Melrose plan to shut GKN Aerospace factory is ‘breach of faith’

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Melrose Melrose plan to shut GKN Aerospace factory is 'breach of faith'

Melrose denies loss of jobs at Birmingham factory violates assurances over GKN’s future

A protest in March 2018 against Melrose’s takeover of GKN outside a GKN factory in Erdington, Birmingham. Photograph: Alamy

Melrose has been accused of a “breach of faith” after revealing plans to shut a GKN factory in Birmingham, a year after promising to invest in the business to avoid government intervention in its £8bn takeover of the engineering firm.

The Kings Norton factory, which makes windscreens and windows for both civilian and military aircraft, is to close with the loss of 170 jobs over a two-year period.

Melrose denied the decision ran contrary to commitments it made in the face of opposition from MPs and trade unions to its takeover of GKN, including an accusation of “asset stripping” by Jeremy Corbyn.

It offered a series of “legally binding” promises to the business secretary, Greg Clark, to allay such concerns, including keeping the HQ in the UK, not selling GKN Aerospace before 2023 and maintaining research and development spending.

The Labour MP Rachel Reeves, who chairs the business select committee, wrote to Melrose’s chief executive, Simon Peckham, on Friday to ask how the closure tallied with the firm’s promise to invest in the UK economy.

“It is difficult to reconcile these commitments with the decision to close the Kings Norton plant,” she said.

“Could you please explain the reasons behind the closure and set out where the work there will be carried out in future? How many UK suppliers do you envisage will be affected by this closure?”

Richard Burden, the Labour MP whose Birmingham Northfield constituency includes Kings Norton, said the closure might not technically break Melrose’s promises but urged Clark to seek assurances from the company.

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“Barely a year has passed since Melrose were falling over themselves to tell everybody how committed they were to UK manufacturing, but their words ring hollow today,” he said.

“Not only do they want to close a UK plant which is a key part of the supply chain for the aviation industry, but their warning that production could move to ‘low-cost areas’ means they plan to shift this specialised work out of the UK altogether.

“Whether or not the closure of GKN Aerospace breaches the letter of those undertakings, it runs contrary to the impression that Melrose sought to give of its intentions at the time,” Burden said.

“It is a breach of faith with GKN employees, with my constituents and with UK manufacturing as a whole.”

A spokeswoman for Melrose said the closure of Kings Norton was taken by GKN Aerospace’s management, without any pressure from the parent company.

A GKN Aerospace spokesman said that while there would be no immediate impact on operations, Kings Norton “does not have a long-term, sustainable future within the business”.

“By taking this difficult decision now, we will be able to carry out a carefully managed site wind-down process over a period of more than two years, leading to expected closure in 2021.

“Over the coming months and years, we will seek to support all employees, including the opportunity to apply for roles elsewhere within GKN Aerospace. This will be accompanied by assistance in job searches and CV drafting, on-site jobs fairs, time off to visit potential employers and the active promotion of external jobs.”

Britain’s largest union, Unite, said the closure of Kings Norton was a clear breach of Melrose’s assurances about GKN’s future.

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Unite’s national officer, Rhys McCarthy, said: “Unite has real fears that this announcement is the prelude to concerns we voiced – about asset stripping and UK operations being run down during Melrose’s hostile takeover of GKN – being realised.
“Early next week Unite will be convening an urgent summit of all of its GKN representatives where we will be discussing our next steps.
“Unite is demanding an urgent meeting with senior Melrose bosses and will be scrutinising the business case for these plans, which appear to fly in the face of assurances given around keeping military aerospace manufacturing in the UK.”

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