Siemens to close semiconductor plant


Siemens AG is to close its semiconductor plant on Tyneside, north-east England, just 15 months after the 1,100 job plant was given a fanfare opening by Queen Elizabeth.

IDA Ireland came close to winning the Siemens plant for the Republic during the intense battle which preceded the German company's decision to locate in Britain.

"Ireland nearly made it but we were pipped by money at the closing stages," according to an IDA spokesman. "We stopped bidding because the bidding went way beyond our terms of reference."

Semiconductor plants cost hundreds of millions of pounds to set up. If the plant had been established in the Republic, the IDA would have invested millions in the project, though the spokesman pointed out that a contract would have been in place which would have ensured the return of the investment in the event of closure.

Siemens said it had no choice but to wind down production from September in the face of a global glut of computer chips which has seen prices plummet by over 95 per cent in the last three years.

A spokesman for Intel, the dominant player in the semiconductor industry, which employs about 4,400 people in its computer chip plant in Leixlip, Co Kildare, agreed that it too had had "a more challenging year" than previously but said there were no changes to Intel's plans for its Irish operation.

The IDA spokesman said that when conditions in the semiconductor market improve, the presence of the empty plant in Tyneside will give a major advantage to the Tyneside Development Agency. Ireland had been looking for a second large semiconductor plant - Intel being the first - but has put its plans on hold until market conditions improve.

Mr Ulrich Schumacher, president and chief executive of Siemens Semiconductor Group, said other jobs might still have to go at the company's other four plants in the US, France, Taiwan and Germany.

The news marks the second major jobs blow to British manufacturing in as many weeks. The car maker Rover Group, a division of BMW, last week announced at least 1,500 job cuts, blaming the strong pound for crippling exports.

Trade union leaders were quick to blame sterling's strength for Siemens' decision to axe its British facility rather than others where currencies were more competitive. But the company said the choice of Tyneside for closure reflected its production volumes.