From the TUC

What ceramics jobs cuts say about industry policy

27 Jun 2011, by in Environment

News that 86 jobs are under threat at British Ceramic Tile, Newton Abbot, a company that installed state-of-the-art technology to retain international competitiveness, begs some questions about the coalition’s industry policy. The tile maker is beginning a 30-day consultation with staff over proposals to cut shifts from four to three. It employed 250 workers 12 years ago, it’s about 380 now. But why? Is it higher energy costs in the UK? Or the dumping of cheap Chinese products on the EU market?

It’s not likely to be questions of productivity or efficiency. The firm opened a new £40m factory in 2009. Falling demand and a new kiln (which increased plant capacity) seem to be involved. But our concern is that the UK’s high energy costs are a factor. And given the high energy efficiency at the plant, the danger is that we will import ceramics from competitor with a higher energy and therefore CO2 content, losing jobs and investment overseas, the process known as carbon leakage.

And what of the government’s talks with Chinese Premier Wen Jiabao?  Ceramic tile prices are set to rise in Europe after the EU said it would introduce heavy duties on imports from China. In an effort to put an end to what it says is illegal dumping, the EU said it would impose duties of up to 73%. China exports tiles worth 275m euros (£239m) to Europe per year. EU industry “is suffering material injury because of the effects of dumped imports”, the EU said in a statement. Europe’s ceramic tiles industry is the world’s largest after China’s.

As to the future of the plant, we must await the results of the consultation process. But with around 10,000 people registered as unemployed in the county, and the supply chain impacts still to register, the announcement is really bad news for the region.

Last year, the TUC’s joint study of the energy intensive industries, of which ceramics is a key part, found they are carrying the greatest burden of polices to tackle climate change and reduce energy use. In future, we said, the impact will become even more disproportionate and intense. We suggested that the cumulative impact of these policies has not been fully understood by government. It was essential that an assessment should be made as to whether the UK’s climate change policies were appropriately balanced. Sectors which have the potential to underpin a lower carbon economy and reduce the UK’s energy use should not be commercially compromised by the policies aiming to deliver it.

The cumulative impact of all climate change policies is significant, especially on energy intensive sectors. Ceramics employs 20,000 people directly and 60,000 in the supply chains. It’s vital that the complex reasons for this decision – UK energy prices, international trade issues – are understood. And the lessons applied to government policy making.