Outlook: When the chips are down, chop here
Saturday 01 August 1998
A WEEK is a long-time in the fast-moving world of semi-conductors.
On 21 July Siemens held a dinner to extol the virtues of its UK operations, and in particular its state-of-the-art chip plant on North Tyneside. Don't worry, was the general message from Alan Wood, its chief executive in the UK. Plunging chip prices might be wreaking havoc on the group's semi- conductor business as a whole but the pounds 1bn Tyneside plant was alright. In fact it was as efficient as anything the company had in Germany, Taiwan or the US. Phase two might have been canned but Siemens was getting as much output from phase one as the entire project had been targeted to achieve.
Little did he realise how much built-in obsolescence there were in those words. Seven days later Siemens top brass met in Munich and decided that they had one chip plant too many. And, you've guessed, North Tyneside was the one that was surplus to requirements. Yesterday the news was broken to an understandably shocked workforce of 1,100 who will be looking for new jobs come September.
John Redwood claims they are the latest victims of the strong pound. But he is wrong. This is one piece of retrenchment that cannot be blamed on the Bank of England's Monetary Policy Committee.
The strength of sterling is not responsible for the 95 per cent decline in DRAM prices since Siemens decided to build the plant three years ago or the Asian crisis which has led to dumping on an unprecedented scale. Nor can it be blamed for the way that the growth in chip demand has undershot Siemens' forecasts by 50 per cent.
But why then has North Tyneside been singled out for special treatment when Siemens has similar operations in Germany, Taiwan, France and the US? Dr Ulrich Schumacher, the big chip in the Siemens semi-conductor group, says it is because the plant has the same cost structure as facilities producing two or three times as many wafers. If this is right, then Mr Wood was wrong.
The more likely explanation is that the Dresden plant was never going to close, the French one is jointly owned, the US benefits from a booming economy and the Taiwan plant does not pay UK wages.
None of this is much consolation to the workers on Tyneside who thought a new dawn had arrived when Siemens came charging over the hill. Peter Mandelson, the new Trade and Industry Secretary, has formed a joint taskforce to try to rescue the plant. But if Siemens has already trawled the market for a buyer without success, what chance has he of pulling the fat out of the fire?.
Newcastle manager taunted again as his side loses to Stoke
- 1 Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
- 3 The Simpsons death: Creator Al Jean would 'kill himself' before a character like Homer or Lisa
- 4 British man raped while urinating in bushes at Oktoberfest beer festival in Germany
- 5 Pope Francis assures atheists: You don’t have to believe in God to go to heaven
Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
Isis an hour away from Baghdad - with no sign of Iraq army being able to make a successful counter-attack
Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
British man raped while urinating in bushes at Oktoberfest beer festival in Germany
George Clooney and Amal Alamuddin wedding: The famous congratulate actor and human rights lawyer after Venice nuptials
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
'Women, walk wherever you want' posters taken down in Stamford Hill following 'unacceptable' signs separating men and women
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Should gay sex be illegal? 16% of Britons think so
- < Previous
- Next >
iJobs Money & Business
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...
£300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...