Melrose under fire over plans to close GKN factory in Birmingham


Poland and France will benefit from the planned closure of GKN’s factory in Birmingham, with local plants taking on work currently carried out by 500 of the group’s UK employees, under plans being considered by its owner, Melrose.

Melrose, a private-equity group, announced plans in January to close the factory run by its GKN subsidiary in Erdington, Birmingham, in a blow to the embattled British manufacturing sector. The plant produces drivetrain components for petrol and diesel cars.

The proposals angered unions and local MPs because of previous assurances to the UK given by Melrose during its £8bn hostile takeover of GKN in 2018.

The plans, which are subject to mandatory consultations with employees, could lead to about four-fifths of Birmingham’s work being moved to a plant in Oleśnica, south-west Poland. The rest of the work could move to locations in France, people with knowledge of the plans told the Guardian.

Melrose confirmed that Poland manufactures similar products, but did not respond to questions about France.

Simon Peckham, the chief executive of the FTSE 100 company, apologised for the difficulties faced by workers in Birmingham, but did not respond directly three times when asked if work would move to the EU, at a hearing with MPs on the business select committee on Tuesday.

However, Peckham said the decision to close the factory was not linked to Brexit. He said it had lost £100m over a decade of consecutive losses.

Shrinking demand from its UK carmaking customers meant the factory had lost a quarter of its work. Another 40% was under threat in the move to electric cars, he said. Melrose had inherited GKN’s current manufacturing footprint from previous management, he added.

The Unite union alleged that Peckham had misled parliament in his description of the Birmingham plant’s manufacturing capabilities and by omitting to detail the proposals to move production.

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In a statement, the Unite national officer for automotive, Des Quinn, said Peckham should clarify his evidence.

Jack Dromey, the Labour MP for the Erdington constituency where the plant is located, said: “It’s not true that the Chester Road plant does not manufacture for the automotive industry, and it is the sad truth that the company intends to export British jobs to Europe.”

A Melrose spokesperson said: “No matter how often these unfounded allegations are trotted out by Mr Dromey, it doesn’t make them true.”

Melrose said Peckham was unable to give details on its plans for the work done in Birmingham because they were under consultation with workers.

The company strongly denied the claim that Peckham misled parliament and said it had not breached its assurances.