NEC Semiconductors
The next item of business is an emergency statement by Wendy Alexander, on NEC Semiconductors. The minister will take questions at the end of her statement; there should therefore be no interventions.
NEC's announcement on Tuesday that it plans to mothball its semiconductor plant at Livingston is most regrettable. The news has been a devastating blow for the work force, especially at this time of year and coming, as it does, hard on the heels of the Motorola closure. I made a commitment in relation to Motorola to do everything possible to help. I make the same commitment to do everything possible to assist NEC workers and, indeed, others who might be affected. I would like to take this opportunity to offer details of how we intend to deal with the situation at NEC, and to announce additional funding for West Lothian in recognition of the very significant shocks the local economy is having to absorb.
As many members know, NEC has a long association with Scotland. The company restructured earlier this year; about 600 jobs were shed in the summer. At that time—this was the position until very recently—we understood that that was necessary to safeguard the long-term future of the plant. Since July's downsizing, officials have met the company regularly both in Scotland and at the company's headquarters in Tokyo. The then First Minister visited the company in October and last week I instructed a senior official to travel to Japan to meet the company at the highest level. Our ambassador in Tokyo also met the company president.
As members know, market conditions for the electronics sector have continued to deteriorate. The reality is that the July downsizing and refocusing of activities has not achieved the outcome that was intended for the Livingston operation. NEC has taken a commercial decision to mothball the Livingston plant, although the company remains committed to Scotland. If the market improves, NEC has undertaken to review its position. Obviously this is a huge blow for everyone who is affected: the people who work at NEC; their families; indeed, West Lothian as a whole. NEC has stressed to me that the company's decision is in no way a reflection on the skills and commitment of the work force. Rather it is an outcome of there being more adverse market conditions than were anticipated.
Today, the Executive is acting. I am announcing the steps that we will take to assist the people of West Lothian. NEC has advised me of its intention to provide strong leadership in the matter. It has indicated that it will continue to work closely with agencies, through the PACE—the partnership action for continuing employment—arrangements; in other words, the rapid response team, which is being led by Scottish Enterprise Edinburgh and Lothian and has been in place since July. That work involves a range of partner agencies, including the Employment Service, the Benefits Agency, careers Scotland, West Lothian Council, and Coutts Outplacement International, which has been appointed by NEC to deliver outplacement support. A one-stop shop providing information, advice and support for all those who are affected is already operational.
An immediate task will be to identify the needs of NEC workers. I can announce that everyone who is affected will have help with searching for a job. I can also announce immediate access to training for work and other specialist training as people require it. The completion of the European computer driving licence has proved extremely successful elsewhere in helping employees acquire highly sought-after skills. I intend to stand by the commitment that I made following the Motorola closure to inject up to £10 million into West Lothian. That is why I am pleased to announce that I am providing £6 million for the West Lothian strategic action plan for economic development. That money will be channelled through Scottish Enterprise Edinburgh and Lothian so that we can target it to local needs and priorities quickly and effectively.
The action plan, which has been drawn up by a partnership of local economic development agencies, contains a number of measures to strengthen and modernise the West Lothian economy. It will promote business growth, particularly in high growth sectors, and it will create jobs by broadening the employment base in West Lothian. There will be substantial investment in tailored training programmes to ensure that everyone is equipped to take advantage of the new opportunities that will be created.
With those measures, I am optimistic that we will be able to turn the situation around. There will not be immediate solutions, but the lessons that have been learned at Motorola mean that we can draw comfort from the fact that, less than six months after the first Motorola redundancies, almost three quarters of the Motorola workers have already gone on to employment or training. What were the key factors in that success? The skills and experience of the work force have certainly been key, as have the resilience of the local economy—where the level of unemployment today is no higher than it was a year ago—and the training and employment opportunities that the local response team provides. All those factors are relevant to the situation that now faces NEC.
Some members might expect me, or press me, to announce another task force. I do not intend to do that for the following reasons, which I hope have become apparent from what I have said so far. There is already an effective NEC local response team in place and there is already an effective partnership between the local development agencies. The West Lothian action plan partnership has produced a clear plan of action for boosting the local economy, with priorities that from today have £6 million of new funding to support them. We will work with the partnership to progress that plan.
In more general terms, the recently launched electronics action plan aims to help the industry shift from high-volume to high-value manufacturing and product development. More than £30 million will be invested in that sector over the next two years towards those aims.
In conclusion, 2001 has been an incredibly hard year for West Lothian. The cumulative impact of closures has undoubtedly had a severe impact on the confidence of the area, on individuals and their families, on the local community and on businesses. They have all been affected. Today, I want to offer reassurance that we will do everything that we can to secure not only a quick recovery for West Lothian, but long-term economic stability.
The minister will now take questions on the issues that were raised in her statement. I intend to allow about 15 minutes for questions, after which we will move on to the next item of business. It would be helpful if members who want to ask a question were to press their request-to-speak buttons now. Let us have sharp and concise questions. I call Andrew Wilson.
I am sure that the minister will agree that the situation in West Lothian is devastating, because it deals families a dreadful blow at what should be a time of joy for everyone. Will she outline exactly what she regards as being the role of Government in this context? At what level does she believe Government should best administer the situation? What does she plan to do for the business and transport infrastructure in West Lothian to ensure not only that the problem is alleviated, but that wealth creation in the area can be boosted in the long term?
Does not she feel that the Scottish economy has stumbled from crisis to crisis over the past four years, if not during the entire post-war period? When the dust has settled, will she reflect on the fact that our economic performance is utterly mediocre and that we are in continuous economic decline? In the year to June, wealth creation grew eight times faster in the UK than it did in Scotland. Is not it the case that this week's announcements only add to the gravity of that absolutely desperate situation? Does the minister agree that the performance of the Scottish economy is utterly unacceptable and that the current situation signals a time of crisis?
I do not doubt the minister's intention to do good for the Scottish economy, neither do I doubt her ability, but is not she tired of administering sticking plasters to a gaping wound rather than powering up the engine of growth that should drive the people of this nation towards success instead of towards continued economic decline? There have been too many moments like this, and that cannot go on.
I do not want to turn the matter of the statement and debate into a political football, although Andrew Wilson invites me to do so. The important thing is that the unemployment rate in the West Lothian economy is currently lower than it was when Motorola announced its closure plans. As that is partly due to the resilience of the wider travel-to-work area, Andrew Wilson's substantive point about the need to strengthen the transport infrastructure is one of which I am very seized. Indeed, I am more seized of the issue because of my new portfolio of responsibilities. I assure members that I have spent the past few days discussing how we can make access to the buoyancy of the Edinburgh economy more straightforward than it has perhaps been in the past.
On the responsibility of Government, the primary issue for Labour members is opportunity of and access to employment. Over the first four years of a Labour Government, 100,000 jobs were created in Scotland. However, the past year has been very difficult for reasons that are beyond anyone's control, including that of national Government. That said, long-term employment is lower than it has been and interest rates are at the most sustained low level that they have been for more than the member's or my entire lifetime. The same can also be said about inflation. Our commitment to continued growth is evident in the fact that 4,000 more people are in employment in West Lothian today than there were a year ago.
I thank the minister for the advance copy of her statement and I associate myself and my colleagues with Mr Wilson's expression of deep concern about the plight that confronts NEC employees. We hope for their sakes that some measure of hope and assistance can be offered.
In her statement, the minister observed that 2001 has been an incredibly hard year for West Lothian. However, 2001 has been an incredibly hard year for the electronics sector in Scotland. We have lost nearly 8,000 jobs and 3,700 jobs have been cancelled or postponed. NEC says that the plant has been mothballed; however, there is surely a danger that the electronics industry is being blackballed. What future does the minister see for the electronics industry in Scotland and the retention of skills associated with it?
More specifically, the minister mentioned that almost three quarters of former Motorola workers have already gone on to employment and/or training. I think that members will want to know what proportion of the three quarters are actually in work.
I do not have the full figures in front of me. However, I recall that more than 50 per cent of the workers are already in employment and that between 50 per cent and 75 per cent are in training. That figure is significant. The hope for the electronics industry is its ability to reposition itself and the skills of the individuals within it. In the past year, we extended the modern apprenticeship scheme to adults of all ages and recently people in the electronics sector have formed one of the largest take-ups of the scheme, which is allowing them to retrain for higher-value-added parts of the sector.
As for the sector in general, we published the electronics action plan earlier this year. The plan has three elements. The first is the development of skills and retraining, and I have mentioned the £30 million that will be available for that over the next few years. The second element of the plan is development of the supply chain. NEC is concerned about some of their upstream suppliers and the need to globalise suppliers in electronics that have their headquarters in Scotland. Because electronics companies source on a global basis, they must supply on that basis.
The third element of the plan is to grow our research and development capability in Scotland. I know that the member has a particular interest in matters such as the proof of concept fund, the Scottish Enterprise fellowships and the desire to build research and development institutes that are specifically linked to areas of strength in the Scottish economy. For example, the Alba Centre has been a significant recent development in West Lothian and it continues to prosper, despite the short-term difficulties of the downturn.
I want to associate myself with remarks that were made by the minister and Annabel Goldie, and I am pleased to hear about the progress that the minister is making on the matter. How will the £6 million that she has announced for the West Lothian strategic action plan be spent? Furthermore, on her previous point about the commercialisation of research at universities throughout Scotland, is there any possibility of finding out how more of that work can be used to the advantage of small businesses generally?
I shall lay out some of the ways in which the £6 million is being spent at the highest level. First, Lothian technology assistance is providing assistance to local companies to access and adopt new processes and to achieve greater levels of research and innovation.
Secondly, almost £1 million will be aimed at marketing West Lothian as the Cambridge of the north. The Alba Centre is really about saying that there is a research and development capability in central Scotland.
Thirdly, we need more high technology business units. One of the problems for spin-outs in the West Lothian area is that the right sort of high technology spin-out business units are not available. That area will be the beneficiary of about £2.5 million.
More generally, on the training side, the West Lothian business learning network will focus on training in information and communications technology so that the European computer driving licence will not be the only qualification that is on offer. That training will receive funding of just under £1 million.
There are a number of other training measures related to ICT and the areas in which we know there are the greatest labour market pressures in Edinburgh. I am thinking particularly of the finance sector, the health care sector and the retail sector. Those measures will benefit from about £0.5 million.
The NEC plant lies partly in my constituency and partly in that of Mary Mulligan. I associate myself with the minister's remarks about the impact that the announced closure will have on many thousands of families.
I recently met the strategic action plan group that drew up the West Lothian action plan. That group would welcome a continuing partnership with the Executive in the plan's implementation. Will the minister give a commitment to that?
The problems that we are experiencing in West Lothian are not confined to West Lothian. They are the result of a global problem, and the job opportunities that are provided in West Lothian are available to people throughout central Scotland. Does the minister recognise the importance of restimulating the West Lothian economy as a driver of the whole of central Scotland's economy?
Does the minister agree with one of the key recommendations of the strategic action plan, which is that we need to improve extensively the transport infrastructure that runs through West Lothian, especially the connections with Edinburgh?
It is significant to record this while all members are here. The West Lothian action plan has been drawn up through an exemplary partnership between local agencies. We talk often about partnership working on economic issues. There has been an exceptional partnership, which has come up with a list of measures that commend themselves very strongly to the Executive. That is why—although there are more people in work in that local economy now than there were a year ago—we still thought it right that £6 million should be allocated to plans to reposition the West Lothian economy.
In order to reposition that economy, we are considering how we can strengthen educational provision in the area. Members might recall that, in response to the Motorola closure, we allocated extra money to West Lothian's further education activities. We want to strengthen that initiative.
We share the view that there is a need to examine the transport infrastructure. Members might be aware that three multimodal studies are centring on the M8 corridor, the A8 corridor and the M74 corridor. The study on the A8 corridor is focusing on how travel congestion problems in the west of Edinburgh can be addressed so that the Edinburgh travel-to-work area will become larger and more easily accessed than at present. Over the past few days, I have been involved in discussions with the various rail organisations, City of Edinburgh Council and other interests to get that agenda moving. We will have a chance to debate that work when the multimodal studies are published.
Is the minister aware that West Lothian has now lost 10,000 exporting and manufacturing jobs since October 1999? Those were direct job losses, but not only is direct employment affected; indirect employment is affected.
The minister's statement refers to the allocation of £10 million to West Lothian after the closure of the Motorola plant but, in a recent written answer, she said that only £4 million had been allocated. Is the £6 million that she is announcing today additional to the £10 million that was announced after the Motorola closure or is it an allocation and release of the money that was identified in the summer?
I note the difficulties that manufacturers have had in some areas recently and I think that it is important that we examine what has happened in individual sectors. Some areas of manufacturing are doing particularly well and other areas are experiencing difficulty. One of the areas of difficulty has been the semiconductor industry, which has gone from an uplift of 65 per cent to a downturn of 30 per cent. That represents a swing of 95 per cent worldwide in the past 18 months. That has driven many of the difficulties that we have seen in the sector.
That said, it is important to recognise that direct and indirect employment in West Lothian has increased by 4,500 in the past year and that unemployment there is at its lowest point for a decade. That is a result of our getting the fundamentals right in recent years.
The money that is being allocated today is money that we said we wanted to devote to the area following the closure of Motorola. We invested for Motorola workers £3 million of the £10 million that was announced and then—this has never been brought to members' attention—brought to bear from within the resources of other agencies a matching sum. In total, about £6 million has been spent directly over the past six months, half of which came from the £10 million that we announced and half of which came from other organisations that were working in the area. That has left us with a net balance of £7 million, almost all of which we are allocating today.
What actions will the minister be able to initiate to attract new employers to the area to take advantage of the skilled workforce? How might they be used in other parts of Scotland?
I mentioned that some of the money that is being announced today is being spent on the creation of high-technology business units. In the east of Scotland, the availability of suitable property—particularly with short-term leases, which tends to be what high-technology companies want—is a matter of concern. Sometimes leases in the commercial property sector tend to be too long for companies that are in the early stages of growth.
On spin-outs, we have offered to hold workshops—similar to the ones that were held by the entrepreneurial exchange in the aftermath of the closure of Motorola—to enable workers to set up their own companies. Support for that will be provided by the small business gateway.
At a broader level, there is no doubt that the Alba initiative is key to the attempt to reposition the Scottish electronics industry away from assembly activities towards high-value activities that draw our university research more effectively out of laboratories and into our businesses.
With apologies to Mr Sheridan and Mr Ingram, I call Alex Neil, whose question will have to be the last.
Will NEC be asked to match the public sector funding of £6 million, as it should in order to meet its social responsibility? What action is being taken to save the 2,400 Motorola jobs that still exist in Scotland? Does not the latest investment prove that we have for far too long put too many eggs in the foreign investment and electronics basket and that it is high time that we grew indigenous companies in Scotland in a diversified market?
I agree with that last point, the sentiments behind which led to this year's merging of Scottish Trade International and Locate in Scotland and the formation of a new organisation that is much more about taking Scottish knowledge to the world than it is about simply attracting assembly activity to Scotland.
Members will be aware that Motorola has announced that it must shed another 9,400 jobs worldwide in the next 12 months, 4,000 of which are expected to be in the semiconductor industry. We are anxious that Motorola should clarify the position soon. I assure Alex Neil that senior officials are in continuous and close contact with senior Motorola executives in Scotland and the United States. We await further news.
That said, I want to do nothing that will raise anxiety levels in Scotland. At East Kilbride in particular, Motorola's work is in the automotive sector, in which demand continues to be more buoyant than in other areas of semiconductor manufacture.
I do not recall what Alex Neil's initial point was.
It was about the money from NEC.
We have asked NEC to make a substantial contribution to the rapid response team. It has employed Coutts Outplacement International as its outplacement agency. From our experience on the Clyde task force, Coutts provides a high-quality service. NEC has not made clear to me the scale of the contribution that it will make.
I inform members, because they may be interested, that we clawed back immediately the regional selective assistance that had been made available to Motorola. With NEC, we are facing mothballing rather than closure. Members might be unaware that, as a result of the decision, NEC will not carry out any semiconductor manufacture at all in Europe. It is retreating temporarily to the United States, Japan and China, with no alternative European location for a semiconductor fabrication plant. In light of that, we have said that the outstanding amount of RSA, which—I think—is about £2.5 million, will not be clawed back pending its being made clear that the situation is simply a mothballing, and that we can look forward to Livingston being the European location for NEC if the upturns that we anticipate in the semiconductor industry happen.