Pfizer creates 1,000 jobs but Siemens thinks again in Tyneside

Pfizer, the US drugs giant, confirmed yesterday that it is investing pounds 109m in a new research facility in Sandwich, Kent in a government backed move which will create 1,000 new British jobs in the next five years. However, Siemens, the German engineering and electronics giant, has abandoned plans to create up to 600 more jobs at its computer chip plant on North Tyneside after a new crash in global semi-conductor prices. Sameena Ahmad in London and Chris Godsmark in Munich report.

Pfizer's decision to expand its existing research facility in Kent was hailed by Margaret Beckett, President of the Board of Trade, as "a vote of confidence" for inward investment into Britain. She said the investment by Pfizer showed "Britain's historic science base really is a priceless asset".

Pfizer which receives a pounds 3m grant from the Department of Trade and a pounds 2.5m contribution from English Partnerships is considering an additional pounds 241m investment in the next three years to expand its research facilities, and for a new manufacturing plant and warehousing. Ken Moran, chairman of Pfizer Limited, the UK subsidiary of the US group called the UK was "the healthcare innovation centre of Europe."

Ms Beckett defended her decision to award the pounds 3m grant even though Pfizer has been operating in the UK since 1951 and already employs 3,400 people. "Pfizer could have put its investment in a number of other countries including the US," she said. Pfizer said the grant was a "significant factor", in its decision to expand in the UK.

Though Ms Beckett boasted yesterday that Britain "has attracted far more of the world's inward investment than any comparable country of its size," not everything is going the Government's way. When Siemens revealed its pounds 1.1bn investment programme for Tyneside in 1995 the original intention was to build two manufacturing halls, creating 1,800 new jobs in one of the UK's most depressed regions. But as work began on the site, the price of computer memory chips crashed by as much as 80 per cent, forcing the company to review its world wide investment plans. When semi-conductor prices staged a 30 per cent recovery in the spring, Siemens pledged to press ahead with the second stage of the plant. But the group pointed yesterday to a new slide in prices.

Heinrich von Pierer, Siemens's chief executive, said: "It's always been a cyclical market and the cycle is now at a low point, a trough. That is why it would not have been wise to start up a new plant." Instead Siemens has squeezed more production out of the first hall, opened by the Queen in May.

The move follows hot on the heels of the decision by Samsung, the Korean clongomerate, to cancel pounds 350 million expansion plans at its Teesside manufacturing base. Toyota also confirmed this week that it had chosen France and not Britain as the site to build a new small car.

The chip price crash took its toll on Siemens results yesterday with profits at its semi-conductor divisions in the year to September dropping from DM603m to DM109m Siemens's overall profits in its 150th anniversary year rose 5 per cent after tax to DM2.6bn.

It also emerged that the company has delayed for six months holding single currency seminars with many of its 13,000 UK suppliers. They have been asked to adopt voluntarily the euro for transactions with Siemens UK companies, which will prepare their accounts in the single currency from October, 1999.