The UK as a base for research
14. In Corus' restructuring of its R&D facilities
there has been a significant imbalance in the job losses between
the British and Dutch halves of the company. The closure of the
three technology centres in the UK will result in a decrease
in 43% of Corus' British R&D staff, compared to only 6% for
the Dutch part of the business.
This represents a very significant loss in terms of skilled technologists
for the UK economy and skills base. The Committee notes with
grave concern the imbalance of job losses between the UK and Netherlands,
and what appears to be a downgrading of Corus' commitment to R&D
in this country.
15. Corus provided the Committee with various reasons
for the unequal division of job losses between the British and
Dutch sections of the company, including the tax regime, changes
in the energy market and the strength of the pound contrasted
to the Euro.
SIMA implied that differences in employment legislation between
the UK and the Netherlands were also significant.
Such issues are beyond the scope of this inquiry, but the Government
must examine the underlying causes of the job losses in Corus
R&D and act promptly upon their findings. We are concerned
that Corus is taking long-term decisions on the basis of short-term
exchange rate considerations.
The Trade and Industry Select Committee is currently
undertaking an inquiry into the UK Steel Industry as a whole,
and examining the difficulties it is currently facing. We await
its Report with great interest.
16. One issue raised by Corus, which was of especial
concern to the Committee, was the quality of science teaching,
particularly physics, in the UK. Mr Bryant argued that the quality
of physics students leaving schools and universities was declining
noticeably and that Corus had long-term apprehensions regarding
the scientific qualifications of future school leavers and the
effect it would have on Corus' recruitment.
This reflects the view expressed to us by other industrialists
and is not new to the Committee. We have commented in detail
on this in earlier reports.
We remain deeply concerned about the current state of physical
sciences teaching within UK schools, which, if unreformed, will
inevitably damage industry in the long-term. We are pleased
to note that the Science and Technology Committee of the House
of Lords is currently holding an inquiry into Science and Schools.
17. While job losses in research and development
are always to be regretted, it was apparent from both Corus' and
SIMA's evidence that some restructuring of British Steel, and
its research and development facilities, would almost inevitably
have taken place with resultant redundancies, even had the company
not merged with Hoogovens.
It is clear, however, that research and development at Corus has
suffered deeply over the last year and will continue to do so
until after the restructuring is complete. It is disappointing
to note that the UK side of the business was required to bear
more than its proportionate share of the cutbacks. If the company
is to survive its current difficulties successfully, R&D must
be given a higher priority. We would urge Corus to consider carefully
its resource allocation for R&D and to do everything possible
to maintain its commitment to the UK in this field. The opportunity
to create a centre of excellence for steel R&D in the UK with
modern, purpose-built facilities at its new Sheffield Technology
Centre must not be wasted. We hope that the new centre will truly
be a state of the art facility, attracting new investment and
new science, engineering and technology recruits into steel R&D.
18. The Government must examine the fundamental
reasons for Corus shifting the emphasis of its research and development
activities to the Netherlands. The fiscal and economic problems
identified by Corus (the currency issue, the tax regime and changes
in the energy market), which clearly affect the other companies
in this sector, need be addressed within the Government's policies.
It is also imperative that the Government tackle the severe weaknesses
identified by Corus in science teaching in the UK, if the country's
technological future is to be guaranteed.
7 This was at the time of the merger; it is now the
fourth largest. Q. 7. Back
Evidence, p. 1, paragraph 1. Back
Compared with a net profit of £226 million in 1998 and a
net loss of £81 million in 1999 for British Steel. British
Steel plc, British Steel Annual Report 1998/1999. Back
Qq. 4 & 23. Back
Q. 33. Back
Corus press release, 16th June 2000. Back
Office of National Statistics, Labour Force Survey; and
British Steel, British Steel Annual Report 1998/99. Back
Evidence, p. 2, paragraph 8; and DTI, The UK R&D Scoreboard
1999, p. 19. Back
Corus press notice, 5th December 2000. Back
Evidence, p. 3, paragraph 19. Back
Q. 15. Back
Evidence, p. 3, paragraph 20; and Q. 57. Back
The US company which spends most on steel R&D is the Aluminium
Company of America, with a spend of £79,499,000 in 1999.
This would make it seventh in the world. Source: DTI. Back
DTI, The R&D Scoreboard Online Database, Steel and
Metals sector. http://188.8.131.52/finance/rndscore_2000/introfr.html Back
British Steel/Corus is included here for purposes of comparison.
Q. 5. Back
Q. 6. Back
Evidence, p. 14, paragraph 3; and Qq. 10 and 11. Back
Qq. 11-14. Back
Corus press notice, 16 June 2000. Back
Q. 5. Back
Evidence, p. 14, paragraph 3. Back
Q. 28. Back
Q. 24. Back
Evidence, pp. 14-15, paragraphs 5-6; and Q. 56. Back
Q. 78. Back
Q. 19. Back
Q. 63 and 86. Back
Q. 94. Back
Q. 76. Back
Q. 75. Back
Q. 17. Back
Corus press release, 16th June 2000. Back
Qq. 16 & 43; and Evidence, p. 3. Back
Qq. 63-65. Back
Q. 40. Back
Engineering and Physical Sciences Based Innovation, paragraphs
88-89, HC195-1; and Glaxo Wellcome and SmithKline Beecham,
paragraphs 8-9, HC 207-1. Back
Q. 36; and Evidence p. 14, paragraph 2. Back