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Peter Hadden

Will Peace bring jobs?

(January 1995)

From Militant Labour, January 1995.
Transcribed and marked up by Ciaran Crossey.

Last December’s investment conference in the Europa Hotel struck an upbeat note. The 300 delegates enjoying a slap up dinner at taxpayers’ expense, heard John Major announce new investments and imply that the benefits of peace would mean more are on the way.

Press headlines and reaction from all the main political parties was no less upbeat. John Hume, whose long term involvement in drawing in US investment was underlined by his arrival at the conference on board the special Concorde flight which brought in the US delegation, had a particularly rosy view of the future: “The next century will be the first that there has been no conflict on our streets and no emigration of our young people.”

Journalistic hype

To answer the question whether this conference, and the one to follow in May in the US, which Bill Clinton has promised to chair, heralds a recovery of Northern Ireland’s manufacturing base from its present weak state, it is necessary to examine the facts behind the political and journalistic hype.

Major used the Europa platform to announce £75 million of investment which would create 300 jobs. These were – the expansion of British Telecom’s customer services opera lion in Fermanagh adding 113 jobs – a £30 million investment by BT to build a new office block in Belfast – a new Fujitsu plant with 100 new jobs – NACCO Materials Handling investing £11 million and creating 100 new jobs – a £13.5 million investment by Du Pont into its Lycera operation in Derry – a £15 million investment by Ford at its Finaghy plant – a community work programme creating 1,000 openings in the next year.

Other investments suggested by 1994/95 the press to be in the offing included a possible 500 new jobs in Shorts through work for the Ministry of Defence and the establishment of a new plant by Bell Helicopters to produce part of their new Osprey plane/helicopter.

Examined soberly what is startling about this conference is not how much, but how little, new investment it unveiled. The 300 delegates were only half of the number of jobs announced at the conference.

The “new” investments which were announced, such as Fujitsu and NACCO were long in the pipeline and in both cases the number of jobs promised does not necessarily those which will eventually materialise.

British Telecom’s expansion in Fermanagh in fact represents the transfer of an existing operation from London. Jobs created in Enniskillen, with IDB backing, are jobs lost in London. BT Management are proposing that about 80 of these will be part-time leaving a total creation of new full time jobs of little over 25.

As for BT’s “new” office block on Belfast’s Laganside, this project was actually agreed by BT more than a year before John Major’s speech. Those who will work in it are BT’s existing staff re-deployed from other offices in Belfast. After construction there will be no new jobs.

The other side of BT’s employment record went unmentioned by Major in his speech. The company’s staffing levels proposed for the financial year aim at a cut of 268 jobs. Initial proposals for the following year, made to BT union’s just days after the Europa conference, call for a further 85 job losses.

Major neglect

DuPont’s Derry investment will, according to company figures, ate a maximum of 20 jobs. Major also neglected to spell out the small print about Ford’s Belfast investment. The £15 million is subject to the plant winning all the contracts it has tendered for. So far only one of these contracts, for fuel rails, has these contracts, for fuel rails, has been won bringing £2 million of investment.

The rest is uncertain. Meanwhile Ford UK, faced with over production last summer are engaged in cutting employee numbers through a special early retirement package. In November, only weeks before the Europa Conference, Ford managers in Finaghy had told local unions that similar cuts may be necessary here.

Not yet secured

The Bell helicopter project is at this stage little more than a gleam in the eye. Even the production of their new Osprey plane is still subject to winning US defence contracts which have not yet been secured. Similarly the creation of 500 jobs at Shorts is subject to a consortium involving Westland, McDonnell Douglas, Martin Marletts and Shorts securing a contract from the British Ministry of Defence to buy its new Longbow Apache helicopter.

Meanwhile, Shorts are carrying out a phased restructuring which means substantial redundancies. Early in January it announced that 220 jobs are to go. Unions have been told that further redundancies are to follow.

These were planned before the investment conference and must have been made known to Major. That they were not announced until into the New Year can only be down to the conspiracy by industrialists and Tories to make sure that nothing was said to take the shine of the carefully staged propaganda exercise being carried out at the Europa. It would be wrong to exaggerate in any direction. Some new investment is sure to come, but nothing on the scale implied by the government.

The numbers of new jobs is not the only issue, there is also their nature and durability. Northern Ireland’s new attractiveness is not just that there is peace. What is being promoted as the real carrot is a combination of relatively cheap labour and the glistening array of government grants on offer.

Labour costs in Northern Ireland are 10%–15% lower than in Britain. A recent survey carried out by First Trust bank pointed to real wage productivity rising steadily because of these lower wage costs.

Productivity has also shot ahead of employment. There are now 77,000 fewer jobs in manufacturing than there were in 1969. Yet over this same period manufacturing output has increased by 18%. Output per person has doubled. The return is not seen in higher wages but in greater profits.

Those companies who come, attracted by low wages, will be determined to keep wages low and productivity high. So the Seagate company in Derry operates on a strictly non-union basis. Shorts last year could afford to double the salary of local president Roy McNulty to just under £400,000 per year but this year are proposing a package which amounts to a wage cut for its workforce.

This strategy of industrial development through offering huge state hand-outs to foreign companies is the main plank of government policy and is supported by all local political parties, including Sinn Fein. The trade union leaders also support this. A major ICTU document, Investing in Peace, issued just before the conference offers no alternative policy but instead calls for the grants and concessions to private industry to be increased.

One of the few concrete demands it makes is that the North’s rate of corporation tax be reduced to the minimal 10% rate which applies in the South.

Yet this policy of offering handouts to businessmen is not new. It has been in force since the 1960s – that is throughout the period which has seen the rapid de-industrialisation of the North.

Firms setting up on the basis of grants have tended to pack up during recession or when the aid package thinned out. A long litany can be presented of companies who when they came were hailed, as are their counterparts today, as examples of success but who have long since packed their bags entirely – ICI, Monsanto, British Enkalon, Goodyear, ICL, STC, Pye, Grundig, Rolls Royce, Goblin, Molins – the list goes on and on.

1994 began with two new investments announced – Daehwa is to set up a factory in Antrim. It promises 240 jobs- but this figure won’t be reached until 1998, of the £7 million investment half is to be provided by the IDB.

Joint Ventures

A joint venture between US company Leprino and Golden Vale to manufacture mozzarella cheese at Golden Vale’s Leckpatrick plant in Artigarvan is also grant assisted. But other manufacturers have pointed out that there already is sufficient capacity in existing European factories to supply the mozzarella market The Southern development agencies turned down the project on this basis, even though Golden Vale is a Southern based company.

The example of Hualon best illustrates the precarious nature of jobs promoted by state hand-outs. Hualon promises a £157 million plant near Mallusk. Of this sum £61 million is to be provided by the government. Textile manufacturers in Europe have questioned the viability of this plant and regard its claim that work will be provided for 1,600 as spurious. Neither this nor the fact that 34of the group’s Board members have been indicted for illegal stock dealing in Taiwan, has deterred the government from promising £61 million.

Tory philosophy promotes private industry, the so-called free market, and demands that state interference be curbed. Yet the truth is that in Northern Ireland private industry only manages to exist on the basis of the money handed over by the state.

On the eve of the investment conference there were hints of a significant expansion of its workforce. But it too depends on IDB grants for its continued existence. In 1993, it made an operating profit of £697,000, a significant figure but significantly less than the £848,000 donated to it that year by the state.

Even the terms “private industry” is very much a misnomer in Northern Ireland. It would be more accurate to talk not of the private sector but of the “state subsidised sector”. The problem is that the state pays the money but can exercise no control over the future of these companies. When boardroom directors in the US, Taiwan, Germany decide that an operation is no longer profitable enough they leave behind only an empty shell of a factory and a growing dole queue.

The “peace dividend” of an investment and jobs bonanza hinted at by Major will ultimately prove a lie. Overall the money coming in, in the form of aid and investment will do little more than scratch the surface of the chronic poverty and unemployment.

A growth of tourism could well create new jobs, although the often quoted figure of 10,000 could widely optimistic. Aid which reaches the communities may also create jobs which will last for the duration of the aid. None of this means a development of the manufacturing base – the real backbone of an economy. And on the downside there is likely to be a loss of up to 20,000 jobs in security if the ceasefires hold.

Public Expenditure

Public expenditure accounts for 70% of Gross Domestic Product in Northern Ireland. It is maintained at current levels only because of the £3 billion subvention from Westminster. If the Tories stay in office they are likely to come under backbench pressure to reduce this to help pay for vote winning through concessions at home.

Even without such further cuts, existing Tory policy already means a massive job retrenchment in the public sector. A three year freeze introduced last April on the civil service budget means a cut in real terms when inflation is taken into account. Already this has led to a loss of 1,000 jobs. A further 2,000 jobs will be cut by 1998 – a total loss of ten times the numbers of new jobs announced by Major in December.

The Tories most far reaching proposal to date is for a Community Work programme ultimately to provide three year placements for 20,000 long term unemployed on the basis of topping up their dole by £20 per week. Few details have emerged about how this scheme is to be implemented but there is a real danger that most of these placements will be in the public sector and that they will lead to a cut in full time jobs.

Whatever else this scheme is, it is a recognition by the government that they have no real answer to mass unemployment other than more fictional job creation schemes.

A socialist economy in Ireland linked with a socialist economy in Britain and Europe would place wealth in public hands and mean that growth could be planned to provide decent jobs and produce goods that people need.

The promise of a new booming Northern Ireland is a carefully packaged Tory lie. Instead of swallowing it, the working class movement should be exposing it and campaigning politically for the socialist alternative.

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