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DELACOMMISSION
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DOCUMENTS "COM"
COM(79)592
Vol.1979/0203

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GenerolSecretariat;COM(79)592final
Brussels,November1979
FOROFFIClALUSEONLY
REQUESTFORASSENT,PURSUANT TOARTICLE56.2aOFTHE
ECSCTREATYTOGRANTING ARECONVERSION LOANTO
"SHEEPBRIDGE ENGINEERING LIMITED"-UNITEDKINGDOM
(Communication fromtheCommission totheCouncil)
C0M(79)592final

COMMISSION
OFTHE
EUROPEAN COMMUNITIES
INTERNAL DOCUMENT
COMMUNICATION TOTHECOUNCIL
Subject:Requestforassent,pursuanttoArticle56.2aoftheECSCTreaty
tograntingareconversion loantoSheepbridge Engineering Limited/.
UnitedKingdom.
I.ESSENTIAL INFORMATION
:Sheepbridge Engineering Limited
:Same
:Expansionofmanufacturing facilities
fordieselenginecylinderliners
:Sheffield,S.Yorkshire ,Yorkshire&Humberside
:fc1/800/000
:b900/000<+I,435*812EUA)
:50
Interestreduction :24,000EUA.peryearforfiveyears «
II.CONFORMITYWITHARTICLE56OFTHEECSCTREATY (,f
v ■
TheprojectisatSheffield,theSouthYorkshirepartoftheYorkshireand,,
Humbersideregion.Theregionwhichcontains8.9%(nearly2millionpeople),;i-:
oftheworkingpopulationoftheUKhasawidediversityofindustryand
itscentralpositioninthecountry 1smaincommunication networkmakesitf-y
asuitablelocationformanyactivitiesparticularly wheredistribution
costsareimportant.InJune1979thenumberunemployedintheRegion
was116,955(including80/324males)apercentagerateof5.5%(6.3%males)
comparedwiththenationalaverageof5.4%(6.3%males).
SouthYorkshirewith28%oftheregion'semployeesisheavilydependenton
thebasicindustriesofcoalminingandmetalmanufacture-mainlysteel.
TheSheffield/RotherhamareaistheprincipalcentreintheUKforthe
productionofspecialsteelsinthenationalised andprivatesectorsand
employment hasfalleninaperiodofrationalisation andreorganisation .In
the3yearsendingJuly1979/3steelmakingplantshavebeenclosedand
redundancies announcedatafurther18.Inthesameperiod/theclosureof
collieries andredundancies intheSouthYorkshirecoalfield havemeantthat
over300jobshavebeenlost.Futuredemandforlabourinthecoalmining
industryislikelytobeconfinedtoreplacingworkerswholeaveorretire
■aa/■•■Applicant
Beneficiary
Project
Location
Investment
Loanrequested
Jobscreated
Provisionaladdress:RuedelaLoi200,B-1049Brussels–Téléphoné7350040/7358040–Télégraphie address:"COMEURBrussels–
Telex:"21877COMEUB"

-2-
andtheoverallsizeofthelabourforceisnotexpectedtoincrease.
ThenumberunemployedintheSouthYorkshireRegionatJune1979was
37,480(including24,829males)apercentagerateof6.4%whichis
abovetheregionalandnationalaverage.
Thisaboveaveragelevelofunemployment inSouthYorkshireemphasises
theneedforassistancetowardsprojects,suchastheoneproposedbythe
applicant,whichwillcreateemploymentopportunities forredundantcoal
andsteelworkersandencouragefurtherdevelopmentwithintheRegion.
III.THEUNDERTAKING
Nameandaddress
Sharecapital
Natureofbusiness
Employment:Sheepbndge Engineering Limited
(Alistedcompany)
Chesterfield,Derbyshire
andits16subsidiarycompaniesand
1associated company
:Ordinaryshares(25p)fc8.8m
Sharepremiumaccountfc2.7m
Thereisnoshareholder whoholds5%ormore
oftheissuedsharecapital
:Manufacture ofcylinderliners,pistons,
pistonringsandothercomponents
primarilyfordieselengines .
Wholesaledistribution ofautomotive
components
Ironandalloycastingsandsinteredproducts
Quarrying,materialshandlingandother
equipmentforthecivilengineering and
construction industries
Machinetools
Heavydutybrakes,clutchesandcouplings
:TheGroupemploys5,362
SheepbridgeEngineering LimitedhavenotpreviouslyappliedforECSC
finance.
IV.THEPROJECT
Thesupplyofcomponents,particularly dieselenginecomponents,tothe
automotiveindustrywhichaccountsfor61%ofsaleshasbeenthebasis
oftheGroup'sactivitiesoverthelast5years.TheGroupisthebiggest
UKmanufacturer ofdieselenginecylinderliners,withsome60%ofthemarket,
andamajorsupplierofanumberofothercomponents whichincludepistons
andpistonrings.
»■·/···

-3-
Theproposedprojectisanexpansionofthecompany'smanufacturingfacilities
atSheffieldwhereironcastingsfordieselenginecylinderlinersare
produced.Overallcapacitywillbeincreasedby20%butequallyimportant
meltingfacilitieswillbeupdatedtoproducethespecialironswhichare
beingconsideredforthenextgenerationofdieselengines.Theinvestment
willbeimplementedoverthenext2yearsatatotalcapitalcostof
b1.8m.
V.EMPLOYMENT
Theexpansionwillcreate50extrajobsoverthenext2/3yearsforfoundry-
menandmachineoperators.Thecompany'sworksarebetweenChesterfield and
Sheffield,some8/9milesfromtheSheffieldCityCentreandthelocation
ofredundancies atanumberofprivatesectorsteelcompanies.
VI.THEMARKET
Themarketfordieselengineshasbeenparticularly buoyantsincetheoil
crisisin1973/4andthecompany'scustomersincludemanyofthelarge
USandEuropeanmanufacturers ofcommercialvehicles/tractorsandearth
movingequipment.Approximately 40%ofoutputisexported.
Dieselenginecomponentsareexportedtooriginalequipmentmanufacturers
inBelgium,Denmark,Finland,France,Israel,Italy,Norway,Sweden,USA
andGermany.ExportstoSwedenareprobablygreaterthanto"anyother
country.
Inaddition,dieselenginecomponentsforthereplacementmarketareexported
throughanexportmarketingsubsidiarytoeverycontinentintheworld.
VII.FINANCING
Thetotalfinancerequiredis:
Plantandmachineryc
1,800,000
Workingcapital 720,000
2,520,000
Thesourcesoffinanceenvisagedare
ECSCloanOwnressources 1,320,000
900,000
InterestReliefGrant 300,000
2,520,000
mm/mm

-4
VIII.CONCLUSION
TheCommissionconsidersthattherequestcomplieswithArticle56
(2a)oftheECSCTreatyandthattheproposedinvestmentiseconomically
sound.Inconsequence theCommissionhasapprovedaloantoSheepbridge
Engineering LimitedforitsprojectatChesterfield,Derbyshirefora
maximumamountofb900/000(+It435»8l2EUA)oritsequivalentamount.
Interestistobereducedby24f000EUAperyeaxforthefirstfiveyears
afterthepaymentorpaymentsoftheloan.
TheCommissioninvitestheCounciltogiveitsassenttotheforegoing
decision.