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Brymbo Steelworks

Volume 173: debated on Wednesday 6 June 1990

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. Chapman.]

11.59 pm

I am pleased to have been selected for the Adjournment debate, but I am not pleased about my reason for requesting the debate. We are discussing the proposed closure of the Brymbo steelmaking plant with the loss of nearly 1,200 well-paid jobs in a manufacturing industry. Almost 40 per cent. of the products made at the plant are exported.

Brymbo steelworks has a long history. John Wilkinson built a smelting works on the site in the 18th century. The first blast furnace began production in 1798 and since then steelmaking has continued until now. Only 10 years ago, in 1980, a new finishing mill was built at a cost of £48 million—which was a great deal in those days. Jobs have been lost since 1980 when more than 2,000 people were employed, but production and productivity increased and there are now more than 1,100 employees at the plant.

As a result of the Phoenix II negotiations and their conclusion in 1985, a new company, United Engineering Steels, was formed. That company, which was heavily dominated by plant east of the Pennines and managed by people from that area, controlled nearly all engineering steelmaking throughout the United Kingdom. When the new company was set up it decided to spend nearly all the £60 million of Government money that it received on a concast plant at Aldwarke, and we knew at Brymbo that the writing was on the wall. However, now that the closure is imminent, the awful reality of what will happen around Wrexham and the village of Brymbo is before us.

The area will become a complete wasteland as Brymbo depends on the steelworks. The proposed closure would affect not only those employed at the steelworks, but the bus drivers, the shopkeepers and the tradesmen. The viability of the entire community would be wiped out at a stroke. Well-paid jobs would disappear and no one can pretend that any redevelopment could compensate for them. There would be other jobs, but they would not be well paid.

That would be undesirable but understandable in a mixed market economy if the steelworks were making a loss. It could be said that if a country is to get ahead it needs to adapt and invest in new industry and that the steelworks had to close. Social services and counselling would be provided to assist in redeployment. We would all regret that, but we would recognise that it was necessary because our country can survive only if we make trading profits and increase our manufacturing productivity.

However, that is not the case at Brymbo. The plant has not made a loss in any of the past 20 years and I suspect that it did not make a loss in many of the years before that. Last year it made approximately £5 million in profit. Up to 40 per cent. of its production goes to export. It is one of the most profitable steel plants in the United Kingdom, yet it faces closure.

It is not surprising that the United Kingdom is on the decline, that countries such as France are pulling ahead and that Germany is more powerful than us in economic terms when we continually shoot ourselves in the foot by closing down our profitable, export-leading companies.

Why does United Engineering Steels propose to close the plant? It can only be because UES is taking a close, selfish view of its position and believes that it is easy to enhance its monopoly east of the Pennines. I do not want to say anything against plants east of the Pennines—they need to survive and make profits, and I wish them well—but they should not be making profits at the expense of plants, such as Brymbo, west of the Pennines.

Is the UES management afraid of competition? It says that Brymbo does not have a long-term future, which is why it needs to be closed. If it does not have such a future, there can be no objection to UES selling the company as a going concern, should a buyer be found. That is a critical issue.

I am glad that the Secretary of State nods, although I hope that I have not embarrassed him by pointing that out.

If the plant has no long-term future, it cannot be a threat to UES. If it has a future, why close it? Brymbo can handle orders as small as 1 tonne. Such orders would not be filled by the plants at Aldwarke or elsewhere east of the Pennines, so there would be a loss of market share for this country.

There is customer loyalty to Brymbo. A number of customers prefer steel made not by the concast methods but by the traditional methods deployed at Brymbo in the manufacture of billets. As Mr. Pennington, the former chief executive of UES and now the board member charged with deciding Brymbo's fate, said, instead of potentially taking capacity out of our United Kingdom plants, we should be seeking new markets in Europe and the world. He believes that the right way forward for UES is to do that and to increase production so that full capacity and full utility can be made of the plants in the Sheffield area.

Mr. Pennington said that the market in engineering steels was not going to decrease. The current wisdom in some economic circles is that there is 10 per cent. overcapacity of engineering steels and that there should be contraction, but Mr Pennington does not believe that. His logic does not add up. Instead of taking away our profitable manufacturing capacity, we should expand, look for markets and sell Brymbo as a going concern or perhaps in a joint venture with some other partner. Closing it is not good for Wrexham, Wales or the United Kingdom. I have no doubt about that.

I am pleased that, because of last weekend's events, Wales is now united in marketing Brymbo worldwide. The local councils and my hon. Friends the Members for Alyn and Deeside (Mr. Jones) and for Clwyd, South-West (Mr. Jones) are with me on this issue. I pay tribute to the Secretary of State for sending in the Welsh Development Agency to decide whether Brymbo was viable. The WDA's chairman, Dr. Gwyn Jones, believes that it is. Brymbo is being marketed worldwide to find a potential buyer, and I know that the Secretary of State supports that stance.

We have overcome that hurdle, but there are many more and it would be foolish of me to pretend that I am optimistic about saving the plant. We must find a buyer. I have no expertise in that matter, but I am confident that either Clwyd county council or the WDA, through their contacts and international expertise, will be able to find a buyer. Interest has been shown in taking over the steelworks. After that, there comes the most difficult hurdle: we must persuade UES that it is not against its interests to sell Brymbo as a going concern. On its record, the plant deserves to survive.

If we add to that the advantage of a steel-producing plant and the benefits that that brings to the people of Wales and in particular to the standard of living of people in Wrexham and consider the advantages for the United Kingdom in that 40 per cent. of its products are exported and thereby help our balance of payments, the case for the retention of steelmaking in Brymbo is unanswerable.

I hope that the Secretary of State for Wales agrees with what I have said. I do not want promises from him tonight because no one has unlimited powers and no one can make promises. However, the Secretay of State has considerable power. I hope that he will do his best and use his influence, if a suitable buyer comes forward, to persuade UES to sell the plant at a fair price so that steelmaking at Brymbo can continue.

I would like the Secretary of State's help. However, more importantly the people of Brymbo and of north-east Wales want it in that endeavour.

Do the hon. Members who are rising have the consent of the hon. Member for Wrexham (Dr. Marek) and of the Secretary of State for Wales?

12.11 am

I am glad that the Secretary of State for Wales is present for this urgent and extraordinary debate. I support 100 per cent. the vigorous efforts of my hon. Friend the Member for Wrexham (Dr. Marek) to assist his beleaguered constituency and the community of Brymbo. I also support 100 per cent. the efforts of the Brymbo steelworkers.

I very much regret that the decision to close the plant was taken by a small board far from the seat of production at Brymbo. That cannot be right and I deeply regret the decision of the UES board. The 1,125 workers, their families and the community face an uncertain future. Those 1,125 jobs are highly skilled and well paid. Most importantly for Wales, they are manufacturing jobs. As my hon. Friend the Member for Wrexham said, the jobs are important to Brymbo, to Wales and to Britain and its industrial future. If those jobs are lost, they will not be recreated in Wales. They cannot be reclaimed. Those jobs are vital to the industrial future of Wales.

The board's decision is unacceptable. It represents deskilling and deindustrialisation at a time when we need more skills and more wealth-creating manufacturing industry. Our nation sees its manufacturing capability bleeding away. Brymbo would add to the disaster that we will face if there is any more erosion of our industrial base.

The social impact will be severe. I am concerned about Brymbo, but I am also concerned about Llanfynydd, Ffrith, Cy Mau, Caergwrle, Llay, Hope, Penyffrid, Cefn-y-bedd and Abermorddu in my constituency. Those are small communities, but they all send workers to Brymbo. The work force earns its daily bread at the plant. It is productive and it creates profit. It has been very loyal to the company and to the industry over many years. The proposed closure is a wretched and unwelcome reward for a fine steelmaking capability.

I congratulate the steelworkers' leaders, Mr. Griffiths, Mr. Jones and Mr. Bostock. The help of the Wrexham Maelor council has been superb. Again I praise the vigorous efforts of my hon. Friend the Member for Wrexham.

I blame the Prime Minister and the former Chancellor of the Exchequer. Their economic policies were so wrong that they have led to high interest rates which have destroyed domestic and commercial budgets. Her Majesty's Government bear a heavy responsibility.

The proposed closure will mean more imports of the product that Brymbo will cease to make. That will happen as the years roll by. Also, there will be a steel desert in the north-west and in north Wales. I refer to the former production centres of Workington, Mostyn, Warrington, Manchester, Irlam, Shotton, and, as proposed, Brymbo. That cannot be good for north Wales and it cannot be good for Britain. I am one with my hon. Friend in seeking to stay this execution.

I note from the House of Commons Library that steel strip imports have increased by about 67 per cent. since 1983. In that same period there has been a 103 per cent. increase in stainless steel and alloy imports. I warn that if the jobs go to the wall, there will be more and more imports. One of Britain's greatest problems is a terrifying balance of payments deficit.

The decision by a board that is far away from Brymbo will add to the difficulties of our nation.

I should like the Secretary of State to visit Brymbo. Indeed, I should like him to set up and chair a meeting of his agency, the company, the unions and the local authorities. I should like him to do that urgently, with the objectives of subjecting the company to the severest questioning and enabling the trade unions and councillors to talk to and question the company. Above all else, I ask him to redouble his efforts and, even at this late hour, to use the considerable powers in his armoury to help the people of Brymbo. If he does that, we shall support him.

12.16 am

I am grateful to my hon. Friend the Member for Wrexham (Dr. Marek), who has been fighting all along for the jobs in Brymbo, for allowing me a few minutes of his valuable Adjournment debate to make some points about the wider implications of this matter for the people of north Wales.

Many people work in the plants and bring money into my constituency and into that of my hon. Friend and many other hon. Members in north Wales. There are 1,100 well-paid jobs involved, and they are well-paid because the plant is profitable. However, it is being closed when it is profitable. As my hon. Friend said, closing an unprofitable plant is bad enough—it is unpleasant—but closing a profitable plant is obscene. It is the reality of free market Thatcherism taken to a ridiculous extent.

I remind the Secretary of State of an article that appeared in the Daily Post, which states:
"On the eve of his first official visit to North Wales, Mr. Hunt said: 'As Secretary of State for Wales my commitment is to all parts of Wales in seeking to spread prosperity everywhere.'
He intends to spend at least one day each week in North Wales."
I am not sure whether he has done that; I hope so. The Secretary of State is further quoted as saying:
"Over the coming weeks and months I shall be taking every opportunity to listen and to learn … I want to develop the most positive possible partnership with the Welsh people."

Does my hon. Friend agree that the refusal of the owners of Brymbo to allow some formula to emerge—a sell-off, for example—is reflected in many other parts of Welsh industry? For example, in the coal industry, British Coal has refused to contemplate the sale of mines that it proposes to close to companies that had made offers to buy those mines. What is happening——

Order. The hon. Member must restrict his remarks to the matter before the House.

I fear that what is happening in the steel industry at Brymbo, for example, is another case of the way in which decisions that are made elsewhere are marginalising the Welsh economy. Unless we sort this one out—I hope that the Secretary of State will address this matter—the problem will become more urgent and more prevalent——

I hope that the Secretary of State will address the matter that we are considering.

I am grateful to my hon. Friend the Member for Pontypridd (Dr. Howells) for that intervention because, although he strayed a little from the subject, what he described is happening all the time. In fact, it is happening to a factory in my constituency. The James Seddon factory is being closed because of decisions made elsewhere, although it is profitable. My hon. Friend has made a valid point.

I remind the Secretary of State that he is reported as saying that he intends
"to ensure that North Wales does not lose out in the Government's drive to lure more job boosting ventures to Wales … Two hundred and ninety five important inward investment projects have come to Wales since the last election and there are many more in the pipeline."
The article also reported that the right hon. Gentleman is
"to lead a new effort to boost investment from Japan, Korea and France."
That was reported on 14 May, the very day of the Brymbo announcement. I hope that the right hon. Gentleman will take what has been said to heart and that he will not rue his words. If he does not keep Brymbo open, those words will come back to haunt him. I hope that they do not have to.

12.20 am

The importance of Brymbo is demonstrated by the presence in the Chamber tonight of the Minister of State, my hon. Friend the Member for Conwy (Mr. Roberts); my Parliamentary Private Secretary, my hon. Friend the Member for Battersea (Mr. Bowis); and myself. I am also pleased to note the presence of the shadow Secretary of State for Wales, the hon. Member for Alyn and Deeside (Mr. Jones). Brymbo's importance is further demonstrated by the presence of my hon. Friends the Members for Clwyd, North-West (Sir A. Meyer) and for Chipping Barnet (Mr. Chapman), and by my many other hon. Friends who have stated their strong support for the community in Brymbo. I note also the presence of the hon. Members for Wrexham (Dr. Marek), to whom I shall return in a moment, for Clwyd, South-West (Mr. Jones), and for Pontypridd (Dr. Howells), who have both spoken, and for Brecon and Radnor (Mr. Livsey). Their presence demonstrates not only the importance of Brymbo but the fact that the issues that we are considering transcend any party political differences that we may have. I very much appreciate the spirit of the way in which all those who are involved in this difficult matter are working together to do their best to ensure a secure future for those employed at Brymbo.

The hon. Member for Wrexham, with the local authorities, the communities and the steelworkers, has taken a positive lead in this. Together with the Welsh Development Agency and United Engineering Steels Ltd., they have all shown a willingness to co-operate which I very much welcome. That applies to all the political parties in the area, including the local Conservative party, led by Owen Patterson and John Myers. All the parties and all parts of the community have come together under the leadership of those involved on behalf of their community.

The hon. Member for Wrexham has already given the House some of the history of Brymbo and has mentioned how United Engineering Steels Ltd. was formed in April 1986 as a company jointly owned by the British Steel Corporation and Guest Keen Nettlefolds. This joint venture, code-named Phoenix II, was launched at a time of severe over-capacity in the United Kingdom engineering steels sector. It was intended that Phoenix II would maximise the level of investment available and enable the company to match international competition. This project involved the Government providing £55 million in funds to BSC to subscribe in preference shares and loan stock in UES on the understanding that UES would undertake further investment. There were no conditions attached to the Government's funding in relation to the location of the investment.

As hon. Members will know, the decision was made in June 1986 by the UES board to invest £60 million in a continuous bloom caster at the Aldewarke plant near Rotherham. I know that great disappointment was felt at the time—which I shared, as a north Waleian—that Brymbo did not receive this investment. However, UES stated that it had no plans to close any of its major works during the following two years. Thereafter, the future of all plants, including the steelworks at Brymbo, was said to depend on market opportunity. Over the ensuing four years, conditions in the steel industry have remained extremely competitive.

Following the announcement by UES on the proposed closure of the Brymbo plant on 14 May, I arranged immediately to meet a delegation led by the hon. Member for Wrexham—I could speak to him that day because I was opening a factory and a new mill in the area—and company representatives. Those meetings took place on 16 May. I listened with great care to the points made by the hon. Gentleman, the local authority, the trade union and community representatives. They stressed, as the hon. Gentleman has tonight, that the steelworks was profitable and that the work force was loyal and skilful. It had co-operated fully in the management's efforts to improve productivity over the past few years.

I subsequently met, in the afternoon, the company directors who explained their reasons for announcing the intended closure. A number of reasons for their decision were given, including the scope for increased use of capacity at their other plants. They said that significant expenditure would be required at Brymbo to bring it up to standards achieved elsewhere in the group and that this expenditure would add considerably to the costs of continuing to manufacture at Brymbo. To utilise fully what they described as the more modern process routes of other UES plants within the group, the company had reluctantly concluded that Brymbo should be closed. Nevertheless, I took the opportunity to convey to the company the points made forcefully to me earlier by the local representatives.

Following those two meetings, I am pleased to say that it was agreed that the company would hold urgent discussions with the Welsh Development Agency about all the options for the future of the steelworks. I immediately contacted by telephone the chairman of the WDA, Dr. Gwyn Jones, who made arrangements to visit the Brymbo works. He held detailed talks with the company as part of his agency's examination of the plant's viability. Although ultimate decisions about the Brymbo works are a matter for the commercial judgment of its owners, a number of options have already been identified.

Clearly, the ideal solution for the area would be to ensure continuing steelmaking at Brymbo and I have asked the WDA to concentrate on finding such a solution, covering the examination of joint venture operations. Naturally, in addition, the WDA is looking into possible alternatives which include securing employment at the site, first, by attracting an allied industry to the works to use all or part of the plant complex; secondly, by converting the buildings for alternative uses, such as heavy engineering or steel fabrication; and, thirdly, by redeveloping the site totally. Dr. Jones is keeping in close touch with me on all those issues.

Hon. Members may have read press reports saying that various companies have shown an interest in Brymbo for one of the uses mentioned earlier. The House will, of course, appreciate that discussions are at an early stage and it would be unfair of me to raise Members' hopes without foundation by giving details of any negotiations which may eventually prove fruitless. I would, however, like to thank the WDA for its prompt response. It has circulated worldwide the details of the facilities at Brymbo and the opporunties available to all interested companies and to all major banks throughout the world for them to convey to their clients.

The hon. Member for Wrexham asked about grant aid paid to the company. I should be happy to explain the position to him. The last of the four-year conditions on assets at the works will have expired in September 1989. Therefore, there are no continuing conditions. I have little time left to deal with his remaining points.

The WDA intends to be as positive and constructive as possible. I recognise that manufacturing employment in the Wrexham travel-to-work area at 16,600 is some 22 per cent. higher than it was in 1983. In overall terms, Wrexham and the Deeside area is one of the strongest growth areas in the United Kingdom. Nevertheless, our commitment to north Wales through the vast sums being spent on the A55 includes our commitment to Brymbo.

Let me make it absolutely clear that, whatever the result of all the work now being undertaken, both sides of the House are determined to secure the future of the Brymbo community. Both Brymbo and its surrounding area have seen a dramatic fall in unemployment in recent years, but that in no way lessens our resolve to help the steel community.

I hope that the House will understand that I can say little about the detailed commercial discussions that are taking place, but I assure hon. Members that no opportunity will be left unexplored in our search for a satisfactory solution.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Twelve o'clock.