HC Deb 20 December 1974 vol 883 cc2050-8

1.0 p.m.

Mr. Jim Marshall (Leicester, South)

It is indicative of the serious situation facing the textile industry in Leicester that I, with my hon. Friends who represent Leicester constituencies, thought it necessary to bring its difficulties to the attention of Parliament and the country.

Most people know that Leicester is famed as a prosperous city. I should hasten to add that it acquired that reputation during the 1930s and that it is not necessarily true today. However, compared with the country as a whole it is undoubtedly still far more prosperous than many other areas. That prosperity has been based on a number of industries, one of which is the textile industry. The city encompasses the whole spectrum of the textile industry—from the textile knitting machine section to the dyeing and finishing sections. The city is world renowned for its textile technology, and the development of one section of the industry has reinforced and underpinned developments in other sections, particularly by the interchange of personnel and ideas between sections.

However, we in Leicester have become seriously worried about the textile knitting industry in the city as a consequence of the dramatic decline in the world demand for knitting machinery. Only two years ago the textile knitting machinery industry in Leicester was responsible for supplying 30 per cent. of the world market in such machinery. Now it is finding it difficult to maintain a share of just under 15 per cent. of a world market which is much smaller than it was two years ago.

Let me remind the House of the reasons for the decline. Some are within and some are without the Government's control. The main reason undoubtedly has been the sharp drop in demand for textile knitting machinery because of the sharp decline in consumer demand for double jersey products which has naturally worked its way through the system so that the hosiery manufacturers no longer require the same number of knitting machines. The industry has been accustomed to the cyclical nature of the industry, but on this occasion the downturn has been so pronounced that it has led to serious difficulties on the machine side. To a great extent that is outside the Government's control, and I cannot blame the Government for the decline.

There are, however, other factors which the Government could do something about controlling. They concern mainly the unfair competition which the manufacturers in Leicester believe, rightly, they face from foreign competitors. I am told that Italy gives a direct subsidy to its principal manufacturer, Egam. I am told that there is evidence that the French, German and Spanish banks, with connivance, either open or closed, of their Governments, are aiding the knitting machinery producers.

The Czechs are able to sell a machine in this country at £1,000 less than the cost of the equivalent British machine. There appears to be no economic reason why there should be that difference between the prices of the two machines. I am led to the conclusion that the Government of Czechoslovakia are providing a subsidy, cither direct or indirect, to the Czechoslovak knitting industry.

On the hosiery side, which must eventually come to bear on the machinery side, there is a flood of cheap imported knitted goods coming into this country from the Far East and Eastern Europe. This means that there is considerable under-capacity among the hosiery manufacturers in this country, with a consequent marked decline in the demand for textile knitting machines. This is a further reason why the knitting machine manufacturers are experiencing difficulty.

Another contributory reason which I believe the Minister of State acknowledges is this. The textile knitting machinery industry has not been notable for its efficient and remarkable management. Recently a firm in the city went bankrupt largely as a result of bad management.

Whatever the reasons, there is a serious situation in the city which becomes more serious week by week. In the past two or three years 2,600 jobs have been lost in the city. Stibbe recently made redundant 900 men. Cotton recently made redundant 1,320 men. The Wildt Mellor Bromley Group has made redundant sizeable numbers of men. We are told on good authority that before the end of the year a further 147 men will be made redundant by the Wildt Mellor Bromley Group at its Aylestone Road factory. This indicates the serious situation which not only the city but the textile knitting machine manufacturers are facing.

In addition to the job loss, there is a genuine possibility of a technological loss which in the long term may be more significant than the short-term job loss. Design teams are being broken up, and we know from experience in other industries that once design teams are broken up it is extremely difficult to build them up rapidly again when the market requires further research and development.

In recent years Stibbe has made an electronic leap in knitting machines with its new machine called the Patent Master. I hope that the Minister of State will say that such advances in electronic technology will not be lost.

In Leicester the bulk of the ownership in the knitting machine industry is in the hands of Sears Holding Company. I do not wish to criticise the management of that company, but it is well known that the chairman is far more interested in holding liquid assets rather than capital tied up in manufacturing industry. I believe that to be a contributory factor to the uncertainty in the industry.

We in Leicester believe that the Leicester industry, which contributed so much to the balance of payments surplus in recent years and to the worldwide development of the industry, must not be allowed to disappear. It has contributed greatly to our balance of payments and has earned us a lot of money. It is also of world renown for its developments in textile technology. I urge the Government to investigate possible areas of action, which I will list.

First, the Government should set up a twofold inquiry with the aim of discovering whether the industry has been mismanaged in the past and, of more importance, whether it is subject to unfair foreign competition. Secondly—and this is related to my comments on Sears Holding Company—is the present ownership of the industry the best to ensure its continued survival?

Thirdly, I urge the Government to support the development of knitting machines. Only by research and development can we ensure that when world demand again increases Britain will be in the forefront of production of the most modern machines. Fourthly, I urge the Government to give help in the form of tax allowances to purchasers of knitting machinery.

If the Government will investigate these four matters and decide what help is required, we can ensure the continued survival of the textile knitting machine industry in Leicester.

1.13 p.m.

Mr. Greville Janner (Leicester, West)

I congratulate my hon. Friend the Member for Leicester, South (Mr. Marshall) on his immediate and constructive speech and on the efforts which he made previously within Leicester Corporation to assist the city.

I speak also on behalf of my hon. Friend the Member for Leicester, East (Mr. Bradley), who is on other duties. I know that he will wish to associate himself with what my hon. Friend and I say about the need for the Government to take action to preserve this mighty and extremely vital industry. I make a plea to the Government for help to overcome unfair competition from overseas and to face the inevitable contraction of overseas demand for hosiery knitting machines.

My hon. Friend referred to the collapse of Stibbe, which was the most important company of its kind in my constituency. That collapse was caused by disgraceful mismanagement. With a loyal labour force and no industrial disputes, the company was bedevilled by squalid family quarrels. The mismanagement and incompetence were by-words in Leicester. During the final week before the receiver was called in, the chairman of the company had the impertinence to negotiate with the work force for increases in pay, but did not inform the two Labour Members of Parliament for the city at that time that the company was going into the hands of the receiver until the receiver was actually called in. To top it off, he had the impudence to blame the Labour Party for the downfall of the company, which has caused so much hardship to my constituents this Christmas.

I publicly thank my right hon. Friend the Secretary of State for Industry, my hon. Friend the Minister of State and officials in the Department for doing what they could to save this company. It is a great pity that they, and we, failed. However, it is vital that the rest of the industry, particularly those parts of it which are well managed and have made a great contribution to our overseas trade, should be enabled to continue to do so. Management must pull up its socks, and I hope that the Government will help. The city has the pledge of all three of its Members of Parliament to co-operate in every possible way to assist the industry. We believe that, in spite of the difficulties, by a united effort we shall succeed.

1.15 p.m.

The Minister of State, Department of Industry (Mr. Eric Heffer)

I congratulate my hon. Friend the Member for Leicester, South (Mr. Marshall) on securing the Adjournment debate. In all the years in which I have been in the House I have never yet been successful in doing that. I congratulate my hon. Friend also on his first-class speech. The people of Leicester should be well satisfied with the type of representation they have. My hon. Friend put up a fine case, in which he was ably supported by my hon. and learned Friend the Member for Leicester, West (Mr. Janner).

It almost goes without saying that the Government recognise the importance of the knitting machine industry in Leicester, and of the whole of the textile industry collectively. We are naturally concerned about the position in Leicester, and we went out of our way to try to assist the industry in certain difficulties.

Rendundancies in Leicester amounted to about 850, which is about 19 per cent. of the work force, and about 1,500 employees outside Leicester have been made redundant. That is a serious position. Most of the Leicester redundancies —that is to say, 500—occurred at the Braunstone factory of G. Stibbe and Company following the failure of the company and the appointment of a receiver in September this year.

My hon. Friend the Member for Leicester, South said that Leicester is not in the same position as are certain other parts of the country. We have noted that about 300 of the redundant Stibbe workers have already found alternative employment. In addition, it appears that a further 100 former Stibbe employees who left the company without waiting for reundancy notices have also found other work. Although the position is not good, the latest unemployment figures for Leicester are better than those in many other areas. The total number of unemployed is 4,800, which is 21 per cent., lower than the national average of 2.6 per cent. Unfilled vacancies number about 2,750, which is 57 per cent., of the total unemployed.

I wish to put clearly on record, coming from me, that if I were representing Leicester I should never be satisfied with any percentage of unemployed that was higher than the unemployable percentage. No one should ever be complacent about redundancy and unemployment.

Mr. Greville Janner

Does my hon. Friend appreciate that we are worried particularly about the future?

Mr. Heffer

I shall come to that point in a few moments.

If I may deal with the situation regarding Stibbe, the firm approached the Department's industrial development unit in July this year to discuss informally possible Section 8 aid for its Braunstone factory because the firm said it had a liquidity crisis. The company at that stage was advised in the first instance to explore more fully other resources, with further discussions to follow. There was a second meeting with the IDU in early September, and at that meeting the company set out more fully its need for financial support.

The company considered the matter in some depth and it became clear that the Braunstone factory would not be viable in the longer term due to its dependence on a limited range of product liable to cyclical demand, and the company accepted that it should seek some form of association with other interests which could provide a wider product base.

The case was drawn to the Secretary of State's notice on 25th September when it appeared that the Department's efforts to bring about such a grouping were being forestalled by the imminent appointment of the receiver. All possible avenues of providing assistance to the firm were examined, and a case for Section 8 assistance was submitted to the Industrial Development Advisory Board on 26th September. The IDAB recommended that Industry Act assistance could not be justified to maintain the Braunstone factory, though it supported the Department's efforts to save the business, which had traded profitably for several years. The Secretary of State, having seen the IDAB report, expressed the view that he was most anxious that every assistance should be given to find purchasers for the viable parts of the business and assumed that Industry Act assistance could be made available for any prospective purchaser of the S. A. Monk business in Sutton-in-Ashfield.

I take my hon. Friend's point about future technology. I agree that it would be a great shame if the technological know-how of the design team were to be lost. The Government appreciate that consideration.

Sutton-in-Ashfield is an intermediate area, and assistance can be given under Section 7 of the Industry Act. Indeed, the Government have made it clear that we are only too keen to give assistance in this way, provided that the circumstances are right. I repeat that we do not want to see the technology lost, for that would be a great shame for this country.

There is no question that there has been a downturn in the world trade situation, and my hon. Friend the Member for Leicester, South outlined the basic reasons. There was an extremely rapid growth in world trade for circular knitting machines during the 1960s from £20 million in the 1960s to approaching £200 million in 1972. The United Kingdom has been recognised worldwide as the technological leaders in this industry. In the peak year of 1972 our exports totalled £43.3 million, over 20 per cent. of world trade, second only to the Federal Republic of Germany with exports of £74 million.

Since that time exports of all the principal manufacturing countries have declined, with the exception of the United States, although the decline between 1972 and 1973 in the case of the United Kingdom amounted to 19 per cent., which was somewhat higher than that of our principal continental competitors, France and Germany, whose exports fell by 10 and 13 per cent. respectively.

The latest figures of United Kingdom overseas trade show that during the period January to October 1974 our imports of circular knitting machines fell by 26 per cent., against the comparable period in 1973, to £4.2 million, while during the same period our exports fell by 23 per cent., to £24.4 million. Thus, we have continued to show a favourable trade balance this year amounting to £18.7 million in a situation of declining trade, and our industry appears to be holding its own in the domestic market in face of strong foreign competition.

I should like to turn to the future prospects for the industry. The problems in Leicester brought about by the decline in the world market for double jersey circular knitting machines have created problems for all the companies in this sector. Bentley Engineering, the largest manufacturer in the world of such machines, with about three-quarters of total United Kingdom production, was in a relatively strong position to weather the storm because of its size and wide product base.

The regrettable closure of Stibbe's Braunstone factory need not involve a loss of its knitting machinery technology, and there is strong ministerial interest in providing assistance for any proposals which will maintain the United Kingdom capability, particularly in the context of maintaining the remaining Stibbe unit at Sutton-in-Ashfield.

We are not aware of any closures or redundancies among any machinery manufacturers in the Leicester area outside Stibbe and the Bentley Engineering Group. We believe that the remaining firms in this sector will be able to continue in business, though on a reduced scale until the market picks up again, which we expect to be in 1976. The redundancies which have occurred have to some extent reflected the decline in world trade, but the firms have been able partly to offset the effect of the decline in trade and thus limited their redundancies by taking on general engineering sub-contract work.

I shall not go into all the background concerning the firm of Stibbe, but this matter was brought to ministerial notice on 11 th November when my hon. Friend met the Under-Secretary of State for Industry. It is probably regrettable that the matter was not brought to ministerial notice before that date, but that is the situation, and my hon. Friend the Undersecretary of State did everything possible at that stage.

My hon. Friend advanced four reasons for urging the Government to set up an inquiry. He raised a number of points about import controls and mentioned various foreign countries. He suggested that other countries are subsidising the textile machinery industry or parts of it. We have no knowledge of that situation, and if my hon. Friend the Member for Leicester, South has any evidence I hope that it will be forthcoming.

Many of the matters raised by my hon. ,and learned Friend the Member for Leicester, West are not the responsibility of my Department. I do not seek to hide behind the ministerial office, but the fact is that those matters happen to be the responsibility of the Department of Trade and the matter of imports is not our concern. However, I shall see to it that my hon. Friend's points are drawn to the attention of my right hon. Friend the Secretary of State for Trade. I assure him that will be done.

Mr. Greville Janner

I thank my hon. Friend.

Mr. Heffer

I cannot say that an inquiry will be set up, but the point made on that topic will be clearly noted. We will examine what has been said. At this stage the Government have no intention of carrying out such an inquiry, but the point has been clearly noted. I shall see that these matters are drawn to the attention of the relevant Ministers, and possibly something positive will come out of this debate to make certain that the industry does not decline any further.