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Last Updated: Thursday, 22 May, 2003, 11:49 GMT 12:49 UK
LG: The dream that died
John Major at the launch of the LG complex
Then-Prime Minister John Major welcomed the investment by LG
When electronics firm LG announced in July 1996 that it was setting up a factory in Newport, it was hailed as the largest single inward investment ever seen in Europe.

Ministers from the then-Conservative government queued up to welcome the 1.7 billion investment which promised to create 6,100 jobs directly with thousands more in related industries.

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

He added: "It is a tribute to the Welsh workforce.

It's the biggest vote of confidence the Welsh economy has ever had
William Hague

"It reinforces Britain's progress in becoming the unrivalled enterprise centre of Europe and it will get better."

Welsh Secretary William Hague said: "It's the most wonderful opportunity.

"It's unqualified good news for Wales and the whole of Britain.

"It's the biggest vote of confidence the Welsh economy has ever had."

The news prompted euphoria in Newport - an unemployment blackspot which has suffered years of decline in its traditional heavy industry.

But the massive investment came at a cost.

It will provide well-paid, secure jobs well into the next century
Paul Flynn

The government was forced to deny that a grant to LG of 200 million - around 30,000 a job - was too generous.

But the grant was seen as a price worth paying to secure what Ian Lang, President of the Board of Trade in the Conservative government, called "the largest single investment the UK has ever seen."

It was hoped that the LG factory and the spin-off industries created to serve it, would secure jobs and prosperity for Newport into the new century.


Newport West MP Paul Flynn said: "This is the most significant boost for us this century.

"It will provide well-paid, secure jobs well into the next century."

When Labour came to power in 1997, the LG factory was a major part of the new government's strategy to develop "industrial villages" on the former south Wales coalfield.

LG Philips plant
The LG plant promised to bring 6,100 jobs to Newport
Clusters of high-tech companies were planned for former pit communities, centring on the M4 corridor.

"LG could lead the way towards regenerating the south-west of Wales as well as the valleys," said Welsh Office Minister Peter Hain.

But the hopes surrounding the LG factory 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.

Around 2,000 jobs at the Sony, Panasonic and Hitachi plants were lost in Wales alone.

The LG factory survived, but the promise of more than 6,000 jobs created was never realised.

Rumours about the future of the plant continued to circulate and last September, a leaked document received by the union Amicus suggested LG Philips could be reviewing its UK operations.

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

BBC Wales' Penny Roberts
"John Major came to Newport to mark the start of the project"

Assembly seeks LG crisis talks
07 Sep 02  |  Wales
LG Philips 'might cut UK jobs'
06 Sep 02  |  Business

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