Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 100 - 111)



  100. What percentage are other European competitors producing in recycled steel?
  (Mr Rea) I should have to have notice to give you a figure. We have the lowest rate of electric arc steel making in Europe and, of course, electric arc steel making is 100 per cent scrap based and, therefore, recycled, however you do get scrap recycled in the BOS furnace as well so I would have to give you a set of numbers.

Mr Morgan

  101. Is it quicker, easier and cheaper to lay off employees in the UK than it is in other countries in Europe?
  (Mr Siddall) I do not think I would choose to use those sorts of words.

  102. They are the words I used.
  (Mr Siddall) Legislation differs from country to country.

  103. So is the effect of that legislation to make it easier or cheaper or quicker to get rid of people working in this country than it is elsewhere?
  (Mr Siddall) I do not think it is ever easy to get rid of people. One does not set people on to get rid of them.

  Mr Morgan: Easy in the sense that you do not have so many hoops to jump through.

  Mr Hoyle: That is not what they say in Workington.

Mr Morgan

  104. I think this is a fair question. Is the burden of legislation such that it is easier if you have to make cutbacks because of economic reasons to make them in a UK plant than it is in, say, France?
  (Mr Pedder) I certainly do not think I would use the word "easier". Because of some of the consultative differences there are it may take longer than in the UK. As Peter Siddall said, if and when you get to that situation and there is a business industrial logic that says a plant has to reduce its costs or a plant cannot continue its format and that process of consultation starts, in the end the industrial logic finally gets to the end point. You are correct in saying that in some jurisdictions it will take longer to get to that point than others and the consultation will take longer.

  105. Has it got to the stage that if you are making investment decisions, the fact that it will be less difficult perhaps to restructure later on will be a factor in you deciding where to make an investment?
  (Mr Pedder) Certainly I think I can speak for Corus in that and that is not what is driving investment decisions. What is driving investment decisions for us is where we should locate our businesses to best serve our customer base profitably and we are as good as our customer base.
  (Mr Siddall) I would echo that. Even in our small way in the company that I work for we are looking at the moment for a joint venture in France purely for the same reasons that Mr Pedder has outlined. People perhaps would argue that legislation on employment is slightly tougher in France, that is not a primary concern for us.

Mr Laxton

  106. With respect, in response to Mr Morgan's question he managed to wring out of you almost that, yes, it can take longer elsewhere but let us have a look at the issue of cost. Is it cheaper to lay off people? If faced with certain business decisions here in the UK, is it cheaper in the UK than, say, France, Holland, Germany?
  (Mr Pedder) I think I would have to come back to you specifically on that. It will presumably depend country by country and on the particular redundancy and labour conditions that apply in each country. What I would say as far as Corus is concerned, and I am sure my colleagues would say the same, we will endeavour in any country where we unfortunately have to lay off workers to apply the best practice, the most sensible practice we can. As wages and employment costs differ from country to country, so I have no doubt that redundancy costs will have some differences as well. Again, I can only repeat that is not the factor. The factor that we are about is where can we follow our customers, where can we meet our customers' needs?

Mr Hoyle

  107. If I follow the logic of that, you would have expanded Workington rather than go to France to supply Railtrack. Railtrack are based in the UK, it is UK lines that need to be replaced and you have got a plant at Workington. Surely instead of people being made redundant we should have seen an expansion of that and the long rail investment gone to where your business is?
  (Mr Pedder) That is a point of view.

  108. I am only repeating what you have told me.
  (Mr Pedder) No, you are not. I need to go through again with you—not here, on a different occasion—the logic of investment decisions and why they are made. I have said to you that I believe we have the capability, and we certainly have the desire, to supply Railtrack. If Railtrack want the products that we can make in Workington and we can schedule them, we will endeavour to do that. You are talking about a relatively short-term programme and a relatively small programme in terms of their immediate replacement needs against a much longer business imperative that we have to pursue.

  109. Just to pursue that, what we are talking about is the extra business on top of what you have already negotiated from Railtrack, so all that you are getting is a bonus on the existing work that you have got. Let us stop pretending that this is some special little piece, this is actually a bolt-on on the existing contract that you have got. If I follow through what the Government is saying, it wants to see more use of Railtrack and, whichever way we want to see that, it has got to be an expansion. Surely you want to be where your market is?
  (Mr Pedder) Yes, and Railtrack is a market that we have pursued over the years, we have supplied over the years, and we will endeavour to continue pursuing over the years. If you look at the volumes supplied into the UK track industry over many years going back, it has gone down to a very low level. It has risen to something better than where it was at its trough but it is still not by any means a huge load on the rail business that we have got. We are looking to other markets in other parts of the world and how we can expand into those and meet our customers there with their technical needs and do that economically. On a different occasion I can get myself in a position where I can talk to you more specifically about investment in Workington.

  Mr Hoyle: Okay. Can we have the information that you promised earlier?


  110. I realise that maybe your organisation could have had a wee bit of thought and anticipation on some of the issues that might have arisen and you might not have been put behind the eight ball on this particular one, but we are grateful for the information you were able to give us across the board about Corus because that has been helpful. Can we thank you, Mr Siddall, Mr Bagshawe, Mr Rea and you, Mr Pedder. We are very conscious of the fact, as I said at the beginning, that there is always a tendency in a hearing such as this for us to drift into more controversial aspects and perhaps in some ways, to use your expression, the more short-term aspects of your plans and your problems. We are very conscious of the fact that as an industry you are facing a number of other challenges of a character and severity which may be different from some of your other industrial partners within the United Kingdom and, indeed, within Europe. If we need additional information, Mr Rea, we will certainly get in touch with you and pursue the matter. We may wish to talk to Corus individually at some later stage. Can I say we are very grateful to you and we wish you well in your continuing negotiations with the DETR over the Climate Change Levy because, as far as I can recall, not a penny has yet been required in terms of the tax, it starts on 1 April. There may well be investments and things like that to meet some of the requirements but it is the beginning of April next year that CCL will have to be paid and I would hate people to leave here with the impression that there were burdens of a major character being charged at the moment, there are still a number of things to be resolved. Am I correct?
  (Mr Rea) You are technically correct of course, Chairman. However, there has been an enormous investment of time, effort, expertise and lawyers' fees, amongst other things, in dealing with the proposal so far and I would not want that to be underestimated in any way. Both management time as well as expertise.

  111. I accept that. We all know that in some ways it is the tip of the iceberg but I would not like the idea that somehow the Climate Change Levy in its raw, ill-considered, rough form is being imposed upon British industry, you have quite enough burdens at the moment. I am sure that at the right time it will be appropriate for us to look at that again and that may be after the next General Election. Thank you very much for this afternoon.
  (Mr Siddall) Can I thank you, Chairman, and your Committee. Our members are passionate about manufacturing in the UK, we have a lot of skills built into our industry and we are having to be very persistent at the moment. I would certainly ask you and your colleagues to support British manufacturing because in some quarters it does not get the recognition we believe it deserves. Thank you very much for your time today.

  Chairman: In this room it does. Thank you.

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