Manufacturing Industry

Part of Opposition Day – in the House of Commons at 3:58 pm on 24 January 2001.

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Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry 3:58, 24 January 2001

The hon. Gentleman touches on two important points. One is the important role that relatively small factories in the grand scale of things can play within particular communities. He is right that the loss of a few hundred jobs in a small town can have a devastating impact, and we need to be acutely aware of that. Secondly, it is short-termism at its worst when multinationals, almost as a kneejerk reaction, close down smaller subsidiaries. Long-term planning is often the best way forward, and sometimes short-term decisions are taken which are not in the companies' long-term interests.

I should like to address the point about Corus raised by my right hon. Friend the Member for Alyn and Deeside (Mr. Jones). As we meet this afternoon to discuss manufacturing, we are all acutely aware that thousands of workers in the steel industry are extremely concerned about their prospects. Last year, Corus replaced its joint chief executives because the two of them were not prepared to adopt a short-term approach to the problems faced by the company and the industry. They were not prepared to embark on plant closures and cuts in capacity. There is no doubt that Corus faces a challenging period. Trading conditions in steel are difficult and the company will need to take steps to address the problems it faces. However, Corus needs to be aware that it will stand condemned of short-termism at its worst if its response is to close plants with the loss of thousands of jobs.

In the first nine months of trading as Corus, there was an operating loss of £96 million—clearly a state of affairs that any company could not ignore, but Corus is particularly affected by movements in exchange rates. Its operating profits closely track the sterling-deutschmark exchange. Little wonder that that is the case, when a 10 pfennig movement in the exchange rate with the pound affects operating profits by £80 million one way or the other.

The House needs to consider, as does Corus, what has happened over the past two months. In November, the pound was trading at DM3.26. Yesterday, the rate closed at DM3.06, or a fall of more than 20 pfennigs—resulting, by Corus' own calculations, in a saving to the company of some £160 million in just two months. The £8 million climate change levy pales into insignificance beside that. The Tory party is trying to play politics with the futures of a crucial industry, communities and thousands of workers.