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Last Updated: Friday, 23 May, 2003, 06:23 GMT 07:23 UK
Doomed LG plant - inquiry call
LG Phillips plant in Newport
LG received more than 200 million in public money

The closure of the LG Philips television components factory in Newport with the loss of all 870 jobs has prompted calls for a public inquiry.

The electronics firm was given grants of 220 million to set up seven years ago, after promising to create more than 6,000 jobs.

But hopes for the plant were never realised, and it has been under threat since last September when a leaked company memo revealed that LG Philips was considering closing its UK plants.

Jenny Randerson, the Liberal Democrats' economic development spokesperson, is demanding an inquiry into why so much public money was given to the firm.

When LG announced in July 1996 that it was setting up a factory in Newport - an unemployment black spot - it was hailed as the largest single inward investment ever seen in Europe.

It promised to create 6,100 jobs, which would have a knock on effect on related industries.

Then-Prime Minister John Major proclaimed the South Korean firm's decision as a "vote of confidence" in the UK economy.

First Minister Rhodri Morgan
Mogan: 'Too many eggs in one basket.'
But the massive investment came at a cost as the hopes surrounding the plant were never realised.

The collapse of economies across Asia in late 1997 and 1998 threatened dozens of Far Eastern electronics factories sited in Wales and the UK.

And Thursday's announcement that 870 jobs were to be axed was blamed on a downturn in the market and increased competition.

Now Jenny Randerson is calling for a full inquiry into the history of public funding to the company, which she said has received vast amounts of taxpayers' money.

'Flagship'

"The Conservative Government made this a flagship project, most of which did not get off the ground." she said.

"Now the Newport plant will close because the company has failed to adapt and reinvest in newer technology.

"This was clearly a bad investment from day one.

"I want to know how much public money has been swallowed by this company.

It's the classic example of putting too may eggs in one basket
First Minister Rhodri Morgan

"Can we recoup any of it and can we learn lessons for the future?"

The Welsh assembly's First Minister Rhodri Morgan said the government at the time pinned too many hopes on the plant.

" It's the classic example of putting too may eggs in one basket," he said.

"Nobody could have foreseen the collapse of the Korean economy, but we have struggled with this project ever since."

But former Secretary of State for Wales, Ron Davies, told BBC Radio Wales said the decision to attract LG to south Wales with public money was seen as the correct one at the time.

He said: "If you cast your mind back, everyone was jubilant in 1996.

"There has (since) been an European inquiry which concluded that the investment was a proper investment.

"The great hope was not for the manufacturing plant, which has now shut, but for a semi-conductor plant which never materialised due to Korean domestic politics."

Former chief economist with the Welsh Development Agency, Brian Morgan, added: "The problem began with the failure to open the semi-conductor part of the business.

"When it didn't open, it was downhill from then on."




WATCH AND LISTEN
BBC Wales' Nick Palit
"The Korean firm was lured to Newport with a multimillion pound grant"



SEE ALSO:
LG Philips shuts - 870 jobs go
22 May 03  |  Wales
LG: The dream that died
22 May 03  |  Wales
Jobs axed as factory closes
22 May 03  |  Merseyside
Assembly seeks LG crisis talks
07 Sep 02  |  Wales
LG Philips 'might cut UK jobs'
06 Sep 02  |  Business


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