North-east's jewel quickly lost its shine

OUTSIDE THE entrance to Newcastle upon Tyne's railway station is a billboard poster emblazoned with the words "Fish Into Chips - From Mackerel Economy To Micro Technology. Invest In North Tyneside - Siemens Did."

The local council was rightly proud of the Siemens microprocessor plant in Wallsend, a few miles north of the city. No one could have predicted what came next. When the pounds 1.1bn plant was opened by the Queen 15 months ago, it was hailed as a major endorsement of the region's future in high- tech manufacturing.

It was the "jewel in the crown", a "flagship for North-east revival," and men and women - many of them couples, flocked to Tyneside to build their futures around this factory for the 21st century.

But as if the North-east had not been dealt enough body blows in recent years, it happened again - only this time, it wasn't the closure of a traditional heavy engineering enterprise, such as coal mining or ship building, but the death of a factory dedicated to the most modern of manufacturing industries - microchips. "So, welcome to the dark, satanic mills," said Ross Forbes, Siemens' public relations manager as we approached the shiny, futuristic building. "Look at it. Does it look like the sort of place you're going to can?"

Mr Forbes has had longer than most to get his head around the idea that the state-of-the-art plant is going to close. He was informed last Monday, five days before Siemens' president Dr Ulrick Schumacher, flew to Britain to break the news to the 1,100 staff. Employees' reactions were "incredibly disciplined", said Mr Forbes. "Within half a day they were literally back to production as normal, which is an absolute credit to the people here."

David Clemes and his wife, Rita, both 41, bought the dream. "It was one of those opportunities you just could not turn down," he said explaining why they had sold their home near Glasgow and moved to the North-east. They both got jobs at Siemens and, with salaries adding up to a total of pounds 65,000 a year, had confidently signed up to a pounds 100,000 mortgage in nearby North Shields. "Personally, I thought of it as a long-term plan. I have no intention of moving," he said.

But now it looks as if Mr and Mrs Clemes will be leaving behind their new life in North Shields, hopefully to take up positions within Siemens on the Continent. "It's a brilliant place here. We've really enjoyed it," he said. "I don't know how you define "best', but it's probably been some of the happiest times we've ever had, being here."

The saving grace, however, has been the way in which Siemens has handled the situation. "You can't soften this blow, but one of the things we've been able to pick out are the positives is that we are guaranteed another year's salary from now on."

Although Siemens has no legal obligation to do so, it is offering six months' severance pay to anyone who stays on until January. Anyone who wishes to go immediately gets two months' pay. The training wing has been turned into a "job shop", where workers can turn for advice. Lew Aviss, personnel director, was the first employee at the Wallsend plant. Even if the company had to slim down its workforce - in fact especially if it had had to - his job was safe. "If anything happens in this industry, you thin your labour. You don't decide to close a wonderful, modern plant like this. It has never been done before," he said.

While Mr Aviss understands the cause of closure - the notoriously volatile international electronics market and, in particular, the "suicidal pricing" of Asian competitors, as Siemens' chief executive put it - that doesn't make him feel any better. "My job was to bring people in," he said. "And now suddenly, I'll have to take them all out again." The Siemens factory was the biggest single investment in the North-east, but now it adds its name to the region's death toll. In 1992, it was coal mining; in 1994, it was ship building; and now, in 1998, it is new technology's premature turn.

"This is a severe setback for the North- east," said Rita Stringfellow, Labour leader of North Tyneside council. "But the resilience and the confidence of the area will win out in the long run."

John Hamilton, the council's economic development director, said that the impact of the closure would extend right across the region. "The fear is that despite major inward investment we are still vulnerable to closures," he said. The Wallsend plant placed pounds 75m in orders with 250 UK suppliers, many of them local firms.

One delivery owner said: "Siemens was my business. I just drove for them. With them gone, my firm is finished."