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Explanations needed over firm's decision to relocate

By John Simpson

Published 04/11/2015

Workers leave the Michelin plant after hearing that it will be closed in the next two years
Workers leave the Michelin plant after hearing that it will be closed in the next two years

Michelin has given its employees nearly three years' notice that the Ballymena factory will close in 2018.

Recent news about the tyre company's operations in Ballymena has been dominated by repeated suggestions that the factory was not viable in the long term.

Now, it seems, a compelling need to plan for new production equipment and a decision on where to locate the new plant has led to a management decision to re-equip the tyre production plant in Dundee.

Several aspects of the Michelin decision-making process have been inadequately explained.

For Michelin to say that it has been facing aggressive competition in a market with excess manufacturing capacity is, on its own, an unsatisfactory suggestion since it makes no reference to how competitive Ballymena is compared to Dundee.

Why, with the inherited efficiency of Ballymena, does Dundee offer a better deal?

The viability of the Ballymena plant has frequently been questioned when reference is made to the costs for an intensive electricity-using plant. Electricity costs in Ballymena are acknowledged to be high in any comparison with other locations in Great Britain.

In Northern Ireland we know that electricity costs for major energy users are near the top of the EU league table. There is no satisfactory answer to this handicap.

The Utility Regulator has a duty to minimise electricity costs to all consumers. For normal households and smaller businesses, this has been achieved.

Either because the legislation is faulty or because the Regulator is not acting to balance the electricity costs of all consumers, Northern Ireland is top of the wrong league table.

Either the legislation should be amended or the regulator should adopt a better definition of responsibility for all consumers. There are, it is believed, less than 20 larger electricity users who, as a group, have for a long time asked for better trading arrangements.

A surprising omission, yesterday, in the statements from Michelin and Invest NI, is that neither has made any comment on the scale of assistance that might have been offered. Financial assistance is, of course, subject to the EU rules on State Aid. These rules also apply in Dundee and across Scotland. Nevertheless, Invest NI fails to even mention that it was prepared to assist within EU rules: why?

Instead Invest NI has offered to "engage with the company to fully understand its decision to close the plant".

At the very least, Invest NI is already well equipped to understand the decision. Routine monitoring of accounts and financial performance has surely given plenty of notice, even if in confidence, that competitive factors were pointing the wrong way.

There is one further unspoken suspicion. Neither Michelin nor Invest NI is likely to want to say that Northern Ireland is being handicapped by a history of several decades of political instability which puts it in a higher risk category than other UK or Irish regions.

Even the expectation of lower Corporation Tax by 2018 has not figured in this evaluation.

Mention it softly but put it on the agenda - real political stability and improved competitiveness are, and remain, essential requirements.

Belfast Telegraph

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