multinational closure and the case of massey-ferguson, kilmarnock

Multinational closure and the case of Massey- Ferguson, Kilrnarnock

Here the authors examine the reasons under- lying the closure of a large manufacturing plant of a multinational corporation, the mechanics of that closure and the apparent inability of conventional bargaining and industrial relations practices to alter the course of events.

COTLAND was probably host to the first S multinational subsidiary in the world economy, following the establishment of the Singer Sewing Machine Company’s Glasgow plant in 1868. Since th.at time, Scotland has continued a s a major location of multinational capital within Europe, a process which accelerated faster than in the rest of Britain in the period after 1945. By 1975, US-owned firms accounted for 14% of total Scottish manufacturing employment, and a further 3% was contained in foreign corporations (MNCs) from other countries. This fails to consider the role of English-based MNCs, whose view of Scotland as an outpost may be just as real and significant to company management and to the Scots.

To peripheral economies such as Scotland the attractions of inducing foreign investment are considerable. It affords a relatively swift way of injecting a dynamic into the local economy. But at times of international restructuring, and particularly in recession, these features become a source of vulnerability. The 1970s saw the onset of a reorganisation by international capital that took a wide range of

0 Simon Henderson is Tutor Organiser for the Un- employed in the WEA, Northern District, and Christopher Baldry, Nigel Haworth and Harvey Ramsay are Lecturers in Industrial Relations at the University of Strathclyde.

companies into the EEC on a more centralised basis, and away from Scotland. Moreover, as the recession intensified, so this process was accelerated, as MNCs rationalised by lopping off unwanted extremities to meet the demands of their internal crises. Thus from the late 1970s Scotland has witnessed the total de- parture or severe curtailment of operations in a growing list of major corporations, including Monsanto, SKF, Lawsons (Unilever), Bur- roughs, Hoover, Singer, Goodyear, Dunlop, Chrysler/Peugeot-Citroen, NCS, Honeywell, Plessey and British Leyland. In 1975, 108,200 people worked in foreign-owned units in Scotland; by 1980 this had fallen to 80,457, a net loss of almost 30,000 jobs[ll.

This paper examines some of the major factors behind and features of just one such MNC closure, that of the Massey-Ferguson combine harvester plant at Kilmarnock. It will look at why one MNC chose to shut a particular plant, how it did so successfully, and at the revealed possibilities for and limitations on opposition to closure by the workforce, the unions and , less directly, by the government. In the process a large number of issues relating to industrial relations analysis in general and to labour relations in MNCs in particular will arise. These will be made explicit and briefly explored in the final section of the paper[2].

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Massey-Ferguson - a corporation in crisis

Massey-Ferguson is a Canadian-owned MNC which for decades has dominated the world agricultural machinery market. By 1978 it was in sales terms the largest non-communist farm and agricultural machinery manufacturer in the world, employing some 67,000 people. The story of the growth of MF is the story of essentially international acquisition and expansion - the company has never relied on a large home base from which to expand but rather has been international in its operations almost from its inceptionL31.

In 1938 the Canadian Massey-Harris company had developed the world’s first self-pro- pelled combine harvester and twenty years later the company scored a considerable market coup by merging with the firm of Harry Ferguson Ltd. and thus acquiring the Fer- guson-system tractor (the forerunner of most modern tractors), then being made in Britain at the Standard Motor Company’s works at Coventry. One year later, in 1959, it gained a versatile power source by purchasing the British company of Perkins Diesel Engines (PDE) of Peterborough.

This triad of tractors, combines and engines proved to be a world-beater and the following years saw a rapid growth in the company’s manufacturing operations. Fearing competition from its North American rivals it deliberately left the home market to its competitors and , like many corporations in the upswing of the 1960s, embarked on a programme of rapid international expansion. Europe, and especially the UK, became the major manufacturing base, but by the 1970s MF was producing in 30 countries and selling in 190. How- ever, probably less than half of these manufacturing plants were wholly-owned by MF or PDE, the rest being operated by licencees and associates, or as prestigious joint ventures with overseas governments such as Pakistan and the Philippines. The attraction of these expanding Third World markets was that they held out the prospect of a limited but vigorous period of ‘new’ demand for agricultural machinery instead of the fluctuating ‘replace- ment’ demand characteristic of well-established mechanised agricultures.

The bulk of sales however remained in the developed countries, with Europe taking just under 40% of all world sales. Only 30% of

1977 sales was going to North America (and only 7% going to Canada).

Thus MF was, and is, its international operations - it could not contract to any home base in time of crisis.

And crisis of some sort has been faced by the corporation at increasingly frequent intervals over the past decade[4]. To some extent the fluctuating and seasonal nature of demand for agricultural machinery may have contributed to periodic crises, but the major reason undoubtedly lies in a series of managerial mistakes and errors of corporate strategy.

Since 1948 MF (and Massey-Harris before it) had been controlled by a Canadian financial holding company, the Argus Corporation, which until 1981 held around 17% of MF common stock. Thus for most of the post-war period ultimate control of the company rested not with directors with a background of industrial management, but with financiers (Argus was itself controlled by another holding company, Ravelston). It may be this factor which led MF to over-rely on the finance market to fuel its rapid expansion in the 1960s. for instead of retained profit or ordinary share issue, much of MFs growth was financed by bank borrowing. The advantages of this were that it was quick and it boosted the return on equity (i.e. ordinary shares), both by providing money for dividends and by spreading the latter over relatively fewer equity dollars than in other companies. The disadvantage was that it provided little in the way of company funds to be used in time of crisis - an alarmingly high proportion of the funds belonged to other people (i.e. banks) who were apt to start asking for them back if the future looked shaky.

At the end of 1977 the future for MF looked very shaky indeed, due to an unlucky conver- gence of three factors. The demand for agricultural machinery had undergone a severe downturn due both to the general recession and, paradoxically, to the expansion of Euro- pean sales by MF and its competitors in the late 1960s and early 1970s. This had resulted in a glut of used equipment (especially tractors), which was further boosted by the threat of cheaper Eastern bloc machines starting to enter Western markets (including a threat from the giant Ursus plant set up by MF for the Polish government).

At the same time as this slump in demand, a series of political reversals in key markets and manufacturing centres around the world piled on the trouble for MF; these included deterior-

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Multinational closure and the case of Massey Ferguson, Kilmarnock

ating conditions in Turkey (a major tractor market) and later Iran, and the collapse of the Latin American market due to astronomically high interest rates in the key producing countries of Brazil and Argentina.

The third factor was a series of costly corporate investment mistakes, the most notable of which was the decision to enter the construction machinery industry through the purchase in 1974 of the German firm of Rheinstahl Hanomag. On paper this seemed a logical way of both finding a product with a less seasonable demand, but which used many of the parts and engines of the existing agricultural machinery; however, in practice the decision proved disastrous. The mistake of initially attempting to sell the equipment through the company’s existing farm machinery network (which proved unsuitable to handle the essentially urban construction market), a reversal of the values of the Deutschmark against the dollar, and the arrival on the market of a Japanese competitor (Komatsu) all rapidly contrived to make the construction equipment division of MF begin to bleed money at a drastic rate - in the first nine months of 1978 it clocked up a loss of $39 million.

It was not the losses alone that created the crisis however, but rather the fact that they increased the financial vulnerability created by the gearing of the company’s debt-equity ration mentioned above. In 1978 MF’s long term debt stood at $658 million which, plus another $537 million in short term bank borrowings, gave the firm a total debt of $1.2 billion, equity repre- senting only 3 5 % . This was seen as danger- ously low, about half what it should have been in normal European and North American practice, Rising European and American interest rates meant that the company was committed to very high levels of interest repayments which could not be matched by trading profit but only financed out of past earnings. At the end of 1977 MF shares on the Toronto stock ex- change fell from their 1976 all-time high level of $32 to the 1971 level of $13; by September 1978 this had fallen still further to $11 and MF suspended payment of dividend.

Now, fairly obviously, MF was under considerable pressure to d o something to halt the slide. However, the action which it eventually took must be understood in the light of who was applying the pressure. These parties were:

1. The banks, who threatened to recall their loans and curtail any future financing unless the company could show that it was taking a firm

grip on the situation by measures such as real- ising some of its assets to give itself more liquid funds.

2. The Argus Corporation, who had seen the value of its MF shareholding scythed in half from $90 million to under $40 million. Although Argus was able to buy up more MF shares at the new cheap price, its main aims were twofold: (a) to return MF to profitable trading, and (b) to reduce the debt ratio in order to restore the confidence necessary to attract further capital inputs from investors. Following a series of intricate board room purges in which several oldtimers were pro- moted sideways or forced to resign, the new head of Argus, Conrad Black, rapidly installed himself as chairman of the MF board and appointed a new president, Victor Rice. The institutional stage was thus set for MF to announce the sort of policies that the banks wanted to hear[51.

Basically these consisted immediately of short-time working or temporary shut-down in several of its major plants in order to run down stocks, and in the long-term of embarking on a programme of redundancies through the selling of peripheral and loss-making activities (such as Hanomag), and the rationalisation of production in the retrenched core of tractors, combines and engines. The aim was to cut the company’s labour force fairly quickly by 1 4 % (some 9,000 employees) and , in the words of the new chairman, Victor Rice, to generate ‘substantial sums of cash’. The company esti- mated that total layoffs in 1978 would generate a saving of $100 million in production costs.

However, MF was limited in its liability to implement this rationalisation programme by the very fact that it had set up so many of its international operations as joint ownerships with overseas governments and concession- aries, in many of which MF had only minority holdings. Thus the finger pointed at tractor and combine plants in North America and Europe. One of these was the combine harvester plant at Kilmarnock in Ayrshire.

Kilmarnock This, then, was the process whereby the

company came to consider the possibility of the termination of its operations at Kilmarnock. At this stage we can conclude that the reasons why a MNC chooses initially to run down a particular plant can be less to d o with any glaring non-viability of that plant than with a desperate

effort to correct mistakes made elsewhere in the multi-product empire; in this case clearly the MF losses and ensuing crisis had little to d o with the actual trading fortunes of combine harvesters and even less to d o with the position of the Kilmarnock plant.

The factory had been set up in 1949, when MF had been directed to Ayrshire by the Attlee government, and was originally a multi-product plant turning out a full range of farm machinery. In the 1960s, however, the design department had been moved to Coventry (from where it later moved to Paris), and production had been specialised around medium- sized combine harvesters only. By 1978 the plant was the only factory in the UK making combine harvesters, exporting 6 0 % of its output, and was one of the largest employers in the Kilmarnock area with a payroll of some 1,600 (itself a drop from the peak period in the 1960s when employees topped 2,000).

Alarm bells had begun to sound for the Kil- marnock workforce in May 1978 when, following the company’s half-year results, some redundancies had been announced in several UK plants, including 8 7 at Kilmarnock. By the summer Kilmarnock was only working the equivalent of two weeks in four. Union representatives from MF plants throughout the UK held a series of meetings with ministers of the Labour government then in office to discuss the downturn in the market share of the UK plants and to examine the possibilities of the Ministry for Overseas Development giving some assistance to boost agricultural machinery for the Third World.

This initial concern by the MF workforce in Britain was met by a series of placatory state- ments from a variety of quarters. In August the Minister of Industry felt able to tell the unions that he was ‘satisfied that the company have n o plans to reduce the output of their UK operations permanently’, and in the same month the company assured a meeting of the Com- bined Staff Unions that the ‘redundancy programme in the UK . . . is now virtually complete’. Despite these assurances many of the stewards at Kilmarnock were far from surprised when, barely one month later, in September 1978, the company announced to the Kilmar- nock workforce that it was going to conduct a ‘feasibility study’ into the rationalisation of combine harvester production between its two major European combine plants at Kilmarnock and Marquette in northern France. The almost

universal assumption at the Ayrshire plant was that the result of this study was a foregone con- clusion; an assumption apparently confirmed when the company refused to let the unions take part in the study.

The Secretary of State for Scotland responded to these vocalised forebodings by tell- ing the stewards that the company had convinced him that the study was a genuine one and that n o final decision had been made. The workforce, however, had already begun to plan in anticipation of an unfavourable out- come, a decision that also seemed fully justified when, in five weeks instead of the promised three months, the company announced the result of the study. At a meeting of the Joint Shop Stewards Committee the management flashed at the bemused stewards a gloomy sequence of slides of statistical tables and plummeting graphs that ostensibly demon- strated the necessity of locating all combine production in northern France,

The workforce At the beginning of the subsequent nego-

tiating and campaigning the workforce appeared to be in a relatively strong position compared to that of other plants facing closure. Levels of union membership were very high, represented in a total of seven manual and four staff unions, of which the most important numerically were AUEW(ES) and APEX res- pectively. The MF plant traditionally paid some of the highest wages in the area, achieved in the past and maintained by militant action and strong shopfloor organisation. When the feasibility study was announced the JSSC rapidly set up a smaller co-ordinating or action committee to organise the campaign against the company’s plans, containing representatives from all the manual and staff unions.

The JSSC had kept a copious dossier on the company’s performance and activities (to which our research is considerably indebted) and had above-average links with MF plants both in the UK and abroad.

Outside the plant, the national MF Combine Committee met regularly during 1978 and pledged support against closure, and in addition the co-ordinating committee was able (through a French-speaking secretary at the plant who undertook translation for them) to make contact with the unions at Marquette, and representatives from Kilmarnock and the Marquette CGT held several meetings both in

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London and at the French factory. The committee also sent representatives to Rome for a conference attended by MF delegates from France, Italy and the UK.

Thus the co-ordinating committee, both through their own monitoring and via this information network, were well informed about Massey’s corporate activities. They were also very well aware of strategies likely to be adopted by a multinational company to weaken the position of a particular sector of its workforce, including transfer pricing, sub-con- tractng and the playing off of one plant against another.

One tactic which the committee were especially on guard against in the early stages of the campaign was managerial provocation of industrial action. There were definite pre- cedents for this, including the BL closure at Speke[61 in May of that year and several other instances occurring in Scotland in the early months of the campaign. For example, in the Goodyear Tyres’ Drumchapel closure and the eventual total shutdown of Singer’s, Clyde- bank, both in February 1979, the closure had been announced, or partial closure had been made total closure, directly following a stoppage of work. As taken up by the media these cases were invariably interpreted in terms of the workers being responsible for their own (and fellow workers’) redundancy. Thus the co-ordinating committee were on the lookout for suspected trigger incidents and on several occasions persuaded sections of the workforce to exercise considerable restraint in case industrial action at that stage might prejudice the overall campaign.

In this campaign the co-ordinating committee could count on a considerable amount of support from various quarters, both trade union and political. In the first place, as has been indicated, they had the initial support of the workforce who not only refrained from collective action on the committee’s request, but would have undoubtedly taken such action if they had been so requested. Kilmarnock also had the support of other MF plants in the UK and also from the CGT in Marquette. Political support came from the local Kilmarnock and Loudon District Council, who funded a special train and mass lobby of Parliament, Strathclyde Regional Council, who commissioned its own study from the Strathclyde Business School to show the likely economic effects of closure in the area, and , up to March 1979, from the

Labour Government. In February the AUEW were informed that the Secretary of State for Scotland would give ‘sympathetic consider- ation to government financial assistance i f , by that means, jobs can be secured at Kil- marnock’.

More significantly for the purposes of this paper, the Scottish TUC responded to a request from the workforce and through its Trade Union Research Unit set up a research team to examine critically the feasibility study as soon as its conclusions had been announced. The research team’s counter-report to the co- ordinating committee concluded not only that (for reasons already outlined in this paper) Kilmarnock was not a major contributory factor in the company’s crisis, but also that, on the company’s own figures (and more specifically even on those selected for use in the feasibility study conclusions) it was cheaper to make combines in Kilmarnock than it was in Mar- quette.

There is n o doubt that this demolition of the feasibility study came at a critical time for the co-ordinating committee; despite much talk of resistance there had been a certain amount of fatalism in some quarters about the non-viability of Kilmarnock. The counter-report injected new life into the campaign against closure - at last the committee had some con- crete arguments they could bargain with.

Having said all this, how was it then that closure still took place despite these apparent strengths on the part of the workforce?

Firstly, after March 1979 and the change of government, even the faintest possibillity of government financial intervention dis- appeared. Secondly, there were, in addition to the strengths, several areas of vulnerability. The workforce was an old one , many of the workers having been with the company since the 1950s, and the longer the negotiations dragged out, and the more one deadline was replaced by another, the greater the stewards felt was the likelihood that the older workers would opt for the redundancy money (and rumours of just what the handout would be were rife in the plant in the months before closure).

These factors, however, are only incidental features of the closure. Of more fundamental

The four authors of this paper made up the TURU(S) research team. A fifth member (Frank Harrigan) was involved in the research and support work but is not responsible for the analysis offered in this paper.

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concern is the question of just what strategies unions can realistically adopt to combat closure. By the time the research team was asked in, the workforce had already narrowed its goals considerably. Firstly, it had rejected the idea of an alternative product and gone for the retention of combine production. In aiming for this goal it had been rejected (via the co- ordinating committee) the idea of setting up any sort of worker co-operative. Thus the strategy was wholly aimed at (if persuading Massey-Ferguson itself that it was mistaken in its wish to close the plant (and this basically formed the terms of reference given to the STUC research team) and, (ii) later in the pro- ceedings when this did not seem to be having any effect, of trying to find a buyer for the plant.

The question must then be raised as to whether, in pursuing the goal of keeping Massey’s making combines in Ayrshire, the union side may have placed too great a reliance on the facts and the apparent logic of their case, as set out in the research team’s counter-report and the contributions of the unions’ research departments, to the extent that more traditional means of emphasising the arguments were pushed into the background.

For the company did not necessarily accept this logic - its arguments were based on its own internal logic, which was rooted in very different premises.

Management rationale and policy

The crucial thing to note about the way in which MF management closed the plant is that, to all outward appearances, they played it by the rules, their actions agreeing with all the codes of conduct on bargaining and recom- mended safeguards against the overt pre- judicial wielding of power by multinational giants issued by both national governments and international bodies such as the ILO and OECD.

The ILO guidelines for example place emphasis especially on establishing consult- ation arrangements between MNCs, workers and their representatives ‘for regular consult- ation on matters of mutual concern’, and on the need for the disclosure of appropriate information:

‘Multinational enterprises should provide workers’ representatives with information required for

meaningful negotiations with the entity involved and , , . to enable them to obtain a true and fair view of the performance of the entity or, where appropriate of the enterprise as a whole’[71.

The OECD’s proposals take on board much of the same phraseology. They also call for pub- lication of ‘pertinent information’ which is to include the structure of the enterprise, the geographical and product distribution of its operations, operating results broken down by geographical and product area, significant new capital developments, sources and uses of funds, employees, research and development expenditure, intra-group pricing, and account- ing poIicies[81.

This general approach is taken up more specifically in relation to redundancy by the British Government’s own Employment Pro- tection Act. This again places great stress on the requirement of employers to consult with the appropriate trade unions ‘at the earliest opportunity’ or ‘as soon as there is a likelihood that a redundancy will occur’, and also stresses the necessity for the disclosure of information including ‘the reasons for the proposals’ (i.e. redundancies). The Act goes on to say that once the employer has informed the trade unions of its plans and given them the appropriate information, if the representatives then reply to the employer ‘the employer must consider any points they make and reply to them and give reasons for rejecting any of them’[9].

All told, these constitute an impressive- sounding and stern set of obligations and potential restraints on companies bent on closure. If we now look at the actions of MF at Kilmarnock in the light of these codes the performance of MF management initially looks quite impressive. Indeed, in many respects MF appears to have gone well beyond the common practice of private sector employees, MNCs or otherwise, in its openness to presentation and discussion of its proposals to workers’ representatives.

Firstly, as mentioned above, the company gave Kilmarnock stewards a slide presentation of the facts and figures of the conclusions of the feasibility study. These slides were then made available as a document for union scrutiny, purporting to be a detailed and definitive study of the costs involved in different production options which showed clearly that any decision which maintained combine production in Kii- marnock was markedly more expensive than those transferring some or all production to Marquette.

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Secondly, the company offered the possibility of a compromise which they claimed would save about one third of the Kilmarnock jobs by transferring production of a baler from France to Scotland. This, they argued, would be more costly than pulling out of Kilmarnock altogether, but was justified by the ‘social res- ponsibility’ which the company felt to consider the direct and indirect repercussions of their withdrawal on the local labour market and economy.

Thirdly, the company undertook a series of negotiating meetings with the union side, and took the trouble to respond with reasoned answers to criticisms of their decision. The union reply to the feasibility study, based on the analysis by the STUC research team and the unions’ research departments, was heard on 2nd February, 1979, just over three months after the management announcement. Man- agement’s counter-reply, including some information requested by the unions, ‘was not dis- cussed until May, thus taking longer in the formulation than the feasibility study itself. A series of meetings and communications with government representatives also took place. The unions’ second reply to management was also listened to, and finally matters were resub- mitted to the top for judgment, t o the chairman, Victor Rice. Rice came to Britain and met a delegation of the unions to hear the case himself. It was November 1979 before the final confirmation of the decision to close Kilmar- nock was announced, just over a year after the preparation of the feasibility study. There were then extensive negotiations over redundancy terms, in which a number of major concessions to union demands were made. Closure finally took place on 15th February, 1980.

One final development apparently in the company’s favour was that major efforts were undertaken, at MF expense, to find alternative employers to take over the site. Management consultants were hired to carry out a work- search, with extensive international pursuit of possible purchasers[lOl. The company de- clared themselves ready to leave a great deal of the plant’s equipment behind for any new user.

Co-ordinating Committee representatives were included on the committee planning the search, the presentation of the factory’s capa- bilities and the evaluation of any approaches that resulted. In the event, when n o buyer was found, MF provided the finance to set up a new enterprise, Moorfield Manufacturing Ltd., which would employ at least a small part of the

workforce and wlu ld undertake subcontract work for other firms. This company still sur- vives, with an important part of its work reputedly being provided by sub-contract work from MF itself.

So, on the face of it, MF‘s behaviour over the closure of Kilmarnock appears to paint the picture of a company well aware of and living up to, its social responsibilities. However, if we look at the same events from the viewpoint of labour, and include some details of the behind- the-scenes activity, then this rosy picture rapidly fades.

Firstly, given the way, according to the research team’s analysis, in which the proposal t o rationalise European combine production came about, and the rationality of finance capital which guided it, the meaningfulness of any of the ‘discussions’ with the unions be- comes virtually zero.

Despite periodic MF claims (repeated in January 1981 by Rice) that their operations are decentralised with considerable autonomy given to local management, the direction of matters from Toronto is evident. Several times during the MF 1980-81 crisis, the British news- papers described MF as a more British than a Canadian company, observing that British employees outnumbered Canadians almost three to one. To British workers, however, this observation is irrelevant; management strategy and the rationale behind it is seen to be for- mulated in Canada, and by people whose interests are not in those they employ, nor even the specific products they make, but in profits and financial viability. The spatial distance, the organisational distance, and the material distance between the political economies of labour and capital by which options are evaluated all worked to put MF management decisions beyond the reach of labour’s influencell 11.

In a sense this, in itself, is enough to close the discussion. But there is some value in looking more closely at events in the Kilmarnock case. The feasibility study, the research team argued, was a post-hoc justification of a decision taken for financial (and chiefly cosmetic) reasons. It was primarily a propaganda exercise to under- mine labour and government resistance. When the research team examined it closely, we found it to be a remarkably inept document qua evaluation of the options. Its method of comparing the plants was consistently and heavily weighted against Kilrnarnock; it failed to provide the kind of projections and tirne-dis-

counted calculations that would be considered necessary for such a study by any accountant or economist; and the restriction of the options it considered also seems invalid and inequitable for Kilmarnocks case.

These, and numerous other criticisms, were put in detail to the company, but the company’s ‘replies’ never made any serious attempt to confront them, and at the end , in announcing closure, Rice merely asserted that management remained convinced by the original study. In fact we cannot say that MF ‘negotiated’ at all in any real sense; yet the evidence of this remains concealed from the outside observer, to whom the appearance is still likely to be one of extensive bargaining having taken place,

Other factors, partly mentioned already, help to further qualify this outward appearance, such a s the refusal to allow the unions to take part in the feasibility study (though whether this would have helped the unions is debatable), the refusal to release the study’s text without considerable pressure from the stewards, and the fact that key information was never released, above all on unit costs. When the unions used contacts with other MF plants to try to obtain this information they discovered that such data were skilfully hidden in the interstices of the company records, so that only a handful of senior head office managers would be able to make the calculations. Demands for such information were ignored, or met with surrogates which were found to be insignificant or irrelevant.

The management’s ‘social conscience’ offer of bringing the baler to Kilmarnock was from the start seen as a sop to appease the government and unions. The stewards, on the basis of past experience of making balers, argued that it would provide work for far fewer workers than the company claimed, that it could never provide security for the plant and could be with- drawn at short notice to complete a less troublesome two-stage closure. In the event, when the market for balers turned down in 1979, the company concluded that this option was no longer viable. It can, therefore, hardly be seen as a serious concession.

Meanwhile, the mood of the stewards inside MF became more irate as time went on , be- cause of what they saw as a series of management attempts to ‘sabotage’ the plant and pro- voke a strike, and that in what seemed to be a growing multinational tradition of ‘dirty tricks’ in Scotland. For example, work was subcon-

tracted out which could have been done in plant, where men and machines stood idle. Line speeds would suddenly be cut when orders remained uncompleted, affecting both earnings and indicators of the plant’s performance. Inexplicably, overtime would be given to some groups of workers when work was still short, and when others could not even make bonus in normal hours due to lack of work. This caused inevitable tensions between groups and for stewards, trying to explain to the bene- ficiaries why overtime was undesirable. Fires were lit constantly on a multitude of petty issues, testing shop steward stamina and patience. Lay-offs were announced without warning, and the unions had to fight to forestall these (and the further divisions they would create) without using the reserves of action they felt management wanted to drain.

Perhaps the most difficult task is to evaluate the role played by the management consultants, Inbucon. By the late stage they were called in, the main period of the research team’s involvement was over, and we could not observe how far the arguments which their agents advanced permeated the perceptions of key members of the co-ordinating committee. It is again hard not to be sceptical of their role, and of the purpose of MF in hiring them.

Ostensibly they were called in to examine and propose reforms for payment systems and industrial relations in the Kilmarnock plant - but such an expensive operation in a plant scheduled for closure seems to make little sense. However, in conversation with the consultants, the co-ordinating committee seems to have encountered the idea of asking management why they had not conducted a work- search. Management, it seems, responded with remarkable willingness and alacrity and agreed to fund Inbucon for this further task. The committee felt some suspicions, but felt that having made the request they could hardly abstain from co-operating in consequences. Thus they were drawn into the activities of the work-search and so into looking for solutions to M F s withdrawal which lay outside resistance to the ending of combine production.

In retrospect therefore, Inbucon seem to have been a sophisticated flypaper, though how important, relative to other factors, their role was in defusing active resistance to closure can only be guessed at (and opinions differ widely among individuals a t MF who have given us their post mortems). To the more cynical of the ex-employees, the new com-


pany, Moorfield, seemed a convenient source of cheap, untroublesome and flexible labour, and how its workforce was selected remains a matter of some interest. A fuller assessment of Moorfield in its own right still remains to be done, however, and n o adequate judgement can be advanced here.

Some conclusions The conclusions to be drawn from this case

study are, with regard to the behaviour of MF, fairly clear, but with regard to the lessons to be learned and future strategy on the part of other workgroups facing closure, less so.

There is little evidence that MF‘s conformity to most of the formal requirements of consult- ation and negotiation and disclosure offered any major advantages to the workers at Kil- marnock. The nature of the decisions made and the way they were implemented was such that the outward manifestations of company responsiveness gave little or n o purchase on the political economy of the company’s actions; ‘industrial democracy’ here proved to be a hollow shell, containing little of substance [121.

Only effective union power could have used the information provided by STUC and union research to any advantage. The question is to what end should that union power have been directed? The debilitating effects of the Inbucon- inspired work-search perhaps validates the earlier decision of the co-ordinating committee to avoid looking at ‘alternative plans’. On the other hand a proposal for an alternative product drawn up by the workforce on their own terms early in the campaign may have been more advantageous than a last minute scramble to find an outside buyer or buyers. Similarly, the idea of a factory occupation had been rejected as unlikely to succeed; a year later the women of Lee jeans at Greenock suc- ceeded, through an occupation, in both retain- ing their product and finding a new owner. It is unwise to generalise from these examples - we are talking about a different product, a different market and a differently-structured workforce. The point is that there is now quite a range of strategies open to a workforce fighting mass redundancy but at some stage that range has to be narrowed down to two or three options.

A further complicating factor in this choice really concerns the difference in the way that labour power is seen by the company and the

way it is experienced by the workforce. Capital treats labour as a homogeneous entity; in the case of a MNC it may not matter whether that labour is located in Scotland, France or the Sudan . For the workers, however, it is just these locational differences which form the usual parameters for action - workers experience themselves primarily as members of local labour forces.

Thus when a company takes an action whose effects spread beyond the bounds of the local labour force, the reaction by the workforce can take one of two contradictory forms - either a purely local strategy to safeguard the interests of that group irrespective of the effects on other groups within the company, or an attempt to transcend the bounds of plant location and to include within their action framework the other components of the company’s workforce. The ‘extended’ strategy can have two components: the ruling out of action which benefits one’s own plant or group at the expense of other plants within the company, and the attempt to include workers in other locations in any action takenIl31.

In practical terms this conflict between local and extended strategies was well illustrated at Kilmarnock. The importance of ruling out any solution at the expense of workers’ jobs elsewhere was stressed both by the co-ordinating committee and the Marquette CGT (and also implicitly, it must be admitted, by ourselves in the way we constructed the reply to the company’s figures). In contrast, the AUEW national official who led the negotiations at the NJC was inclined to float the idea (using our figures) of shifting all combine production to Kilmarnock instead of Marquette and , at one notable meeting of the JSSC, spent some time emphasising the alleged unreliability of the French CGT, and the fact that they only organised a minority of the Marquette workforce and thus would be unable to deliver the goods in terms of supportive action anyway.

Now in one sense this latter point is important, as it indicates the potential error of mistaking communication for organisation. If o n e re-examines the list of alleged union strengths outlined earlier, it can be seen that in many cases they amount to little more than ‘contacts’: one union official has a contact with a government department, the workforce has contacts with the French workers, ‘our representatives were received very well by such-and- such a committee’ and so on .

Realistically, it must be asked whether this

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sort of network - typical of union attempts to broaden the base of action - can ever really hope to be capable of launching a counter- offensive against an MNC which is bent on closure. The network is essentially a communications network, and we have mentioned before that even here essential information remains company property; for example, no one in the Perkins shop steward committee at Peterborough had euer been able to discover the unit cost of a Perkins engine (an obvious source of transfer pricing within the MF empire). The implications for those who view the emergence of effective international unionism as almost inevitable are salutory; this instead gives credence to the arguments that stress the limits of developments in labour’s response. Let us pursue this point a little further I14l.

It may be argued, we think, that case studies such as our own cast a shadow over any assumption that a ‘pluralist’ system with a ‘web of rules’ is an inevitable, stable and developing feature of modern capitalism. For such a notion to have any validity it would be necessary to suppose that multinational corporate power will automatically call forth countervailing power. This can come from two sources in the pluralist model - the unions and the State. The former requires the emergence of international labour solidarity on an increasingly co- ordinated and effective basis. The latter entails unified action by nation states to formulate, agree and enforce controls to redress any sur- viving imbalance.

Our arguments suggest that although it is widely supposed such a balance will come about, this is based on ill-founded rhetoric and assertion that carries little ccnviction. The logic of collective trans-frontier activity for labour is easy to see from a detached position, but for each group of workers seeking survival or just comfort the distances are far greater and the conflicts of interests far greater. Neither Kil- marnock nor Marquette workers wanted to benefit at the other’s expense - but neither would fight not to do so, and perhaps say goodbye to their own jobs. In n o case of which we are aware (including the much-vaunted Dunlop-Pirelli combine) has international co- operation been successfully sustained.

Nor is the idea of supranational bodies able to contain the power of international capital a potent one. Again such bodies being torn by national interests lack the coherence that a corporation has, since each country will be seeking

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to induce investment that, at the time of inflow at least, is economically attractive. The UN, ILO and OECD are quite unable to muster en- forceable sanctions that would daunt MNCs, and even the EEC is unlikely to find sufficient unity of purpose and effective will among its members to affect more than a fringe of events. This comparative powerlessness is reinforced by our observations on the enforceability of codes of conduct, and undermines confidence in the response to MNCs even before the fundamental question is considered of the nature of the States involved in these bodies, the economic logic they accept and express, and the interests that consequently govern their actions.

A situation of closure tests ideas of balanced power to their limits and SO is particularly valu- able in showing their inadequacy. Yet rundown and closure is now so common as to be a cen- tral feature of labour relations, whether by action, threat or fear. Contrary to one recent claim, it is not only in the U S that unions fear the job loss impact of MNCs[l51. British unions have long worried about the effect of the strongly international activities of British capital. But the modern strategies of MNCs, particularly when recession raises the pace of restructuring, makes job losses a key concern to labour everywhere. Recent research has confirmed the highly mobile nature of capital, and its willingness and ability to pressurise governments or to abandon them[l61. The effort to make labour globally homogeneous, substitutable according to price and related local attractions, runs counter to the political economy and the entire lives of labour and its organisations.

Finally, the gist of our findings also casts light on the problems of giving substance to the proposals of the ‘alternative economic strategy’ to counter MNC power through planning agree- mentsLl71. These proposals d o at least recog- nise the problem - but enforcing the union or State sanctions that would be necessary to give them bite would require information, resolve and probably international backing that not even the best organised parts of the labour movement are close to being able to provide at this stage. The accelerating pace of international restructuring of production promises to aggravate the problem sharply. There a re no guarantees for a democratic solution to challenges of this order, though the search for one may at last be progressing beyond anodyne platitudes.


References 1. For analyses of the consequences of multinational

investment in Scotland since the Second World War, see Hood, N. and Young, S., Multinationals in Retreat, Edinburgh University Press, Edinburgh, 1982; Firn, J . , ‘The political economy of Third World industrialisation: the complication for Scotland’, in Maxwell, S . (ed.) , Scotland multinationals and the Third World, Mainstream, Edinburgh, 1982; Scott, J . and Hughes, M., The Anatomy of Scottish Capital, Hutchinson, London, 1978; Forsyth, D., U . S . Inuest- ment in Scotland, Praeger, 1972. The information used in this section of the paper is primarily drawn from Hood and Young.

2. See Baldry, C . , !-laworth, N. Henderson, S. and Ramsay. H., ‘Fighting multinational power: possibilities, limitations, and contradictions’, Capital and Class, No. 20, June 1983, for a discussion of the Kil- marnock case in relation to the Alternative Economic Strategy debate.

3 Cook, P., Massey at the Brink, Collins, Toronto, 1981, gives an alternative and more detailed account of the history of MF.

4 Ibid. 5. See Baldry, C . et al. (1983), op. cit., for a more

detailed discussion of this contradiction between financial and manufacturing interests.

6 . Beynon, H. , What happened at Speke?, TGWU, Liverpool, 1980.

7. ILO, Multinational enterprises and social policy, ILO, Geneva, 1973.

8. OECD, Declaration on international investment and

multinational enterprises, Pan, London, 1976. 9. Employment Protection Act, 1975.

10. See ‘The industrial relations industry’, Labour Re- search 71(4) , April 1982, for a discussion of the growing trend in managerial use of such consultants in the context of restructuring and closure.

11. Again, see Baldry et al., op. cit.. for lengthier examination of these points.

12. Ibid. 13. tiaworth, N . and Ramsay, H. , ‘Grasping the nettle:

problems in the theory of international labour organisation’, paper to BSA Conference, Cardiff, April 1983.

14. See also Haworth, N. and Ramsay, H. , op. cit., and Haworth, N . , ‘The trade union response to multinationals’, in Maxwell, S . (ed.) , Scotland, multinationals and the Third World, Mainstream, Edin- burgh, 1982.

15. Enderwick, P . , ‘Labour and the theory of the multinational corporation’, Industrial Relations Journal. Vol. 13 No. 2 , Summer 1982, pp . 32-43.

16. For example, Frobel, F. et al., The new international division of labour. CUP. Cambridge, 1980: Elson, D. and Pearson, R.. ‘The subordination of women and the internationalisation of factory production’, in Young, K . (ed.), Of marriage and the market, CSE Books, London, 1981; and Beynon, H. , ’We all lay awake and wondered what the hell to d o next’, mimeo, Durham, 1983.

17. For an example of this argument, see London CSE Working Group, The Alternative Economic Strategy: a labour movement response to the economic crisis, CSE Books, London, 1980, pp. 107-8.

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multinational closure and the case of massey-ferguson, kilmarnock

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