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Bad news for Larne, good news for Wuxi. On the day Northern Ireland learned of 760 lost jobs at four FG Wilson plants — with 400 more feared to be in the pipeline — its owner Caterpillar announced a $91.5m (£56.83m) investment in Wuxi city, Jiangsu province, eastern China.
Caterpillar currently supports 3,000 jobs directly at its Northern Ireland plants — and many more downstream. Some 760 redundancies were announced on Thursday to which must be added 160 agency staff and potentially up to 400 more as production shifts to China in the next couple of years.
FG Wilson said it was facing falling demand for its generators as a result of the Eurozone crisis and global economic uncertainty. Wuxi will, Caterpillar said, be its largest component production base in the world.
Last week Richard Lavin, Caterpillar’s chief executive, waxed lyrical about the prospects for China.
Even when he felt its own economy was slowing he predicted that it would be an export hub for Africa and the Middle East.
His spirits must have soared on Saturday when he attended a meeting of business leaders at which Hu Jintao, the Chinese President, announced $150bn (£93bn) in infrastructural investments in 60 major projects.
“It’s good news” which “is going to have a direct, positive impact on our industry and Caterpillar’s business in China,” Mr Lavin enthused and he wasn’t kidding.
Europe wasn’t so promising he had earlier observed. The European Central Bank's recent move to expand its debt purchase programme cheered him a little, but not enough to invest just yet.
It is “a good step,” he said. “But it'll be a while before the debt problem will be resolved.”
Was the decision to hit Northern Ireland quite this hard and this quick taken over the weekend? Did Caterpillar accelerate its Chinese investments because it liked Mr Hu’s stimulus package better than Europe’s debt purchase programme?
Certainly the first that Arlene Foster, our own Enterprise Minister heard of the full scale of the cuts here was at the beginning of this week, probably Tuesday, when Mr Lavin’s mind was already made up.
It was at 9am on Thursday that staff were brought into a meeting at FG Wilson and told the grim news that will slash their numbers. Ms Foster’s only feasible option on hearing the news was damage limitation — a written commitment not to close the plant altogether. The company later promised to pay staff enhanced redundancies and pledged “resources will also be provided to workers to help them during the transition stage”.
The minister is now in Istanbul pitching to attract a 20,000-delegate conference to Northern Ireland. Earlier this week she exchanged emails with Richard Lavin, the CEO, but her main contact was with William J Rohner, Caterpillar vice president with responsibility for the Electric Power Division.
“I told him it was a devastating blow to the people of east Antrim and Northern Ireland,” she said.
Another company which may be affected is Anixter Fasteners in Mallusk which supplies components for Wilson’s generators. Grafton and Blueprint both supply agency staff.
When cleaners, retailers and other businesses where all these workers spend their wages are taken into account, the total number affected could rise to thousands.
Caterpillar is a prestige local employer. Not only did it pay its directly employed staff well by local standards, it built a skills base that will vanish unless a new engineering employer can be attracted in.
It has invested £700m here since it took over the former FG Wilson plant.
It may remain a key driver of our local economy even as it declines in importance. It could even expand, as it did for most of the last decade, if the European economy revives and we can offer the right incentives.
Lavin hopes for an economic pickup in Europe after 2014, but just now he is bullish about China and the US in that order.
Foster’s department was braced for bad news but not on this scale and not in the same week that we hit the very bottom of the UK jobless league.
Redundancies were mooted in July. The talk was of 160 with contract workers and 100 directly employed staff but a 90 day cooling off period was announced.
Over the summer there were hopes that the total could be reduced. “In July when the first round of redundancies were announced they indicated that they would be coming back again to look at efficiency and competiveness issues and the whole issue of their markets.
“At that time we very clearly said, look if there is anything we can do in relation to any of those issues, and we are here to help,” Foster recalled yesterday.
Nothing came of it.
But what can a small local economy in totaldo in the face of global economic forces? What influence can our Executive have on the decline of European markets, the rise of China and its decision to release funds worth more than three times our entire economic worth and spend it on construction now?
In China there are no planning delays or judicial reviews such as holding up the A5 road, John Lewis and other infrastructural plans. Every project seems to be shovel-ready.
On Thursday the Executive called a mini-economic summit, but it smacked of rearranging deck chairs on the Titanic.
Danny Kennedy, Minister for Regional Development, was dispatched with a mission to look again at town centre parking charges in the hope that a reduction could increase town centre footfall. Peter Robinson, the First Minister, is yet again asking for a meeting with David Cameron, and an economic summit is planned for October. It is a start.
For Theresa Villiers, who had only visited Northern Ireland once before being appointed Secretary of State, it was a baptism of fire. Her meetings this week will have left her in little doubt that the one policy which unites all the Executive parties is the devolution of corporation tax, though they cavil at the price.
A Eurosceptic right winger, she was predicted to have little sympathy for the idea, but who could judge when her main concern up to now was London’s Crossrail project?
Irwin Armstrong, the local Tory leader who briefed her on Wednesday night, and Peter Robinson, who took a break from his mini summit to meet her yesterday morning, were pleased to find her responsive to the idea.
“Peter found her positive on the idea; we’ll see where it leads,” said a DUP insider. Mr Armstrong added: “She left me convinced she will press as hard on this as Owen,” (Paterson her predecessor). Even a cut in corporation tax would not have stopped Caterpillar from switching some production.
To compete with the Chinese we need to be as quick and as flexible as they are. And we need to build local businesses with roots here like FG Wilson, the local family firm which Caterpillar bought out in 1999.
That is a challenge for both the private and public sectors.
Dismayed, scared and livid
Outside gates of the plant, staff tell of their uncertainty and resignation
By Clare Weir
Welcome to FG Wilson— Generating new ideas every day” is the digital display which welcomes visitors to its headquarters.
However, yesterday’s new idea — to axe hundreds of jobs — was not a big hit with workers or residents of Larne.
There was a mood of doomed resignation at the gargantuan plant — the biggest of FG Wilson’s four plants in Northern Ireland – as well as a sense of fear amongst the workers.
There was also an air of uncertainty as none of the staff know yet whether they will be the ones facing the axe.
Even union shop stewards were shy to identify themselves, leaving Unite regional secretary Jimmy Kelly — clearly livid — to face the media.
The mood was not a comfortable one.
Reporters gathered at the gates were pushed back to the main road by security staff.
As Larne's mayor Gerardine Mulvenna and Alliance MLA Stewart Dixon addressed the cameras, the workers began to emerge from the gates.
No one coming from the factory wanted to give their names and when asked whether they had been told not to talk to the media, many workers heading for their lunch break gave a curt nod.
At the nearby complex of shops — a chippy, a Chinese takeaway, an off licence and a convenience store, staff also spoke grimly about the knock-on effects.
In the forecourt, blue-sweater wearing workers, some still in high-visibility jackets, made phone calls home to concerned relatives.
Outside the Spar, two workers slumped on a display of bags of coal, glumly poking around at a polystyrene container of chips while they discussed what their next move could be.
“It’s a real bombshell coming just weeks before Christmas,” said one worker, who did not wish to be named.
“We knew there was bad news coming but nothing like this.
“People have families to think of and they don’t know what is going to happen.
“We have been told the firm is looking for voluntary redundancies first but no one really knows if their job is safe or not.”
Another worker said: “People don’t want to speak out, they don’t want to put their jobs at any further risk.
“A lot of my team already know that they are going because they are agency workers, but the rest of us have been left in limbo.”
“It’s grim,” said another, referencing the mood on the shop floor. “People are very worried. There are few enough jobs as it is out there.”
‘People are worried. There are few enough jobs’
