Examination of Witnesses (Questions 100
MONDAY 6 NOVEMBER 2000
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.
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.
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.
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,
(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?
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
(Mr Pedder) That is a point of view.
108. I am only repeating what you have told
(Mr Pedder) No, you are not. I need to go through
again with younot here, on a different occasionthe
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
(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.