Alexander Dennis: FM warned a year ago over firm 'reconsidering'

The Herald Scotland

5 hours ago

The First Minister was also told they had already been 'forced' to offshore certain manufacturing functions to China.
The Labour MP for Falkirk, Euan Stainbank, said it was 'absolutely astonishing that John Swinney' had been informed of the risk to hundreds of Scottish jobs and 'done absolutely nothing to avert this'.
Notes seen by The Herald show the First Minister intervened after learning of potential redundancies at the firm, suggesting 'further capital support' and advising Scottish Enterprise to 'exhaust all options to support the business'.
Scottish Government records show ADL has received £58 million in public 'subsidy' for green vehicles since 2020 under two schemes aimed at transitioning Scotland to green buses.
Some £30m in job grants for research and development over 10 years came from the Scottish Government's economic development agency, Scottish Enterprise.
A delivered Alexander Dennis bus (Image: Pic supplied) Despite this, ADL said there was not enough support from government and issued a stern warning about its future in Scotland in August last year.
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"We are regretfully left with the impression through recent developments that the Scottish Government has little regard for domestic bus manufacturing jobs in Scotland and we have no choice but to reconsider our entire investment in the Scottish operations of Alexander Dennis," the Canada-based executive told the First Minister.
"In fact, in an attempt to enhance our price competitiveness we have already been forced to offshore certain fabrication functions to China.
"I would appreciate an urgent face-to-face meeting with you and key members of your Government to further discuss this critical situation."
The First Minister and Deputy First Minister set out the economic case for Scottish independence in 2013 at the Alexander Dennis Falkirk plant. (Image: NQ)
He said that in Canada and the United States, governments and transit agencies are 'incredibly proud' of their domestic manufacturers and support them accordingly.
"Alexander Dennis operates in a market that had left them with the impression that governments do not seem to care about domestic economic importance," he added.
"Indeed, this seems to fly in the face of Scotland's flagship policy plans for a Just Transition, which aims to deliver a fairer, greener future for all, delivered in partnership with those impacted by the transition to net zero.
"Alexander Dennis is a key manufacturer in Scotland assisting in delivering a Just Transition through the manufacturing of zero-emission buses with their workforce.
"Alexander Dennis should be considered a business of strategic economic importance to Scotland."
ADL expressed frustration in May 2023 over the Scottish Government's Zero Emissions Bus Challenge Fund (ScotZEB).
A Scottish Government memo to the Deputy First Minister, Kate Forbes, revealed a series of letters from ADL and NFI raising concerns about the outcome of the fund.
While a Scottish Government memo said ADL received orders for 363 zero-emission buses – more than any other manufacturer – a separate briefing stated ADL was awarded only 17%, or 44 buses, from phase two.
A meeting was set up between the First Minister and Mr Soubry in August last year over levels of support rooted in Scottish Government schemes launched in 2020 to accelerate zero and low emission bus manufacture and 'help drive a green recovery out of the Covid pandemic', worth £155.8m to date.
The relationship between Alexander Dennis and the SNP goes 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.
He said while ADL received 17% of the orders under ScotZEB2, no other UK manufacturer benefitted — despite all being part of the Scottish Bus Decarbonisation Taskforce.
He expected 83% of the 252 buses ordered under ScotZEB2 to go to manufacturers based in either China or Egypt.
He said there was a 'further disappointing revelation' in the final round of ScotZEB — that the winning bid would leverage £3.20 of private sector investment for every £1 from the Scottish Government for 252 vehicles.
Mr Soubry said 'this was surprising to read' as the unsuccessful Alexander Dennis-led Phoenix consortium bid planned to deliver up to £3.94 of private investment per £1 of ScotZEB2 funding for a volume of 300 zero-emission buses.
"With recent decisions by UK bus operators to acquire largely imported buses with no domestic economic, technology or labour requirements or benefits, we feel we have no choice but to now begin preparations to put a number of people within our team at risk of redundancy, which could decimate the communities we operate in and have important historic ties with," he said.
(Image: Alexander Dennis)
Mr Stainbank said the letter to the First Minister was a damning indictment of the SNP's failure to act.
"It is absolutely astonishing that John Swinney was informed of the real risk to Alexander Dennis's Scottish operations close to a year ago," he said. "He appears in the interim to have done absolutely nothing to avert this.
"This is a monumental failure of SNP industrial policy. Greater Manchester bought more than five times as many buses from Alexander Dennis than the SNP did - operating under the exact same legal framework. John Swinney should be embarrassed by that."
A month after Mr Soubry's letter, 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'.
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'.
An official note of a meeting between Mr Swinney and representatives of Alexander Dennis from 12 August says the First Minister 'noted the potential for further capital support should be explored'.
By then Alexander Dennis had already benefited from taxpayer-funded grants and support from the Scottish Government worth £90m since 2005.
In the same year of the 2023 ScotZEB2 launch, Scottish Enterprise sanctioned a £13.2m grant on top of a £49.7m ADL investment into the development of zero emissions technology for battery-electric and hydrogen fuel powertrains. Some £11.2m was drawn down.
John Swinney (Image: PA) Last week, Mr Swinney told MSPs he was 'deeply concerned' about the proposed job losses and said the government was 'exploring all viable options' to support the workforce.
He defended the government's record, stating that Alexander Dennis had received more orders than any other manufacturer under the first phase of ScotZEB and was supported with significant research and development funding.
However, he acknowledged that UK-wide subsidy control rules limit what the Scottish Government can do to directly support or prefer domestic manufacturers. 'We must work within the law,' he said. 'But we are trying to find a way through the Subsidy Control Act to ensure we can support manufacturing in Scotland.'
Union leaders are calling for more urgency. Unite Scotland estimates that up to 1,600 jobs could be at risk when supply chain roles are included and warned of a 'devastating' impact on communities already reeling from the Grangemouth oil refinery closure.
A Scottish Government spokesperson said: 'We are 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.
'Since 2020, ADL secured orders for more zero emission buses than any other single manufacturer through the Scottish Zero Emission Bus Challenge Fund and its predecessor the Scottish Ultra Low Emission Bus Scheme.
"ADL has received £58m of Scottish Government subsidy for vehicles under these programmes. ADL have secured orders for more than 360 vehicles through Scottish Government zero emission bus funding programmes, compared to the 160 currently on order from Manchester.
'In response to correspondence in August 2024, the First Minister met with the company that same month, and Scottish Enterprise have been supporting the company with additional supportive measures.'