View from City Road: Strange movements in Belfast

Normal economic conditions do not apply in Northern Ireland, so perhaps one should err towards giving government policy there the benefit of the doubt.

None the less the Northern Ireland Office's decision to give a Taiwanese company, Hualon, pounds 61m towards building a pounds 157m textile plant near Belfast borders on the absurd, even for such a topsy-turvy place.

Never mind the hypocrisy of it - it ill becomes a government that screams blue murder at grants for Air France or the European steel industry - or even the fact that Hualon executives are tainted by allegations of fraud. There are also serious questions to be asked about the project's feasibility as well as its effect on UK jobs.

The plant, the biggest industrial development in the area since the failed De Lorean project, will be a low-cost operation churning out cheap fabric of the sort being imported into Europe from the Far East. The Northern Ireland Industrial Development Board insists that there will be no impact on UK manufacturers such as Coats Viyella, which have moved out of low-margin fabrics into higher-value goods. This is only half true.

Large textile companies are moving upmarket, yet to say they have stopped making basic fabrics is incorrect. Moreover, scores of smaller firms are struggling to survive at the low- cost end of the market.

European manufacturers have responded to the downturn in the textile industry by offering greater flexibility and speed of delivery, something Hualon's bulk-run production methods prevent. And Hualon's claim that it can compete with Asian companies is questionable, even with the plant sited in an area where unemployment is the highest in the UK and labour costs the lowest.

Nor does Hualon's argument that advanced technology will keep costs at competitive levels bear much analysis. This is the same technology already being used in the Asian plants that undercut Europe. Many critics argue that, in any case, the project will only create 950 jobs and not the 1,800 promised.

Much of the anger caused by this project is down to the lack of any form of consultation with other interested parties. The rest of the textiles industry has been allowed to see only edited highlights of the government study into the project.

It is just possible that the Government knows something the rest of us don't. But from the outside it is hard to see what.