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HOOVER CLEANS UP
The Scottish Development Agency has just celebrated its first birthday. Reports indicate its second year will start with the offer of a huge cash hand-out to the American multinational Hoover to expand its factory at Cambuslang.
Hoover UK shelved plans to expand at Cambuslang three years ago after a vicious twelve week strike. Like other multinationals Hoover came to Scotland for cheap semiskilled labour and free government regional aid. The company has similar operations in Portugal, Spain, Rhodesia and South Africa. Unused to the workers resisting exploitation in its branch factories, Hoover responded to the Cambuslang strike with an investment strike of its own. There would be no new jobs in Scotland until the government and the trade union leaderships kept the workforce in line. Hoover was glad of the excuse: the market for the products of its Scottish factories was beginning to decline.
Three years of the TUC-policed Social Contract has gone a long way to meet Hoover's needs. A four-day unofficial strike at Cambusling in January was quickly brought to an end because trade union officials were worried a bad industrial relations image would delay new jobs even longer.
However, with the economic recession over, Hoover needs expanded manufacturing capacity. Hoover and the SDA - headed by Sir William Gray, have therefore opened talks to decide how much state aid the SDA will supply in order to persuade the company to reinstate its three-year old expansion plans. A sum of £15-£20 millions has been mentioned.
Hoover is by no means short of cash. At the last count, the UK subsidiary had at least £21 million in liquid assets — that is money lent via the financial system to the government at a rate of interest around 15% per annum. Hoover's shareholders are unlikely to stop lending and start investing when the current average rate of profit on industrial investment stands at 4%.
The Labour government resolves the dilemma by giving the moncy it borrows back to Hoover via bodies like the SDA. For instance the Welsh Development Agency has just made Hoover a present of a brand new £10 million factory at Merthyr Tydil, South Wales. Thus much of Hoovers investment capital is courtesy of the SDA, WDA and big brother NEB. Hoover stockholders pocket both the profits and the interest on the loan to the government.
Hoover's UK profits for the first three quarters of 1976 (a "bad patch" as these things go) were £7.4 million.
Where does the government get the 15% to pay interest to Hoover for borrowing its money to give back to Hoover to persuade it to be kind enough to bring jobs to Scotland? From cutting public expenditure on health, education and housing. Yet at the end of the day the government and the SDA will have achieved nothing. For if the extra 2,400 jobs at Cambuslang do eventually appear they will only just balance the redundancies at the BSC plant on the very same Cambuslang industrial estate.
MULTINATIONAL RESEARCH Two cconomists at Paisley Tech, N. Hood and Young, have completed a survey into the activities of American multinationals in Scotland. One worker in every three in the Scottish mechanical and electrical engineering industry works for a US multinational. In instrument engineering, it is three in every five:
The Paisley economists report that over half the branch factories surveyed were allowed to undertake no local rescarch, thus escaping British patent laws. Scientists and engineers trained in Scotland have to emigrate to find work in research.
Hood and Young also note that 60% of US firms in Scotland were not allowed to adapt production to local needs. When markets fail, the branch factories are closed. "US Investment in Scotland - aspects of the Branch Young and N. Hood, Scottish Journal of Political Economy, Volume 23, Number 3. ECONOMIC TRENDS
One Scottish worker in every twelve is now without a job, according to the January unemployment figures published as we go to press. Since October there has been an average of 1000 redundancies each week in Scotland, not to mention seasonal unemployment and jobless school-leavers. Meanwhile the Scottish stock-market share index rose 10.3 in November alone and now stands at 83.0.
GEORGE KEREVAN