§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Berry.]2.30 pm
§ Dr. Oonagh McDonald (Thurrock)
I wish to draw attention to the plight of the British Bata Shoe Company, which has its main factory in my constituency and another in Cumnock in Ayrshire.
The Bata factory at East Tilbury is a long-established factory surrounded by the Bata estate, which formerly included a hotel, shop and social centre owned by Bata, all of which it has had to dispose of because of its financial position.
Bata produces a wide range of footwear products, including Ministry of Defence orders for footwear, particularly boots for the Armed Services—those were hit hard by last year's Government moratorium, which, after some pressure, has been lifted—slippers, leisure shoes, fashion shoes for girls and ladies and boots of all types, mainly made of rubber and plastic.
Recently the company has had to announce redundancies at both factories. Their effect is to cut the work force to virtually half the number employed in 1979. The East Tilbury factory had 1,572 employees in 1979. The redundancies that have just been announced will reduce the number from the current 991 to 864.
Unskilled workers will be hardest hit by the most recent bout of redundancies, though every grade of worker in the factory is affected. The total work force in both factories is 1,126, compared with 2,472 in 1977. By February 1983 it will be just under 1,000, according to present company plans.
My hon. Friend the Member for South Ayrshire (Mr. Foulkes) is, unfortunately, unable to be here because he has an important constituency engagement today, but he has asked me to express his anxiety about the redundancies in Ayrshire, and he supports all that I have to say about the redundancies and company policy in both factories.
The footwear manufacturing industry has been undergoing its most severe contraction since the war. By the beginning of 1981 more than 10,000 jobs had been lost and in the past six months alone 20 factories have been closed. Yet the Government do nothing, in spite of repeated demands from the Opposition and from some Conservative Members for Government aid to the industry and for import controls. No response has been made to either request.
The Government have suffered from overvalued sterling, but have been putting that right, perhaps inadvertently, over the past couple of weeks. The overvalued currency undermined the footwear industry's exports and its attempts to modernise and to improve designs. The industry has tried to improve its position, both domestically and on exports, but it has not been helped by the Government. The factory in my constituency is suffering from that lack of concern.
The footwear EDC has made several proposals calling for assistance for the industry in this difficult period of transition. Perhaps that is because it was established by the Labour Government in 1978. It set up a comprehensive scheme to assist the industry, but that was closed in March 1980. It encouraged the industry to rationalise and to reconstruct. It laid emphasis on projects aimed at reorganising production, assistance for consultancy 1177 projects concerned with management information, production organisation, control, design and marketing. That scheme was deliberately closed by the Government at a time when the economic climate provided little inducement to invest and when the industry's sales begun to decline in this country and abroad.
It seems to me that the Government are out to ignore the needs of manufacturing industry. Their policies are wrecking Britain's manufacturing base. The footwear industry has done much to help itself. That has certainly been true of Bata. Output from its factories has increased. This year, based on figures for the first six months, it is estimated that 4 million pairs of shoes will be produced. Productivity has been improving year by year. In 1977 the number of pairs of shoes produced per operator per year was 2,943. This year, measured in those terms, productivity will be 3,552 pairs of shoes. The industry is fulfilling what the Government have demanded—that productivity and output should increase. In spite of all these efforts, no assistance has been given. Exports continue to fall and the decline in the United Kingdom footwear industry continues.
A major problem faced by the company and by the footwear industry in general is imports. Bata is threatened by imports from Italy in girls' and ladies' fashion footwear and from South Korea in leisure footwear. The Government like to talk of the need to cut labour costs. How can a company in this country possibly compete with labour costs in a country such as South Korea? Conditions of work in South Korea bear no comparison—they should not do so—with conditions of work in this country. South Korea has the world's longest working week of 53.1 hours on average. Its workers have practically no holidays and its labour costs are probably about one-fifth of ours. Bata cannot compete, and knows that it cannot compete, in leisure footwear with the ex-factory prices of such footwear from South Korea.
I have mentioned working conditions in South Korea. Have the Government protested about such working conditions? What support have the Government given the industry, and Bata in particular, in the efforts to negotiate voluntary import restraints on South Korean footwear? It would surely do no harm to block such imports, as South Korea refuses to take imports from EEC countries.
It is not a question of Bata competing with the most expensive Italian footwear. It is a question of competing with cheap Italian ladies' and girls' footwear. There are repeated allegations that some of this industry in Italy is supported by child labour. I wonder what attitude the Government have taken to that, knowing, of course, that we cannot conceivably expect our own footwear industry to compete with labour costs which depend on that kind of labour in either Italy of South Korea.
I have mentioned labour costs, but I should point out that in the footwear industry in general, and in Bata in particular, labour costs cannot be regarded as exceptionally high. Wages are notoriously low in the footwear industry, and Bata is no exception to that. In addition, in East Tilbury Bata workers have had to take cuts of another kind. Formerly, Bata subsidised rents for its workers on its own estate. Those rents traditionally were regarded as part of the workers' wages. Bata abandoned its policy of subsidising the rents—of course, they have increased—and in a sense it could be said that for that 1178 reason Bata workers had taken a cut in their wages, although I am not here referring to the wage packets taken home from the factory each week.
Wages are not a problem. Labour relations and industrial relations in the factory, as is again typical of the industry, are good. So the workers cannot be blamed, as the Government are wont to do, either for pricing themselves out of jobs of for raising labour costs to such an extent that Bata could not possibly compete with manufacturers in other parts of the world. The problem is that it is competing with countries whose wage costs are quite unjustifiably low.
I mentioned imports from Italy. I should also mention the problem of exports to the United Kingdom from other European Community countries. One of the recommendations of the footwear EDC was that pressure should be placed on the Commission for effective and speedy action in response to cases calling for anti-dumping and countervailing action. What action have the Government taken in response to that proposal from the footwear EDC? What support has been given to a system of controlled trading with the EC? We are told repeatedly that the Common Market provides a wonderful market for British exporters. In theory, it does. It totalled 800 million pairs of shoes in 1980. France, Germany and Italy sell a significant proportion of their exports to other EC countries. The British do not. There has been some increase, but only a very small one.
What action are the Government taking to assist the footwear industry here to expand its exports to the EC? What action are the Government taking to prevent unfair competition in the form of cuts in labour costs or other hidden subsidies such as subsidies for energy costs? One can only believe that the Government have taken no action.
Bata has tried to improve its operation. New methods for manufacture have been developed and new machinery has been installed. It has tried to make more efficient its manner of distributing footwear throughout the country and elsewhere. As I say, the workers present no problem. Despite all that, the company in East Tilbury faces massive losses—currently, £33,000 a week—and losses of that kind have been sustained for the past two years.
It is true that British Bata is part of a multinational firm based in Canada which has substantial overall profits. I know that subsidiary companies are always held to be completely independent of their parent companies, but it is worth saying again that it is to be hoped that the Canadian parent company will see fit to assist its United Kingdom subsidiary to get through a particularly difficult period. That, of course, is outside the Minister's control, just as it is outside my control. I have appealed to the Canadian parent to assist British Bata, but I received little sympathy from it.
There is plenty that the Government can do. Why do they not reinstate the scheme that was introduced by the Labour Government? Why do they not do something about import controls, instead of just talking about them? No doubt the Minister is aware that, for the first time this year, imports of finished products exceeded exports. That is surely a record of which the Government should be ashamed. They talk about their fears of retaliation, often in relation to countries which do not import British imports anyway. Why do the Government not provide financial 1179 assistance to the industry and help to control imports, so that Bata in East Tilbury can continue instead of slowly fading out of existence?
§ The Under-Secretary of State for Industry (Mr. John MacGregor)
The Government are aware of the proposed redundancies at British Bata. Naturally, these further redundancies are a matter of deep regret and concern to us, and to the footwear industry in general.
Bata is a well respected manufacturer of long standing, whose work force, as the hon. Member for Thurrock (Dr. McDonald) said, has already been cut by half over the past two years, and is now to be cut back still further. I recognise that this is a commercial decision which the company has been obliged to take. The hon. Lady gave the figures. It would not be right for me to intervene.
I understand that the local jobcentre at Thurrock is aware of the proposed redundancies at British Bata, and I know that it will do everything in its power to help to find new employment for those who may be affected by the company's decision. In that context, I remind hon. Members of the Government's temporary short time working compensation scheme, which is administered by the Department of Employment. This is one of our special employment measures. Its aim is to give a breathing space to those companies that are faced with having to make redundancies in the short term, so that they can take whatever action is necessary to safeguard jobs in the longer term. British Bata is fully aware of the scheme and is free to submit an application. If the company feels that the scheme would be of benefit, it should get in touch with the Department of Employment's south-east regional office.
As for my Department, and my own direct ministerial responsibilities, small businesses represent in my view an invaluable source of jobs. I am encouraged to hear that my Department's small firms service has recently opened a local counselling office in the area, at Grays. The counselling officer is encouraged by the initial response that he has received. In addition, the Anglian regional management centre in Chelmsford is a local enterprise agency which can help both new and existing small businesses. It has available to it a wide variety of measures to assist. I say that because small businesses have an important part to play in the restructuring of an economy. Indeed, we have debated that issue all morning. The hon. Lady should draw that possibility to the attention of her constituents.
This latest development at Bata is, sadly, symptomatic of current conditions in much of the footwear industry. Demand on the home market has seriously been affected by the general recessions which, as the hon. Lady knows, is world wide. Furthermore, our manufacturers have, as in earlier years, had to compete with low-cost imports from a wide variety of sources. That is not new. The hon. Lady talked about the need to block imports. She will know the wider dangers of a policy of general import restraint. As a major exporting country we have to be sensitive to the reactions of other countries to what might be regarded as extreme protectionist measures. We must also bear in mind the possibility of retaliation against our exporting industries—which, of course, include footwear.
Those matters raise much wider issues of trade policy which, as the House knows, are at present the subject of intensive discussions in the GATT ministerial meetings in Geneva. We await the outcome of those discussions with 1180 great interest. However, in general, we take the view that the maintenance of an open international trading system is in Britain's overall best interests.
I must make one other point, which is general rather than specific, in response to the hon. Lady's points on low wages in the countries from which low-cost imports come. I am sure that she will agree with me that trade is an important element of aid to developing countries, to which she devotes a great deal of her time. That aspect must also be taken into account.
Nevertheless, I can assure the House that my ministerial colleagues and I are conscious of the effect that cheap imports are having on Britain's footwear industry. Where there are complaints about unfair footwear imports, such as dumped or subsidised products, we shall resolutely pursue the necessary investigations undertaken by the EC Commission and seek effective remedies wherever action is justified.
The hon. Lady asked why the Government do not do something in relation to the general problem of cheap imports. Let me tell her what the Government have been doing.
I must remind the House that the footwear manufacturers are among those sectors of United Kingdom industry benefiting most from an extensive range of controls and restraints of various kinds. These include, first, formal quotas on rubber-soled, rubber-textiled uppered footwear from Poland, Czechoslovakia, Bulgaria and Hungary, which have been held down to the same level over the past three years.
Secondly, there are formal quotas on most footwear from China, at the low level of £200,000, overall. Thirdly, there are voluntary restraints arrangements on leather-uppered footwear from Poland, Czechoslovakia and Romania which have also been held to the same level over the past three years. Finally—and relevant to the hon. Lady's point—there are inter-industry agreements covering all footwear imports from Taiwan and South Korea.
Furthermore there is an 8 per cent. countervailing duty imposed by the United Kingdom on men's leather fashion shoes from Brazil, as well as a Brazilian 15 per cent. export duty to offset an export subsidy on women's leather footwear exports to the European Community market.
It is estimated that in total those measures cover around half of imported footwear from low-cost countries. However, as the hon. Lady said, not all of the import competition emanates from non-Community countries. She referred specifically to Italian footwear. A significant proportion of footwear imports into Britain comes from within the EC. In particular, Italy is a major source of competitively priced and stylish footwear which is proving very attractive to British consumers.
I regularly have discussions with people in the footwear industry and a point that is frequently made is the strong emphasis among Italian manufacturers, not just in footwear but in other areas as well such as textiles, on design. That is undoubtedly one reason why Italian products have been atrractive to the British consumer.
The hon. Lady hinted at unfair competition in relation to the way in which Italian products are manufactured and their cost. Where it can be shown that, for example, unauthorised subsidies or other matters are distorting trade between Community member States, action can be taken through the European Commission. My officials and those 1181 of the Department of Trade will give all possible assistance to the industry in presenting any such evidence to the Commission. That evidence is, of course, necessary.
However, it must be said that competition within the Community is generally regarded as fair and must be met head on. In other words, it must be met by United Kingdom manufacturers becoming more price effective and producing the types of footwear that consumers will choose in preference to foreign articles.
As the hon. Lady said, the Community also provides a major opportunity for our footwear exports. Trade within the Community is free in both directions. The recent reduction in the value of the pound should give a small but useful boost to our exports to Europe—an opportunity which the industry must seize with both hands.
Although our exports to other Community member States have been disappointing so far this year, I am delighted to note that this year our sales to France have risen by no less than 26 per cent. Admittedly they have risen from a low base, but it must provide encouragement in difficult circumstances. The hon. Lady asked what the Government are doing in that respect. It is vital to realise that in terms of British industry's competitiveness vis-a-vis imports and the need to achieve greater exports, the strategy of reducing inflation—inflation has, more than anything else, been the reason for Britain's decline in competitiveness—lower interest rates and of concentrating on helping industry with its costs, is designed to do precisely that.
The enlarged Community will also give us access to other potentially valuable export markets, particularly with the accession of Spain. Hon. Members will be aware of the enormous imbalance that exists in the car industry and the treatment of our exports to Spain and our imports from that country. Last year we exported 360 cars to Spain and we imported no fewer than 60,000 Spanish-made cars. Trade in footwear shows a similar imbalance. In 1980, the latest year for which detailed figures exist, we exported 64,000 pairs and imported 5.2 million pairs. Our tariff on leather footwear imports from Spain is 4.8 per cent., while Spain's tariffs on imports from Britain range up to 20.8 per cent. When our trading opportunities are overshadowed by the world recession we must consider whether we are being denied a fair chance of competing in countries to whose products we are offering a virtually open market. Spain's accession to the Community will give us a chance to remedy that.
I turn to consideration of the steps that the Government are taking to encourage and assist footwear, in particular, and other manufacturing industries. My Department's very wide range of aid schemes under both the Science and Technology Act—recently streamlined into support for innovation—and the Industry Act, is available to the footwear as to other manufacturing industries. Footwear manufacturers are actively encouraged via the footwear economic development committee and other channels to make use of these schemes. For example, a micro-electronics awareness programme for the footwear industry is currently being prepared in co-operation with the Shoe and Allied Trades Research Association and the East Midlands regional office of the Department of Industry. Footwear manufacturers and their suppliers are, indeed, very well served by SATRA—which I recently 1182 visited—which my Department supports through financial grants towards research and development projects. In 1981–82 SATRA was the recipient of the largest financial contribution made by the textiles and other manufactures requirements board. At £561,000 our aid that year to SATRA accounted for 18 per cent. of that board's total expenditure.
In supporting and assisting the footwear industry the Government also have an important role to play in participating in the work of the footwear economic development committee. The committee has existed since 1978 and, in recognition of the very useful part that it plays in pursuing and promoting the interests of the footwear and related industries, it has recently been reconstituted for a further two years. The EDC is a forum in which not only the manufacturers are represented, but leather suppliers, footwear distributors and retailers. Officials from my Department and from the Department of Trade represent the Government.
That mix of interests has enabled the committee to encourage import substitution through its manufacturer-retailer panel, which meets regularly to discuss the opportunities for United Kingdom manufacturers to supply sectors of the market where imports are often quite significant. The conclusions from those meetings are given wide circulation throughout the industry to both manufacturers and purchasing organisations. The EDC is very well aware of the need to raise the industry's productivity and to this end it has commissioned a project at SATRA specifically to identify and point out areas in which practical improvements are possible.
The EDC has also initiated a special project that aims to increase exports of United Kingdom footwear. Initially, market research under that important project has concentrated on the French and German markets. I am glad to say that the British Overseas Trade Board has taken a leading role in assisting that market research and in the follow-up. Both the productivity and the exports projects have been funded jointly and equally by my Department, the National Economic Development Office and the industry, with the total financial contribution from public funds amounting to some £50,000. Another important activity of the EDC is the footwear marketing award scheme, which is designed to encourage and recognise improved marketing in United Kingdom footwear manufacturers and distributors.
As for the longer term prospects for the footwear industry, under the auspices of the EDC a report on this important question is being prepared for submission to the National Economic Development Council next year. I look forward with interest to reading that report and hope that it will be circulated widely in the industry. As for the present, the latest signs are that the decline in new orders and deliveries in the domestic market is levelling off. The drop in employment in the industry has also levelled off. Those are positive signs, but I agree that there is no room for complacency.
Our general economic policy will help and I very much hope that what we in the Government are doing, combined with the manufacturers' efforts to improve productivity, and to raise production and sales, will begin to pay off in terms of a healthy and viable industry.
§ Question put and agreed to.
§ Adjourned accordingly at one minute to Three o'clock.