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Adjournment Debate: Management of Assets and of pensions at Visteon Corporation

5 May, 2009 - by Pat Sheehan, Fra McCann, Jennifer McCann, Sue Ramsey

Sinn Féin west Belfast MP and MLA Gerry Adams today sponsored an Adjournment debate in the Assembly on the recent closure of the Visteon plant, the treatment of workers and the Management of Assets and of pensions at Visteon Corporation.   The detail of this scandal is such that it will require the contribution of several Sinn Féin MLAs to put it into the record of the Assembly. Gerry Adams will open and will be followed by contributions from Jennifer McCann; Paul Maskey; Paul Butler; Sue Ramsay and Fra McCann.   Sinn Féin is calling for all relevant government and statutory agencies, including the Pensions Regulator, to carry out the necessary rigorous assessments and investigations into the conduct of these companies.   Sinn Féin believes that Ford and Visteon have been engaged in corporate fraud.   All of the information which Sinn Féin is revealing today has been placed in the Assembly library for reference.   We have also furnished copies to the Pensions Regulator, the Minister for Employment and Learning, the Minister for Enterprise, Trade and Investment, and to the private company handling Visteon UK’s administration.    We will be drawing the attention of the New York City Comptroller and interested parties in the United States Congress to this scandal.     Full text of Sinn Féin’s contribution to todays debate.   Gerry Adams will open:   A cheann Chomhairle, ba mhaith liom labhairt inniu faoi Visteon Corporation.   Is doigh liom go bhfuil eolas tabhactach tugtha dom agus tá sé praithneach a meid eolas sin a phlé san áit seo   Ceann chomairle, I would like, on behalf of the Assembly, to welcome workers from the west Belfast Visteon who are here with us today.   They have conducted their campaign with dignity and unity.   They have staged a sit-in at the plant for the last 36 days.   As a result of these efforts and the public support for their campaign, the Visteon Corporation has been forced to negotiate a resolution.   The pay-off offered by Visteon goes some way to addressing the rights of their workers to redundancy packages. But even in this the Corporation has differentiated between workers.   Moreover, no effort has been made by Visteon or Ford to reinstate employment and manufacturing in Belfast.   Those companies still have to answer for the pension funds which belong to the workforce. The behaviour of the Visteon UK Board and of the Ford Motor company and their treatment of the workers here and in Britain, has been shameful.   I also believe that aspects of that behaviour amounts to fraud and corruption, and sharp practice and it is important that we highlight these matters, bring them to the attention of this Assembly, and seek to ensure that the relevant government and statutory agencies, including the Pensions Regulator, carry out the necessary rigorous assessments and investigations into the conduct of these companies.   The immediate background to the Visteon dispute began on 31st March when the directors of Visteon UK put their company into administration.   That day, 210 men and women employed at the Belfast plant of Visteon were told that their jobs ceased to exist   That information came by letter from the management of Visteon UK.   The statutory 90 day consultation was not afforded to the workers.   No information was given to them about their rights and entitlements.   They were denied any right of reply.   Moreover, their right to Ford terms and conditions, including the lifetime protection of their discretionary pension in payment increases, contained in the ‘Agreement governing the separation of the Ford Visteon organisation’, was binned by Visteon.   This was unacceptable and contemptible behaviour by the management of these two companies.   In light of this the workers rightly and courageously took over the plant and refused to leave until Ford and Visteon negotiated a satisfactory agreement on redundancy and pensions.   They refused to be cowed or intimidated by threat of legal action and lobbied and fought for their rights.   Their actions encouraged their union colleagues in Britain.   I want to congratulate the workers on their determined and principled stand against injustice and to commend them for the example they have set in defence of workers rights.   Ford and Visteon UK’s activities raise very serious concerns about the management of assets and pensions by both companies, including passing the burden for paying pensions onto the public purse (through the Payment Protection Fund).   Sinn Féin also has concerns about information provided by Visteon UK about the future plans for the Belfast plant and the use of government investment in new product lines.   We have provided this information to the Administrator.   Sinn Féin intends placing this information on the record in this debate.   It is too much for one member to present in the time available so my colleagues will continue until the full information has been provided.   Sinn Féin believes that the closure of Visteon UK plant in west Belfast has not been a reaction to unprecedented financial difficulties.   It has been the result, if not the objective, of strategic decision-making by the Ford motor company in conjunction with Visteon Corporation, including Visteon UK.   Visteon UK would not have existed but for Ford Motor Company.   The workforce mostly came from Ford.   The workers were transferred to Visteon under a ‘spin-off’ agreement in 2000.   That agreement was negotiated and signed by Ford Motor Company. The agreement which governed the formation of Visteon UK said:   “For the duration of their employment, terms and conditions of existing Ford employees, who transfer to Newco (aka Visteon) will mirror Ford conditions (including discretionary pension in payment increases) in their respective countries (lifetime protection)”   There have been claims that Ford has no responsibility to the workforce under the terms of this spin-off agreement.   Yet one of the signatories of the ‘spin-off’ agreement was J R Walker, the Vice President of Ford in Europe.   The agreement was faxed from his Ford office in Cologne, Germany on 25th January 2000.   The Belfast workers worked for Ford.   Some of them had given up to 30 years service to Ford, through the worst times of the conflict.   When they were presented with an assurance by Ford that they would have mirror terms and conditions, in employment and pensions, with lifetime protection, they agreed to the ‘spin-off’.   In Sinn Féin’s view Ford cannot evade its moral, ethical and contractual obligations to the workers.   It has a duty to ensure that workers, who have given loyal service, receive their full rights and entitlements.   Since 2000 the information shows that Visteon UK was not a company which lost its way during unexpected economic difficulties.   Of course, the prevailing economic circumstances are hostile to manufacturing, especially in the automotive industry.   However, it is clear that shortly after Ford established Visteon UK the run-down and closure of Belfast and other plants was already on their agenda.   Visteon UK never made a profit from the time of the ‘spin-off’.   In fact, the viability and profitability of the Visteon UK plant in Belfast was entirely in Ford’s hands.   Ford had been the owner of this plant.   It then became the sole customer of the Belfast plant.   In the case of another plant, Swansea, Visteon UK only secured the transfer of that to new owners Linamar because a sourcing agreement (for manufacture of global flywheels) was approved by the Ford President and CEO Alan Mulally.   If Ford helped to form Visteon UK, and then controlled supplies and sales, it is no accident that Visteon UK were struggling to become profitable.   In fact, it has been argued that by cynically creating a separation between Visteon UK as a parts company, from Ford as a car maker, Ford has benefited from increased competition for parts, thereby driving down costs.   It also ensured that loss making aspects of Ford production no longer appeared on Ford’s books!   This gave and gives Ford the appearance of being more profitable than it might otherwise be if it still had responsibility for the production of these car parts.   In addition, with the failure of Visteon UK, Ford hope to bury the cost of promises made to local workers in January 2000.   Sinn Féin’s primary concern is with the rights and entitlements of the workforce and sustaining local employment.   During meetings with Sinn Féin in 2005, we learned that Visteon UK was considering the position of its four plants. (Belfast, Basildon, Enfield and Swansea)   I/Gerry Adams visited the Belfast plant to meet with workers and management in December 2005.   At that time, Visteon UK were indicating that they expected to make a decision about the future of the Belfast plant by the end of March 2006.   Visteon UK’s management made clear that they wished to renegotiate workers’ terms and conditions, including the Ford agreement at ‘spin-off’.   Here, at Parliament Buildings in July 2006, I facilitated a meeting between the management and workforce.   It was agreed that the management and workers would reconvene “to commence a process to spell out in detail a viable future for the plant and address, explore and seek to resolve the concerns of the Belfast workforce”   However, information has come to light now that shows that Visteon UK were working to a different agenda.   In 2001, the year after spin-off, Visteon commissioned the ‘Stone study’ on the future of the Belfast plant.   The only three options considered were: closure in 2001; closure in 2007; or substantial reduction in the Belfast plant.   Visteon UK chose to shrink the plant and assets, which included all of the land on which the Belfast plant was based, were sold off.   Amounts of money accruing from these sales amounted to £114 million.   Meanwhile some components manufactured on site were moved to other locations.   Then Visteon UK leased part of their old site back.   All of this was consistent with the objective set out in the ‘Stone Study’ of 2001.   None of it represented an earnest attempt to consolidate the Belfast plant.   By 2007, Visteon formulated a confidential plan named ‘Project Protea’.   This stated that Belfast’s “geographical location” made it a financial liability.   The Project Protea strategy proposed to “engage Ford for assistance in transferring products to new locations”.   On the one of the main components manufactured in Belfast, the confidential document stated: “Fuel rails – This business is marginally profitable in Belfast……under Project Protea it will be transferred to the Visteon Port Elisabeth facility” which is in South Africa.   Another report which clearly signalled their ulterior agenda was Visteon UK’s confidential Cummins D3 strategy (dated February 2008).   This clearly reiterates Visteon’s intention to transfer manufacturing from Belfast to other locations, especially S Africa.   Project Cummins D3 was led by Steve Gawne of Visteon UK.   At around the same time, Visteon Corporation published its Annual report for end of year 2006.   That report stated: “In 2009 and beyond, we will have our restructuring mostly behind us and will begin to see the full benefits for our efforts to move Visteon to sustained profitability and a stronger global market position”   It is also clear from the documents available, that Ford shared Visteon’s ambitions to move manufacturing out of Belfast.   In a Ford Confidential paper titled “European Cycle Plan Actions 2005-2009” Ford scheduled their exit from certain manufacturing lines in Belfast and their intention to seek an alternative buyer for remaining product lines   A cheann Chomhairle, despite the fact that Visteon and Ford were examining a basis for closing the Belfast plant over several years they continued to seek and were given grants from government departments.   Visteon UK sought funding from Invest NI in 2003 for almost £110k of which £97,210 was paid for research and development of fuel rails.   That is the same product which Visteon has spent the last two years planning to move to South Africa.   Invest NI has said that its letter of offer to Visteon UK contains a clause precluding the company from exploiting this project outside the European Union without written consent from Invest NI.   Sinn Féin understands from our discussions with the Minister for Enterprise, Trade and Investment that she is examining grounds for clawing back this money.   It should also be noted that while the Belfast plant was owned by Ford, Invest NI’s predecessor IDB also invested public money.   At this time, exact details of the total amount of public money invested between Invest NI and IDB are not known and we are seeking to find this out.   Visteon Engineering Systems Ltd is another member of the Visteon family.   It has not been put into administration.   It was incorporated on 9th June 2007.   The chairman of the company is Steve Meszaros who is a vice-president of Visteon Corporation.   One of his fellow Directors of Visteon Engineering Systems is Len Drury, who was director of Human Resources in Visteon UK.   Subsequently, 148 managers chose to move their pensions out of Visteon UK and into a new pension scheme under Visteon Engineering Systems Ltd.   That asset transfer was scheduled to be complete during 2008.   Another new company called Automotive Products Ltd was incorporated on 4th February 2009.   This resembles the name given by Ford to its component supplier called Automotive Product Operation.   In 2000, that company was renamed Visteon.   The name and address of the main shareholder of this new Automotive Product company is Visteon International Holdings, with Eric Sachs and Michael Lewis authorising the documentation on behalf of Visteon.    The company shares the same address, same postcode and has the same company secretary as Visteon Engineering Systems.   One of the company directors is Stephen Gawne, former managing director of Visteon UK.   From the time of Visteon’s spin-off from Ford, workers were assured that their terms and conditions, including any redundancy or pension payments, would mirror those promised by Ford.   However, they were also told they had no option but to move their pension schemes to Visteon.   This now smacks of being an example of ‘sharp practice’, of being a confidence-trick on workers.   Management on the other hand were treated differently from ordinary workers.   A Cheann Chomhairle, it was clear as far back as 2003 that there were questions arising about the commitment of Visteon and Ford to meeting their pension obligations to employees in Visteon UK.   From near the outset there was a deficit of $49m in the Visteon UK pension plan.   In April 2008, the chair of the Visteon UK Trustees wrote to Visteon Corporation to remind its Board that the “transfer of funds from the Ford plans to the (Visteon UK) plan left the plan with a substantial deficit.”   The Chairperson reminded Visteon that commitments had been given “to sponsoring the plan as an ongoing concern… and to meeting fully its funding responsibilities, on a statutory and fiduciary basis”   In October 2007, company management were invited to move their pensions out of Visteon UK and into a new pension scheme under Visteon Engineering Systems Ltd.    148 managers chose to do so even as Visteon UK continued to examine options for closing plants and transferring products.   That asset transfer was scheduled to be completed during 2008.   Visteon did not engage the Pension Regulator in making this asset transfer.   In total, around £22m were transferred out of Visteon UK   Other assets were transferred out of the Visteon UK pension plan during 2008.    Ford and Visteon maintained communication about each others pension plan liabilities as restructuring of Visteon UK continued.   They also shared information about employees as well.   Why this was done remains to be explained.   However, in April 2008, it was confirmed at a meeting of the Trustees of the Pension Plan that around £18m was being transferred to Ford under a scheme called Firefly.   This divestiture clearly impacts on the assets available to the administrator now handling the company.   More importantly, the massive divestment arranged by Ford and Visteon from Visteon UK’s pension plan impinges on the workers.   How much of this was shared with, or indeed approved by, the Pensions Regulator is not clear.   But what is clear from available information is that vast sums of monies were moving out of the Visteon UK’s pension plan and into other companies during 2007 and 2008.   All when the future of the company was uncertain.   Also, knowledge and information was being shared about pensions and liabilities, amongst the same management of Visteon and Ford who were sharing knowledge and ambitions to close down Visteon UK.   At the beginning of March 2009, the same month that Visteon UK was put into administration, Visteon Corporation paid a performance bonus of an unspecified amount to 2,700 salaried workers worldwide.   That included the senior management of Visteon Corporation and Visteon UK. It was the final insult.   We know that information and documentation is under examination by the Pensions Regulator.   There is a case for a full investigation.   However, before any final assessment is made, it is imperative to establish whether any of those involved in confidential projects detrimental to the future of the Belfast, and Visteon UK, were also involved or aware of the transfer of assets out of the company.   A Cheann Chomhairle, at the beginning of this year, Visteon Corporation began a process which purported to be a feasibility study about the future of Visteon UK.   The parent company asked the managing director of Visteon UK to produce proposals by 31st March to ensure financial viability.   The feasibility study was cosmetic to cover the decision to close the Belfast plant and the other two remaining plants.   When Visteon UK asked Visteon Corporation for subvention, they knew what answer they would receive.   They knew that administration was next.   They knew they would not provide 90 day consultation.   They knew that they would try to pass responsibility for the pensions of existing and former workers onto the public purse.    Sinn Féin recognises very clearly, that there have been many job losses in recent times.   Many people are facing tough times in making ends meet.   Local businesses are being hurt together with local workers.   However, the Ford/Visteon scandal is not like any other job losses.   Sinn Fein believes that it is in the interest of the workers, their families and the communities from which they come, that a full and rigorous investigation by the proper authorities is carried out into this scandal.   Beyond the impact upon individual workers, or loss of jobs in manufacturing is a case study in global capitalism and malpractice   The Visteon Corporation has a declared stake in both Visteon Engineering Systems (VES) and Automotive Products.   It has confirmed that VES and Visteon UK were both part of the same corporate family.   The Visteon group makes parts for Ford car production.   In real life, if someone falsely claims marital separation from a partner in order to try and draw down social welfare, no effort is spared by the state in investigating benefit fraud.   In a legalistic, superficial and expedient way Ford and Visteon claim separation.   But when Ford talk to Visteon, they are looking at themselves in the mirror.   Their legal advisers presumably have advised on the legality of these manoeuvres.   In reality, Sinn Féin believes that Ford and Visteon have been engaged in corporate fraud.   This scandal has been a decade in the making.   It not only deserves but requires a rigorous and comprehensive investigation.   All of the information revealed today has been placed in the Assembly library for reference.   Sinn Féin has furnished copies to the Pensions Regulator, the Minister for Employment and Learning, the Minister for Enterprise, Trade and Investment, and to the private company handling Visteon UK’s administration.    We will be drawing the attention of the New York City Comptroller and interested parties in the United States Congress to this scandal.

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