Electronics (Northern Ireland)

– in Westminster Hall at 12:30 pm on 24th April 2001.

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Photo of Mr William Ross Mr William Ross UUP, East Londonderry 12:30 pm, 24th April 2001

It is sad when Ministers are cut off in full flow, just when they are getting to the bits and pieces that some hon. Members find interesting, but perhaps the Minister for Tourism, Film and Broadcasting will complete her speech elsewhere, so that we can hear about the exact long-term effects of digital television.

Similar to digital broadcasting is the future of Northern Ireland's electronics manufacturing industry, and I am grateful for the opportunity to debate it, although somewhat surprised. I am sure that this debate has been allowed only because of the United Kingdom-wide implications of what is happening in the electronics industry in Northern Ireland and the unemployment issues associated with it in Northern Ireland, the rest of the UK and throughout the world.

The subject is of particular concern to my constituents because of the recent announcement of job losses at the AVX plant in Coleraine. Some 95 people were laid off a month ago, and it is feared that 150 more will lose their jobs in the near future--protective notices have been issued. As the Minister will know, the presence of AVX in Coleraine is vital for the town, because the firm employs around 1,300 people, many of whom are highly skilled and educated people. If AVX and other electronic manufacturing companies are to hold on to their most talented workers and attract other equally talented individuals, stability in the industry is essential. Unfortunately, that stability has been lacking recently.

The problems at AVX are far from unique in Northern Ireland. Earlier this month, Valence Technologies announced that it would be laying off 181 workers at its plant in Mallusk. Redundancies have been announced at Leaf Technologies in Newtownabbey, and it has emerged that 270 jobs are to go at the Nortel plant in Monkstown. Additionally, Nortel announced a total of 20,000 job losses at its plants across the world. That unfortunate statistic demonstrates the crux of the problem--the volatility of the global market in electronic components. Some hon. Members who can remember the 1960s will recall Northern Ireland putting many of its eggs in the basket of man-made fibres. They were all quickly broken, and we do not want the same situation to arise.

When one hears of job losses on that scale in other industries, one might be forgiven for concluding that the industry in question is in terminal decline, but that is not the case in the electronics manufacturing industry. We are living in the electronic age and demand for products made by companies such as AVX--miniature electronic components for mobile phones and computers, for example--is still high throughout the world. Despite that, the industry is going through a difficult period. As I said, the market is volatile, and that has been demonstrated most graphically recently by the continuing fall in stocks in global technology and telecommunications. So, what can be done to introduce a measure of greater stability for the work force, product lines and sales of such companies?

Since devolution was restored to Northern Ireland, we have been fortunate to have Sir Reg Empey as Minister of Enterprise, Trade and Investment. That role fits his talents especially well, and he has been the deserving recipient of quite a lot of praise from all quarters for his efforts on behalf of every shade of opinion in the Province.

As soon as I was informed of the first tranche of job losses at AVX, I contacted Sir Reg to discuss the problems at the plant, and we have kept in close contact since then. However, as the difficulties are far from unique to the Province, I thought that it would also be useful to seek the views of a Northern Ireland Office Minister, who could outline thoughts about the problems of the electronics industry from a Government perspective.

AVX has been in Coleraine for quite a long time. Its ownership has changed more than once, but the management is excellent and comprises high-quality people, who are working hard with trade union representatives to explore every available option to reduce costs and safeguard jobs. The honest and open nature of those discussions is to be commended and can only help to maintain the unity of purpose between management and workers at the plant. In the longer term, management and workers at AVX should be confident of an upturn in the company's fortunes.

As I said, the industry is volatile: there have been considerable increases in employment followed by quick drops, which is what concerns workers more than anything. However, AVX is well known for its commitment to new products and it has a portfolio of high-calibre customers throughout the world. With a well-focused marketing campaign, the firm will, in time, be able to combat the difficulties in the global market and resume its growth with corresponding and, I hope, long-term employment prospects for even more people in the Coleraine area.

To speed that process, Government assistance is required. The Northern Ireland Executive will play their part, and Sir Reg Empey is already doing what he can, but what on earth are the Government doing? Although these matters are devolved, the Government cannot escape some measure of responsibility throughout the United Kingdom.

As the Minister well knows, there is a large number of electronics manufacturing plants in Great Britain, and I am sure that the Government are as concerned as I am about the state of the global market and the on-going consequences of that. The number of redundancies announced in recent months in the electronics industry in Northern Ireland totals about 1,000, and I am told that that would be the equivalent of 30,000 lay-offs in the electronics industry in Great Britain. That statistic puts the impact of the problem in the Province into perspective. Many jobs are involved in the electronics industry, which is a growth industry. It has expanded extremely rapidly during recent years, and I believe that it will go on expanding, but we do not like to see downturns.

The latest especially vivid demonstration of the poor state of the global market came on Friday, when Ericsson, the Swedish-based telecommunications company, announced that 12,000 staff would be made redundant. That brings the total number of job losses in the global telecommunications industry in the past 10 weeks to more than 100,000--an astonishing and horrifying number. Mr. Kurt Hellstrom, Ericsson's chief executive, said on Friday that we were witnessing

"the fastest dive in the industry that we have ever seen." The number of redundancies certainly confirms that.

The global downturn seems to have come about because of a number of factors. There is a fear of recession in the United States of America, and it is sometimes perception rather than the actuality that matters. That fear has, in turn, adversely affected markets in Asia and, with that, orders for companies such as AVX, because all purchasers of the relevant materials are looking some months ahead. As we all know, however, they sometimes get things wrong rather than right.

The events at Ericsson have demonstrated the particular problem with the mobile phone market. The explosion in sales of mobile phones seems to be over, at least for the moment, and the recent announcement by the largest UK network providers that the cost of calls is going up underlines the fact. We are all aware of concerns about the colossal amounts paid by such companies for licences to provide third generation services, when no one is sure whether there will be sufficient demand for them. It is the third generation of mobile telecommunications that would have provided the market for the electronic components that were mentioned.

The global computer market is also in a particularly difficult state with sales of personal computers also on a slide. Such developments have a huge impact on the fortunes of companies such as AVX. However, my experience of PCs is that as soon as one is bought and taken out of the box, it becomes obsolete and one has to start thinking about buying the next one, so the slide is unlikely to continue for long. The pressures to buy a new computer system will continue and the sector will soon experience an upturn.

During recent weeks, I have been in contact with several people at AVX--mainly people working on the shop floor, whose opinions I wanted to ascertain. As can readily be imagined, morale is low at the moment. I encountered one young man who recently got engaged. He had obtained his degree in England and returned home to Coleraine to work at AVX. He thought that he had a long-term job, but sadly soon found himself in a position where he had to return to Great Britain to find a decent job to provide a living for his fiancee, himself and, hopefully, his children in the not too distant future.

Such an eventuality is a great loss to Coleraine and to Northern Ireland as a whole because we want to keep highly skilled graduates in the Province. Education is important for people to gain the technological skills that they need at their fingertips. Northern Ireland's manufacturing industry and the long-term prospects of the Province depend on it. It is a shame when people such as this young man--there are many more like him--leave their local areas in Northern Ireland.

The brain drain from the Province to more distant parts has thankfully been stemmed in recent years and I hope that that will continue as manufacturing industry develops and more young people stay at home and find employment in industries with good prospects of expansion. Sadly, the uncertainty over long-term job prospects--at AVX, for example--will do little to help the problem or to encourage people to establish roots in their home territories and stay there.

At the weekend, I was quoted in the local media as saying that AVX is the jewel in Coleraine's crown. That was underlined recently when the company was presented with the Queen's award for enterprise for its success in international trade. It is a successful company with many highly skilled workers. I want to see its success continue and I hope that the Government will play their part in helping AVX to maintain its remarkable achievements in the future. For that to happen, the work force must be able to look ahead with anticipation rather than dread. I therefore hope that the Minister will today have something positive to say to me and to the workers and people of Northern Ireland.

Photo of George Howarth George Howarth Parliamentary Under-Secretary (Northern Ireland Office) 12:44 pm, 24th April 2001

I congratulate Mr. Ross on his good fortune in securing a debate on this important subject. I share his surprise that the debate was allowed, but it is important to have the opportunity to debate the UK-wide economy, even though there are important regional differences that are rightly reflected through the workings of devolution.

It is also important to place on record the healthy performance of the Northern Ireland economy in recent years. I am not saying that there are not still problems--I will address those in a moment--but all the key indicators point to a healthy economy, consistently outperforming other regions of the United Kingdom and competing successfully with other European countries. Northern Ireland has enjoyed a good rate of economic growth during the past 10 years and, with an unemployment figure of 5.9 per cent., compares favourably with other parts of the European Union. The high unemployment of the years of the troubles is thankfully now receding, although it is apparent, as the hon. Gentleman made clear in his speech, that there are still problems that must be overcome.

Northern Ireland has benefited during the past few years and particularly during the life of this Parliament, and that is well illustrated by the confidence that has been shown by companies that are investing in Northern Ireland. More than £2 billion in investment was announced or promised by companies in Northern Ireland between 1996-97 and 1999-2000, of which some £500 million was inward investment. The hon. Gentleman raised the problems of AVX in his constituency. That example shows that the economy in Northern Ireland is not immune from outside events, although in macro-economic terms there is a good story to tell. Electronics and technology companies in Northern Ireland, as in the rest of the United Kingdom, have been affected by the worldwide slowdown in the economy, to which the hon. Gentleman referred.

Foot and mouth disease and BSE have affected Northern Ireland's agriculture, tourism and related industries. Dealing with those difficult problems is now primarily a matter for the Northern Ireland Executive and Assembly and I am confident that Northern Ireland Ministers will continue to build up the strong and competitive economy that exists in Northern Ireland.

The hon. Gentleman asked what the Government are willing to do to help the Executive and Ministers in their efforts on that front. We have been, and will continue to be, helpful in several areas, mainly to do with the general manner in which the macro-economy is managed. For example, it is important that the success that Northern Ireland and other parts of the UK have enjoyed is allowed to continue. That means building a strong and competitive economy to enable companies in the UK to compete around the world and, of course, with other European countries. A key to that is low interest rates and inflation. The Government and the Chancellor have been successful in that area, particularly in terms of controlling inflation, and it is our intention to continue to do that.

Mr. Trimble has been present throughout the debate. He is the First Minister, and I believe that he will accept entirely that the Secretary of State for Northern Ireland, the Minister of State and I are willing, available and more than happy to help Ministers in the devolved Administration. We remain willing to raise specific issues on behalf of the Executive within Whitehall.

I regret that I cannot respond directly to the hon. Gentleman's specific points on the electronic manufacturing industry in Northern Ireland, as responsibility for economic matters in Northern Ireland now rests in the very capable hands of the Northern Ireland Minister of Enterprise, Trade and Investment, Sir Reg Empey. The matters raised by the hon. Gentleman are therefore no longer a matter for the Secretary of State for Northern Ireland.

We are, of course, happy to work alongside Sir Reg Empey and other Ministers to address the points raised during today's debate. It is appropriate that when we pass on the points that have been made today to Sir Reg, we also pass on the House's good wishes for his continued success in building up Northern Ireland's economy. Such a relationship already exists between hon. Members present here today and that work is continuing. Although it is a devolved issue, the key principle is that we are willing to be as helpful and accommodating as possible with Ministers in the devolved Administration.

Sitting suspended.