Melrose boss’s ‘difficult’ decision to shut GKN plant as £100m losses revealed

Simon Peckham, chief executive of Melrose Industries

The boss of Melrose has said that the decision to shut GKN’s Birmingham plant, with the loss of 500 jobs, was a “difficult” decision.

Simon Peckham, chief executive of Melrose, which bought GKN three years ago for £8bn, was giving evidence to the Business Select Committee on the impact on UK businesses of leaving the EU. However, he said that Brexit had nothing to do with shutting the Erdington plant.

He said: “It was one of the things we had to do to make GKN a better business.

“Let’s be entirely clear, Brexit has no influence over the decision. Erdinton is one of the difficult decisions as well as the good stuff we do. We inherited GKN, which was basically a troubled business.”

Peckham revealed that the GKN plant in Birmingham which assembles drivetrains for the automotive sector has racked up losses of £100m during the last decade.

He added that the plant had lost a quarter of its market share between 2016 and 2019 and that the drive towards electric vehicles would mean that 40% of its market will “disappear”, possible referencing a decision by Jaguar Land Rover to take all of its cars electric.

Peckham said: ““Unfortunately, before we turned up, past management of GKN placed the manufacturing elsewhere, Erdington’s not a manufacturing site, it’s purely an assembly plant. It doesn’t have manufacturing equipment.

“They chose to put the manufacturing for EV manufacture in Italy, we didn’t make that choice, they did. Now we have capacity in that plant. There’s nothing we can do about it. It’s a legacy we inherited.”

However, the Unite union has disputed this claim, calling it “a lie”.

Unite national officer for automotive Des Quinn said: “Simon Peckham is guilty of misleading MPs and must apologise and correct his evidence immediately.

“The GKN Erdington factory has a world class manufacturing capability, currently undertakes manufacturing and should be given the opportunity to increase its manufacturing capacity in the future.

“Mr Peckham clearly indicated to the select committee that the work in Erdington will be transferred to Italy and yet GKN are indicating differently.

“Either MPs have been misinformed or the workforce has been misled. Melrose must swiftly correct the record.

“With the level of misinformation that has been given to the select committee, there must now be major question marks about the integrity of Melrose’s commitments to a “UK manufacturing powerhouse”.

“Unite remains committed to working with Melrose and all interested parties to ensure the decision to close the GKN factory in Birmingham is reversed and the jobs of the highly skilled and dedicated workforce are protected.”