All Party Support Group for Turner & Newall Pensions
Meeting of the Parliamentary support group for T&N in the House of Commons, 19 October 2004.
Left to right: Tony Hill, Adrian Cowley, Federal Mogul US Chairman Steve Miller, Tom Levitt MP and Dave Evans.
Tony, Adrian and Dave represent workers at Federal Mogul, Chapel-en-le-Frith.
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Colleagues who were able to attend yesterday's meeting will have been impressed by the manner in which what we hope are the closing stages of this issue are being pursued. We were particularly fortunate in having Steve Miller present, the Chairman and Acting Chief Executive of the Federal Mogul parent company in USA. I certainly felt that the administrators, trade unions and the independent trustee of the pension fund all found the meeting valuable.
In a nutshell, the company have responded to concerns expressed here in UK, principally by those pursuing the pensions issue, in a positive and timely fashion. Although bemused as to why their previous offer of $130M cash into the fund was rejected (given that the fund would have stayed open and been allowed to grow) the current deal could certainly be better.
But is it good enough? All sides have welcomed it and the administrators have said that whilst the outcome will always be a compromise in one form or another, if the trustees and other creditors are happy they will sign the deal. It would benefit Federal Mogul (and other parties in the long run) to sign it off before November 3, the date upon which the US asbestos creditors decide whether to accept the offer that is on the table to them - although it is better to get the result right than get it quickly.
The proposal includes:
taking the pensions fund back to where it stood on July 15, the day before things went 'pear-shaped', with the restoration of all the participating employers who withdrew (and the rights if not the jobs of those made redundant in some plants in the interim)
the company accepting its liability towards the pension fund in full, within the law, and taking into account the minimum funding requirement and any future changes in UK law (i.e. the safeguards in the Pensions Bill)
the company making significant contributions into the fund over a period
the future liability of non-UK employers within the scheme to be capped at $100M
The full text of the 'Term Sheet' was circulated to those present. The company's bottom line was that FM is a successful company with a positive future. It would be far better for the company to use its assets rather than sell them off or wind up the pension scheme. They described the prospect of controlled realisation of assets as 'disastrous'.
Steve Miller, describing himself as the company's 'caretaker manager', said that the company acknowledged that FM's UK employees had endured "the most stressful period of their lives" recently and paid tribute to their discipline and productivity in doing their best to maintain customer confidence in FM products.
The administrators' view was that the return to the creditors of the company's plan had to be demonstrably better than controlled realisation of assets would be; and that the distribution of funds had to be fair to all creditor groups. The trustees' view was that there were issues to be resolved around the detail of the plan - such as successor liability should the company change hands - but they welcomed the willingness of the company to talk and to talk frankly in an attempt to resolve differences.
As well as 2 representatives from each of the company, administrators and trustees, there were 12 MPs present and over 20 officials and shop stewards from T&G, Amicus and GMB from FM plants around the country. The meeting also provided an opportunity for them to talk to the company informally about specific local issues connected with the present situation.
The meeting was followed by a half-hour debate on Federal Mogul in Westminster Hall (by Alice Mahon MP) which several MPs and guests attended.
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