Siemens to push ahead with second Tyneside plant

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The Independent Online
Siemens, the German engineering and electronics giant, is set to push ahead with plans to expand its computer chip operation in Tyneside, which could bring thousands of new jobs to the area.

Dr Heinrich Von Pierer, Siemens' president and chief executive, said yesterday: "It looks as though computer chip prices are improving and we are considering accelerating our expansion plans in north Tyneside."

Siemens employs around 750 workers at its new pounds 1.1bn computer chip factory near Newcastle, which the Queen opened in May. It will press ahead with plans for a second plant nearby, which could employ another 750 workers, and is considering a third factory.

There have been fears that Siemens would postpone its expansion plans after computer chip prices slumped 85 per cent last year. But their price has stabilised in recent months and Dr Von Pierer believes the market is set for a recovery.

The jobs of nearly 900 employees at Parsons, the troubled steam turbine business Siemens acquired from Rolls-Royce in April for pounds 30m, also look secure.

The Tyneside plant now produces parts for Siemens' German businesses for which orders are flowing in. Siemens may expand the business and take on extra workers. "I was pleased to find very motivated staff at Parsons. We have given Parsons more orders and those have been completed very successfully," Dr Von Pierer said.

Siemens confirmed it is in talks with GEC, the UK electronics and engineering conglomerate, over the future of GPT, their telecoms joint venture.

But Dr Von Pierer appeared to rule out buying GEC's 60 per cent stake in the business in return for Siemens-Plessey, the UK defence business it has already earmarked for disposal, and a large cash sum.

"It [the acquisition of GEC's stake in GPT] is not an issue but we are looking to intensify our involvement in the business and our cooperation with GEC," he said yesterday.

Analysts believe Siemens baulked at GEC's asking price for GPT. However, Dr Von Pierer did confirm that GEC was still in the running to buy Siemens- Plessey, and in turn Siemens could be interested in GEC's semiconductor business which is understood to be up for sale.

The sale of Siemens-Plessey is part of a widescale restructuring programme which will see Siemens sell businesses with a combined turnover of DM6bn (pounds 2bn) by the autumn. Its dental chair business and lighting operation have also been groomed for disposal. But Siemens has ruled out selling its medical engineering division, another business GEC was thought to have been eyeing up. "The medical engineering business is an indispensable part of our core operation and is not up for sale," said Dr Von Pierer.

His comment came as Siemens announced results for the nine months to June which showed a 3 per cent rise in net income to DM1.7bn on turnover of DM71.2bn. Siemens predicted that sales would top DM100bn for the year to September.