity levels have been improving. There are now very, very good industrial relations at the site and, of course, a new Dragon engine has begun being manufactured. 

As we look to the future and the dramatic change in the automotive sector, I'm confident that as Ford considers hybridising powertrains, the Dragon engine being built new at Bridgend will place that particular site and the loyal, committed, dedicated workers at the forefront of considerations for Ford Europe, as it determines where is most suitable to hybridise future powertrains. 

Photo of Suzy Davies Suzy Davies Conservative 2:03, 15 January 2019

Thank you for the response to the question on this. Just a couple of questions from me, based on promises that you made back in 2016. At that point, when Ford was potentially in trouble at that stage, you said that Welsh Government would be prepared to invest in the plant, and I'm glad to hear you praise it yet again for the high level of commitment of the workforce there, but that you would be expecting a minimum of five years of sustainable and secure employment for a specific number of workers there. So, perhaps you can just fill us in a little bit on what support, financially in particular, you have given them in the interim, and whether you're confident that the promises they will have given you—obviously, that finance would have been conditional—whether those promises have been fulfilled. 

You've mentioned that you've been talking about new technology since then, and you've mentioned the Dragon engine; obviously, there's a question mark about the long-term sustainability of that work because of Jaguar Land Rover's announcement—but what other technology, apart from electric cars, have you been talking about? Because one of the considerations I'm sure you've thought of is, of course, that Ford globally is now working in partnership with Volkswagen, and Volkswagen itself already has the infrastructure available to produce electric cars, which, for me, places a question mark over the possibility of Bridgend being used for that. But there are other options; you've probably come across Projekt Grenadier and the potential for off-road vehicle development. Obviously, Jaguar Land Rover has had its problems, but there were huge pre-sales for the Suzuki Jimny announced relatively recently. So, I wonder what kinds of conversations you've had about that, alongside anything to do with electric cars.

And then, finally, from me, when Tata was in trouble, Welsh Government was very keen to talk about the new opportunities it would offer anybody who was made redundant on the back of Tata changes, particularly in retraining. We've already had, for some months now, criticism of Welsh Government because it doesn't have a skills strategy, but I'm hoping that this may have concentrated the mind and that you have some idea of what you might tell Ford plant workers, should they be made redundant, about the training opportunities that they can be offered at this stage. Thank you.

    

Photo of Ken Skates Ken Skates Labour 2:05, 15 January 2019

Can I thank Suzy Davies for her questions? There are a number of important points and potential products, particularly powertrains, that could be considered in the years to come for the Bridgend site. First of all, in terms of conditions that are attached to support from Welsh Government, of course, the Dragon engine was brought to Bridgend as a consequence of support offered by the Welsh Government, and conditions attached to that support in terms of the security of work for five years minimum will stand. The Dragon engine actually is a safe and secure engine because it can be hybridised. Within the new product cycle that Ford are looking at, it's hybridisation rather than a complete move immediately to full electrification of powertrains that would be their priority. That's why I think the Dragon engine actually is probably one of the most attractive products that they currently produce, to hybridise for a global market.

What we want to do is ensure that hybridisation of the Dragon engine comes first, before other powertrains, and that that work is carried out in Bridgend. There is, of course, potential for increasing capacity with regard to the Dragon engine. At the moment, about 125,000 units are being manufactured. It could increase to 250,000 units. There is a question mark over Ford's operations in Russia. If Russia were to be taken out of the equation, then that would clearly give a huge opportunity to increase production of the Dragon engine at the Bridgend plant. These are all factors that are currently in motion that we are monitoring and that we are clearly trying to influence with a view to making sure that we get the best outcome for Bridgend.

The Member rightly raised the question of what support can be given to workers affected by any decision by a company to reduce head-count numbers. In terms of the support that we can offer, clearly we would seek to deploy the same sort of support that was offered to Tata workers, primarily through our employability plan and with a special regard to the new Working Wales suite of interventions to make sure that people can be trained up with new skills if necessary to get them straight back into work or signposted to immediate opportunities already within the sector that they are specialists in.

The Member also raised perhaps the most important potential project for the site—it's actually project Seagull. 'Grenadier' is the product name that has been attached to the rugged 4x4 off-roader. This is a potential investment by Ineos. Welsh Government has worked tirelessly in collaboration with Ford and Ineos to ensure that we are best placed to secure that investment. If we bring production of that vehicle to Bridgend, it will provide work for hundreds upon hundreds of people and potentially thousands in the supply chain. A decision will be made next month. The big question is whether Wales can win that contract ahead of one other site in Europe as we leave the EU. It will perhaps be the biggest test of whether the Welsh economy can withstand the challenge of Brexit that we will face in the coming months ahead. 

Photo of Rhun ap Iorwerth Rhun ap Iorwerth Plaid Cymru 2:09, 15 January 2019

Can I also express my deep concern at this announcement and what it means for both the workforce at Bridgend and also the wider Welsh economy? Can I also seek assurances from Welsh Government that you will leave no stone unturned in seeking a new future for the plant at Bridgend? Can I also seek assurances about the use of public funds—both money that has already been invested at Ford Bridgend and also public funds that may need to be invested in future, considering the uncertainty that has surrounded the Ford Bridgend plant at various points over the past few years? And also, can I suggest that is it perhaps not time, considering the seriousness of the situation we face at Bridgend and elsewhere, that a major summit is convened to look at some of the threats that we face in the Welsh economy, not just the announcement at Ford Bridgend but also the deep uncertainty surrounding Wylfa, an issue I hope to be able to raise with the Minister later today or this week, plus the threats in the longer term, perhaps, to Airbus at Broughton, due to Brexit, and indeed the wider issues linked to our planned departure from the European Union?

Photo of Ken Skates Ken Skates Labour 2:10, 15 January 2019

Well, can I thank the Member for his questions and say that it's largely as a consequence of the support that the Welsh Government has been able to provide over many years and the public-private collaboration that we've seen between Ford and the Welsh Government that the site is still in Bridgend, alive and well, producing some of the world's most cutting-edge engines? And we stand ready to support further production at the Bridgend plant, and we are certainly keen to ensure that further investment is secured for the area. Indeed, the investment that we could be looking at from Ineos amounts to many hundreds of millions of pounds, and that would be a huge win for the Welsh economy if we can secure it next month.

The Welsh Automotive Forum acts as a very important forum for horizon-scanning of trends and emerging technologies and for advising Government on the situation that the sector is currently positioned in and also the potential challenges and opportunities that are coming down the line. The forum continues to do excellent work in advising Ministers, both here in the Welsh Government and in the UK Government. And in terms of working together—if you like, a summit to assess future trends and opportunities and challenges—well, I can tell Members that a working group had already been established prior to this week's news to look at what the potential opportunities are, particularly for Ford in Bridgend in the context of a rapidly changing automotive sector.

I can also assure the Member that, with regard to other major projects that there is considerable speculation over at the moment, I have asked for the North Wales Economic Ambition Board to convene urgently, and I'm keen to meet with the ambition board to discuss the decision that Hitachi is due to make on Thursday. It's my intention to be in north Wales on Thursday, ready to meet with the economic ambition board, if all stakeholders and local authority leaders are available. If that can't take place immediately after the decision taken by Hitachi, then I will be asking for that board to be convened at the earliest opportunity.

I spoke with UK Government Ministers today about the situation at Wylfa. I also spoke with Horizon. I think that what's pretty clear is that the Prime Minister let Wales down, I'm afraid, last week in failing to raise this crucially important matter with the Japanese Prime Minister and with key stakeholders in Japan. The Prime Minister said that this was solely a commercial matter for Hitachi. That is not true—that is not true. This project is something that the UK Government is willing to take a £5 billion-stake in. It could provide up to 10 per cent of the UK's energy. It could provide hundreds upon hundreds of incredibly valuable jobs for generations to come. It is not purely a commercial matter for Hitachi. This is about securing our security over energy, and it's about securing the economy of north Wales, Wales and beyond.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour 2:14, 15 January 2019

The Minister has given us some degree of optimism, certainly in the respect that, again, the Welsh Government is making sure that it stands by Ford Bridgend, which it has done over many, many years. As to why Ford has been a success, its two biggest strengths are (1) the Welsh Government standing with it, but paramount the skilled, committed, highly motivated workforce, which have adapted previously to challenging circumstances and to change, and they've come through in difficult times and have put this company, year after year, back on its feet and doing very well. And it's doing well at the moment, even though it has declines in some production lines.

Much of this does rely on Ford Europe and their decisions, but I think it's helpful that the Welsh Government is signalling that it is there to help in any way it possibly can. Could I ask what role, if any, there is for the UK Government as well? Because the worry would always be that we'd want the UK Government to be here, equally standing as strong as the Welsh Government is, knowing the regional importance of this not only in the constituency of Bridgend and Ogmore, but in the wider supply chain throughout south Wales and, indeed, up into the Midlands as well, and into north Wales. So, we want to know that the UK Government can also play a role and doesn't see this in any way as a threat to other parts of the UK. It is of paramount importance to the regional economy in south Wales.

Photo of Ken Skates Ken Skates Labour 2:15, 15 January 2019

Well, can I thank Huw Irranca-Davies for his question? There are, of course, a number of areas that the UK Government could be of great assistance in right now. First of all, Brexit is a factor that needs to be considered. Because of sterling weakness, there's been impact to the tune of £600 million on Ford UK's turnover. That, in turn, of course, has affected profitability. Secondly, there is a role that the UK Government can play in ensuring that Ineos decides to invest in the UK rather than continental Europe, thereby providing a huge number of highly paid jobs for well-skilled people. And thirdly, there is a role for the UK Government, and in particular the UK industrial strategy, in promoting opportunities for Welsh research institutions and, crucially, Welsh businesses to take full advantage of some of the grand challenges. I'm thinking, in particular, of the Faraday challenge. I know that the Member has shown a great interest in the potential production of batteries for vehicles at the Ford Bridgend site. At the moment, what is quite clear from industry is that the production of batteries within the UK for the automotive sector could only take place if there is collaboration between manufacturers and with a significant degree of assistance from UK Government. I know that this is an area of work that the Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, is very interested in and very committed to, and my call on UK Government would be to engage as much as possible for Welsh companies and Welsh research institutions to make sure that we get maximum benefit from the Faraday challenge and the industrial strategy as a whole.