Select Committee on Science and Technology Minutes of Evidence

Supplementary memorandum submitted by Corus plc


  In the time that has passed since we submitted our evidence last April, a number of things have happened that have had an impact on Corus both generally and with particular regard to our R&D. In this memorandum, we will concentrate on only three:

  In our evidence, we identified some areas of overlap in the new company's R&D. As a result of a thorough review of our R&D activities, in June we announced that we would reorganise our R&D, concentrating on only two sites, a new site located in the UK and the existing technology centre in the Netherlands. These will be of approximately equal size. The UK technology centre will be a new purpose-built site, custom designed to encourage innovation and which will represent a commitment to the future. At the same time, we proposed to concentrate certain activities, which are presently split, so that they are carried out on only one site location. This will require a two-way shift of staff between the UK and Netherlands. Whilst we acknowledge that this will be disruptive for the staff concerned, this will enable Corus to do better research and to do so with a lower overhead. We are currently engaged in discussions about the final location for our single UK technology centre, with the aim of completing the process by the end of next year. This is a very ambitious timetable, but we are not yet in a position to say anything further in that regard.

  Also, starting since the merger last October, but particularly focused in the time period from mid-May until only a couple of weeks ago, we have made a series of announcements about business organisation and manpower. These have resulted from a set of business reviews that have identified fundamental changes in the market place as well as the much more pressing problems of the continuing excessive value of the £ by comparison with our major trading currency, the euro. Coupled with a tax regime in the UK that has loaded costs onto business and changes in the energy market that will add substantially to our costs of production, we have had no alternative but to announce changes in organisation structure that will result in more than 4,500 people leaving the steel industry in the UK by the end of next year.

  Finally, we have announced a number of investment decisions. In the UK these have been large maintenance schemes, with the decision to re-line the No 3 Blast Furnace at Llanwern being the most recent example. Perhaps of greater long-term significance have been the strategic investments in aluminium and in downstream processing (for example in electrical steels) that have all taken place outside the UK and which will add in excess of 2,200 employees in Germany alone. Unless the economic fundamentals of the UK change very dramatically, this is likely to be the pattern for the future.

26 October 2000

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