UK: Behind the Irish troubles, business is looking up. (3 of 4)

UK: Behind the Irish troubles, business is looking up. (3 of 4) - Added to this is the Exxon Valdez effect. New legislation in the United States aimed at averting another such environmental catastrophe has introduced a requirement for tankers operating i

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Last Updated: 31 Aug 2010

Added to this is the Exxon Valdez effect. New legislation in the United States aimed at averting another such environmental catastrophe has introduced a requirement for tankers operating in US waters to be double skinned in future. Two of the five vessels being built for Olsen are designed to comply with this legislation, and this, says Parker, will give it a proven ability to fit in with the new requirements.

But in case the recession turns into a depression, Parker has set up a repair subsidiary to exploit the market for renovating old vessels. In addition, Harland and Wolff has teamed up with the Japanese manufacturing giant Kawasaki, and so far has sent 60 people across to the Japanese yards to study their methods.

Harland and Wolff has yet to show a profit, but the future looks good. Seven years ago the yards were losing £45 million a year. When the company was privatised the prospectus projected a £10.2 million loss for the first year (which in fact was 16 months long to take its accounts to the calendar year end). Now, Parker predicts, it will show a profit of £1.7 million by June 1991.

Meanwhile, a few hundred yards away, across the harbour is Belfast's other traditional employer, Short Brothers, the engineering and defence firm. Publicly controlled since 1943, and a loss-maker for much of the period since, it came as little surprise when Chris Patten, then a junior Northern Ireland minister, announced plans for privatisation in 1988. But its eventual sale, in 1989, was a jolt back to reality.

It emerged that the firm was to be sold, with massive government subsidies, to the Canadian Bombadier group. The Government did, however, put in a £200 million investment programme over a four-year period (the previous annual average, apart from one missile development programme, had been £5 million). Large amounts of debt were also written off and grants for training, and predicted losses were included in the equation.

Shorts' managers welcomed the flight to the private sector. "Governments don't invest properly - unpopular job losses, even if commercially necessary, are likely to be resisted," was how one put it. At the same time, necessary, but expensive, investment on plant and equipment was lacking, and the firm's ability to remain competitive was severely hampered.

Much has changed since the sale went through in 1990. Privatisation revitalised management's enthusiasm and allowed harder-edged business decisions to be taken. But the company claims that this did not come from Bombadier. Although the Canadian parent did send an accountant over to Belfast, this was only to ensure that Shorts' accounting methods were harmonised with the group. For the rest, investment and a careful appraisal of products and a division of the firm into five subsections was implemented.

Changes have occurred among the workforce too. The number of unions that management has to negotiate with has fallen from seven to one and Shorts claims much better labour relations. It was also frequently criticised by the Catholic community for its failure to recruit Catholics. The firm has been at pains to correct this recently, however, and points to a ban of all flags in the workplace (Union Jacks were seen to be intimidatory) and its monitoring of the composition of the workforce. Although, at 12%, the proportion of Catholics employed is still out of step with the Northern Ireland population, Shorts points out that it has more than doubled over the past 10 years, while the proportion of Catholic apprentices taken on has trebled to 20%. "We're now the biggest manufacturing employer of Catholics in the province," it claims.

Currently Shorts has a wide range of products, including the Tucano trainer (flown by the RAF and other air forces), the Javelin shoulder-mounted anti-aircraft missile system, sections of the Fokker 100 airliner, as well as its own short haul passenger planes.

Since privatisation (and no doubt helped by the £200 million of public investment) the firm has expanded substantially and currently has about 1,000 more employees than at the beginning of 1990. This year's annual report talks about becoming profitable "as soon as possible, to ensure growth and a sound future for employees and suppliers".

While much of the UK is looking gloomily at the dark clouds of a major recession, it seems poetic justice that for at least some of Belfast's population the future looks better than it has for many years.

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