Challenges Facing Manufacturing in Wales in the Light of Panasonic’s Announcement of Proposed Job Losses

On Friday 23 January, staff at Panasonic's plant in Pentwyn were notified of a proposal to transfer television and set box units to the Czech Republic with the loss of up to 600 jobs. The company blames this on continual global market pressures. Panasonic considers that it is unable to continue competitively producing set top boxes and using cathode ray tube televisions, thus the proposal to transfer production to its sister plant in the Czech Republic. Consumers are increasingly buying plasma screens and liquid crystal display televisions, and the cathode ray tube televisions produced at Pentwyn are now commodity items. Prices need to be keenly competitive, margins are low, and Panasonic believes that it has little choice but to look to lower-cost production centres.
The plan is for the move to the Czech Republic to be completed by the end of this calendar year. There are currently around 1,300 staff at Pentwyn of which around 300 are temporary staff. The announcement does not affect Panasonic's research and development centre and its production of microwaves and laptops at Pentwyn. Over recent years, there has been a shift of focus from volume manufacturing at Pentwyn towards research and development. The Pentwyn plant is now Panasonic's leading research and development centre in Europe and has 130 employees working exclusively on research and development. Pentwyn is also the marketing arm for Matsushita in Europe.
The thoughts of all Assembly Members will be with those who are employed at Panasonic, and their families, at this difficult and uncertain time. The Assembly Government has been a strong and active supporter of Panasonic, with the Pentwyn plant receiving regional selective assistance totalling £6.7 million. We will provide all possible support and assistance following Friday's announcement. The WDA, on our behalf, has been in regular and close contact with the company in order to gain an understanding of its business needs and the pressures that it faces. The Pentwyn plant is just outside the assisted area and, therefore, it is not possible to secure further new RSA supporting investment to balance the Czech Republic's advantage in terms of costs. An existing RSA offer to the company remains valid, and we are exploring whether Panasonic plan investment that could be supported by this offer.
In December 2003, claimant count unemployment in Cardiff stood at 4 per cent for men and 1 per cent for women. Over the year to December, the number of unemployed people claiming benefits fell by over 10 per cent. If job losses are confirmed, which would be regrettable, Team Wales and Jobcentre Plus will work closely with the company and the unions to help staff affected by the closure to find new jobs or to develop skills that are in demand in the local buoyant economy. My officials are meeting company representatives tomorrow and arrangements are in hand for me to meet Panasonic's European director to discuss the situation in more detail.
I wish to refer to some of the general challenges that the electronics sector faces in these challenging times for the sector. The Government, all those engaged in manufacturing, and I understand the challenge of global competition. 'A Winning Wales' underlines the Assembly Government's clear understanding of those global pressures and recognises that Wales simply cannot compete with emerging industrial nations on the basis of cost alone. That is why we have put a clear emphasis on driving innovation and research and development towards a future based on higher value-added products and processes.
This strategy applies to the manufacturing sector and call centres. We have to work smarter. The Assembly Government is committed to playing its full part, alongside industry, in tackling the challenges that we face. We stand the greatest chance of success in maintaining an effective partnership approach. The Assembly Government, the WDA and Education and Learning Wales are working with the technology industry in Wales to promote its international competitiveness. The technology industry strategy, which the Minister for Education and Lifelong Learning and I will launch on 4 February, builds on the dialogue between Welsh technology businesses and the public sector. It is the start of the process that will lead to the development of a lasting, world-class public-private partnership.
We will continue to use a range of programmes to assist manufacturing. The Assembly Government's own regional selective assistance fund involved offers to 233 companies in 2002-03, and of these, the vast majority-139, or 60 per cent-were in manufacturing. Those grants are supporting indigenous companies and innovative, high-value-added inward investors such as Cogent, General Dynamics and International Rectifier. Through the WDA, we also have a suite of support to help companies with the transition to higher-value-added manufacturing.
Earlier this week, I invited a wide range of senior representatives from the manufacturing sector to take stock of how the Assembly Government and its agencies can support the sector even more effectively in the light of the competitive threats from low-cost locations. We had an excellent exchange of ideas, and what emerged was an even deeper shared commitment to work closely together to create the conditions within which manufacturing in Wales can become even more competitive. We considered issues ranging from transport infrastructure and broadband to the need to promote more vigorously a wider understanding and take-up of lean manufacturing. We discussed in detail the case for developing skill sets, including those for managers, that are tailored even more closely to the needs of our partners in manufacturing. I was enormously encouraged that all stakeholders had a clear understanding of the nature of the issues facing the sector and a determination to work together to find even better ways to tackle them. I suggested-and the idea was taken up enthusiastically-that we set up an industry-led task and finish group to deliver clear recommendations on what practical action Team Wales can take to improve the competitive position of manufacturing in Wales, not just for the short term, but as a means of promoting sustainable solutions. The group has been asked to report back to me, and the broader manufacturing forum, within two months.
I will keep the Assembly closely informed about the progress of this important, practical and industry-led action.