Letter: When costs increase Taiwan will say ta-ta

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The Independent Online
Sir: Your Business Comment "Britain the back door to Europe" (15 November) is absolutely correct [about the nature of the investment by Chungwha in making cathode ray tubes in Scotland], but your arguments and warnings must be taken farther. Taiwan and Korea were once cheap labour economies, which is why the Japanese, in particular, invested heavily in them. When labour rates, and manufacturing costs, for simple products such as televisions went too high the Japanese simply pulled out.

Four years ago, after manufacturing in Pusan City on the south coast of Korea for more than 20 years, a Japanese company closed a factory manufacturing exactly the same product as Chungwha will be making in Scotland. Three thousand people lost their jobs, and the same company set up a production line in Thailand. Sooner or later, labour rates in Thailand will rise too far, and the company will move again, probably to an emerging African country. The warning for us is that it is even easier to move out of Britain as we have one of most free money markets in the world, and there is no skill in manufacturing this type of product.

Some pounds 80m and a few thousand jobs may generate a few votes for the Conservative Party, and will bring relief to an area where unemployment is well over 2 per cent above the national average, but let us be warned by what is happening all over Asia. When they are ready, the Taiwanese will simply pull out of Britain. This will not build an "enterprise culture".

Nobody in Westminster has any concept of "enterprise" beyond the ability to invest in businesses linked to privatised utilities, the NHS and local government. Its latest "enterprise" wheeze is Business Link. To qualify, you have to employ more than six people, so a country solicitor, who has never exported a thing but has three offices and more than six full- time employees, qualifies for a 50 per cent grant to "teach him how to market"; while everywhere small, genuinely enterprising British manufacturers struggle to survive by exporting, using money borrowed at high interest rates from high street banks, and have little or no help from government.

British manufacturing industry is still in decline. Unless this is halted, there is no hope of an "enterprise culture", or a bright future, for this land.

Yours faithfully,

Anthony Smallhorn

AS&A: Industrial and

Engineering Designers

Hitchin, Hertfordshire

15 November