Behind the Wrightbus Scandal

As hundreds of workers at Wrightbus face an uncertain future, Somhairle Mag Uidhir takes a look at the background to this scandalous mismanagement by company bosses.

Wrightbus, one of the North’s largest employers, has gone into administration. Management announced that roughly 1200 people will lose their jobs within the week, with the rest (out of roughly 1400 total employees), being kept on for a few more weeks to “keep the lights running”.

Wrightbus is based in Ballymena, and its closure follows in a long line of other manufacturers in the town either shutting up shop or moving their premises abroad. While the headline number of 1400 job losses is bad enough, the knock-on effect on supply chains and the wider economy is even worse, with unions forecasting up to 5000 jobs affected. And being as it is a Ballymena company, founded in the town after the Second World War by William Wright, its failure will affect workers, families and communities on an emotional and cultural level, on top of the huge economic difficulties.

Underperformance

It had been underperforming for some time, despite assurances to the contrary to workers from management. Now those workers face one final week’s pay, before having to wait five or six weeks on a government redundancy package—all while the owners have made vast sums of money. At one stage there had been talk of interested buyers, but they didn’t materialise. Union representatives have since questioned why those potential bids were so quickly taken off the table. Where did it all go wrong?

Firstly, there is the simple fact that Wrightbus has not been performing well for a number of years. William Wright has been a staunch supporter of the DUP’s crash-and-burn approach to Brexit, but it appears that the economic turbulence brought about by the latter has added to the bus-maker’s difficulties. The UK demand for new buses has significantly declined in the past number of years and it is likely that Brexit uncertainty has had an effect here. On top of that, the pound has taken a heavy hit over the past two years. This has meant that the cost of some of the parts imported by Wrightbus have risen significantly, while the value of the company’s exports abroad have fallen. In these conditions, and under the shadow of ‘No Deal’, investing in Wrightbus carried risks.

But there is also the unusual business practices of Wrightbus and its affiliated companies to consider. In recent days a raft of allegations and information has come to light about the company’s relationship to Green Pastures, a Ballymena-based evangelical church. The latter was founded, and is still led by Jeff Wright, the majority shareholder in Wrightbus (and William Wright’s son). Accounts show that Wrightbus is enmeshed in a complex corporate structure which includes other companies, groups and religious organisations. Over a number of years, by making use of this complex network, they have made huge donations to the tune of millions of pounds to Green Pastures church. Despite claims to the media by owners and by Ian Paisley, these donations were not simply shareholders deciding how to spend their personal cash dividends. They were made up of company funds, on the basis of a company decision. Potential investors may have thought that all this showed that Wrightbus’ structures were too much of an incestuous mess to be worth taking a chance on.

Inasmuch as the generous gifts to Green Pastures may have hurt Wrightbus’s turnover, they also appear to have had some advantages. Profits are taxed; therefore if you can show you are channelling your profits somewhere other than a private bank account (into research or new technologies, say) then you greatly reduce the tax you may have to pay. Passing funds over to an organisation with charitable status (such as a church) has a similar effect. Safe to say, capitalist governments have very loose interpretations of the rules which entitle corporations to pay lower taxes. And so, while Green Pastures church has charity status, the fact that its ownership structure is so closely related to those of Wrightbus means these donations should likely be seen as more than simply the misguided actions of extremely religious owners. At the very least, despite them now being in administration, it’s unlikely that the transfer of money was always lose-lose for the bus company. (And it is likely it greatly benefitted some individuals).

Therefore it’s possible, contrary to what I wrote above, that potential investors may not view Wrightbus’s structures as “too much of an incestuous mess.” Indeed, arrangements which help lower tax burdens are often an attractive asset. Another reason that bids didn’t materialise is not hard to come by. Ian Paisley Jr., an influential member of Ballymena’s mini-elite, said soon after the job loss announcement that he hopes “a buyer comes in quickly and rehires two-thirds” of the workers. And certainly, if you are one of the large multinationals rumoured to have an interest, why save the company now? By waiting, you allow the current management to fire the (unionised) workforce on your behalf, wherein you can swoop in and hire “two-thirds” of them at a lower rate and poorer terms and conditions. Not only that, but the state will foot the redundancy bill. And it is telling that Paisley parroted this prospect within hours of workers hearing of their devastating fate.

Aberration?

The industries around Ballymena once formed a key component of the Unionist hegemony in this part of the world. They were an economic success story and provided jobs largely to Protestant workers, often through discrimination. In short, these industries, and those like them in other parts of the north, helped form part of the material basis for partition. The changing nature of capitalism has meant that this material basis has been undergoing a long erosion from the 1950s onwards. Some industries and geographical areas faltered quite early on, such as those centred around shipping. Others, thanks to heavy political interference, lasted longer. The wider Ballymena area was arguably one of those, but the past decade has now seen it face the full force of the market as well.

It might be tempting to see Wrightbus as an aberration; if only the company didn’t transfer all that money to Green Pastures things would have been ok! Questionable relationships with evangelical churches, as well as the continued influence of Brexit uncertainties, have undeniably had a strong influence. The point, however, is that the deeper movement of capitalism has also played its part. Take the example of the Michelin factory which closed in Ballymena in 2015, at a loss of 850 jobs. It’s highly unlikely that this international tire company was giving away its profits, and Brexit didn’t factor since its closure predated it. It was the pressure of the market—the fact that Michelin must keep costs as low as possible in order to compete—that led to them moving their plant to cheaper pastures. It is this same competitive pressure which Wrightbus came under, much like every other company in the north does every single day.

As mentioned above, the fallout of the closure on the wider area will be devastating. And it is a familiar story across the capitalist world; rural towns centred around a major employer face great hardship when the latter goes bust. Take a second to think about this phenomenon and the utter irrationality of capitalism is laid bare. What a bizarre way of organising society. Having whole communities dependent on one company—a company which will be subject to the merciless whims of the market—is a recipe for disaster. And whether those companies pack up and move off, or are simply shut down, it is not the executives who will be left to pick up the pieces.

Political and Systemic Failure

At a very basic level, workers and the wider population in Ballymena can be forgiven for asking a very simple question. Could those donations to Green Pastures have been better used, maybe to help transition the company or at least to help soften the blow on workers who had made huge profits for Wrighbus over many decades?

At a deeper level, this episode is but the latest in a list of damning indictments of capitalist society. The vast majority of us are dependent on the market for getting a job in order to clothe, house and feed ourselves. The speed with which that same market can cast us aside, as has happened in Ballymena, should be enough to convince us that it’s an inhumane system.

Finally, the fiscal irregularities in the Wrightbus case point to what could arguably be described as an insidious local power network existing in Ballymena. One which takes in large companies, religious institutions, local government as well as prominent Unionist politicians. More will be written on this in the coming weeks of course. For now it is enough to say that the great and good of Ballymena have allowed the continued decimation of the local economy to occur under their watch. And of course, the effects of which will be felt not by them, but by the ordinary workers and the rest of the community.

Capitalism is a destructive force which needs to be overthrown. But as powerful as it is, this does not absolve either the Wrightbus owners or establishment politicians. The British government could step in, guarantee jobs and help transition Wrightbus to developing carbon-friendly buses (a path which the company had begun to take). Local politicians could ensure that executives and owners are made to pay for their failings. Wrightbus owners could take a hit commensurate with that taken by workers who have lost their jobs.

Instead, all of these influential groups have left the employees out to dry. They have helped hide the company’s financial difficulties. They have sat on their hands while the jobs were pushed over a cliff-edge. And ultimately, they have built, protected, and profited from, an economic system which makes a handful rich while the rest toil.

In some ways, the story of Wrightbus seems odd and unusual. In others, it is simply a continuation of the long and horrible record of capitalism.