Siemens steps in for Parsons rescue
Saturday 22 March 1997
Siemens, which beat off competition from General Electric of the US, is understood to have agreed to pay between pounds 25m and pounds 30m for Parsons, which makes large turbines used to generate electricity in power stations. Negotiations with Rolls-Royce's advisers, Morgan Stanley, were due to have been concluded before the group's annual profits announcement on 6 March, but became bogged down over contractual terms. However these stumbling blocks have been overcome and Siemens is expected to announce the purchase within the next fortnight.
The axe has been hanging over Parsons since last July, when Rolls-Royce revealed plans to sell the works and make provisions of pounds 248m, partly to cover a possible 1,700 redundancies. In 1989 Rolls-Royce had paid pounds 304m for Parsons' parent group, Northern Engineering Industries, but was hit by intense competition from larger rivals. A further 800 jobs were also threatened at another industrial power subsidiary in Derby.
Closure of Parsons would have ended a manufacturing tradition stretching back to to 1889, when Sir Charles Parsons, inventor of the steam turbine, created the company. Parsons made the turbines used to power the ill- fated Titanic, a succession of warships and at its height in the 1960s employed 12,000 people.
Last night Siemens declined to comment. However, in a further boost Siemens is thought to be planning to continue turbine production at Parsons, which is a short distance from the German company's new pounds 1bn microchip plant at Wallsend. Analysts had speculated a buyer would use Parsons' expertise in international contracting and consultancy, but would end turbine-making itself.
Unions will be pressing Siemens to give a commitment to preserve job numbers at Parsons, which have dropped by almost 400 since the sale announcement. The local management are considering whether to make another 80 staff redundant, though no decisions have been taken on another 400 potential job cuts.
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