Search site

The EU Constitution would contribute to the continued decline in the manufacturing sector we have witnessed in Britain over the last thirty years.

A recent TUC report revealed that government support for UK manufacturing is the lowest in Europe and that the UK has lost 750,000 manufacturing jobs since 1997 due to 'low levels of government support and chronic underinvestment'.

However, under the EU constitution, all state aid would be directly controlled by the Commission and the rules enforced more vigorously. This would make it significantly harder to direct UK government investment into essential industries and services.

All substantial government procurement and manufacturing investments and transfers have to be open to private competition across the member states. A good example of how EU rules and unaccountable institutions undermine UK manufacturing is the closure of Peugeot's UK plant in Ryton, Coventry in 2006. The closure of Ryton and the shift of production of the French company's cars to Slovakia was not an 'inevitable' casualty of 'globalisation', as Prime Minister Tony Blair weakly tried to claim, but was a direct result of EU policies.

Problems began for Ryton in 2002 when the UK government agreed a request of state aid from Peugeot- to be approved by Brussels - of around 14 million, so that the company could build its 207 model in Britain. Inexplicably, the European Commission sat on the request for two years - by which time Peugeot had switched 207 production to France and now to a new factory in Trnava, Slovakia. An investment in the skills of Coventry's engineering workers of over 190 million was withheld because it took two years for Brussels to approve a state subsidy of just 14 million.

As a result, over 2,300 more UK manufacturing jobs have disappeared. Meanwhile, since 2003, million of euros of EU state aid have been pumped into the new Peugeot/Citroen plant in Slovakia. In other words, while Brussels sat on the UK request for state aid, it was pouring funds into upgrading the Trnava site and its surrounding infrastructure. The Slovakian government realising the critical importance of building manufacturing capacity offered Peugeot 73 million in subsidy, free land, The closure of Ryton and the shift of production of the French company's cars to Slovakia was not an 'inevitable' casualty of 'globalisation'construction-financing, local infrastructure enhancement, a 10-year "tax holiday" and local labour training subsidies - all approved by Brussels.

A Single Programming deal between the Commission and Slovakia also gave massive EU funding for transport links near the site. The European Bank for Reconstruction and Development (EBRD) now says that Peugeot cited "proximity of quality transport links as one of the critical factors in picking Trnava". PSA/Peugeot-Citroen already plans to expand capacity at Trnava to 500,000 cars by 2009.

The Financial Times explained: "by 2008 Slovakia will be turning out 1 million cars a year - compared with 1.6 million in Britain this year. The reason is simple. The average gross wage a month for a car worker in Slovakia is 350 - compared with about 2,000 a month for assembly line workers at Ryton." The impact of the European Union as the regional arm of multinational big business in relocating manufacturing to low wage economies has been much underestimated.

To some trade unionists the EU seemed once to be the solution to our problems, not the cause. In fact EU policies are driving down the cost of wages by relocating manufacturing to lower wage economies in order to compete in world markets. Some trade unionists have also fallen for the illusion that UK manufacturing and millions of jobs are somehow dependent on EU inward investment or reciprocal trade. This is simply untrue, as Britain has a large accumulated trade and services deficit with the EU, whereas we have a trade surplus with non-EU countries.

A strong, wealth-creating, industrial plan is also ruled out by current EU policies as the EU focuses industries in particular regions and imposes tough procurement rules. Under these rules any major work, particularly if it involves manufacturing production, has to be put out to tender on the European market, so that effectively protection of domestic industries becomes impossible.

All EU Treaties are based on the free movement of labour, capital, goods and services, not on protection of labour rights, regulation of capital, maintaining skilled manufacturing jobs and protecting and expanding public services.

For instance, the trade union movement wants a publicly owned railway network. To achieve this we would not only have to renationalise the network, but also to rebuild and restock the machine tools, plant and skilled labour, which have been lost from UK train manufacturing since privatisation.

Similarly, if we wanted to ensure that we had a merchant fleet again. The ship-building sector would have to be reopened. To achieve this we would need to reopen the coal mines and take back steel into public control. The EU would be the main obstacle to achieving any of this and would become less likely if Britain signs up to the renamed Constitution against the wishes of the electorate.