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M E N T IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y ' S G O V E R N M E N T C ( 7 5 ) 106
C O P Y NO
14 October 1975
o i
0 £
CABINET
A N A P P R O A C H TO INDUSTRIAL STRATEGY
Note by the Chancellor of the Exchequer and
the S e c r e t a r y of State for Industry
1.
The task we face is a daunting one - nothing l e s s than a r e v e r s a l
of the r e l a t i v e decline of B r i t i s h industry which has been a l m o s t
continuous since at l e a s t the end of the 19th century.
This is not
something we can a c h i e v e o v e r n i g h t .
It w i l l be a long haul and the full
benefits w i l l only e m e r g e i n the long t e r m .
But we must start the
p r o c e s s now.
2.
T h e attached document sets out the G o v e r n m e n f s proposals for the
d e v e l o p m e n t of a long t e r m industrial s t r a t e g y .
W e b e l i e v e that any
approach to an industrial s t r a t e g y must contain two i n g r e d i e n t s .
First,
it must be r e a l i s t i c and f l e x i b l e .
Our proposals w i l l i n v o l v e a c a r e f u l
analysis of the p e r f o r m a n c e and p r o s p e c t s of individual industries which
w i l l be open to continued adjustment as e x p e r i e n c e g r o w s and c i r c u m s t a n c e s
change.
This w i i ] not be a r i g i d s t r a t e g y but a flexible f r a m e w o r k within
which s t r a t e g i c decisions can be m a d e .
Second, it is v i t a l to engage the
c o - o p e r a t i o n and d r i v e of both industry and its w o r k - p e o p l e .
W e intend
to do this by thorough d i s c u s s i o n on a r e g u l a r b a s i s with r e p r e s e n t a t i v e s of
both sides of industry, both at industry and at company l e v e l .
W e need
better d e c i s i o n s both by companies and by G o v e r n m e n t .
3.
The objective we seek i s a c o h e r e n t f r a m e w o r k f o r the operation
of the G o v e r n m e n f s new instruments of i n d u s t r i a l p o l i c y .
Although the
f r a m e w o r k is p r i m a r i l y c o n c e r n e d with long t e r m p r o b l e m s , as it d e v e l o p s
it w i l l i n c r e a s i n g l y help short t e r m p o l i c i e s to be f r a m e d against a l o n g e r
t e r m industrial p e r s p e c t i v e .
W e r e g a r d our p r o p o s a l s as a m a j o r and
constructive step towards the d e v e l o p m e n t of a much g r e a t e r c o m m o n
sense of purpose among a l l c o n c e r n e d with the future of B r i t i s h industry.
D W H
E G V
Cabinet Office
14 O c t o b e r 1975
DitAVl' KEDCi PAPER:
T;V
"AIT APPROACH PC INDUSTRIAL
STRATEGY"
THE CHANCELLOR CP THE' EXCHEQUER AED THE SECRETARY CP STATE
FOR INDUSTRY
Introduction
Cur p r i m e
objective
niust be t o become a -high o u t p u t - h i g h
This can o n l y be a c h i e v e d
raisin-r; our g r o w t h
of
by improving
productive
our i n d u s t r i a l . p e r f o r m a n c e
potential.
since t h e war h a s n o t b e e n s a t i s f a c t o r y ,
failure
by c o m p a r i s o n w i t h
industrial
problems.
instruments
to
and the P I P .
armoury,
tackle
for
purposeful
for
improvements
modernisation p r o c e e d s ,
labour
force.
develop a c o h e r e n t
a c t i o n where
(training,
sectors
this
strategy.
2
The N a t i o n a l
discussions
about
and a t t h e A u g u s t
a caper s e t t i n g
then be f u l l y
strategy
is
is
is
This
The
some s e c t o r s
some
of
Development
t h e need
for
to
the
a new a p p r o a c h t o
inevitably
a, l o n g
of
output
the
our ­
need
importance
can he
others
and
to
has h e l d
of
Government
the p a r t i e s .
and d i f f i c u l t
policies
of
The d e v e l o p m e n t
task.
defensive
a series
strategy
in.
increase
in
to
with
to
geared
undertook
an i n d u s t r i a l
as
taken
take
industrial
pressure
In
can be p r o d u c e d
capacity
degree
the
labour.
to mobility)nustbe
Council
our
soundlv^b^sed
may mean, t h a t
first
in
in
industry
shed.;P:g o f
expand
or
a
other
so t h a t ' a c t i o n
a greater
m eting
d i s c u s s e d by a l l
for
Manpower
encouragements
with
o t h e r weapons
calls
industry.
good p r o s p e c t s
Economic
out
and t h e
necessary.
Council
effectively
our
agreements
therefore
strategy
part
planning
in productivity
and c o m p a n i e s
with
re-training,
this
It
in large
particular
in
force
performance
new
same o r a l a r g e r
industrial
good t i m e by G o v e r n m e n t
employment i n
the
In
deal
end
powerful
these,
manufacturing
to
economy.
introducing
effect.
competition w i l l
technological
a smaller
that
manpower p l a n n i n g .
of i n t e r n a t i o n a l
others,
to
strategy
l/as a g u i d e
problems,
We must e n s u r e
are used
industrial
these
is
Our e c o n o m i c
reflecting
our c o m p e t i t o r s
The G o v e r n m e n t
wage
with
planning
produce
which
of
any
could
ouch
xiiis paper
the
approach which t h e
realistic
Government
and f r u i t f u l .
developing
a strategy
It
is
not
which w i l l
on u n i o n s and on management t o
considers
likely
a s t r a t e g y but
place
improve
s e t s ov.
t o b e t h e most I
a programme
for
responsibility
on Governiaei
our
performance,
industrial,
Background
3.
She h e a l t h
industry,
of
which
accounts
and o v e r 80% o f
national
not
visible
and t o
suffer
in p a r t i c u l a r
the. early
analysed
stages
exports,
from
of
burden o f
not
vital
changes
to
o f wo?­
which
show t h e m s e k
and c o m p o n e n t s in
The. reasons
the
Council
and t h e r e
is
no u n i v e r s a l
a s an o v e r - v a l u e d
f o r our relsj
exhaustive!;:
and t h e
Economic
agreement
exchange r a t e
on the
and t
may now b e l e s s s e r i o u s .
labour
for
But t h e main r e l e v a n t , " a n d
thought
our
in the pattern
standards have been
supply of
to
appear
i n manpower
responsibility,
empioyme
industry
rigidities
the economy.
and
importance
Cur m a n u f a c t u r i n g
to
manufacturing
output
in
f a c t o r s , such'
inescapable.
I n v e stment
in
of
our
least
such a s a l i m i t e d
Labour
is
by i n t e r n a t i o n a l
international
are
30% o f
structural
upturns
Committees,
Some i m p o r t a n t
factors
about
adequately
and d i s c u s s e d ,
Development
and i n p a r t i c u l a r
in b o t t l e n e c k s - both
poor performance
Others,
for
economic p e r f o r m a n c e .
t o have responded
trade
are
our i n d u s t r y ,
industries
clearly
to
draw
inter-relate
include:
(i)
a low r a t e
of
( i i )
i n e f f i c i e n t u s e o f c a p i t a l , which)
h a s r e s u l t e d i n a p o o r " increments,
output-capital ratio.
( i i i )
poor choice
(iv)
i n a d e q u a t e d e v e l o p m e n t o f a manpoj
p o l i c y and t h e c o n s e q u e n t 1 (region
and s e c t o r a l ) s h o r t a g e s o f s k i l l e
labour.
( v )
low l a b o u r p r o d u c t i v i t y reflectin,
p o o r m a n a g e m e n t , i n a d e q u a t e consu
t a t i o n , r e s t r i c t i v e p r a c t i c e s , ov
m a n n i n g and d i s r u p t i o n by industr
action.
of
investment
investment.
1
Government
( v i )
a t t i t u d e s t o p r o d u c t i v i t y and labour­
m o b i l i t y b a s e d on v i e w s a b o u t
a p p r o p r i a t e pay ana t a x s t r u c t u r e s ,
r e f l e c t i n g long-standing attitudes
t o r e l a t i v e pay i n i n d u s t r y .
(vii)
s h a r p and f r e q u e n t c h a n g e s o f aconomi
r e g u l a t o r s t o meet t h e c o n f l i c t i n g
n e e d s o f e c o n o m i c and s o c i a l p r i o r i t i
making i t d i f f i c u l t f o r c o m p a n i e s t o
plan ahead.
( v i i i )
pre-emption of resources by the p u b l i
s e c t o r and "by p e r s o n a l c o n s u m p t i o n t o
the detriment of/industry s investment
and e x p o r t p e r £ o r m a n c e .
1
(ix)
n a t i o n a l i s e d i n d u s t r i e s ' performance
a f f e c t e d b y Government i n t e r v e n t i o n
on p r i c i n g , i n v e s t m e n t and e m p l o y m e n t
policies.
(x)
a declining
fitability,
(xi)
i m p e r f e c t i o n s in the c a p i t a l markets
m a i n l y a t t h e medium and l o n g e r t e r m
ends.
(xii)
a c a p i t a l market which d o e s not g i v e
p r i o r i t y t o the needs of i n d u s t r y .
Finance
4.
There
themselves
Indeed,
is
no r e a s o n
out
on t h e
more r a t h e r
as a r e s u l t "
developing world to
could
E l e m e n t s o f
5*
both
management
front
difficult
-
the
our t e r m s o f
economic
situation
intensified
and a b u i l d
and t h e
sort
developments.
is
likely
to
from
capability,
up o f
security
become
the
increased
pressures
of
supply
which
of
strategy
o u r u n d e r l y i n g p r o b l e m s and t o
call
pro­
materials.
an i n d u s t r i a l
will
industrial
pressures
own m a n u f a c t u r i n g
trade
of
our problems w i l l
favourable
s e t up i t s
and k e y r a w
To t a c k l e
performance
that
from low c o s t p r o d u c e r s ,
affect
foodstuffs
of
international
than l e s s
competition
t o "believe
rate
for
and t h e u n i o n s ,
s t r a t e g y t o w a r d s i n d u s t r y
action
by a l l
underlining
on a l o n g
improve
parties
the need
term b a s i s .
our
concerned,
for
industrial
Government,
an a g r e e d
notional
Such a s t r a t e g y
must
i.
the b e t t o r c o - o r d i n a t i o n of p o l i c i e s
affecting
i n d u s t r y having regard t o t h e i r c o n t r i b u t i o n t o growth
through i n d u s t r i a l e f f i c i e n c y .
In p a r t i c u l a r t h i s
demands a more p o s i t i v e i d e n t i f i c a t i o n o f t h e i n d u s t r i a l
i m p l i c a t i o n s o f the whole r a n g e of Government
p o l i c i e s , and t h e f e e d - b a c k o f i n f o r m a t i o n f r o m p l a n n i n g
a g r e e m e n t s w i t h c o m p a n i e s w i l l he o f p a r t i c u l a r v a l u e .
ii.
t h e more e f f e c t i v e u s e o f s p e c i f i c i n s t r u m e n t s
o f i n d u s t r i a l p o l i c y and t h e d e p l o y m e n t o f f i n a n c i a l
assistance to industry.
B o t h p l a n n i n g a g r e e m e n t s and
t h e HEB w a l l h e i m p o r t a n t i n s t r u m e n t s i n t h i s f i e l d .
i i i . e n s u r i n g t h a t i n d u s t r y , b o t h p u b l i c and p r i v a t e , i s able
earn s u f f i c i e n t p r o f i t s
on i t s s u c c e s s f u l i n v e s t ­
ment t o s p u r managements t o expand and i n n o v a t e and
t o p r o v i d e them w i t h t h e b a s i c f i n a n c e t o do s o .
A d e q u a t e s o u r c e s o f e x t e r n a l funds a r e a l s o v i t a l :
seme v.li;
be p r o v i d e d t h r o u g h t h e N a t i o n a l E n t e r p r i s e B o a r d and some ti
F i n a n c e - f o r I n d u s t r y , hut i t w i l l a l s o he e s s e n t i a l t h a t the
m a r k e t s h o u l d he a b l e t o m e e t t h e n e e d s o f i n d u s t r y .
iv.
a more e f f e c t i v e manpower i : ) o l i c y , i n c l u d i n g
m e a s u r e s t o p r o v i d e a b e t t e r s u p p l y o f s k i l l e d man­
p o w e r f o r g r o w t h i n d u s t r i e s and t o c o p e -with t h e
human p r o b l e m s o f r e d e p l o y m e n t f r o m c o n t r a c t i n g t o
expanding i n d u s t r i e s .
T r a i n i n g and r e t r a i n i n g w i l l
be c r u c i a l h e r e , both in coping with the problems of
t h e p r e s e n t r e c e s s i o n and i n e n a b l i n g p e o p l e t o m e e t
the needs of a r e - o r i e n t e d B r i t i s h i n d u s t r y .
The NSC
and i t s a g e n c i e s w i l l h a v e an i m p o r t a n t p a r t i n t h i s . .
v.
t h e improvements i n p l a n n i n g , both i n i n d u s t r y
and b y G o v e r n m e n t , w h i c h w i l l f l o w f r o m s y s t e m a t i c
and c o n t i n u i n g t r i p a r t i t e d i s c u s s i o n o f t h e l i k e l y
prospects of individual industries,' a l l i e d to greater
d i s c l o s u r e o f i n f o r m a t i o n . a t company l e v e l ,
p a r t i c u l a r l y , but not e x c l u s i v e l y i n planning
agreements,.
Above
all,
the need i s
t o work t o g e t h e r
and
to get
away from p o l i c i e s
in the national
interest
of
confrontation;
towards agreed
common si
objectives.
6.,
For
its
economic
tions
and s o c i a l
for
greater
part,
policy.
weight,
the
Government w i l l
objectives
need t o
which o f t e n
Nevertheless,
the
and more c o n s i s t e n t l y
have
Government
continue t o
conflicting
intends
than h i t h e r t o , ,
to
to the
balance
implii
give!
needt
increase
the
growth
rate
through r e g e n e r a t i n g
and i m p r o v i n g
efficiency.
the i m m e d i a t e
future
our s o c i a l
to
industrial
objectives.
base w i t h o u t
Only
which t h e
social.reform
cannot
This w i l l
i n d u s t r y and
firm
inicro-poli c i e s .
the s h o r t
7
term
to
complete
This would o n c e
were based
attention
to
Plan.
find
ourselves
basis f o r
the most
to
indicate
objectives.
This
should
the
of
and t r y
of
to
development
relationship
between Government
committed i n
the White Paper
the
Government
to
to
set
and l a c k
to
the
with
too
and
of
they
little
companie
early
than
and
Jike
the
resources
a
we
consistent
prospects
of
years
economic
both, s i d e s
and more
of
in.
because
5 or more
of
overall
closer
discarded
Accordingly
provide
in
erected
be
industries
a. p e r i o d
and i f
to
planning
and p a i d
the l i k e l y
Regeneration
The f r a m e w o r k w o u l d n e e d t o b e r e v i e w e d
and
forecasts
largely
and i n d u s t r y t o w h i c h
on t h e
macro
As a r e s u l t
extensively
of
of
n o t a. s o l u t i o n
result.
consider
be d i s c u s s e d
will
national,
industrial
strategy
in meeting
at
and h a v e
again.
over
and
our aims
question, r a t h e r
little
sectors
role
in
economic
industrial
individual
any c o - o r d i n a t e d
their
set
circumstances
with too
industrial
of
it
and i n d u s t r y
ahead and t o
industry as p a r t
in
industrial
t h a t any p l a n which
aosuiiiptioriSj
abandon the p l a n
without
is
the
attempts which f a i l e d ,
changes
the
even
now.
by events
affecting
be d i s s i p a t e d
important
be f o r
.rocoss
economic
to r e v i s e
Government
the
of
support
is
for
consumption, or
achieving
this
structure
priority
co-ordination
that
he f a l s i f i e d
constraints
French o r J a p a n e s e ,
to
proper
consistent
previous
response
in
needing
The l i k e l i h o o d
ard m u t u a l l y
s u c c e s s was t o
hove t e n d e d
factors
again d i s c r e d i t
the
programme
Success
problem might
on u n s u s t a i n a b l e
Our r a t i o n a l
visible
the
as h a v e
over
p r o b l e m s w h i c h we f a c e
would r a p i d l y
this country,
whole
end. r e q u i r e s
economic
hand a new N a t i o n a l
and t a r g e t s
of
greater
way can we m a i n t a i n
B u t we must r e c o g n i s e
One r e s p o n s e
a single
in t h i s
be f u l f i l l e d .
level
mean g i v i n g
development
Government's
depend on a c o m p l e x v a r i e t y
our i n d u s t r i a l
of
positive
the Government
British
necessary
Industry.
adjusted,
at
is
regular
tie
in
intervals,
with
With major
what
to take
t h e Government
companies
expenditure
account
as w e l l
of
changing
intends to
as w i t h
circumstanced.
do i n p l a n n i n g
Government p l a n n i n g
and n a t i o n a l i s e d i n d u s t r y
Think
agreements
of
public
investment.
uneworK
8..
Ihe
first
analytical
take
is
framework.
account
hand i n t h e
framework
step
of
the p r o v i s i o n
of
Although t h i s
can u l t i m a t e l y
other useful
a systematic
information,
R a t i o n a l Economic Development
should
initially
rest
be b r o a d e n e d
including
Office,
on two main
statistical
and
to
work c u r r e n t l y in
we p r o p o s e
t h a t the
elements:
i..
An a n a l y s i s o f p a s t p e r f o r m a n c e o f i n d i v i d u a l s e c t o r s o f m a n u f a c t u r i n g b a s e d on a number o f s t a t i s t i c a l i n d i c a t o r s such a s s i z e , g r o w t h r a t e , t r a d i n g performance, import c o n t e n t , growth of w o r l d demand and i m p o r t a n c e t o o t h e r s e c t o r s . A key f a c t o r would be the c o m p e t i t i v e n e s s o f the i n d u s t r y a t home and a b r o a d .
This process w i l l help i d e n t i f y the importance of i n d i v i d u a l s e c t o r s in achieving various o b j e c t i v e s . ii.
The i m p l i c a t i o n s f o r d i f f e r e n t
industries and s e c t o r s o f a l t e r n a t i v e medium t e r m g r o w t h a s s u m p t i o n s , u s i n g as a s t a r t i n g p o i n t t h e G o v e r n m e n t ' s medium t e r m p r o j e c t i o n s . 9*
The G o v e r n m e n t
this
statistical
qualitative
for
minimum e c o n o m i c
impact
the
of
framework,
factors,
the p o t e n t i a l
supplies
w o u l d make an i n i t i a l
(for
such
import
size
example
of
our
EEC m e m b e r s h i p ,
industrial
objectives
taking
as t h e
full
assessment
account
of
on t h e b a s i s o
a wide
scope
for
improving
substitution,
the
development
plants,
the
security
self-sufficiency
in
of
on p a s t
future
of
new o v e r s e a s
and p o l i c i e s
other
of
perforaa
new technol
raw
materials
energy by 1 9 8 0 ) ,
t h e emergence o f
of
range
the
c o m p e t i t o r s aii
Governments.
10.
T h e aim w i l l
achieving
end f o r
sector
our
will
economic
those
of
analysis
potential
he t o
identify
objectives
private
to
those
industry.
identify
following
a first
grouping
for
the
This w i l l
t h o s e which
and t h o s e w h i c h may b e
involve
both
s e c t o r s most
are
important
Governmenfs
entail
likely
t h e most
purpose
a s e c t o r ' by­
t o have
expected to present
of
for
most
problems.
important
This
industries
the
i
way:
i n d u s t r i e s which, j u d g i n g by p a s t "performance and c u r r e n t p r o s p e c t s a r e intrins.ical.I3/- l i k e l y to be'successful. It
is
-
i n d u s t r i e s w h i c h , though t h e y f a l l s h o r t o f
the f i r s t c a t e g o r y have the p o t e n t i a l f o r success i f appropriate a c t i o n i s taken. -
i n d u s t r i e s whose p e r f o r m a n c e ( a s i n t h e c a s e
o f component s i x p p l i e r s ) i s most i m p o r t a n t t o
the r e s t of industry. of
course
individual
clear
firms
that
any i n d u s t r y
can c o n t a i n
w h o s e p r o s p e c t s may b e b e t t e r
sub-sectors
or worse
and
than t h e
sectoi
as a w h o l e .
The u s e
1.1.
of
This
the
industrial
analysis
a starting point
is
for
not
the
industrial
planning
Government
and b y b o t h
problems l i s t e d
in para
12.
At
policies
the
the n a t i o n a l
affecting
of
an i n d u s t r i a l
development
of
level,
of
for
the Governmenfs
discussion
the
3 above,
objective
which
performance
since
lie
level,
there
industry.
should be a b l e
industry
to
take
is
a wide
to
their
assess
account
of
Government s
industry
root
sectors,
general
analysing
including
economic
the
of
the
and.
the
our
impact
Government
to operate
effects
on
of
affecting
effectively
individual
formation.
should c o n t r i b u t e
factors
policies.
of
them i n p o l i c y
the
a way o f
range
policies
by p r o v i d i n g
1
by
war.
For these
framework
various
the
is
own
must b e t o t a c k l e
at
the
It
and a c t i o n
i n d u s t r y at n a t i o n a l ,
p r o p o s e d medium t e r m i n d u s t r i a l
for
strategy.
Level
Government
sectors
each
industrial
National
itself
sides
At
i.
in
and a f r a m e w o r k
company l e v e l .
inadequate
framework
the
changes i n
to
The
this
prospects
the
13
This
strategy
for
sectoral
governing
selective
be t o
its
it
to
Government
has i n d e e d
sustaining
a"vigorous,
of
industry.
shall
that
made i t
alert,
Industry w i l l
main c o m p o n e n t s
also
v;
of
return
accepts
want c l o s e r
pro3poets
with
described
in
need
each o f
para
undertaking f o r
and o p e r a t i o n
15
at
in
important
the
the
of
improving
to
our
agreements
and t h e i r
industrial
utilities
the
a great
to
and vie
the
basis
system,
to
the n o t a b l e
is
the
for
are
been
structure
in
the
light
trade
steel,
10,
o
(J
performance
h a v e an i m p o r t a n t
efficiently
the
that
strategic
of
t o he r e l a t e d
since
he
most
of
the
to
is
j u s t as
used
in
the
into
nationalised
planning
process.
nationalised
each
other
the n a t i o n a l i s e d
industries,
likely
the
role
it
as t h e y w i l l , he b r o u g h t
than m a n u f a c t u r i n g
of
will
term plans
industries
exception
contribute
) will
improving
intention
of
long
But
at
performance.since
Just
scope
the
framework.
rather
(NEDC(75)
scope
resources
the
enable
supplier
the
industrial
it
industri
discussions.
preparing
sector.
of
groupings
deal
t o be l o o k e d
owned i n d u s t r i e s
overall
come w i t h i n
example,
the
assessing
private
industries
para
in
Publicly
for
within
o r gen i s a t i on s such, as
sectoral
contribute
stage
This w i l l ,
of
Other
w h i c h EEDO a r e
should
analysis
The
as the
with
term
complement
NEJ3C's Medium Term I n d u s t r i a l - R e v i e w .
as w e l l
not,
sector
on a r e g u l a r
the
t o draw upon t h e work
and c a p i t a l
are
have
t h e KDCs' m a c h i n e r y n a y h a v e
industries
of
identified
The IfDCs w i l l
labour
ries
discussions
industries
that
the whole
to
have
may a l s o
this
planning
of
on medium
they
each s e c t o r .
play
public
the
new d e v e l o p m e n t .
valuable
to
extensive
10 a b o v e .
The i n d i c a t o r s
within
t o be
and t h e y wad 1 b e a b l e
associations
The.
level
There w i l l
this
managerial
term p r o j e c t i o n s
place
of
want'ire;
here by c i r c u l a t i n g
take
this,
private
consultation
d i s c u s s i o n o f . s e c t o r a l p r o s p e c t s which w i l l
a s i n d i c a t e d i n p a . r a g r a p h 19 b e l o w *
to
policies
importance
further
14
total
on c a p i t a l .
the
G o v e r n m e n t ' s medium
ways o f
from
economic
and p r o f i t a b l e
e h a v e made a. s t a r t
the
of
this
Trdustry
consider
responsible
of
apart
industry'wil1
objective
it
Government"s
Quite
bellow)
irate
that
the
carrying
ii
be r e a d y t o
further
a priority
clear
of
industry.
earn a reasonable
mnrro-economic ,prospects..
KkJX'! t h e
with
(discussed
an a s s u r a n c e
allow
c a n o n ! y be a p a r t
relations
intervention
t h e Government
wilt
framework
m o s t -of
to f e a t u r e
in
and to
indust­
them a r e
the
groupings
16
The d e t a i l e d
possible
discussions
constraints
implications
of
to
improved
projections
recommendations
for
the
that the
Government w i l l
rial
selection, of
framework
action
should
is
for
of
limited
t o the d e v e l o p m e n t
priorities
Government
Comnany
17
The Government w o u l d
arosaecis
itself
of
also
Government
the
priorities
importance
co-ordinated
but
the
commitment
resources
determining
available.
any
to
the
This w i l l
indust
for
economy,
contribute
intervention
by p u b l i c
mus
agenci.es
and
suppor
such
as
Commission.
level
and t h e i r
though r o t
for
resources
for
v,'hile
specific
Government,
to imply
allocation
on
a l s o make
u n i o n s and
intended
particular
the KEB and t h e Manpower S e r v i c e s
iij
the
light
industrial
They might
intervene.
a basis
areas
and t h e
trade
not
necessarily
within the i n e v i t a b l y
of
throw f u r t h e r
performance
sectors
provide
specific
not o n l y by t h e
to
and d e c i s i o n s .
responsibility
. in
likely
a c t i o n by companies,
although
retain ultimate
are
discuss
implications
exclusively
the i n d i v i d u a l
also
in
decisions
of the f i r m
which w i l l
performance
and p l a n n i n g
the
with
context
industrial
individual
of
projections
companies,
planning
agreement
of
determine
the P k ' s
discussions
should
influencing
at
It
the
is
level
industrial
i n due
a significant
and
primarily
agreements..
t a k e n b y management and u n i o n s
in aggregate
p r o v i d e a v a l u a b l e means
the
course
proportion
of
the U P ' s m a n u f a c t u r i n g s e c t o r .
Y/hile some f i r m s w i l l h o v e o p p o r t u n i t i e s
. . i t would be t h e . aim' t o i m p r o v e t h e o v e r a l l s t a n d a r d o f a s e c t o r
wftich a r e not, a v a i l a b l e t o o i n e r s i n a g i v e n e e c i o r / bp r a i s i n g tire
standard
of
average
of the f i r m ,
this
is
the
-
in
individual
and t h e HBB w i l l
management and o r g a n i s a t i o n
securing d e s i r a b l e
f o r support
regard t o
to
the
have
of
individual
criteria
be
that
-
a role
companies
the b e s t .
to
in promoting
companies
a sector.
the
i n EEDC(75)67,
including
of
viability
and t h e d e v e l o p m e n t
of
a
strategy
in
trie
for
hey
changes
as w e l l
will
the need
the
longer
level.
support
In deciding
Government
prospect
At
provide
eg a s s i s t a n c e
individual
of
of
concerned
cases
restructuring
each company h a s t h e
framework
toward
Government w i l l
justified
projects
companies
investment
in
as
the
by
on t h e
need
to
where
to
case
have
ensure
term.
The
that
will
provide
a comprehensive base
companies
in growth
companies
in
sectors
knowledge
of
the
meat t o
allow
:
'-
va
18.
take
account
of
generally
but
regular
strategy
the
to plan
agreed
with
the problems
prospects.
and t h e
ahead w i t h
Here
framework
greater
fo
of
detailed
Governmenfs
strategic
review
after
a three
the
summer m a t e r i a l
three
i.
the
main
and e v o l v i n g
the i n i t i a l
therefore
stage
view
the
. not
as a c o n t i n u i n g
The G o v e r n m e n t
late
t h e Government
.
would be
of
deteriorating
A s L a s b e e n made c l e a r
operation
19.
dealing
both
coir
shoul
confidence.
Procedure
an i n d u s t r i a l
for
with
end f o r
Government p o l i c i e s
Government' s t h i n k i n g ,
full
companies
sectors
for
operation
on t h e
that
in
and
one-off
with
arrange:
agreement.
a n o r m a l y e a r there
following
would be p u t t o
as a
process,
discussions
envisage
d e v e l o p m e n t p!
lines:
First
t h e NEDC w h i c h w o u l d coi
parts:
a p a p e r s e t t i n g o u t t h e main c o m p o n e n t s
G o v e r n m e n f s medium t e r m p r o j e c t i o n ; of ii.
a p a p e r i d e n t i f y i n g t h e most i m p o r t a n t
s e c t o r s grouped in accordance with para
10
a n d . i n d i c a t i n g the c r i t e r i a /"and i n d i c e s ^ ?
w h i c h had b e e n u s e d f o r t h i s p u r p o s e .
As"the
30 o r so s e c t o r s w o u l d h a v e b e e n c h o s e n p r i m a r i l y
f o r t h e i r i m p o r t a n c e t o t h e economy, i t i s
u n l i k e l y t h e y w i l l change s i g n i f i c a n t l y f r o m
y e a r t o y e a r , a l t h o u g h as e x p e r i e n c e o f t h e
s y s t e m d e v e l o p s i t may be p o s s i b l e t o add f u r t h e r
criteria for selection.
Nonetheless the Govern­
ment e x p e c t s t h a t t h e C o u n c i l w i l l w i s h t o comment
on t h e c r i t e r i a c h o s e n f o r a n y one y e a r ' - s r e v i e w ;
i i i . s e p a r a t e annexes f o r each' o f t h e s e c t o r s
listed.
These would c o n t a i n f i g u r e s , where
available, f o r the appropriate disaggregated part
o f t h e G o v e r n m e n t ' s o v e r a l l medium t e r m p r o j e c t i o n s .
T h e y -would a l s o i n c l u d e a. d e s c r i p t i v e p r o f i l e o f
t h e i n d u s t r y w h i c h woulcjftraw a t t e n t i o n t o i t s main
p r o b l e m s and o p p o r t u n i t i e s and. i n p a r t i c u l a r
would attempt t o i d e n t i f y a r e a s where f u t u r e t r e n d s
were l i k e l y - t o d i f f e r from t h o s e i n t h e p a s t . / Two
specimens are a t t a c h e d a s an a p p e n d i x t o t h i s p a p e r . 7
­
20.
Second,
approach t o
subject
the y e a r s
committees which
would b e i i
at
21.
Third,
least
the EDCs,
improvement
material
with
in the
results
of
these
the
the C o u n c i l
on i n d u s t r i a l p o l i c y
22.
None o f
the C o u n c i l
this
form t h e b a s i s
would i n
o r t h e EDCs a t
strategy
performance.
But
it
at
at
to
to
tripartite
set; up ad
that both
sides
identify
hoc.
of
areas
be p u l l e d
about t h e
time
TTJC,GBT
the
year.
discussion
by
on a r e a s h i g h l i g h t ec
the y e a r t o
influence
policy.
any way p r e v e n t
times of
would p r o v i d e
of
together,
turn of
an i m p o r t a n t
a suitable
other
will
and i n p a r t i c u l a r
or the p a r t i c u l a r
N E D C s main d i s c u s s i o n s
to
the Government,
for
on m a c r o - e c o n o m i c
to i n d u s t r i a l
existed,
s t a g e s would be
discussions
Council
wotild then
Government t h i n k i n g
Government's
action.
This r e p o r t
and i m p r o v e m e n t ,
of. t h e
would be r e m i t t e d
EDCs
group r e p r e s e n t i n g
and KEDO and s u b m i t t e d ; t o
action
early
iii.
Government w o u l d a t t e m p t
p e r h a p s b y an o f f i c i a l
for
in
o r ad h o c c o m m i t t e e s ,
and p o s s i b l e
the
endorsement
o r w h e r e no a p p r o p r i a t e
industry t o g e t h e r
for
Council ' s
review,
1
i n d i v i d u a l EDO' s i
It
t o the
or i n h i b i t
the year
aspects
discussions
on i s s u e s
of
matters to
related
industrial
a framework which would
on i n d u s t r i a l
in
the
relate
Government s
1
own t ime t ab 1 e .
23-
At t h i s
initial
t i o n s must b e
stage
of
of
early
the d e t a i l e d
at t h i s
experimental,
it
i n t h e New Y e a r ! .
of
set
of
entails
analysis
After
a good d e a l
sectoral
If
we a r e t o
any a d d i t i o n a l
quickly.
for
level
However,
consideration
in the
could b e g i n ,
as t o
some
groups that
medium t e r m
to
this
by
Council,
although
again
extent
be r e v i e w e d by the
stick
of
the
techniques.
discussion
n e x t y e a r when r e v i s e d
I n hand
consuita­
above,
develop
might need t o be r e g a r d e d
shouh. become a v a i l a b l e .
need t o be
at
to
and. p r o g r e s s m i g h t u s e f u l l y
about t h e m i d d l e
establishment
resources
an e x p e r i m e n t a l
examination
stage
base
for
i s b r e a k i n g new g r o u n d and r e q u i r e s
considerable
to produce
the C o u n c i l
it
the t i m e t a b l e
As e x p l a i n e d
a sound s t a t i s t i c a l
w o r k , b e c a u s e much o f
the aim i s
development,
treated, f l e x i b l y .
the p r e p a r a t i o n
application
of
Council
projections
timetable
may b e n e c e s s a r y
the
will
24
The Government r e c o g n i s e ? t h a t
largely
view
with
about
procedural
the
merits
p a p e r we h o p e w i l l
moni; d o e s
ai i a c h
it
right
is
the
p r o b l e m s . ' They
work t h a t
-forward
25
Government
will
wide
of
It
range
will
more
will
its
for
developed.
in meeting
easirg
Government
its
on t h e
early
industrial
be i n
to frame
of
its
i n key
tools,
of
problems
confident
disposal,
t h e hew
agencies
that
set
from
t h e use
fi-rth!
policies
like
and t e x t i l e
will
for
have
these
overcome
to
of
be a b l e
to n
those
assist
sector?
for
role
t h e fe.
to
be
to
play
t r a i n e d , manpower
shedding
labour.
instruments,
way w i l l
its p
acco
and t h e
a major
the
take
industries,
suitable
industries
framework,
financial
projects
schemes,
problems
range
The NEB w i l l
and p l a n n e d
out.
the
inch;
developed,
and
and t o
the whole
viable
of
they n
and s h o u l d b e hrou
a coherent
Selective
sectors
t h e Go­
term
that
a' f
furthfl
because
our l o n g
the needs
economic
needs.
clothing,
However
agree
needs
bear
appropriate
take
h a s had t h e
have been
against
sectors.
arising
to
deal
Year.
these
general
growth
of
paper
cannot
new a p p r o a c h
examine
tc
this
the y e a r .
proposals
to
bring
it
be u n d e r t a k e n
t o meet
in a coherent
p r o b l e m s we h a v e
this
and a s s i s t
The TdSC and i t s
the needs
in
of
in
Council
a solution
should
industrial
encourage
machine
is
to
and c o m p a n i e s
should enable
the
turn
strategy
in h e l p i n g
the
the C o u n c i l
a position
companies
be u s e d t o
foundries,
at
invite
Government w i l l
be a b l e
that
way do move t o w a r d s
therefore
proposals
new a p p r o a c h u n t i l
importance
industries
part
the
discussions
in
great
systematically
finance
the
and
he r e a d y b y t h e
discussion
V/hen t h e s e
problems
of
lias beer, d e s c r i b e d
for
playing
natters
the
and
The
the oil
make a m a j o r irn:
PLTROCKEnlCALS
PRODUCTS
1
The p e t r o c h e m i c a l
scole
processes
raw m a t e r i a l s ,
difficult
of
to chemically
propylene
toluene
and x y l e n e )
products
employing.large
organically
because
of the sector
tons:
ethylene
and i s e s t i m a t e d
prices
t o have
r u b b e r and f i b r e
the petrochemical
The s t a t i s t i c a l
271-2, O r g a n i c
(ethylene,
and a r o m a t i c s
(benzene,,
The f o l 3 o w i n g f i g u r e s
(1,275)?
(212), benzene ( 6 9 6 ) , t o l u e n e (252).
at actual
is
of t h e range
are O l e f i n s
produced by c r a c k i n g ;
it
used i n t h e
f r o m o i l and g a s .
i s HLH
based
However,
of the processes
produced by r e f o r m i n g .
i n thousand
sector
resin,
and v a r i e t y
and b u t a d i e n e )
butadiene
the
and s e p a r a t e
covering the industry
The b a s i c
1974 s a l e s
as t h a t
more p r e c i s e l y
of- c h e m i c a l s d e r i v e d
c a t e g o r y most n e a r l y
Chemicals.
convert
the sector
the extent
manufacture
is defined
m a i n l y naphtha i n t h e U n i t e d . K i n g d o m .
to define
products,
industry
give
(663),
propylene
The v a l u e
of sales
of
f r o m £413m i n 1968 t o £53*-m i n 1971
rose
z
a p p r o a c h e d £1,500m i n 197 '-- - The s y n t h e t i c
/
industries
a r e major
users
o f the output
of
industry.
RAW MATERIALS AND PROCESSES
2
Naphtha,
t h e major
raw m a t e r i a l
f o r the petrochemical
f u 1
industry
is
Q
itself
a joint
a significant
and. thus
extent
rates
expansion
of
product with gasoline
naphtha
o f growth
i s produced
of gasoline
of cracker capacity
course
less
ton i n response
derived
since
immediate
United
i s around
To
gasoline
rates
oi
and p r i c e
Kingdom,
6-Jm t o n s
of
of e t h y l e n e .
which
In the
f r o m a r o u n d US 4^5 t o US $120 p e r
crude
o i l prices
industry.
and t o demand
Prices
have
fallen
197^-, t h o u g h n o t t o e a r l i e r 1973 l e v e l s and t h e r e i s n o
shortage
o f naphtha.
t h a n n a p h t h a and g i v e s
gas l i q u i d s
quantities
rose
of the chemical
use o f o t h e r f e e d s t o c k s
Natural
industry.
industry
both t o administered
from p r o d u c t s
early
the a v a i l a b i l i t y
t h a n 4-m t o n s i s f o r t h e p r o d u c t i o n
o f 1973, n a p h t h a p r i c e s
of
oil..
consumption t o g e t h e r w i t h
naphtha f o r use i n t h e p e t r o c h e m i c a l
slightly
from crude
a t t h e expense
can a f f e c t
naphtha u s e i n t h e p e t r o c h e m i c a l
3
and h e a v y / o i l
Various f a c t o r s
in future
Gas o i l i s r e l a t i v e l y
c
more c o - p r o d u c t s ,
(ethane,
propane
particularly
and b u t a n e )
f r o m t h e N o r t h S e a and may f i n d
The p r o d u c t i o n
of ethylene
proportion
can be v a r i e d
cracking.
Propylene
have been d e v e l o p e d
within
aburdair
are available
in larg,
a use i n p e t r o c h e m i c a l s .
l i m i t s by varying
a r e t h e major
chemicals
more
to the
propylene.
i s a r o u n d 30% o f n a p h t h a
and b u t a d i e n e
f o r these
may b e l e a d i n g
and t h e y
input
the severity
co-products;
but t h
of the
markets
a r e now much' i n demon.
A problem
for
all
in planning
these
new c a p a c i t y
products
which have
is
to
ensure
somewhat
that
there
different
are
market
markets
growth
rates.
MARKETS
4
The main d e r i v a t i v e s
plastic
materials
polypropylene
5
(polyethylene,
etc:
rubbers
products
b e i n g based
Prut t h i s
simple
growth r a t e s
chemical
products
sectors.,
end t h e e f f e c t
price
the
of
and
demand f o r
needs
to
some
substitution
of
other materials
t o be s l i g h t
of
times
Demand may n o t h a v e
run down t h e i r
organic
chemicals
at
stocks.
markets
Further
and s u b s t i t u t i o n
output
of
output
i n 1968-73 i s
experienced
as
output has
patterns
271.2)
(MLH
as f a s t
analysis
of
gross
fallen
consumers
the
major
is necessary
growth.
not l i k e l y
affec
growth
a s much b e c a u s e
sectoral
a more m a r k e t b a s e d e s t i m a t e
growth o f
i n 1974
fallen
industry.
and m a r k e t
or five
the peak reached
petro­
imports w i l l
i n c r e a s e d b y 12% p a i n 1958-73?
Since
for
petrochemical
by the
d e r i v e d product
growth
petro­
particular
chemicals
1975*
The volume
in
as a r e s u l t
b e t w e e n UK p e t r o c h e m i c a l
differing
demand s i n c e
extent
derived
domestic
t o b e amended b y
organic
20-30/O i n
solvents;
petrochemical
in gross
petrochemical
and p e t r o c h e m i c a l
product.
constructio:
which p e t r o c h e m i c a l
of
domestic
arrive
into
and c o n s u m p t i o n
and must b e c o n s i d e r e d .
have
in packaging,
the growth
The l a t t e r . a r e t h o u g h t
relationship
output
judgement
are concentrated
Also petrochemical
are
polystyrene,
plnsticisers
of
of
wdiich. a f f e c t
in production
rises.
products
on e s t i m a t e s
sectoral
chemicals
of
led. t o e s t i m a t e s
e n t e r have
chloride,
of uses
fibres;
and a r o m a t i c s
detergents.
range
prodxicts
olefins
polyvinyl
range
synthetic
and
The v e r y w i d e
product.
the basic
e t c ) w i t h a wide
household wares
synthetic
of
to
However,
to recur
the
between
1975-85.
STRUCTURE,
6
SUPPLIES AND CUSTOMERS
The l a r g e
chemical
scale
industry
and c a p i t a l
together
with
intensity
the inter-dependence
p r o c e s s e s has l e d t o h e a v y c o n c e n t r a t i o n
companies manufacturing
ethylene
with the o i l production
and r e f i n i n g
(BP C h e m i c a l s ,
other
organic
have p l a n t s
conform
Royal
overseas
with t h e i r
companies
share
and s h o r t f a l l s
of
of
estimates
this,
their
to plan
of
of
petro­
products
industry.
The
are e i t h e r
(ICI).
Each o f t h e s e
increments
with reference
plants.
and
four
integrated
naphtha
o r w i t h the manufacture
of
companies
to capacity
U n i t e d Kingdom market
but also
overseas
the
in the
i n d u s t r y which produces
and E s s o )
products
and h a v e
of
in this.country
Dutch S h e l l
and i n o r g a n i c
of plant
growth
to capacity
not only "
and e a c h
surplus
7
The most e c o n o m i c
tons provided
million.
jointly
it
There
is
is
planning
announced
size
run a t
increasing
in
197?.
and t h e
cost:
task of
arranging
to
but
obvious
for
the
now a b o u t
cost
some
500,00C
£IPO
petrochemical
companies
BP anr] I G I h a v e
jointly
plant
t o come on s t r e a m
advantage
a n o t h e r most v a l u a b l e
benefit
absorption by the
of
spreading
is
that
market o f
it
on
the
risk]
eases
this very
the
large
of
COMPETITION
UK t r a d e
1966-74 and f o r
the years
of
is
capacity.
Estimates
inadequately
trade
an e t h y l e n e
plant
and i t s
capacity;
T h i s has t h e
TRADE AND INTERNATIONAL
8
capacity
evidence
and b u i l d i n g
Teesn.de
an e t h y l e n e
full
a plan to build
increment
of
represent
since products
o t h e r UK e x p o r t s ,
for
the
the
of
in organic
first
half
importance
the
of
of
industry
example
chemicals
1975
the
are
current
are
prices
for
shown b e l o w , ,
industry
also
in p l a s t i c s
at
for
The
overseas
an i m p o r t a n t
element
in
products.
TRADE I N ORGANIC CHEMICALS
£ Mil1ion,
Current
Prices
1st
1966
1967
1968
Exports
70
75
Imports
85
95
The v e r y
9
. i n 1973
from t h e
prices
is
1972
1973
1974
1975
99
110
136
154
161
244
545
214
118
136
161
14?
161
237
506
209
estimated
annum w h i l e
periods
of
reflects
that
the
slack domestic
demandc
I n 1973
domestic
at
almost
continue
and 1974
to
do
so
price
After
adjusting
volume
of
the
exports
the rate
large
of
organic
increases
for
stemming
changes
e x p o r t s h a s grown a t
imports has been s l i g h t l y
first
chemicals
half
of
1975
in
about
lower
in
in periods of
reflect
the
peal?
weak
overseas.
accounted f o r
imports
Consumption o f
twice
the
and i m p o r t s o f
demand and s l i g h t l y h i g h e r
Figures f o r
production while
consumption.
the
growth
demand i n b o t h t h e UK and
10
in exports
i n naphtha c o s t s .
11% p e r
domestic
1971
partly
increase
it
1970
strong rise
and 1974
Half
1969
around o n e - t h i r d
accounted f o r
petrochemicals
of
around o n e - t h i r d
of
i n W e s t e r n E u r o p e has
i n t h e U n i t e d K i n g d o m and i s
expected
grown
to
a
INVESTMENT
11
The v o l u m e o f
organic
chemicals
a t 1970 p r i c e s , i n
investment
a v e r a g e d £115m
pa,
1970 and 1971 b u t f e l l s h a r p l y t o a v e r a g e o n l y £55m
pa i n 1972 and 1973*
S i n c e t h e n i n v e s t m e n t has r e c o v e r e d s l i g h t l y .
3
If
ethylene
rate.,
to
o r a t about
be b u i l t
6% p a , o n e more
to satisfy
If
thirds
of the h i s t o r i c a l
UK e t h y l e n e
take
500,000 t o n c r a c k e r s
advantage
Estimates
o f new e t h y l e n e
the cost
times
1968-73
o f an e t h y l e n e
rate,
t h e 196'--',
at half
500,000 t o n e t h y l e n e
plant
w i l l net
to the cracker
i n 1975-85
demand and o u t p u t
t o 3m t o n s .
capacity
increased
UK demand i n a d d i t i o n
1977k
additional
i n 1975-85
demand and o u t p u t
planned f
increased
o r a t about
at two­
8% p a t h e n t w o
would be r e q u i r e d ,
bringing
installed
o f t h e downstream
investment
needed t
capacity
have been put at about
four
plant.
EMPLOYKENT
B e t w e e n 1970 and 1973 e m p l o y m e n t
12
(MLR 2 7 1 . 2 )
sector
output
very
rose
on t h e w h o l e
unlikely
of
rate
based
strongly.
Although
increase
i n output
by past
p e r head
on Census o f P r o d u c t i o n
processed
industry
is
t h e same
in output,
be h i g h e r
Although
period
must
it
tend
seems
i n 1973o
than
in the period
data.
chemicals
i n employment
changes
i s low, the indirect
domestically
during
changes
i n 1975 w i l l
employment
petrochemical
is
b y 34- t h o u s a n d w h i l e
fell
t o be i n f l u e n c e d
that
in the organic
Averag
1963-71 w a s 7*8%,
direct
employment
employment
created
i n thi
i f out
higher.
PROSPECTS
13
The p a r t i c u l a r
advantages
t h e UK l i e i n t h e p o l i t i c a l
and n a t u r a l
existence
gas l i q u i d s ,
of sites
been focussed
value
a larger
i n terms
14-
is unlikely
could
of balance
overseas
companies
to
those
markets,
on t h e C o n t i n e n t .
to
present
manor
15
with
share
depressed
investment
established
A number o f
market
Government
chemical
and t h e
would
enable
and b y adding
Sea f e e d s t o c k s
to
gain
and e m p l o y m e n t .
even
if
they
and u n c e r t a i n
quickly
enoug
s e e m s t o b e through
European markets
otherwise
have
had t h e financial
markets
feedstocks
such f i r m s
building
have
expressed
economic
i n the.I
been
built
interest, M
outlook
is
iniaic'
decisions.
and o f E n e r g y
and t o t h e p o s s i b i l i t y
initiative
sector
North
which would
The Departments o f I n d u s t r y
opportunities
advantages
o f European
these
o f o i l , gas
h a s , therefore,
o f t h e European market
UK c o m p a n i e s ,
plants
Sea s u p p l i e s
Attention
these
o f payments
of exploiting
chance
the
that
p r o d u c t i o n in
and a v a i l a b i l i t y
access.
of these
expand t h e i r
The b e s t
serve
proximity
share
petrochemical
of North
whether
proportion
benefits
resources,
their
w i t h deep w a t e r
to a greater
It
security
on t h e q u e s t i o n
t h e UK t o c a p t u r e
of s i t i n g
might
that,
be necessary,.
i s a candidate
are a l i v e
at the' right
to the
m o m e n t , a.
I n t h e meantime
Tor the f i r s t
t h e petro­
round o f p l a n n i n g
agree­
ments.
;
P
-
, :n. ,;
;
:
^ -,. .
1
Ferrous
steel,
founding
pouring
o f the p r o d u c t .
is
industrial
Market
2
to
into
components f o r
are
out
according
end t r a c t o r
coal mining,
ferrous
castings
was a s e r i o u s
upturn
and t h i s
might w e l l
or
the
end
mould
use
one-third
serving
a
of
similar
a wide
and c o n s t r u c t i o n .
during
313
variety
The
the
1973
again.
Trends
The v a l u e
£125m f c r
of
steel
i n the b u i l d i n g
i n d u s t r y has
UK p r o d u c t i o n
castings.
I 9 6 0 ' s due i n p a r t
to
in
1974 was
The t o t a l
substitution
sector.
In contrast
for
£6481/1
by a l t e r n a t i v e
the
tonnage
castings
since
materials,
supplied
the
and
early
particular
to. t h e
vehicle
increased:­
1963
974
803
200
745
314
64
340
15
16
148
158
...
...
304
above
Total:
3718
3190
there
q u a l i t y eg l i g h t e r
have
been
spheroidal,
pressure
pipes
substantial,
graphite
(SG)
and f i t t i n g s
f
1953
558
287
979
455
117
523
451
348
included
Meanwhile,
000 tonnes
d e l i v e r i e s of
steel
caatings
1974
Vehicles
Tractors
Engineering i n d u s t r i e s
Bu i 3. d i n g and a l 1 i e d
Domestic g o o d s
P r e s s u r e p i p e s and f i t t i n g s
Ingot, moulds and b o t t o m p l a t e s
M i s c e l lane ous
Exports
grey i r o n f o r
iron
t o n n a g e has f a l l e n
'000 tonnes
Production of
iron castings
3
the
industries,
constraint
he s o
from
to
Over
remainder
railways
iron
u n d e r L".f.H 311 and
many i n d u s t r i e s .
vehicle
of
Cn r e m o v a l
classified
engineering with the
including
end r e f i n i n g
a mould.
are. c a r r i e d
eastings
used b y the
proportion goes
supply o f
finishing
Ferrous
and a r e e s s e n t i a l
of i n d u s t r y
the r e m e l t i n g
the molten metal
l i m i t e d amounts o f
the t o n n a g e
involves
...
....
...
A20
...
.
improvements
67
10
62
29
240
265
in
product
i r o n has s u b s t i t u t e d
and i n some
sec tors
of
for
the
vehicle
industry.
thinner
walled
tonnage
of
increase
prices,
Improved
castings.
in the
This
per
ton.
10 y e a r s
castings
4
of
troughs
the
in the
has meant t h a t
Expressed
from
b y 245^ 2nd s t e e l
The p a t t e r n
d e s i g n has l e d
the
1964 t o
the
to
use
decrease
s o m e ' ' d e g r e e by
basis
of
1970
const?
1974 t h e v a l u e
of
iron
castin,
by 177-.
demand f o r
cycle
on t h e
to
overall
produced has been - compensated
castings
in value
engineering
castings
have a c c e n t u a t e d
is
strongly
a number
cyclical
of
the
small.
In
and sue
serious
crobls]
Industry.
Ba/jgvgc e j e f
5
Trad o
-"Direct t r a d e
in
as rough c a s t i n g s ,
iron.
Imports
castings
is
extremely
UK e x p o r t e d . 5$ o f
in tonnage
terms were
steel
less
castings
than h a l f
1974-,
output
expresse;
and 0.55m
experts.
iEmtloyment
6
In
1974 i r o n
Employment
in
foundries
iron
with particular
foundries
effect
employed
8 3 , 9 0 0 and s t e e l
has dropped markedly
amongst t h e
smaller
over
foundries
dumber
of
foundry
t h e number o f
same
at
end y e a r
1974
4 306
965
768
758
822
351
96
-28
9
568
284
85
18
10
458
224
71
15
10
427
237
69
15
10
fallen
operating
having dropped
from
104 t o
84 im?
has been l o c a t e d
near
to
major
foundries
but t o
a much l e s s marked df
e m p l o y m e n t has a l s o
period.
E Ilonal
Cohcei.itration
e
7 -
p a s t 1C
employees
1-50
51-200
201-500
501-500
1001 and o v e r
Steel
the
20,
foundries.
I r o n f o u n d r i e s by employment
1963
1968
1973
Total
foundries
Traditionally
customers
(32W' o f
and h e n c e
iron
the
industry
there
foundries).
is
a heavy c o n c e n t r a t i o n
O t h e r mad o r
areas
in
its
t h e W e s t I.Tidl2
a r e -East' l i t d l a n d s
(18$ )i
:
re
of
4 .
1-
j
There
Klium
llaraa
I;
(115S).
and S c o t l a n d
;ry
a con?
dorado! c d i v e r s i t y
of
size
demonstr?
ed. b y t h e numbers
of
foundries
in
old ^
Ismail
the
is
sectors as
oa"
(13/)
arc! K u m b e r s i d e
i n b o t h i r o n and
in
three
broad
Iron
Annual output
(tonnes)
- Fo
4
7
U n d e r 1,200
1201-5000
O v e r 5000
415
220
133
54
28
18
company r a n g e
engineering
Steel
Annual output
(tonnes)
Ko
Under 2,000
2500-6250
6251 and o v e r
45
26
13
sector
steel s e c t o r
castings
companies,
Steel
Corporation
include
E H Lloyd
Birmid
is
tied
foundries
and f o u n d r i e s
in
and B r i t i s h
Rail.
Qualcast,
the l a r g e s t
group i n Europe)
54
31
15
84"
from i n d e p e n d e n t s ,
and v e h i c l e
including B r i t i s h
the i r o n
;ise
19'
758
Types o f
stc
the
operated
public
sector
Lag o r c o m p a n i e s
Glynv/ed., BSC and B I L C .
group
(in
by
In
fact - the l a r g e s t
and t h e V/eir Group i s . a l s o
in
the
steel
sizeable;
: .1 -ml: and jvc-uipment
9
A large
a result
of
part
of
the
inadequate
with the a s s o c i a t e d
plant
investment
problems
of
foundries, although, t h e . c a p a c i t y
the p l a n t
is
inadequate
c a s t i n g s end s a f e r
1
is
are
the i n d u s t r y
of
cyclical
adequate
in
day requirements
has b e e n e s t i m a t e d
ferrous
replacing b u i l d i n g s ,
£63Crn i n
the
iron
replacement b a s i s ,
plant
sector
foundry
this
industry
and e q u i p m e n t
and £140m i n
implj.es
annual
terms,
of'higher
riant
in
quality
years
Steel
40
15
15
13
41
19
12
12
by the
I n many
of - production.
methods
Buildings
Ideating plant
Sand, p l a n t
Finishing plant
It
antiquated
activity
tonnage
Iron
10
is
and p r o f i t a b i l i t y .
nominally
present
of
in
o v e r many y e a r s
cash f l o w
t o meet
and c l e a n e r
Avera
and e q u i p m e n t
the
and EEPO t h a t
at'currentsteel
capital
the
cost
replacement
sector.
On a 15
expenditure
of
of
cost
year
£50m..
is
Epy i rnrancnta 1 C o n t r o l
11
In addition
the
industry
is
respect
of
melting
plant,
over
in
ait t h e
of
4 years
will
very
that
cost
of
of
the S a f e t y
and t h e
and He
with
a b o u t £90m,
the
this
f r o m REDO and t h e
gross
profit
the
background
industries
the
of
steel
the
(after
order
as a p e r c e n t a g e
cash f l o w ,
next
h a v e had a p e r s i s t e n t l y
1 5 - 2 1 $ and t h e
t o which the
generated
these!
t h e burden I
very
largest
industry
has
depreciation
of
demonstrcfl
and before!
6-9?' o f
turnover
for
net
assets,
the
sector
sector
iron
funds
to r a i s e
required
estimated til
from
for
iniernalij
modernisation
5 years.
A v e r a g e annual
investment
r e q u i r e d £m
(1976-1980)
1974 eash flow
a s $ o f forecas
requirement
Iron
Steel
43
7
54
14
80
51
Total
50
68
74
Thus t h e
industry's
internal
funds
depth
the current
of
foundries
Probloms
14 "
ability
would
would have
a serious
fall
to
short
general
in
finance
the n e c e s s a r y
b y some 2 6 $ .
recession
achieving
Given
and t h e
higher
prices
investment
Given i t s
task
by t h e
particular
extreme
difficulty
for
their
products,
,
industry
present
over
fro:
in
position.
faced
formidable
bcuff
6-14$.
and PESO h a v e
w o u l d be a b l e
additional
low l e v e l
of
industry
A v e r a g e annual n e t
cash f l o w (1971-74)
£m a t 1975 p r i c e s
is
both
p a r t i . c u 3 . a r l y on
compliance
smallest
proce-l
requirements
standards,
application
existing
Indi;strv
has been i n
Expressed
order
the
Recent data
past
Against
over
control
5 years
foundries
and t a x )
sectors.
extent
stringent
has e s t i m a t e d
next
heavy
Position
the
interest
in the
increasingly
of
locations.
profitability.
13
the
Renuircr.or.ts
and m o d e r n i s a t i o n
and a m o r e r i g o r o u s
The f e r r o u s
that
ar:ci H e a l t h
environmental
particularly
Elnarinlsl
12
with
The i n d u s t r y
requirements
foundry
replacement
faced
tighter
a t Work A c t .
being
to
and S a f e t y
position
the next
the
ferrous
few y e a r s .
foundry
industry
The r e a s o n s
summarised:-
for
:
-
A
­
faces a
t h i s may"
.
[(a)
(TJ)
the v u l n e r a b i l i t y
a decline
in
the
towards h i g h e r
( c )
t o m a r k e t der.iar.d3 w h i c h a r e
overall,
qualities
t h e r e d u c e d number
specialised
t o n n a g e demand
of
jobbing
recuiring
operating
arid h i g h
a shift
re-equipment
foundries
quality
with
in
( e )
abnormally
low l e v e l
( £ )
increasing
demands now b e i n g made on e n v i r o n m e n t a l
and h e a l t h
at
investment
work.
skilled
work.
difficulty
of
in the
in
demand
capacity
repetition
and r e t a i n i n g
cyclical
and b e t t e r
( d )
safety
attracting
with
strongly
technique
for
labour
past
control
and
Areas for.' c on s i d a r a t i on
15
The l i k e l y
level
against t h e
potential
the e f f e c t s
of
financial
of
capital
demand f o r
investment
will
need
castings.
This
should
t h e £25m a l l o c a t e d
assistance
under
for
Section
the
8 of
Ferrous
the
t o be
take
Foundries
Industry
consi.de.red
Act
account
Scheme
of
of
recently
announced.
16
In a u d i t i o n
it
will
industry can i m p r o v e
of c o p i n g w i t h
the
he i m p o r t a n t
its
level
of
trade
cycle
by d i v e r s i f y i n g
marketing i n c o n s u l t a t i o n
activities
of
the y r e c e s s
The p r o b l e m
the f o u n d r y
effective
n e w l y formed
own p o s i t i o n
cf
teen a s s i s t e d
in
is
users.
with user
better
in
also
industry.
recent
years
Its
trie E n g i n e e r i n g
recent
training
for Employment w i l l
for
be
of
the
improve
companies
context.
and t r a i n i n g
careful
in
this
Industry
assistance
methods
improved
could
and e n a b l e
need
Industry
better
connection,
relations
and r e t r a i n i n g
particular
and
foundries
efforts
by the Foundry
(under t h e u m b r e l l a , o f
initiatives
products
a national
ore which w i l l
by the
and d e v i s e
industries
labour
t h e means b y which, t h e
-In t h i s
EDC f o r f e r r o u s
manpower s u p p l y ,
industry
action
profitability
w i t h major
cf. c o n s u l t a t i o n
to see t h e i r
17
the
to consider
study
Training Board)
by the
to
the
and
direction
Training
Secretary
foundry
in
have
Committee
and
of
State
industry.