BERNARD WARDLE FACTORY, CAERNARFON (Hansard, 21 March 1980)

§ Mr. Wigley
As I was saying, another question is why did Bernard Wardle, in a depressed market situation, purchase two years ago a major new manufacturing facility at Earby? There is the question that if, as the directors would have us believe, the prospects for the PVC industry are bleak, why should the company be evaluated in a takeover bid at 32 per cent. higher share value than that previously prevailing on the stock market?
906 The biggest question, of course, is what the new owners, Ferguson Investments, plan to do with Bernard Wardle. Mr. Graham Ferguson Lacey, the owner of Ferguson Investments, has told me that he is definitely not an asset-stripper, and that he tries to build up enterprises, and not close them down. I understand that he has kept the first part of his promise by visiting Caernarfon this morning. I hope that this is a step towards reversing the closure and I wish him well in his attempts to do this. Certainly the eyes of the City of London, as well as of Caernarfon, will be on him to see how he intends to set about rebuilding the company at Caernarfon.
This is where I turn again to the Government's role. I ask the Minister here today: what will the Government do about the Caernarfon closure? To sit by as spectators to a travesty of justice is to condone what is being done. Bernard Wardle has benefited substantially from public funds by way of regional employment premium and other payments, and there is a legitimate public interest in this company.
The Minister may say that the Government have no power to intervene. Regrettably, that may be so. But they have a power to influence, to discuss the position with the new owners of the company and to stress the Government's concern at recent developments. The Government can make clear to Mr. Lacey the assistance that can be given to him if he tries to build up at Caernarfon with much-needed investment in new products and in new manufacturing techniques. They can indicate the support they can give him if he tries to develop the export markets, known to exist, for the benefit of the Caernarfon factory. All these things can be done without the power of direction, but by showing a little leadership. I would like to know today whether the Government are prepared to show such leadership.
We welcomed the assurances given on Wednesday by the Secretary of State for Wales that he will take up with Mr. Lacey the future of the Caernarfon factory. I ask that a specific proposal be put to Mr. Lacey—namely, that he consider operating the Everflex factory at Caernarfon as an independent subsidiary of Ferguson Investments, not coming under the umbrella of the Bernard 907 Wardle Group. I believe that if this were done and the company given its own marketing force, he could attract a number of key personnel with this structure that would open up an entirely new prospect for the factory. If the Welsh Development Agency were willing to enter with, say, a 30 per cent. equity stake in such a package, I have real reason to believe that an ongoing profitable concern could be secured for Caernarfon.
We also ask the Government to tell Mr. Lacey that they will be prepared to sponsor an independent assessment by professional consultants of the viability of the Everflex factory at Caernarfon.
The unemployment position in the Caernarfon area today is grim. The present unemployment rate for men in Gywnedd is 11.2 per cent. and the Arfon area will see a rapid deterioration in the coming months because of known changes in employment on construction projects. The CEGB pumped storage scheme at Dinorwig, which currently employs 2,400 persons, will make 800 of these redundant between now and the end of the year. Almost all of these will be local persons. There will be a further rundown in 1981. The construction of a new district general hospital at Bangor is coming to an end with further redundancies.
Likewise, there will be a loss of jobs with the completion during the coming year of the new Britannia road bridge to Anglesey, and of the inner relief road at Caernarfon. A total of 1,438 redundancies are today known to be in the pipeline and in addition to these there will be the school leavers of Easter and the summer who will be seeking work. These factors—

§ Mr. Russell Kerr (Feltham and Heston)
And the Tory Budget to come.

§ Mr. Wigley
Yes; the hon. Member is correct.
These factors and the Tory Budget will lead to the unemployment rate in Caernarfon escalating to over 20 per cent this year unless something is done. We need drastic, urgent action to bring new industry into the area.
It is against this background that the Government have taken the incredible step of downgrading the Caernarfon area 908 from being a special development area to an ordinary development area as from this August. How on earth can the Government justify such a step?
The Minister may well say that the Government over the next few years intend to spend £130 million on the A55 trunk road. This, of course, is welcome, but road building on this scale is not today such a labour-intensive exercise, and I ask him to state clearly how many additional jobs there will be this year from this project, and how many of these jobs will be in Gwynedd. The Arfon area is facing a desperate future, and I shall listen to hear what positive initiatives the Government are about to take to respond to this alarming prospect.
It is in this context that the future of the Bernard Wardle factory has to be judged. We cannot afford to sit back and watch this unnecessary factory closure. The fate of the Bernard Wardle factory at Caernarfon is of more than purely local interest. It is a test case as to whether the Government intend to have as a basis for their industrial policy any concept whatever of industrial ethics. If they have, now is the time to show it—and it can be shown not by passive indifference, but by taking a positive and early initiative to ensure fair play for a work force that deserves nothing less, and better prospects for an area which is otherwise facing a very bleak future.

§ The Under-Secretary of State for Wales (Mr. Wyn Roberts)
It is understandable that the hon. Member for Caernarvon (Mr. Wigley), should want to raise this issue this afternoon, which is of deep concern to a number of his constituents and indeed to all of us who understand and appreciate the problems that the closure of this factory would pose for those living in a rural area.
Our industry department first heard of the decision to close on 31 January. My right hon. Friend immediately arranged for the senior management of the company to be seen by a senior Welsh Office industry department official, so that we could establish the reasons for the decision. That was done on 4 February. We satisfied ourselves that no action was open to us to take to reverse the decision. It is a matter for management and management alone. But we have 909 kept in close touch, and we have assured all concerned that every possible step would be taken in the event of the closure being implemented to find an alternative occupier and attract other industry to the area. We have also kept in touch with the Department of Trade regarding the hon. Member's representations to it on share dealings.
As the hon. Member knows, I was with the Secretary of State when we received a deputation on Wednesday. My right hon. Friend and I were greatly impressed by the way it presented its case. It was both reasonable and reasoned. We fully accept the significant increase in productivity, and there is no reason to dispute the arguments put forward and the good labour relations that exist at the company. The Secretary of State stressed that the labour force's achievements and excellent labour relations record were major plus factors in promoting the area as a location for new investment. It was suggested to my right hon. Friend that there should be an independent assessment of the decision—whether it was, in fact, justified. It was suggested that he should appoint "a kind of referee".
My right hon. Friend explained that he had no power at all to take such action and, furthermore, that there was no way that he could impose a different solution on the company. He emphasised again that it was a matter for the company. But I sympathise with the feelings of the work force, who genuinely believe they have been let down by the company after fulfilling their part of the bargain as regards increase in productivity—the increase of 37 per cent. in one year, to which the hon. Gentleman referred—which, of course, generated considerable profit. Such profits are now being used, according to them, to support other parts of the Bernard Wardle group.
The deputation then asked my right hon. Friend whether, in the event of the Lacey bid going through, he would meet Mr. Lacey and seek to persuade him, as the new head of the group, to alter course. My right hon. Friend assured the deputation that he would certainly be willing to invite Mr. Lacey to see him if he was successful in his bid and that he would put to Mr. Lacey the arguments which the deputation had advanced.
I have noted what the hon. Gentleman said about the acquisition by Ferguson 910 Investments Ltd., and I was aware of the announcement made earlier today by the Bernard Wardle group. The hon. Gentleman has referred to the meeting which Mr. Lacey held this morning with the work force at the Caernarfon factory, and the reports which he has had of the meeting are by no means discouraging.
I am told that at the meeting this morning Mr. Lacey told the shop stewards that the last thing he wants is to be pressured by politicians. He wants no interference from Ministers. However that may be, I think that we shall have to wait for a formal statement to be made by the company before comment can usefully be made. No doubt, Mr. Lacey will be evaluating the evidence which, I understand, has been put before him about the performance of the Caernarfon factory. As I have said, my right hon. Friend intends to invite Mr. Lacey to meet him as soon as such a meeting can usefully be held.
On Wednesday my right hon. Friend stressed again the determination of the Department to do everything possible to find an alternative occupier if the closure proceeded and generally to seek to attract new industry to the area. He would make full use of section 7 assistance if that seemed appropriate. He referred also to the dualling of the A55 and the marked improvement in communications which this will bring. He told the deputation that he would be meeting Gwynedd county council in Caernarfon, as soon as it could be arranged, for a full-scale discussion on the problems of the area.
As I indicated earlier, the hon. Member is concerned also about a number of aspects of company law arising out of transactions preceding and at the time of a takeover bid for Bernard Wardle and Co., Ltd., and he recently raised these with my hon. Friend the Under-Secretary of State for Trade. The hon. Member has asked the Department of Trade to undertake an investigation under section 32 of the Companies Act 1967 into share dealings in the company about the time the takeover bid was announced in late January. I wish to place on record that his request is still under consideration and that meanwhile the Stock Exchange is carrying out its own investigation into those share dealings.
In considering this situation, it is essential to look at the problem in its context. 911 I am therefore glad that the hon. Member has given me an opportunity to comment upon the economic position of North-West Wales. At present, we are all rightly and properly worried about the implications of the British Steel Corporation's proposed run down for employment prospects in the south of the Principality The trap is—and it is a trap into which this Government will not fall—that anxiety about these great issues will cause the problems of other parts of Wales to be overlooked. I am glad, therefore, to be able to demonstrate that we do not forget those problems and to say how we think they can be tackled.
There is no doubt that the employment position in Gwynedd—and particularly in the hon. Gentleman's constituency—is already serious, and the proposed closure of the Bernard Wardle factory will make the position worse. There are other causes 'for anxiety. The hon. Gentleman mentioned the difficulties facing the area in the light of the rundown of construction at the Central Electricity Generating Board's pumped storage scheme at Dinorwic. There are two other construction projects to which he referred, which will come to completion in the relatively near future, but the current economic recession will not help.
What, then, can be done about the situation? I emphasise that although we naturally accept that the Government have a contribution to make—for example, assisted area status and the provision of infrastructure—at the end of the day the only real answer to the problems facing North-West Wales is for us to get the United Kingdom economy back on the right lines. Wales is an integral part of the United Kingdom economy and, unless the Government's economic policies are successful, the future for us all, whether in North-West Wales or elsewhere, is bleak. We need new jobs, but we need new jobs in new industries which have a secure future. Such new investment will come about only when there is a significant improvement in the economic climate in the country, and it is that improvement which our economic policies have been designed to bring about. Those policies are right, and when they have had an opportunity to work 912 through, Caernarfon, like the rest of the country, will reap the benefits.
As I have hinted, however, there is a role for the Government in recognising the particular difficulties of an area such as North-West Wales, which is relatively isolated and has no large-scale industrial base upon which new industry can grow. What, then, can we do?
One important priority is undoubtedly to improve the communications between North-West Wales and the rest of the country so that its attraction to industry is enhanced. I do not think that there is any disagreement about that. In this context I should mention the importance that my right hon. Friend and I attach to the improvement of the A55, which we regard as fundamental to improving the economic prospects of the area.
I, too, have a constituency interest to declare in this matter. Since we came to office, contracts have now been let for the improvement at Casino Junction and the diversion east of Abergele. In the next financial year we hope that it will be possible for work to start on three other major schemes on the A55, including the Bangor bypass, which will cost over £125 million. This scale of activity in North Wales will be significant, and it will considerably enhance prospects both for the attraction of industry and for the promotion of tourism.
There is also the question of assisted area status. I know that the hon. Gentleman is concerned about the effects which the proposed downgrading of his constituency will have on its ability to attract new industry. This view is also shared by the local authorities in the area, and my hon. Friend the Under-Secretary of State for Industry and I are well aware of the concern about the issue. We do not discount the difficulties of North-West Wales. Indeed, it was for that reason that the Anglesey area was able to retain special development area status in the recent review. And the rest of the area will still be able to attract the full range of assistance avail-able through regional policy. While I appreciate the real concern, I hope that the contribution that these incentives can make will not be played down. At a time when the overall size of the assisted areas is being significantly reduced, areas like Caernarfon will find themselves far 913 better placed than hitherto to attract new industry.
As my right hon. Friend the Secretary of State for Industry has said on many occasions, our minds are not a closed book on this. There is scope for further review as and when it becomes clear that economic conditions in an area warrant such a review. I can assure the hon. Member that my right hon. Friend the Secretary of State is keeping a very close watch on the position and 914 will not hesitate to reopen the question should he feel circumstances demand. Indeed, he is looking forward to an opportunity to discuss this and related issues when he can arrange a meeting with the Gwynedd county council. He hopes that this will be possible in the near future—within the next few weeks.