FM funding row as £90m for Scots jobs given to firm going to England
It came against a background of the Scottish Government being criticised for the levels of support for bus manufacturing.
According to Scottish Government records, ADL received £58m of public 'subsidy' for green vehicles since 2020 under two schemes aimed at transitioning Scotland to green buses - despite the company having embarked on a 2020 plan to axe a third of its Scottish workforce.
And some £30m of jobs grants for research and development over 10 years has come from the Scottish Government's economic development agency Scottish Enterprise.
Some £11.2m of those jobs grants from Scottish Enterprise came in 2023, three years after concerns were raised over ADL embarking on major job cuts in 2020.
By the time the 2020 jobs cut was in place ADL had already received over £8m in 'job securing' taxpayer funding which was promoted as supporting building a new greener business in Scotland.
It has led to calls for action to be taken to claw grant money back.
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A Scottish Enterprise source said: "The company is aware of Scottish Enterprise's right to potentially reclaim funding where the terms and conditions of a grant contract are not upheld."
The relationship between Alexander Dennis and the SNP can be traced back to 2013 when then First Minister Alex Salmond and then deputy first minister Nicola Sturgeon used its Falkirk base to launch the economic case for Scottish independence.
In 2016, millions in taxpayer's cash was given to Alexander Dennis which at the time was closely linked with major SNP donor and Scottish tycoon Sir Brian Souter, despite having recorded an £18.5m profit the previous year.
Video: The First Minister and Deputy First Minister set out the economic case for Scottish independence in 2013 at the Alexander Dennis's Falkirk plant
The First Minister said last week that the SNP minority government would do "everything it can" to support the workers saying he was "deeply concerned" that the firm planned to move its full operation to a site in Scarborough, North Yorkshire, putting 400 jobs at factories in Falkirk and Larbert at risk.
ADL, which said the move would lower costs and "increase efficiency" said that current UK policy "does not allow for the incentivisation or reward of local content, job retention and creation, nor does it encourage any domestic economic benefit".
It has emerged that the First Minister had been pushing for support for the company for nearly a year after a row blew up over levels of support.
An official note of a meeting between Mr Swinney and representatives of Alexander Dennis as recently as August of last year revealed that there were plans for earlier restructuring with the prospect of redundancies.
The note said that Mr Swinney had "reflected on the importance of ADL to Scotland, assuring NFI [ADL's parent company] of the Scottish Government's support for ADL".
According to the record, seen by The Herald, at the meeting Paul Soubry, president and chief executive of NFI told Mr Swinney that they were "at a crossroads for investment decision-making given a lack of assured demand and sought clarity on the Scottish Government's prioritisation of support for domestic bus manufacturing".
The First Minister "noted the potential for further capital support should be explored".
Alba Party leader Kenny MacAskill said the job losses were "unacceptable" and added: "If public money was paid out and they go then the funds must be returned. It was for supporting the jobs and community.
"It's absurd to be losing this skilled work and leading technology in the place which should be the epicentre and hub. Its industrial vandalism and indicative of a lack of an industrial strategy."
A row between ministers and ADL emerged over levels of support and had it roots in Scottish Government schemes launched from 2020 to accelerate the use and manufacture of zero and low emission buses in Scotland and 'help drive a green recovery out of the Covid pandemic" which have been worth a total of £155.8m to date.
Frustrations emerged after May, 2023 when Alexander Dennis hosted the second phase of the Scottish Government's Zero Emissions Bus Challenge Fund (ScotZEB) which was to have funding worth £58m. It also showcased its Enviro100EV concept, a lightweight single-deck zero-emission bus with new in-house battery powertrain confirmed that grant backing accelerated its development.
The fund was established to "disrupt the bus and coach market" and allow operators the chance to make the move to zero-emission vehicles.
Then First Minister Nicola Sturgeon visited ADL's Falkirk plant in a trip which coincided with Scottish Enterprise providing a £7.3m million research and development grant (Image: ADL) And a Scottish Government memo to the deputy first minister Kate Forbes a year later states that Alexander Dennis had initially accepted that the Scottish Government's direct investment in ScotZEB would "underpin and grown the 500+ green Scottish jobs it supports".
But it revealed that a subsequent series of letters were received from ADL and NFI raising concerns about the outcome of ScotZEB and wider Scottish Government support of bus manufacturing.
"The company claims that the ScotZEB outcome will have a catastrophic impact on the business."
It said the letters compare the Scottish Government's approach to funding programmes, subsidy control and Fair Work First "unfavourably with policies of other governments to protect their domestic manufacturing base".
But the memo said that ADL had received orders for 363 zero-emission buses from ScotZEB more than any other manufacturer benefitting from the schemes. A separate briefing states that Alexander Dennis was awarded only 17% or 44 buses from second phase of the programme.
According to Scottish Government records ADL received £58m of public 'subsidy' for green vehicles under the four phases of the low and zero emission bus schemes
A significant grant through the ScotZeb 2 programme was awarded to Zenobe, and its consortium of bus and coach operators to support the transition of bus fleets to electric.
ADL, which incurred total losses over three years of £44.9m between 2021 and 2023, made its own bid to the programme but was unsuccessful. While ADL was a supplier to the successful consortium it was not a formal part of it.
The note said that ADL had "praised support from Scottish Enterprise" it added that the First Minister had "assured the company of the support available for its continuing investment in Scotland".
By September, 2024 a further call between the First Minister and NFI and ADL showed that Mr Swinney advised and asked that Scottish Enterprise "exhaust all options to support the business".
And a note of the meeting cleared by Mr Swinney stated that he requested that "all options are exhausted before any final decision is taken by ADL".
By then, Alexander Dennis had already benefited from a raft of taxpayer-funded grants and support from the Scottish Government.
In the same year of the ScotZeb2 launch, Scottish Enterprise sanctioned a £13.2m grant on top of £49.7m ADL investment into the development of zero emissions technology for the creation of new battery-electric and hydrogen fuel powertrains - the systems designed to propel vehicles forward. Some £11.2m was drawn down.
Alexander Dennis president and managing director Paul Davies (2nd from left) and then transport minister Kevin Stewart (centre) with Alexander Dennis apprentices as the bus company launched ScotZEB2 (Image: ADL) At that point Alexander Dennis said it was repurposing its Larbert plant to make it a "manufacturing centre of excellence' for the production of zero-emission buses.
The plant had successfully piloted hydrogen-electric and said it was expanding to battery-electric full production from August 2023.
Three years earlier Scottish Enterprise sanctioned a further £10m grant on top of £29m Alexander Dennis investment into the development of zero and ultra-low emission buses in Scotland.
In September, 2016, £7.3m of public money was given by Scottish Enterprise to accelerate Alexander Dennis's expansion of its low-carbon vehicle programme. It was at the time the largest research and development grant in the quango's history and came despite the manufacturer recording an £18.5m profit the previous year.
One of the company's chief shareholders at the time was Stagecoach tycoon Sir Brian Souter - a major financial supporter of the Scottish National Party.
Alex Salmond and Nicola Sturgeon launched their 2013 economic case for Scottish independence at Alexander Dennis coach builders in Falkirk. (Image: NQ)
That was before NFI took over the Scottish firm for £320m in May, 2019 and announced it wanted to hit a sales trajectory of £1 billion for the coach and bus maker, including expansion in Scotland.
Both ADL chief executive Colin Robertson and Michael Stewart, chief financial officer, stayed on to continue the work done in Falkirk and Larbert.
Scottish Enterprise said the £7.3m taxpayer boost would "help increase their innovation, research and development and global reach".
It helped Alexander Dennis set up a £30m development and product market programme to allow the launch of the eco-friendly Enviro400XLB, its highest capacity bus for the UK market, in conjunction with Lothian Buses.
Scottish Enterprise lauded the launch of the green bus manufactured in Falkirk saying it was "securing jobs and adding value to the Scottish economy directly and via the extensive local supply chain".
"This accelerated our growth much faster," said Mr Robertson at the time.
Then First Minister Nicola Sturgeon described Alexander Dennis as a "true Scottish success story".
She added: "ADL's continued commitment to invest in Scotland is testament to the skilled workforce here in Falkirk."
Mr Robertson handed over the first bus to Lothian managing director Richard Hall on November 8, 2018 in a ceremony at the manufacturer's Falkirk plant that was attended by transport secretary Michael Matheson, and representatives of Scottish Enterprise and Transport Scotland.
One worker told the Herald that the cuts were a "bolt from the blue", described the jobs threat as "horrendous" but said he would now be seeking employment elsewhere because the future looked "bleak".
"I haven't slept since being informed my job was at risk and while I think everything should be done to keep it open, I just wonder whether it will be the case because the fear will be that even with further support, the move to England will just rear its head in the future," he said. "I won't be hanging around to find out because I'm not sure more support would be coming under the circumstances or will even be sufficient. I will take my redundancy cash and get out if I can."
ADL was established in 2004 when a consortium of Scottish entrepreneurs led by Mr Souter and including Dame Ann Gloag (Souter's sister), Sir Angus Grossart and Sir David Murray acquired the business from Trans Bus International's administrators.
A Scottish Enterprise spokesman said: 'Scottish Enterprise has had a strong strategic partnership with Alexander Dennis Limited for more than 10 years, during which time we have supported technology development, skills and cultural transformation at the company. We have recently been working closely with Alexander Dennis Limited to explore a range of possible options. We remain fully committed to continuing to work with the company during the consultation period to try and find a positive solution, despite the challenging circumstances.
'This is a deeply concerning time for the workforce and along with our public sector partners we will continue discussions on how best to support them at this difficult time.'
Deputy first minister Kate Forbes said: 'The absolute focus right now is on supporting Alexander Dennis Ltd its workforce, as well as the families and communities they support. We also recognise the significance of the company within the local economy and across the wider supply chain.
'The Scottish Government has committed to exploring all viable options throughout the consultation period to allow the firm to retain their hard-working employees and manufacturing and production facilities at Falkirk and Larbert.
'We will continue to work in close collaboration with the company, trade unions, Scottish Enterprise, Transport Scotland and the UK Government.'
Alexander Dennis was approached for comment.
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