HC Deb 12 June 1958 vol 589 cc36-40W
Mr. J. Griffiths

asked the Minister of Housing and Local Government and Minister for Welsh Affairs what conclusions were reached by the four-man Team which he appointed to examine the steel and tinplate problems of West South Wales; and whether he will make a statement.

Mr. H. Brooke

The Team were asked to consider further methods of meeting the difficulties raised by the closure of certain steel, sheet and tinplate works in West South Wales and the threatened closure of further works. Their inquiry was confined to the area between Neath and Kidwelly, where the main difficulties of this kind lay, and to the present transitional situation.

The Team were not asked to consider the problems concerned with the building of a new integrated steelworks and strip mill, since this subject was under consideration by Minister.

The Team visited most of the steel and tinplate works in the area and conferred with the managements. They also met representatives of the trade unions concerned and of certain other bodies.

Their report has been received and has been carefully considered by the Ministers concerned.

In their report, the Team reviewed the recent history of the tinplate and sheet industry and emphasised that what they had been examining was essentially the remainder of the industry after the technical revolution represented by the erection of the fundamentally different integrated plants at Ebbw Vale, Margam, Trostre and Velindre. In so far as the Team commented upon the relative inefficiency of the older plant, it was to be borne in mind that it was inherent in the erection of the modern capacity that most of the old plant would be superseded by it.

The Team concluded that there was virtually no prospect of any further work for the hand tinplate mills, which had mostly closed already. They pointed out that the capacity of the modern tinplate plants at Ebbw Vale, Trostre and Velindre was substantially greater than present demand, and in view of the development of these modern plants there was no hope of the re-opening of the old mills.

At some of the hand sheet works, operations were still continuing and might go on until the end of 1959. The scale of operations during that period would depend very much on general economic circumstances. At the end of 1959 extensions to the modern plants producing strip sheet would come into operation and this would inevitably mean little or no demand thereafter for the product of the hand sheet mills.

So far as the steelworks were concerned, the Team reported that there were difficulties which had overwhelmed some of them and in some degree faced them all. By modern standards all the works were small, and it was difficult for a small works making ordinary quality steels to compete with large modern plants, even where other circumstances were more favourable than in West South Wales. All the works made steel from cold pig iron and scrap, and not from hot metal straight from the blast furnace as in most modern plants. The only blast furnace in the area, itself obsolescent, was not "integrated" with a steel plant. Generally speaking, works making steel from cold metal tended to be at an economic disadvantage. Much of the equipment in the steel works was obsolete, and some of it completely worn out. Most of the works were restricted to a very limited range of products and of sizes. Formerly, when the works made sheet and tinplate bars, they were next door to their markets, but now they were obliged to send most of their products to distant markets. Some of these difficulties were inherent in the geography of the area; others could be overcome only by complete reconstruction of the works concerned on a larger scale. The question of constructing new and large-scale steelworks was in effect the same question as the siting of a further strip mill plant, which the Team were not called upon to consider. Their enquiry was confined to the possibility of adapting the existing works to the changed circumstances.

The Team reported that one steelworks had for some years ceased to make sheet and tinplate bars and had developed a new trade in billets, in association with rerolling interests in the Midlands. Improvements had already been carried out at this works and further modifications in process would increase its efficiency. The Team considered that its prospects of continuing in operation were good.

Of the nine other steelworks in the area, five were still in operation, though none was working to capacity. The Team saw little prospect of reopening the works that had been closed, and three of those still open were in difficulty. These three works were operating at a heavy loss, but the immediate danger was that sufficient orders could not be found for their products. Two of them had been adapted to convert part of their output into billets which were sent outside the area. At best all three were high cost billet producers, but in any event demand had fallen away. These three works were working on a week to week basis; it was hoped that they might continue for some time, but the Team thought it should be recognised that sooner or later they would have to close. The remaining two works were not in immediate difficulty; they were being adapted to extend their range of products, and further improvements were contemplated.

One important question was whether the existing mills could be adapted to roll finished steel products, e.g. light flats and sections. Certain steelworks were experimenting with this kind of work and the Team considered that they might be successful in developing this trade, particularly if local markets could be found. The transport costs of sending to distant markets, when added to the high production costs inseparable from small-scale plants making this kind of product, would probably be prohibitive unless they were balanced by substantial local sales. The Team considered that the market for such products in the areas where the West South Wales Works could hope to be competitive was unlikely to be large enough to be of help to more than one or two of the existing steelworks; there was no evidence that any development of this kind could replace a substantial part of the former trade in sheet and tinplate bars.

The Team pointed out that there had been a complete revolution in the tinplate industry. West South Wales now had two of the most modern tinplate plants in the world and the output of tinplate was greater in the area than it had ever been before, but fewer people were employed and the manning of the modern plants was almost complete. The revolution in the sheet industry had not yet gone quite so far, but before long most—and more probably all—of the old plants would be replaced by the modern plants in other parts of Wales. So far as the old steelworks were concerned, the Team considered that further contraction was almost inevitable. They believed that the improvements taking place at a few of the plants had a good chance of success and should be given such encouragement as lay in the Government's power. They did not consider that there was anything the Government could or should do to try to keep the other old plants going, since this would increase the risk that all would ultimately fail.

The Team accordingly recommended that the future of the area must lie in the development of a wider variety of industries there.

The Ministers concerned agree with the conclusions of the Team as to the general policy which ought to be pursued, and, in particular, with the need for diversification of the local industry. Ministers are concentrating their efforts on securing the establishment of new industries as quickly as possible. The difficulties of doing this are evident, but with hard work by all concerned there need be no lack of hope and determination that they can be overcome.