Jitters in Dunfermline

Hilary Clarke on how one town may miss out on vital investment

The Financial Times isn't usually a bestseller in Dunfermline,one of Scotland's worst unemployment black spots. On Thursday, however, local newsagents were sold out of the paper by 9am, following a report from Seoul that the Korean industrial conglomerate Hyundai was about to delay its pounds 2.4bn investment to build a state-of-the-art semi-conductor plant there.

It amounts to the largest, planned foreign investment in Europe. The report sent a chill across Fife, once the seat of Scottish royalty, now the aspiring silicon glen of Scotland.

Nearly everyone you speak to in Dunfermline is either trying to get a job with Hyundai or knows someone who is. The Hyundai board at the job centre has only 13 vacancies advertised, half for the armed forces, but hopes are pinned on the company to trigger the town's regeneration. Following the collapse of the coal industry and the privatisation of the naval dockyards in nearby Rosyth, unemployment hovers around 10 per cent. "This area has suffered from a long decline in employment prospects. We need the semi- conductor investment desperately," said Janet Lowe, principal of Lauder College, whose office window looks out on to the Hyundai construction site, two miles from Dunfermline town centre.

The company is financing a course at the college to train 400 operators. The college also plans to launch a Higher National Certificate course in semi-conductor manufacturing and mechatronics, with Hyundai to train people as technicians.

But, as the Scottish media repeated the FT report verbatim, the atmosphere among the workers at the 150-acre Hyundai site was one of anxiety. "Bloody typical," said the moustachioed security guard, straining to make himself heard above the deafening sound of pneumatic drills and pounding November rain. "I have just left a well-paid job in the south-east so I could come back home, and now I could end up on the dole right before Christmas." His fears, and those of the 1,800 construction workers hired by Laing Management, the contractors for the site, are for the time-being unfounded.

Construction for the first part of the two-stage project, due to be completed by the end of next year at a cost of pounds 1bn is, Hyundai assures, going ahead as planned.

The huge white rectangular concrete headquarters for the plant already dominates the landscape. "It would make a great discotheque," joked the security guard.

He and his colleagues were under strict instructions on Thursday morning not to let the press on to the site, the entrance of which was dominated by a hoarding announcing "Days to Go to First Tool Entry: 151".

At the spanking new Hyundai offices above the Dunfermline building society, the company's Korean executives and a public relations firm were desperately quashing the rumours. The FT claimed the company would delay the project because of strong government pressure on Hyundai to slash investment spending as part of a concerted effort to reduce its massive debt, and was therefore unable to raise the necessary finance to equip the plant with machinery. "It's the first we've heard," said Phil Meadows, a sales executive with Domain Software Solutions in Dunfermline to try and secure the contract to supply the computer software to drive the machinery at the plant. "We had a meeting with the Koreans last week and they assured us everything was fine."

Hyundai issued a statement. "The company wish to make it very clear to the media and the public it remains fully committed to phase one of the project. Construction is on schedule and the facility will be operational and production will begin by the end of 1998, as stated previously. 800 people will be employed by the company by the end of next year".

A spokesman for the company said: "We are confident the financing will be secured." Fife council and the minister of state at the Scottish Office , Brian Wilson, were quick to issue assurances that the project will go ahead - as was Chancellor Gordon Brown, the local MP who last month formally switched on supplies for the new factory.

Nevertheless, while the first phase of the project appears safe, a question mark hangs over whether Hyundai will expand its operation. The company has always said phase two of the project, which will include the construction of two more factories and create a further 1,200 jobs, was "subject to market conditions". Despite the slump in the market for semi-conductors in the Far-East caused by the economic crisis there, analysts are predicting the global demand to rise by around 15 per cent next year. The collapse of the Korean economy makes the prospect of another pounds 1.4bn investment at Dunfermline less likely.

This is causing concern at the regional development agency in Glasgow, Scottish Enterprise and its inward investment arm, Locate in Scotland. Scottish Enterprise will not say how much money they have promised to Hyundai, saying it is a "commercial secret". So is the amount of money the Scottish Office has already spent helping to develop the infrastructure for the plant.