§ 11.57 p.m.
§ Mr. J. W. Rooker (Birmingham, Perry Barr)
In raising the problems of the British zip fastener industry, I wish to declare an interest, but it is an interest affecting my own constituency and employment.
The industry is a relatively small one, employing about 4,500, with a turnover of about £15 million a year. The main employment in the United Kingdom is in two or three large companies centred on Birmingham, Kent, Devon and Cumberland, and there are branch factories of a company in South Wales.
I first raised the problems of the zip fastener industry in this House in May 1974, when I warned that, due to Japanese penetration of the British market, there was a possibility of severe job losses. At that time due to the ignorance of many hon. Members who thought that it was funny, I was laughed down at Question Time. Since that time, more than 200 jobs in Birmingham and about 100 in South Wales have been lost, and one small company has gone out of business.
During a routine industrial visit which I paid to Lightning Fasteners, in Witton, Birmingham, about a year ago, the operations of a Japanese company called YKK were explained to me, including its trading methods and the possible effect on British employment levels.
After raising the matter in the House, I received letters from two quite small companies—not members of the Zip Fastener Manufacturers Association— 1514 confirming what I had been told at Lightning Fasteners. One company in Manchester—Slick Fasteners—told me that the Japanese firm was selling a loss leader—one product—so cheap in 1974 that it was at pre-1939 prices. Subsequently, the product line had been discontinued by British manufacturers unable to compete.
The other company which wrote to me—a London company, Ace Slide—said that 14-day all-expense paid holidays in Japan were frequently available to buyers for United Kingdom concerns. It also complained about the dumping of products in the United Kingdom at unrealistically low prices.
As the Minister will remember, I raised this matter with the Department and was told that YKK had a relatively small share of the United Kingdom market. Five years ago its share was about zero. In 1974 it varied between 23 per cent. and 28 per cent.—depending on the figures that one uses. Nevertheless, we are talking about a share of £3 million out of a total of £15 million. That is no small share. What is more important is that if the existing growth rate continues there will be no British firms in this product line in four or five years and consequently no jobs for British workers.
In the past five years British companies have got rid of 1,000 employees. That has been the price of YKK's increased share of the market. Its penetration from zero to about 25 per cent. has cost British workers about 1,000 jobs. I understand that meetings were held last summer by the Department with the United Kingdom manufacturers' association and YKK. I believe that a promise was extracted from YKK that the United Kingdom content of its product would be increased in the next four years. YKK has a small company in Cheshire, but basically the real threat comes from finished exports from Japan into Britain.
It has been made clear to me by the managements and by the workers on the visits that I have paid to the companies in Birmingham, and in the discussions that I have had with other companies, that the complaint is not that foreign companies import or have plants in this 1515 country. They maintain that imports of finished or part-finished goods should conform to what they believe are reasonable trading practices which conform with international trading treaties designed precisely to prevent dumping so as to capture the market.
The rate of penetration of the United Kingdom market continued during 1974, and in late November and early December of last year we had a redundancy announcement in Birmingham. It was emphasised to me by the company and by the shop stewards that they had warned that there would be redundancies six months earlier and that the Government had done nothing about it. Along with other hon. Members I have made representations to Ministers. It is significant that only today, in discussing the problems with a couple of manufacturers, it came to my attention for the first time that Marks & Spencer Ltd. has an arrangement that when it buys zips from YKK from Japan the zips are produced without the YKK initials appearing on the zip. That was news to me. I shall now look at Marks & Spencer products in a detailed fashion. It is significant that Marks & Spencer does not wish it to be known that it is using Japanese zips on some of its items.
I understand that the brass zips that Remploy use for leather brief cases—that is, incidentally, a Government-sponsored organisation—are being purchased in Japan and flown into this country. They are not made at the YKK plant in this country but in Japan. I am told that there has not been an order from a British company for brass zips—that is an important part of the market—for the past 12 months.
I understand that within the past month the Department has received a fairly detailed report from the Zip Fastener Manufacturers Association in an attempt to back up its claim that YKK is dumping and using illegal methods to sell its products in the United Kingdom. From that point of view this Adjournment debate could not have come at a better time for the industry or for my constituents, particularly for those who lost their jobs and for others who can see that if nothing changes they will be losing their jobs later this year.
1516 On the basis of YKK's avowed and public intention to capture 100 per cent. of the United Kingdom market—which must put all our firms out of business and our workers out of jobs—I must put some questions to my hon. Friend. I understand that I cannot have detailed answers this evening.
First, will my hon. Friend ensure that this Department and, possibly, the Department of Trade, look again at YKK's assurance that its plant at Runcorn was to be used for export, thereby implying that it would help the United Kingdom balance of payments? I understand that it gave the same assurance to the Dutch and French Governments, and it cannot use the same excuse in every European country. Will he also find out what evidence the Portuguese, Spanish and Italian Governments had for putting import controls on this company in the last 12 months? They have found evidence that it has affected their workers and markets and they have acted.
The Canadian experience is most important. The Canadian Government had the initiative to send someone to Japan to obtain local price lists, which are important, technically and legally, in proving a case about dumping. They were satisfied that there was a case and they took action to protect their companies. Since then, however, printed price lists have been withdrawn in Japan, and negotiations take place on the backs of envelopes or cigarette packets, so it is no longer possible to get local price lists which indicate the real costs in terms of production for the home market. This is a dubious practice; Her Majesty's Government should ask the company for its Japanese price lists. We are not interested in the discounts, but lack of these price lists should be taken as evidence that the company is up to no good in this country.
I was surprised by a survey, taken by our manufacturers, of total wage costs—including holiday pay, absenteeism and social security benefits—in the textile industries in Japan and this country. This showed that ours were 79p an hour, and the Japanese costs amounted to 81p an hour. So their labour costs are higher, yet they can still sell at ridicuously low prices.
1517 Also, various Japanese companies obtain loans from the Government, and there are rules requiring YKK employees to deposit 10 per cent. of their earnings and 50 per cent. of their bonuses to assist with company investment. I take that fact from the YKK annual report for 1973.
This company controls 90 per cent. of its home market. It is a major world company, having ruined even the American companies to grab its share of the market. Two-thirds of its world sales are made in Japan, with all the benefits of long runs and low costs, with an output 20 times that of the largest United Kingdom firm, which has its headquarters in Birmingham.
I am proud of the fact that the first zip fastener in Europe was made in Birmingham, in 1919. It is an industry and a product that we should be upset to see leave the city of a thousand trades. We have lost too many jobs in manufacturing industry in the last few years and we do not want to lose this one. My visits to the company at Witton have been brief but detailed, and with my background as a former engineering toolmaker, I did not think that it lacked much in techniques. It is part of Imperial Metal Industries, which is 63 per cent. owned by ICI—probably the largest company in the country—so it does not appear to face the lack of investment which is a problem for the rest of British industry.
I do not know how many visits the Minister has made to the Midlands or Birmingham since his appointment, but I hope that if he has a visit in the near future, he will find it in his brief to accept an invitation to visit the headquarters and look at this factory. I think he would find it useful.
We are having a short debate and I have more support tonight than I have had for either of my previous two Adjournments debates—in the persons of my hon. Friends the Member for Erith and Crayford (Mr. Wellbeloved) and Birmingham, Erdington (Mr. Silverman). They may wish to intervene, but I would make a last point which is important for more than 20 Members whose constituencies include zip fastener companies, or whose constituents work in the industry.
1518 Last July a radio programme, "The Japanese Way," was broadcast on BBC 1 and BBC 2. It was a 45-minute documentary, which showed the Runcorn, Cheshire plant of YKK, examined the operation and discussed the way in which the plant was worked. There was some discussion and criticism afterwards.
I have not seen the programme—nor did many other hon. Members associated with the zip fastener industry—and I am therefore grateful that the BBC is to show it on Wednesday morning for many right hon. and hon. Members, including you, Mr. Deputy Speaker and hon. Members from the Labour, Conservative and Liberal Parties, so that we can see what the opposition is up to.
With this Adjournment debate, I hope that the Government and the Departments of Trade and Industry will feel under some pressure to come up with some answers, because, if not, we shall continue to pursue this. I hope that the Minister will give some of the assurances for which I have asked. I hope he will make it clear that the Government fully understand the seriousness of the case, that jobs are jeopardised and have been lost, and that there will come a time when the people in the factories will say "Thus far and no further".
§ 12.12 a.m.
§ Mr. Julius Silverman (Birmingham, Erdington)
I intervene only briefly to welcome what my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) has said. He covered most of the ground. Constituents of mine, employed in IMI in Birmingham, have written me numbers of letters about the Japanese intervention in this industry, and they are obviously much concerned about this and about Government inaction in this matter.
There have been a number of redundancies—just over 100 at IMI at present. I do not think the company or the workers are concerned about these redundancies in themselves, because most of these people have been absorbed elsewhere in the company. They are concerned about the possibility of the destruction and disappearance of the zip fastener manufacturing industry from this country, and the loss of jobs of all the people concerned in this industry, by what they 1519 regard as completely unfair Japanese competition.
I have read the document to which my hon. Friend the Member for Perry Barr referred. I do not know whether it produces a case which could go before an international court on dumping, but when an ordinary person reads the details, some of which have been set out by my hon. Friend the Member for Perry Barr, it is apparent to him that there is not the slightest doubt that YKK is indulging in unfair practices at home and abroad—at home, because, having a monopoly, it takes measures to ensure that its distributors do not distribute slide fasteners made outside Japan. That is an unfair practice at home. Abroad, there are all the practices set out in the document—dumping and selling below the home market price.
There is the question of Runcorn. The company is obviously concerned about the factory there. Nobody could have any objection to a slide manufacturing company being set up in Runcorn and receiving Government aid—as it would in that area—if it were genuinely intending to produce British goods with British labour, even though the company was foreign-owned. But Runcorn is simply the Trojan horse to introduce Japanese imports. A great deal of what is being sold by Runcorn consists simply of articles manufactured in Japan, or mainly manufactured there and titivated a little in Runcorn. It is another method of achieving the Japanese objective of 100 per cent. of the market in this country.
The livelihoods of many people are concerned, not only at the IMI plant but throughout the country. I hope that my hon. Friend will be able to give us assurances that the Government are taking action. It is no good telling us that IMI must be competitive. If competition were fair, it would have nothing to complain about, but it is not fair. It is aimed, by unfair methods, at destroying an entire industry in this country.
§ 12.17 a.m.
§ The Under-Secretary of State for Industry (Mr. Michael Meacher)
I am grateful to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) for having drawn attention to the problems of this small industry, and for having 1520 done so in such a fully documented and wholly constructive manner. I fully appreciate the anxieties about unemployment expressed by both him and by my hon. Friend the Member for Birmingham, Erdington (Mr. Silverman). I shall do my best to answer their questions in the 10 minutes left to me.
Although many of the firms in it are relatively small, the zip fastener industry is dominated by three strong international groups which together probably account for more than 80 per cent. of the home market. One of these is the Japanese company YKK at Runcorn, to which I shall refer later.
During the last two years we have had several discussions and exchanges with the Zip Fastener Manufacturers Association about the industry's problems. In the course of these we advised it of the sort of evidence which would be needed to enable us to consider whether there were grounds, first, for securing restraints on imports, and secondly for initiating anti-dumping measures. In the event, the association has pursued its application for anti-dumping measures jointly with other European zip fastener manufacturers through the EEC Commission, and I shall refer to this later.
In support of its case for import restraints the association submitted to us a detailed report, which we received on 22nd January, on the effects of imports of Japanese zip fasteners and parts on the home industry. We are carefully considering the report, in consultation with the Department of Trade, but we have not had time to reach a conclusion. We are proceeding as quickly as possible. In the meantime, I cannot comment on the facts the report presents or the conclusions it reaches.
Japanese direct investment in Britain is a fairly recent phenomenon. During the last two years guidelines have been developed with the object of ensuring that new projects are to the mutual advantage both of the companies concerned and the United Kingdom economy. The most favourable terms for the United Kingdom are sought in such matters as employment in the assisted areas; the highest practicable degree of United Kingdom-manufactured content; a high proportion of exports, and the reduction of imports.
1521 These policies had not been developed at the time YKK decided to establish itself in this country and consequently we have no formal agreement with it, such as we would hope to conclude in any future cases. However, in discussions which took place last year, YKK assured us that over the next four or five years it planned to move towards a substantially British operation, with only speciality lines being imported. By 1978 it would be producing about 80 per cent. of the components required for YKK sales here, thus going a substantial way to eliminate its imports of both manufactured and partially-finished zip fasteners from Japan. Furthermore, employment at its Runcorn factory was expected to double over the current four-year period if expansion materialised as planned. The company has assured us that products manufactured at Runcorn already represent a substantial proportion of its sales, that it is contributing to exports, and that it hopes to improve its performance in this sphere.
My hon. Friend put an explicit question to me on this matter. I have no reason to doubt the assurance that we have been given, on the evidence that we have, but we shall continue to have meetings with the company from time to time to follow its progress in this and other areas.
My hon. Friend raised the issue of dumping. When the EEC Commission considered the complaint by European manufacturers of the dumping of Japanese slide fasteners, it announced last year, after a thorough investigation, that it did not consider that any protective measures were then justified. The Zip Fastener Manufacturers Association has told us that, together with other European manufacturers, it is considering making a further approach to the Commission on the need for anti-dumping measures.
My hon. Friend asked what action the British Government had taken on dumping. That was a fair question. Because several member States' industries in the EEC are involved, in the first instance anti-dumping action is a matter for the Commission. It is for the British Zip Fastener Manufacturers Association to consider whether it should formally seek the reactivation of the earlier application if it has any fresh evidence of dumping, 1522 subsequent to the Commission's conclusions of June last year. I stress that in the first instance it is a matter for the association to seek an answer to that question from the EEC Commission. That is what is provided in the regulations made since our entry into the EEC.
The consideration of requests by home industries for protection against imports raises complex issues. I shall try to deal with those issues briefly.
First, there can be no question of discriminatory restrictions on Japan. These would not only be in breach of our international obligations under the GATT and the Anglo-Japanese Commercial Treaty they would invite retaliation against our rapidly growing exports to Japan.
§ Mr. Rooker
I realise that time is short, but I should like to put one point to my hon. Friend. The inference is that we are exporting zip fasteners to Japan. I have been through all our trade figures. We may be exporting other goods to Japan, but no zip fasteners have gone from this country to Japan in the last few years, as is shown by Parliamentary Answers to Questions.
§ Mr. Meacher
The implication in what I said was not that we were exporting zip fasteners to Japan. I was saying that discriminatory—I emphasise "discriminatory"—restrictions on imports from Japan are not possible, for the reasons that I have given. I was about to go on to say that non-discriminatory restrictions are permissible under Article XIX of the GATT as a purely temporary measure, where imports are causing or threatening serious injury to domestic producers. However, other contracting parties with substantial export interests in the product—in this instance, Japan—would have to be consulted, and could claim compensation by way of tariff concessions on other products or, failing that, could take retaliatory action against United Kingdom exports. The United Kingdom has never used these provisions, and other countries have used them only rarely. It is only fair to admit that.
In this context my hon. Friend also asked what evidence the Portuguese, the Italians and the Spanish used to impose import controls on Japanese zip fasteners. I assure him that inquiries that we 1523 have undertaken have revealed no evidence of any quantitative restrictions by those Governments on Japanese zip fastener imports. If my hon. Friend has any evidence to the contrary, I suggest that he lets me have full details, and we shall then investigate the matter.
Another possibility would be for the Japanese Government voluntarily to restrain exports of zip fasteners in the same way as they control exports of ball-bearings and television sets to this country. However, such restrictions are the result of unilateral action taken by the Japanese Government, who normally introduce such controls only after they are fully satisfied that there is a real danger that unrestricted Japanese exports would cause serious disruption to the foreign industry. Another possibility would be voluntary restraint by YKK. This is already happening in the case of that company's imports into Italy.
That is the background against which we shall be urgently considering the industry's representations. It is relevant to point out that out zip fastener industry is a successful exporter. The exports may not go to Japan, but they go elsewhere in considerable quantities. Last year the industry's sales of fasteners and 1524 parts overseas amounted to £3.9 million, which was only fractionally less than our imports of £4.1 million.
I conclude by turning to the rest of the domestic zip fastener industry. My hon. Friend said that it is not under-invested or technologically backward, and I accept that. I shall seek to visit the factory he referred to when I am in the area and when a visit is convenient. Nevertheless, I hope that management and workers in the industry will seriously apply themselves to ensuring that there is more and better investment, the injection of the most modern plant and machinery, and the adoption of the most advance manufacturing techniques. All these factors are prerequisites to meeting the kind of import competition we face from wherever it may come. I end with the assurance that if the industry feels that the Government can help it to achieve even higher levels of efficiency—
§ The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at twenty-seven minutes past Twelve o'clock.