[A-List] New economy bull: cooking the books

["Michael Keaney" <michael.keaney@xxxxxx>]

Further to our discussion of Lanarkshire and, more generally, the fate of
backwash areas within the core countries. Includes an incisive, analytical
quote from the "intellectual" "Dr" John Reid...


Fury as Taiwanese firm quits Scotland
WILLIAM TINNING
The Herald, 1 November 2002

AN electronics factory is to shut, making 600 people redundant a month
before it is due to pay an outstanding rates and water bill of almost £4m.

Chunghwa Picture Tubes, which received almost £20m in public grants,
confirmed last night that it is to close its plant at Mossend, North
Lanarkshire, at the end of January. Only 40 to 50 workers will be kept for
care and maintenance.

The plant was supposed to bring more than 3000 jobs to Scotland, but on
Monday the Taiwanese company will hand 90-day redundancy notices to almost
600 workers.

They will be paid off the month before the Lanarkshire base loses its
enterprise zone status and the company will face a rates bill of £3.5m and a
water bill of almost £250,000.

Politicians and union leaders described Chunghwa's decision as a "major
blow" to Lanarkshire and Scotland.

The Scottish Executive has begun exploring ways to claw back some of the
hefty public subsidies used to persuade the electronics company to locate in
Scotland.

When it was first proposed in 1995, Michael Forsyth, the then Scottish
secretary, said the £260m investment in a European manufacturing facility by
Chunghwa would create more jobs than any other inward investment in the UK's
history.

The £20m in public grants the company received included regional selective
assistance of £15m and subsidies for training. Motorway links were altered
to help accommodate Chunghwa's facility in Lanarkshire which was close to
the Eurocentral terminal.

The first phase of the plant was opened by the Queen in 1997 amid a fanfare
of publicity.

It was built to manufacture cathode ray tubes for computer monitors and
television sets and was hailed as the most technically advanced factory of
its kind in the world.

Scottish Enterprise predicted the company would create as many as 3300 jobs
by early this century in an area still reeling from the closure of the
Ravenscraig steelworks.

The facility was closed yesterday as part of a series of scheduled
production shutdowns.

The company announced its plans last night after news of the closure began
circulating in the media before it had a chance to tell staff.

Chunghwa blamed the downturn in the global economic market for its decision.

A spokesman said: "We can confirm that, despite investing around £205m in
the plant over the last six years, CPT cannot continue to operate in its
present form under the current global economic conditions."

Bernie Hamilton, regional officer of the Amicus-AEEU trade union, said the
cuts were an indictment of the government's reliance on boosting Scotland's
economy through inward investment.

"Initial discussions have taken place with the company and we are seeking
further talks as a matter of urgency," he said.

Local politicians called for a taskforce to be set up.

John Reid, whose Hamilton North and Bellshill constituency includes the
site, said he was deeply disappointed by the decision.

"These announcements always seem to come in the run-up to Christmas," he
said.

-----

The screen goes blank for old technology
ALF YOUNG
The Herald, 1 November 2002

THE travails of Chunghwa Picture Tube's European manufacturing plant in
Lanarkshire have been an open secret since the bottom fell out of the global
technology boom at the beginning of the millennium.

The Taiwanese company, a subsidiary of Tatung, one of the Asian tiger's
largest electronics groups, was world market leader in the production of
both monochrome and colour cathode ray tubes - the glass displays at the
heart of conventional TVs and computer monitors - when it first announced,
in 1995, that it was investing £260m in a new facility on the Mossend
enterprise zone site.

Here were skilled engineering and technology jobs - a whopping 3300 of them
when the project was fully up and running - to help replace those lost in
the closure, a few years before, of the Ravenscraig steel strip mill.
Scotland had been chosen, said CPT president C.Y. Lin, because it lay at the
heart of the European electronics industry.

We were told making the bulky but fragile tubes inside the European Union
made much better economic sense than shipping them half way round the world
from Chunghwa's existing plants in Taiwan, Malaysia, and China.

For our own policymakers this was decisive proof there were rich pickings
still to be had pursuing big inward investment projects. Soon Korean giant
Hyundai would promise to produce silicon wafers in an even larger
development on the outskirts of Dunfermline.

Japan might be in the doldrums. America's Silicon Valley might be proving
less fertile recruiting territory. But Scotland was winning new industrial
investment and thousands of promised jobs from one of the most dynamic
corners of the industrialised world - South Asia's Pacific rim.

Some of us questioned the logic of pouring so much state aid into an ageing
technology like cathode ray tubes. A British company, Mullard, had developed
them in the first half of the 20th century. Now a Taiwanese company had
outstripped a European rival, Philips, in making them.

But the screen technology of the future was flat screens and plasma
displays. Did CPT's ambition to build six lines in Lanarkshire churning out
10 million tubes a year make commercial sense in that fast-changing
technological environment? How readily would the Taiwanese way of making
things translate to Scotland?

Our doubts were dismissed as the usual carping negativity. Local suppliers,
attempting to build their own businesses by plugging into the supply chains
for some of the major names already located in Silicon Glen were dismayed
when Chunghwa, again with Scottish Office help, encouraged some of its own
suppliers and assemblers from Taiwan, notably Lite-On, to open plants on the
same enterprise zone site.

Lite-On did not last long and then the pressures started to mount on
Chunghwa. The 1997 Asian financial crisis was the first blow.

Then, as the new century dawned, the global electronics industry went into a
protracted downturn. CPT's managerial philosophy - "honesty, integrity,
industry and frugality" - was not enough to insulate it from hard times.

Plant building stopped at the first phase. The workforce peaked at about
1200. Chunghwa now says it invested more than £200m just to get this far, an
indication of just how much this plant has been losing ever since it opened
its doors.

Attempts were apparently made by the local management to persuade the parent
company to introduce the newer flat screen technology to Scotland. To no
avail.

With the workforce shrinking and the plant facing more and more production
pauses, the final crunch was fast approaching. There was an unresolved row
over a water bill dating back to the start of operations. Now, with
enterprise zone status rapidly coming to an end, Chunghwa would have to pay
North Lanarkshire Council about £3.5m a year for the privilege of continuing
to rack up substantial losses in Scotland.

Something had to give. It has. The plant that stands just off the M8 is
closing. Chasing inward investment is no longer a top Scottish Executive
priority.

But 600 people in Lanarkshire who thought it had brought them a job and
security have been forced to think again.