HC Deb 20 July 1977 vol 935 cc1810-20

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]

1.30 a.m.

Mr. David Walder (Clitheroe)

The subject of my Adjournment debate concerns the firm of Mullards in Simon-stone in my constituency. The company employs 2,200 people, most of them males. That is something of a rarity in Lancashire, because the county tends to contain a large number of female employees. Between 700 and 800 of these people are employed in the glass factory, and about 1,400 work in the manufacture of cathode ray tubes for television.

Tube manufacture started there in 1955. The glass factory was established in 1960. The significance of the glass factory for Simonstone is that it also supplies glass to the other principal Mullard plant, which is the Belmont plant in Durham. That plant employs 1,400 people. The employment catchment area of the glass factory stretches over about a 10-mile radius and therefore this matter concerns not only me as the Member for Clitheroe but the hon. Members for Accrington (Mr. Davidson), Rossendale (Mr. Noble), Nelson and Colne (Mr. Hoyle) and Burnley (Mr. Jones).

This firm is the last and only British manufacturer of television tubes. It supplies about 60 per cent. of the home market. It is significant, however, that it also has a very favourable balance of exports. The firm received the Queen's Award for Industry for exports as a mark of that achievement.

It has received from Mullards a considerable amount of capital investment in the last few years. Employment in our part of Lancashire is sparse. I do not argue for one moment that we are the worst-hit part of the United Kingdom. Three or four years ago our employment figures were most encouraging. However, there has undoubtedly been a decline in the last few years, which causes us all concern.

The link between this firm and the proposal to establish Hitachi at Washington in Tyne and Wear is that the Hitachi factory, if established, would produce between 200 and 500 jobs. It is no part of my argument or of the case put by the trade unions or management at Mullards to fail to recognise the need for employment in the North-East. I must stress, however, that we in the North-West also have our needs.

Hitachi would be established in a development area. It would encourage inward investment, creating the jobs I have suggested, but in the process—assuming that the Government agree to the development—it would in a sense use British taxpayers' money to become established. According to its own statements, Hitachi looks forward to the Government giving its final approval to the scheme, and I and a number of the hon. Members for the area affected have therefore had discussions and meetings with the Minister of State. I wish to place on record the Minister's most helpful and frank attitude throughout.

The Government's argument is that if Hitachi is given to go-ahead, it will embark on a four-year programme. It will take Hitachi about 18 months before production starts, but the whole programme will take four years. At the end of that period the factory will be producing about 100,000 television sets. Safeguards have been suggested by the Government, and basically the factory will use 50 per cent. or more of British components in manufacturing its sets. If the sets do not conform to the standard laid down, they will count against the quota of Japanese imports into this country. We are also told that 50 per cent of the television sets will be for export from this country.

Mr. Doug Hoyle (Nelson and Colne)

The hon. Gentleman is making an important point, and I, too, have heard the argument that 50 per cent. of the sets will be exported. What has not been said is that if Hitachi comes to this country, it will be limited to a figure of 50 per cent. because of licence agreements. Therefore, if Hitachi desires to exceed the 50 per cent. figure, it will have to look to production on the home market as well as to increased exports.

Another valid argument is that the only other country to which Hitachi is likely to go is West Germany, where labour costs are higher than here. That will have an effect in terms of competitive costs. Would it not be better if Hitachi were not to come to this country but were to go to a country such as West Germany? If that were to happen, the effect on the electronics industry would be less disruptive.

Mr Walder

I would reply to the short point by saying that it would be better if Hitachi did not come to this country, but on the hon. Gentleman's more detailed points, perhaps the Minister will be able to deal with them more fully than I can.

It is the terms which are likely to be imposed by the Government that give me the greatest concern in this matter. Short term I am prepared to accept that there is a gain to the North-West, but in the long term I am worried about the effects on that area—and even on the North-East, too.

The most sinister aspect of the matter is the establishment by Hitachi of a factory in Finland which, we are told by Hitachi representatives in Britain, is to concentrate on the Russian market. That market is somewhat unpredictable because it can be opened or closed at the whim of the Soviet authorities. But it is plain that the overall intention is to penetrate the European market with sets assembled in Britain and in Europe.

The factory in Finland has been established with the agreement of the Finnish Government. It is called Valco. One of the most important points is that anything that is produced by that factory may come into the EEC and we should have no way of controlling that form of import. The developments at Valco are significant in that the ownership is by shares 60 per cent. of which belong to the Finnish Government, 20 per cent. to the Finnish concern, Salora, and 20 per cent. to Hitachi.

I understand that the company is rather old-fashioned in its manufacturing processes now but that the firm has said—and I quote: We shall have completely different methods in the following years". The firm is obviously happy that it will not face the same import duties for its goods entering the EEC as would products from Japan. A figure of 150,000 tubes has been mentioned as the likely number that will be coming into Britain.

They will be tubes for large pictures, and I stress that

There is no doubt that Salora wants to penerate the United Kingdom market and so does Hitachi. I find that worrying, because Hitachi has spoken with two voices, one here in Britain for our consumption and to allay our fears and with a different one in Finland. I have a translation of an article that appeared in a Finnish trade magazine which contains two or three significant sentences which I shall now quote: So they"— That means the new firm— will get a complete selection through Valco already before the year 1980. Furthermore Finland as an outside member of the EEC enjoys the customs reductions, while the imports from Japan stays liable for duty. Hitachi, however, aims to evade this customs duty by establishing a colour television factory in England. That puts Hitachi's hopes, intentions and ambitions clearly.

I should now like to attempt to make a summary. If an Hitachi factory comes to Britain, what shall we get out of it? There will be 200 to 500 jobs in Tyne and Wear. Mullard tubes may go into Hitachi sets—but for how long? That may happen initially but my fear is that the situation would deteriorate and that it would certainly not be to the benefit of the Mullard factories. In consequence, we might experience severe disadvantages and I should like to set out some of those disadvantages.

If the Hitachi sets were to contain 50 per cent. of British components, or even more than that, unless those sets are exported, that will inevitably be at the expence of existing United Kingdom manufacturers and would reduce their present share of the home market. Mullard's present share is now about 60 per cent. of the home market, so that would have to be at the expense of Mullard's. At the same time there would be straight imports into the United Kingdom of Hitachi sets. The figure has been put at a minimum of 10 per cent. rising to about 17 per cent.

In every way Hitachi would be achieving its ambition of penetrating the United Kingdom market and the market that has previously been supplied by Mullard's and United Kingdom manufacturers.

Of course, that would be so if all the conditions that the Government have suggested were applied, imposed to the letter without any variations and abided by. But what if they are not? What if there is some disagreement about supplies or timing of delivery, or some technical specifications? What if at some stage someone decides that Mullard tubes do not fit into Hitachi sets, or imposes the sort of conditions that the Japanese already impose upon attempted imports into their own country, with considerable effect? This can happen by chance, or—and I must say this—it can be deliberately engineered. I must say also that the Japanese have a reputation for being ruthless, determined salesmen, and not the best reputation for observing the spirit rather than the actual letter of agreements.

That really expresses, I hope, accurately, the fears of my constituents and of myself. My basic fear is that if the Hitachi factory is established, we shall have introduced a Trojan horse into our own electronics industry for a temporary advantage. I can see that it may sound attractive—a bit of investment and a few more jobs. But for that temporary advantage we shall have allowed ourselves a permanent disadvantage with regard to the Japanese.

That is the fear of my constituents and the constituents of the hon. Members who are present on the Government Back Benches tonight. It is the fear that I have. I hope that tonight the Minister can allay those fears. I want him, in effect, to say "No" to this project.

1.47 a.m.

Mr. Mike Noble (Rossendale)

I shall be very brief. It should be pointed out at the outset that on this issue the Members of Parliament for North-East Lancashire reach across the party-political boundaries and are united in their views about this particular development.

As the hon. Member for Clitheroe (Mr. Walder) has said, we are very concerned about employment in our area. I want to ask my right hon. Friend the Minister of State whether this proposal for a Hitachi factory is really in the best interests of the workers of this country in this particular industry. My view is that this proposal throws the whole of the Government's assisted area policy into some doubt.

I think that we have some evidence for making that kind of assertion. In the North-West, which is an intermediate area, we have seen tremendous difficulty in attracting new industry. Over the last two years we have also seen closures in our area in many of our basic industries, and factories opening in those same industries in the development areas.

That was within a national context. What we are now seeing with this proposal is a threat to an existing industry in North-East Lancashire from a company operating in an international context. We must therefore ask this question on behalf of our constituents who work at Mullards, which is recognised throughout the area as one of the most modern factories that we have and as one of the major employers of labour for a number of constituencies. If this development goes ahead, will it threaten the existence of this particular industry?

My view is very similar to that of the hon. Member for Clitheroe. That is that it is very doubtful that we can get absolutely watertight guarantees for the future that will last long enough to satisfy our constituents. There are a number of problems—commercial problems, and particularly technical problems—that could arise, and these could throw any agreement about British components into some doubt.

We have all been pressed by our constituents to make strong representations on this matter. I assure the House that we are under no pressure on this issue. But we are also concerned about the deep principle of the Government's policy towards the assisted areas and the relationship between intermediate areas and development areas.

We are concerned, too, about a point raised some weeks ago by my hon. Friend the Member for Nelson and Colne (Mr. Hoyle) when he tried to introduce a Ten Minutes Rule Bill to establish an inward investment board to control exactly this kind of investment in the interests of all the people.

I hope that the Minister of State will give us an assurance that unless he can secure an absolutely copper-bottomed, watertight guarantee from Hitachi, not simply about the existing jobs in Mullards, Simonstone, but about future prosperity and expansion there, he will not throw those jobs in jeopardy in an area in which alternative employment is very difficult to secure.

1.50 a.m.

Mr. Dan Jones (Burnley)

Since most of the workpeople at the factory in question come from my constituency, I wish to make a brief point and put it in the form of a question. The Minister knows of our anxieties, and he knows the reasons for them. I join with the hon. Member for Clitheroe (Mr. Walder) in saying that the Minister has been frank and open with us.

I put this question to my right hon. Friend: if the decision is to allow Hitachi to come into this country, in the North-East or anywhere else, can he assure the people at the factory in question that their industrial future as manufacturers of television sets and, in particular, tubes will be in no danger either now or in the future? It is a straightforward question. I hope that it is within the Government's power to give a commitment on that question, and I shall be very interested to hear the Minister's reply.

1.51 a.m.

Mr. Doug Hoyle (Nelson and Colne) rose——

Mr. Deputy Speaker (Mr. Bryant God-man Irvine)

Has the hon. Gentleman the Minister's agreement to his speaking in the debate?

Mr. Hoyle

I wish to put a new point to the Minister which we have not discussed with him before and which has not been brought out in the debate.

West Germany has an open market in the EEC and certainly Belgium and Holland have. Why should we open the floodgates with an industry which has spare capacity? France has a very restricted market. In fact, one cannot export into France unless one can offer 830 or 840 lines in addition to 625 lines, which is almost impossible for a foreign television manufacture. Denmark has a highly protected domestic market because of technical specifications. Italy—I do not understand this—is a special case. The Italians have not even gone in for colour television yet, but they are to do so next year. But they have controls which pre-date GATT, and they are continuing to operate them and keeping out not only Japanese television sets but ours as well.

Why should we continue, as we do in so many areas, to be the mug for other industries in the world?

1.53 a.m.

The Minister of State, Department of Industry (Mr. Alan Williams)

I thank the hon. Member for Clitheroe (Mr. Walder) and my hon. Friend the Member for Burnley (Mr. Jones) for their generous personal comments. May I genuinely say to all four hon. Members, who constituted a deputation to see me recently, that I thank them for the very constructive and reasonable way in which our consultations have taken place.

It has been a traditional policy of the British Government to welcome inward investment. As the House knows, 20 per cent. of British manufacturing industry is overseas owned. So there is nothing novel in the concept of welcoming foreign investment into Britain.

Furthermore, as hon. Members have said, if the company does not come here, we have to consider whether it would necessarily be any gain to us if it then decided to set up its operations elsewhere in the EEC. I note a report in the Newcastle Daily Journal saying that Germany, for example, would be very ready to accept Hitachi. Interruption.] I have not seen more than a newspaper report. I have not asked the company that myself.

I have to bear in mind also that there is here the prospect offered of 400 jobs in the North-East, in an area which is at the moment particularly hard hit by the closure of Plessey and where there are many people looking for employment.

I have been trying to secure guarantees from the company, particularly in relation to the use of United Kingdom components and particularly, again, in relation to the use of Mullard tubes. The Department and both companies have been having discussions in this matter. At present—as I indicated in private discussions with the hon. Member and my hon. Friends—the Hitachi company has provided Mullard with sets for technical assessment to see how far Mullard will be able to meet the requirements of the Hitachi set.

The aim of Hitachi will be to use as high a percentage of British components as possible, in some instances attaining 70 per cent., which is higher than some British companies attain. I have been told in confidence—therefore I cannot give the information now—which components, in addition to tubes, Hitachi would be willing to try to obtain from this country.

A further point to be borne in mind—as was fairly pointed out by the hon. Member for Clitheroe—is that where sets produced in this country contained less than 50 per cent. of British components they would count in terms the current import ceiling from Japan. The aim of Hitachi would be to export 50 per cent. of its British production, so that out of 100,000 sets that it would eventually produce, 50,000 would go abroad.

I have to consider the effect on the component industry, because this would mean that the industry would be providing substantial amounts of components for the sets sold in this country and also those sold elsewhere within the EEC—sets that would otherwise either be produced in Germany, which therefore would contain no British components, or would be brought in from Japan, which would certainly not contain British components.

The point was made that this would reduce the export potential of the United Kingdom. I suggest, with respect, that that is not a valid argument, because if Hitachi is, as I think we accept, determined to get into the EEC, if the company set up in Germany, it would still sell its 100,000 sets in the EEC market and take the same amount of the market, regardless of the place from which the company is operating, it is going to go ahead. If it is in Italy, it will take the company about 18 months to get into full production, and it will be 1982 before it reaches the level of production of 100,000 sets. By that time the United Kingdom market may be back at around the 2 million set mark that it reached in 1974.

As for the Finnish tube factory, I can only say that I have been given to understand that it is geared for the Eastern European and Soviet markets rather than the EEC market. I accept the point that under EFTA arrangements the factory would have access to the EEC, but the discussions that we have had confirm that Eastern European markets are the targets of the company.

I was asked about guarantees. I would simply point out that Hitachi is one of the largest engineering companies and it is likely that it would want further developments in the EEC and would be aware that other members would watch the way in which it conformed to any guarantees that it gave.

I can assure the House that no decision will be reached without due regard having been taken of our full national interest, including the impact of employment in the constituencies of the hon. Member and my hon. Friends.

Mr. Dan Jones

Can my hon. Friend, in one sentence, give an assurance that before a decision is ultimately made there will be a meeting between Members of Parliament and representatives of Hitachi and the Philips Company, which is the parent company of Mullard?

Mr. Hoyle

And the trade unions.

Mr. Dan Jones

All right; I accept that.

Mr. Williams

I shall certainly consider that suggestion. It is a new one. I have given an undertaking to the British manufacturers that there will have to be further consultation before a final decision is taken.

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 Two o'clock.