THORN ELECTRONICS (FACTORY CLOSURES) (Hansard, 18 April 1978)

§ Mr. Edward Lyons (Bradford, West)

On 5th April, Thorn Consumer Electronics Industries Limited announced firm proposals to close down in July its Bradford and Shipley television factories, leaving only an isolated design and development team of 80 engineers in Bradford. This cataclysmic decision, since the word "proposals" used by Thorn is merely cosmetic, will force 2,100 workers and executives into the dole queue, bringing misery to them and their families. It will also damage the work prospects of future generations of local school leavers, impoverish the Bradford region, and undermine the long-term competitive ability of the British television and components industry.

Not a word of appreciation for the past services of its staff appeared in Thorn's official announcement. No vestige of serious concern for its staff—no element of loyalty or commitment to them—is yet obvious. The announcement was buttressed by the publication of some selective statistics seeking to show that technological change demanded massive cuts in overheads and mass sackings. Thorn's Bradford staff insist that the statistics are misleading.

On the same day that the closure was announced, Thorn advertised in the local Enfield Press for 22 different types of worker under the savagely ironic heading, It pays to work at Thorn. Those at Thorn have repeatedly and successfully enlisted the help of Government Ministers and local Members of Parliament in order to limit Far Eastern imports 410 and to prevent the opening of a television factory by Hitachi in Durham in competition with Thorn, but Thorn now discharges that debt of gratitude by treating Ministers and Members of Parliament alike with contemptuous indifference.

There was neither advance consultation nor advance notice either to Ministers or to Members of Parliament, and Thom's thanks to both is to smash the Government's regional policy by closing its factories in an intermediate area, which Bradford is, and concentrating in the South-East.

I naturally assumed that to close down of one of Europe's largest, most successful and modem colour television factories must mean that Thorn was in financial difficulties. So I looked at the 1977 Thorn Industries report. To my amazement I found that net profits, including television rentals, of the consumer electronics division were £57.4 million—a jump of nearly £10 million compared with 1976. Most of this came from rentals, but the chairman, Sir Richard Cave, said that a small increase in manufacturing profits had been achieved.

Japanese imports have only 10 per cent. of the United Kingdom colour market, and since the PAL licensing system prohibits Japan from exporting to Europe colour sets over 20 inches, and since Hitachi was forbidden to manufacture here, one could scarcely imagine that here was a scenario for closure at Bradford.

Undoubtedly, there have been technological advances but this trend is not new. If these advances alone endangered Thorn in Bradford, it is astonishing that Thorn did not say so months ago in its arguments to show what additional damage Hitachi's coming to Britain would do. The powerful argument that Thorn already needed to cut 2,000 people was never used in that debate, and MPs were permitted to assume that no Hitachi in Durham meant continued manufacture at the main Thorn factories at Gosport, Enfield and Bradford.

This technological evolution cannot have taken Thorn by surprise. Therefore, I am sceptical about it as a reason for closure. After all, Thorn employs 74,000 people in the United Kingdom. It has plenty of room for relatively painless contraction by natural wastage, by phasing out the hundreds of those over 65 and by 411 voluntary redundancies. This course was not taken. Instead, there is evidence of a determination to close. Good television models, such as the 9000 and 9200, have been transferred from Bradford. Problem models such as the 9500 have been transferred to Bradford. The 9500 required 1,000 design changes while actually in production and the work force coped nobly, but the development costs were laid at Bradford's door.

The suspicion must arise that Thorn wishes to close Bradford as part of a long-term design to withdraw from manufacturing and, instead, to import foreign sets for distribution through its profitable rental outlets. Even if this is not the case, Thorn's recent history, including the closure of the Skelmersdale television tube factory, with the loss of 1,400 jobs, does not indicate too robust a commitment to fight for Britain.

Bradford employed more than 4,000 people in 1974. Now it is 2,200 and in July it may be none. Can Thorn be persuaded to change its mind? That is crucial for Bradford. Bradford has a first-class work force, working on the premises, with a brilliant design team. Industrial relations have improved dramatically over the past two years. The workers are capable of great things if they are not impeded by London management. But enthusiasm, skill and reputation for quality are only part of the answer.

Thorn must spend more on research and development and forward planning. It is an utter disgrace that with its huge resources it is having to import 80,000 colour portables from Germany. Why? Because it fails to anticipate the market trends and thus has no colour portable yet of its own. It waits to see what succeeds elsewhere before developing its own model. What an indictment! Thorn has made no real move in video cassettes despite the great future for these.

Thorn must also spend more on market research and advertising for sale. Aggressive marketing is needed. The trouble is the depressed psychology of Thorn Electronics' senior executives. If Thorn can develop the will, Bradford can survive and prosper and contribute to the general Thorn success story.

The staff is now putting forward detailed plans for survival. I do not 412 propose to go into those or to anticipate them, but what is necessary is that Thorn should not just patiently listen but should seriously listen at the meetings to be held to discuss those proposals. If Thorn does not listen, Bradford's serious unemployment figure will rise substantially.

I now come to what the Government can do to assist. Thorn, in Bradford, in its main factory, is divided into two parts. No. 1 factory is the old Baird factory, and across the road is the modern 1969 television factory which, I believe, is owned by the Norwich Union. It is generally conceded that there could be a withdrawal from the No. 1 factory as a move to cut overheads. In order for Thorn to derive benefit from such a move, it is essential for the No. 1 factory swiftly to be sold or let.

I hope that my hon. Friend the Minister will tell us tonight of the Government's proposals to afford assistance to ensure that overheads can be cut, but may I ask what the Government intend to do about this challenge to their original policy? What pressure will they bring on Thorn to be mindful of the need to keep jobs in the intermediate areas? Those are matters which everybody in the Bradford area will listen to very carefully indeed.

I know that the Minister, in common with all hon. Members from Bradford and the Bradford region, was distressed by the surprising announcement by Thorn. Tonight he speaks on behalf of the Government, and he knows that if regional policy is to mean anything at all strong efforts will have to be made to ensure that the Thorn main board is brought into discussions to achieve a change of mind in the directors who run the Thorn consumer electronics subsidiary.

Nobody who has met the executives of the work force recently, as have Bradford Members of Parliament, can fail to be impressed by their conviction that there are solutions to these problems or by their conviction that the statistics and general picture presented by the Thorn consumer electronics management is defeatist and distorted. The executives are convinced that there is no overwhelming argument for closure. They believe that, given the will, there is a need for serious examination of the position and scope for the continuous operation of Thorn, in 413 profit for the company, in satisfaction for the work force, in general prosperity for Bradford, and in tribute to the Government's regional policy—a policy which it is essential should succeed if the British regions are to continue to be worth living in.

§ The Under-Secretary of State for Industry (Mr. Bob Cryer)

I first want to make some general remarks about the position of the consumer electronics industry.

The difficulties of the industry in the United Kingdom have been evident since the dramatic fall-off in demand for consumer electronic goods, notably colour televisions, in 1974. At that time the United Kingdom industry was geared to producing 2.5 million colour television sets per annum, but since then demand has dropped to its present level of around 1.5 million sets, and forecasts do not project any significant increase in today's level in the foreseeable future. I may add that today's position is in no way due to the increase in VAT from May 1975 to April 1976.

In addition, as my hon. and learned Friend pointed out, modern production developments have brought about a need for considerably lower levels of employment. The whole of the United Kingdom consumer electronics industry faces a period of rationalisation and reorganisation if it is to be able to face the challenge of competition. However, it should be noted that the sector working party report, in paragraph 6.9, said: The SWP believes that the size of the labour force necessary to its 1980 objectives will not be significantly different from that in 1976. At present the Government are providing encouragement to the industry through their support of the inter-industry arrangements that are designed to restrict imports of consumer electronic goods, principally from Japan. The Government have also taken direct action to limit the import of portable monochrome television sets from Taiwan and South Korea. These actions have provided the industry with a breathing space in which it can reorganise.

In recognising that, the consumer goods sector working party of the Electronics 414 EDC of NEDO has commissioned a consultancy study to consider the performance and structure of the United Kingdom electronic consumer goods industry. It will present its detailed findings as soon as possible. They are expected at some time early in the summer.

It is extremely surprising that Thorn should have produced a proposal to close the Bradford plant when the working party is producing a report on the industry. The action by Thorn is clearly pre-empting any conclusion that the study may make if it pursues the draconian proposal to close the Bradford plant. In the meantime, the major and underlying problem within the industry—that of over-capacity—has been considered under the Government's industrial strategy by the sector working party. In its annual report, which was published last December, it was recommended that the industry's capacity should be rationalised by between 20 per cent. and 30 per cent.

My hon. and learned Friend presented a strong case. I shall deal in some detail with the Thorn closure at Bradford. The loss of over 2,000 jobs in an area of high unemployment is a severe blow to the local community. I share the concern of the work force and those hon. Members who have connections, like myself, with Bradford. I know that my right hon. Friend the Minister of State, Department of Industry—the Member for Swansea, West (Mr. Williams)—has an exactly similar concern. At a meeting last week with several hon. Members my right hon. Friend asked for a meeting between representatives of the Bradford work force and the Thorn management, with himself in the chair, to discuss a possible alternative proposal that is now being drawn up by representatives of the Bradford work force. Steps are being taken to set up the meeting to take place on 25th April.

It is heavily ironic, as my hon. and learned Friend said, that the proposed closure comes shortly after the controversy over Hitachi. The industry made much of the likely adverse effects on unemployment if Hitachi set up production in the United Kingdom. Thorn and other parts of the industry, both managements and unions, were keen to lobby the Government on the possibility of Hitachi 415 setting up production in this country, and understandably so given the problem of over-capacity, Thorn's enthusiasm for communicating with the Government seems to have evaporated on the closure proposal. We were told of the proposal only on the same day as hon. Members and the unions. It is, as my hon. and learned Friend said, something of a stark contrast of attitude.

A job loss of this magnitude would be tragic, and would be made even more so by virtue of the fact that it would fall in an assisted area. Assistance is given—Bradford is in an intermediate area—precisely because unemployment is greater than in other areas. Bradford is a programme authority under the Government's proposals for the Inner Urban Areas Bill. It ranks for some significant form of assistance because of those problems. To rob Bradford of these jobs is, as my hon. and learned Friend said, to fly in the face of the Government's regional policy.

I understand that the company argues that it is impossible for it to obtain the savings both in manpower and in overheads to enable it to remain viable unless a whole manufacturing unit is closed. The company claims that for various reasons—principally that other important activities beside colour television assembly are undertaken at its remaining plants—Bradford is the plant proposed for closure. It must be said that out of approximately 9,000 employees only 100 are employed on research and development. That is a very small number for such a competitive area of activity and for the development of new jobs to replace those that are inevitably being diminished within the industry.

In its report the sector working party recommends, in paragrph 8, that no support is given by the Government to the creation of additional capacity within the industry at this stage. Further, that the Government and its agencies should consider support for the eliminatoin of spare capacity from the sector, and for the creation of alternative employment for the plants and work forces concerned. We think that sector working parties have an important role to play in laying out a general strategy for industry. Clearly, in its report the working party envisaged discussion of its proposals. We are awaiting the report on the industry, 416 commissioned by the working party, before embarking on a detailed assessment of the position.

Thorn's immediate proposal for closure of the Bradford plant ignores the recommendation in the report for a planned reduction in capacity, the possibility of Government support and the creation of alternative employment. We have not given any support to the creation of additional capacity so we are playing a part in the general strategy envisaged in the working party report.

If workers at Thorn's are to be given a chance to demonstrate their ideas to retain production, the company must be serious in assessing the proposals and not simply watch the three weeks go by while it cynically plans to issue redundancy notices to finish at the summer holidays.

The shop stewards, as my hon. and learned Friend pointed out, have many ideas. They claim that Bradford can be made to work, and work well. If we are to succeed in retaining our manufacturing base as a trading nation, we need to harness the undoubted enthusiasm and energy that is available from working people who build up a relationship of trust between themselves and the management. It would be rendered doubly difficult to build up such a relationship under the threat of the issue of redundancy notices.

Any assessment of capacity in the industry must be made by means of joint discussions and not by a unilateral declaration from the executive suite. People who give their lives to work have the right to be treated with decency and respect by the representatives of the owners of capital. Lives are more important than capital.

I should like to deal with some of the specific points put forward by Thorn's regarding the closure. The company claims that it needs to save £5 million of overheads and that the matter is immediate. Thorn is not a poor company. My hon. and learned Friend mentioned the profits for two years, I should like to go further back.

From 1970, the net profits of Thorn Consumer Electronics are: 1970—£20 million, 1971—£24.4 million, 1972—£29.5 million, 1973—£40.2 million, 1974—£48.2 million, 1975—£47.4 million, 1976—£47.7 million and 1977—£57.4 million. It is 417 clear that Thorn has not been unsuccessful in achieving net profits of considerable magnitude.

Thorn occupies a dominant position in the television rental industry and separate figures for manufacture are available for only two years. In 1972, manufacture accounted for £11.3 million of profits and rental for £18.2 million. In 1973, manufacture accounted for £16 million of profits and rental for £24.2 million. It is a fairly safe assumption that within the profits for 1977 manufacturing accounts for a reasonable part.

In these circumstances, it would be reasonable to suppose that Thorn is able to make some provision for research and development in providing new products and so providing new jobs. Electronics was to be the great growth industry to replace some of the traditional industries, such as textiles, in which Bradford has been affected by reverses.

Clearly, against that financial background there should be room for considerable manoeuvre by this gigantic capitalist enterprise. If it finds that it can afford to run only part of the site in Bradford—the site consists of two areas, the old Baird factory and another factory that is less than 10 years old and is the most modem and largest television factory in Europe—the Department of Industry could examine the possibility of converting the older part of the factory into units for small firms.

We have recently had a feasibility study in Calderdale and we are now widening our area of examination for such a possibility. I emphasise that it is a possibility. We have made a serious examination of a mill in Calderdale, which has not proved satisfactory, unfortunately, but certainly we would be willing, if there were a possibility, to enter into an examination of this property in order to reduce the overheads, so that Thorn could entertain the possibility of retaining an important number of jobs in its major Bradford factory.

This possibility can be considered, however, only if Thorn is willing seriously to re-examine the position, taking into account the proposals put forward by shop stewards. We have no powers to compel Thorn to take a decision either 418 way. Contrary to popular myth, we do not have enormous powers of intervention in industry. We can only persuade. I hope that Thorn can be persuaded that its proposal should be reconsidered and that serious discussions can be entered into with a view to placing Bradford on a viable basis, taking into account the plan put forward by the shop stewards and the points so ably raised tonight by my hon. and learned Friend.

My hon. and learned Friend has mentioned the plan of the shop stewards with enthusiasm. I have not seen the details of the plan and nor has my hon. and learned Friend, so far as I know. But certainly what has impressed us is the enthusiasm, the determination and the dedication of the work people's representatives that we have met. In my view, this determination and enthusiasm must be harnessed into British manufacturing industry if we are to succeed in harnessing all our people's talents for the future.

Not to consider seriously these proposals but to treat them merely as part of a time consuming exercise would be to generate cynicism and disenchantment and that is something that we must set our eyes against.

If I may repeat my words, I very much hope that serious discussions can be entered into with a view to placing Bradford on a viable basis, taking into account the plan put forward by the shop stewards and the points so ably raised by my hon. and learned Friend tonight.

In conclusion, a great tribute is due to my hon. and learned Friend and other Bradford Members of Parliament who have taken up this cause and pressed it so ably. They have taken up a cause when they were met with a proposed decision on which they were not consulted, and on which the shop stewards' representatives were not consulted, and they have sought to reverse this decision in order that meaningful and proper discussions can be entered into. I hope that their efforts, and the efforts of the Government and of all the parties involved, will result in success, and a reassessment of this very serious proposal.