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Alexander Dennis to keep sites open after £4m furlough pledge Alexander Dennis to keep sites open after £4m furlough pledge
(about 4 hours later)
John Swinney made the announcement at the company's Larbert siteJohn Swinney made the announcement at the company's Larbert site
Bus manufacturer Alexander Dennis says it will keep its Scottish sites open after the Scottish government pledged £4m towards a furlough scheme.Bus manufacturer Alexander Dennis says it will keep its Scottish sites open after the Scottish government pledged £4m towards a furlough scheme.
The company had previously set out plans to close its facilities in Falkirk and Larbert, with the loss of 400 jobs, and move production to Yorkshire.The company had previously set out plans to close its facilities in Falkirk and Larbert, with the loss of 400 jobs, and move production to Yorkshire.
First Minister John Swinney confirmed the support, which will need "evidence of sufficient orders to sustain its operations in Scotland" by the company.First Minister John Swinney confirmed the support, which will need "evidence of sufficient orders to sustain its operations in Scotland" by the company.
The furlough scheme will run for 26 weeks to enable Alexander Dennis to bring manufacturing back online.The furlough scheme will run for 26 weeks to enable Alexander Dennis to bring manufacturing back online.
The Scottish government will fund 80% of the scheme with Alexander Dennis providing the remainder.The Scottish government will fund 80% of the scheme with Alexander Dennis providing the remainder.
The furlough scheme - the first of its kind to receive Scottish government backing - will kick in when the firm signs a new order and will support staff between the signing of a deal and the beginning of work.The furlough scheme - the first of its kind to receive Scottish government backing - will kick in when the firm signs a new order and will support staff between the signing of a deal and the beginning of work.
Union members voted last week to back the furlough schemeUnion members voted last week to back the furlough scheme
On a visit to the bus company's site in Larbert, the first minister said: "The Scottish government wants to retain the manufacturing workforce of Alexander Dennis.On a visit to the bus company's site in Larbert, the first minister said: "The Scottish government wants to retain the manufacturing workforce of Alexander Dennis.
"My officials have discussed detailed terms with management and reached agreement on the principles of a company run furlough scheme."My officials have discussed detailed terms with management and reached agreement on the principles of a company run furlough scheme.
"This is intended to act as a bridge to a sustainable future for the company in Scotland."This is intended to act as a bridge to a sustainable future for the company in Scotland.
"During this period, training will also be offered by Scottish Enterprise.""During this period, training will also be offered by Scottish Enterprise."
Alexander Dennis said it had seen increased demand for its single and double-deck buses in recent weeks.Alexander Dennis said it had seen increased demand for its single and double-deck buses in recent weeks.
It said it was "confident in the placement of further orders to support Scottish manufacturing," but details remained commercially sensitive.It said it was "confident in the placement of further orders to support Scottish manufacturing," but details remained commercially sensitive.
The company's managing director Paul Davies said the announcement marked "a turning point" which would save "hundreds of jobs".The company's managing director Paul Davies said the announcement marked "a turning point" which would save "hundreds of jobs".
The company had planned to close its Scottish facilituesThe company had planned to close its Scottish facilitues
He said: "Together with our team members' acceptance of new terms and conditions through the trade union ballot, and the confidence we have in securing new orders, we will be able to keep our manufacturing sites in Larbert and Falkirk open and operational."He said: "Together with our team members' acceptance of new terms and conditions through the trade union ballot, and the confidence we have in securing new orders, we will be able to keep our manufacturing sites in Larbert and Falkirk open and operational."
The company said in June that it still needed to find orders for at least 300 buses a year to safeguard production in Falkirk over the long term.The company said in June that it still needed to find orders for at least 300 buses a year to safeguard production in Falkirk over the long term.
Under its original plans, Alexander Dennis had said it would consolidate its operations at a single location in Scarborough.Under its original plans, Alexander Dennis had said it would consolidate its operations at a single location in Scarborough.
The firm blamed increased competition from electric bus manufacturers in China for the decision, saying Chinese firms now have about 35% of the UK market.The firm blamed increased competition from electric bus manufacturers in China for the decision, saying Chinese firms now have about 35% of the UK market.
The furlough scheme will be managed by Alexander Dennis with financial support from Scottish government.The furlough scheme will be managed by Alexander Dennis with financial support from Scottish government.
The company said that 11 roles not directly linked to Scottish manufacturing remained at risk of redundancy.The company said that 11 roles not directly linked to Scottish manufacturing remained at risk of redundancy.
'Worked tirelessly'
A vote among members of the Unite union last week returned an 85% result in favour of the new furlough scheme.A vote among members of the Unite union last week returned an 85% result in favour of the new furlough scheme.
The union said that the next "immediate priority" was to secure new bus orders for the company to get the sites back up to full capacity.The union said that the next "immediate priority" was to secure new bus orders for the company to get the sites back up to full capacity.
Unite general secretary Sharon Graham said the union had "worked tirelessly" with its members, Alexander Dennis and the Scottish government to develop a rescue package.Unite general secretary Sharon Graham said the union had "worked tirelessly" with its members, Alexander Dennis and the Scottish government to develop a rescue package.
She said: "The announcement by the first minister that the Scottish government will support a company run furlough scheme backed up with public funds is a very positive development, and one we fully support."She said: "The announcement by the first minister that the Scottish government will support a company run furlough scheme backed up with public funds is a very positive development, and one we fully support."
Scottish Secretary Douglas Alexander also welcomed the company's decision.Scottish Secretary Douglas Alexander also welcomed the company's decision.
He said: "This will be relief to the talented workforce.He said: "This will be relief to the talented workforce.
"The UK government has been leading intensive work with partners, including the Scottish government, and actively encouraged the furlough scheme that has been announced today.""The UK government has been leading intensive work with partners, including the Scottish government, and actively encouraged the furlough scheme that has been announced today."
Industries judged to be too important to fail are getting more support, to ensure that they don't.
Governments are becoming more nimble in ensuring their survival. The steel and car sectors have been of particular concern, buffeted by international trading factors beyond their control.
But governments have chosen not to block the closure of two oil refineries, at Grangemouth and Lindsay in Lincolnshire, acknowledging that reduced use of fossil fuels is bringing some painful change. Saving some industries and not others is politically hard.
This time, it's a bus builder getting support, undercut by cheaper Chinese imports.
It matters because it makes the product that governments have said we'll need to use more.
It embodies technology and skills that governments don't want to lose. Manufacturing is no longer being left to the market.
But this is difficult policy, and it raises more questions. To spend up to £4m, it needs to be justifiable to public spending auditors. The hints of an uplift in the pipeline of orders may be commercially confidential now, but they need to be the real thing for accountability in future years.
This deal buys only six months, at an average rate of £10,000 per job protected - with the Scottish government paying 80% of pay, not including employers' pension or National Insurance contributions.
That's not much of the total pay bill. It assumes that some of these jobs must return to production and full pay within those six months. And after six months? Will there be more money found?
As the Alexander Dennis factory in Scarborough is the one that's seen most investment recently, how can governments ensure that HQ in Canada invests the amounts required to turn a short-term difficulty into long-term competitiveness?
Can Falkirk's buses ever be cheaper than China's?
If not, will longer-term government policy have to put barriers in place of Chinese imports?