Cold winds howl through Silicon Glen

Clydeside is facing up to the realisation that the hi-tech jobs boom was a false dawn, writes Charles Arthur

FOR YEARS, whenever the makers of computer chips got together they would tell a joke. "How's business?" one would ask. "Wonderful!" the other would reply. "Our output is 10 per cent smaller this year than last year!"

They aren't telling that joke any more. Most of all, they aren't telling it in "Silicon Glen" - the area of Scotland, around Livingston and Greenock, where companies such as National Semiconductor, Motorola and Seagate Technologies built their manufacturing plants.

In the past few weeks, almost 2,500 people at five different companies' factories have been told that their job may soon cease to exist. The chip business really is shrinking, as profits pour away because a global glut of products - made at plants planned in days of shortage - is forcing companies to sell their chips at less than cost price.

"The saying is that there are a dozen companies each chasing a 10 per cent market share," explained Roy Rubenstein of Electronics Weekly magazine. "But the problems aren't only for chip companies: it's disc-drive makers [such as Seagate] and computer makers. It shows that there are global problems."

Yet, observers expect the semiconductor industry to revive itself within 18 months and to begin to climb out of a three-year slump, the longest recession it has ever known. But for the workers facing the sack, the uncompromising message is, unless you are very skilled - perhaps with a degree - there probably won't be a job like it again.

That will be a social disaster for the area, because 95 per cent of the workers at semiconductor plants are women. They are the ones now in the front line for lay-offs. And as Anthony Parish, director general of the UK's Federation of Electronic Industries (FEI), points out, those lay- offs will ripple out into the wider area.

"Each paid job supports two and a half other jobs in the wider community, in every industry, right down to the launderette," said Mr Parish. On that basis, more than 6,000 people will be affected by the closures in the next couple of years. "That's what is lost when we lose a factory: the money people spend in the community."

Decades ago, employment in the area, along the River Clyde, relied on the men working in the shipyards. When those closed, the burgeoning chip industry began recruiting. The National Semiconductor plant, where last week 600 of the 1,040 staff were told their jobs will disappear, was built in 1972. Often, the people being taken on were the wives of younger men who had just lost their shipyard jobs.

Now, the women may face years of unemployment for decisions made by planners when it seemed the industry could not possibly fail. But the UK, and Silicon Glen, were especially liable. "We were over-committed in semiconductor fabrication plants," said Mr Parish. "Three years ago, people were talking about Britain producing enough chips to account for half of the European semiconductor market. That won't be fulfilled. And I don't believe that when growth does return that it will be in semiconductor fabrication."

Though chip-making has a high-tech image - of people wearing all-body suits and working in super-clean rooms - it is also a laborious, repetitive business, requiring great physical precision but little or no creativity. The chips are instead "etched" using chemicals, according to designs created on the other side of the world.

"In a couple of years we will be making more and more boxes - computers and TVs - here," said Mr Parish. "And the important trick that we have to pull is getting into design and research and development. That's where our ambitions must look in terms of skills input: we need graduates with those abilities."

But for the women facing a final pay-cheque, he admitted the news was less hopeful. "I don't know that we're going to get too much of that chip work back," he said. "But we have to be realistic. Jobs that aren't skilled tend to be mobile. The predictions are that by 2010 one in every 10 of the female workforce will be working in a call centre. Maybe that's what they have to look forward to."

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