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DOCUMENTS "COM"
COM(79)607
Vol.1979/0207

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ihniin»■i■■IIIIIIliIl lini'mi.miII.IlII-mi
COM(79)607final
COMMISSION Brussels,7November1979
OFTHE
EUROPEAN COMMUNITIES FOROFFICIAL USEONLY
Genera!Secretariat
REQUESTFORASSENT,PURSUANT TOARTICLE56.2AOF
THEECSCTREATYTOGRANTING ARECONVERSION LOAN
TODANIELDONCASTER &SONSLTD..UNITEDKINGDOM.
(Communication fromtheCommission totheCouncil)
COM(79)607final

COMMISSION
OFTHE
EUROPEAN COMMUNITIES
INTERNAL DOCUMENT
COMMUNICATION TOTHECOUNCIL
Subject:Requestforassent,pursuanttoArticle56.2aoftheECSCTreaty
tograntingareconversion LoantoDanielDoncaster &SonsLtd.,
UnitedKingdom.
I.ESSENTIAL INFORMATION
Applicant
Beneficiary
Project
Location
Investment
Loanrequested
Jobscreated
Interestreduction:DanielDoncaster &SonsLtd.
:Same
:Modernisation andexpansionofaplantmanu­
facturingringsandforgingsfcrtheaero
engineandgasturbineindustries
:Blaenavon,Gwent,SouthWales
:b4.7"
:b2.35M<±3.796MEUA)
:107
:54.000EUAperyearforfiveyears.
II.CONFORMITY WITHARTICLE56OFTHEECSCTREATY
TheprojectissituatedatBlaenavonwhichformspartoftheadministrative
districtofTorfaenbutisdirectlyadjacenttothedistrictofBlaenau
Gwentandlieswellwithina15mileradiusoftheEbbwValeSteelworks .
Themanufacturing sectoratBlaenavon employsjust840peopleofwhich540
aremales(CensusofEmployeesinEmployment 1976).Itisknownthata
numberofBlaenavon residents workattheEbbwValeSteelworks anditis
thereforeappropriate thatforthepurposesofthisloanapplication thelocal
labourmarketshouldberegardedasBlaenavon/BlaenauGwent.Thissub-region
hastraditionally beendependentuponcoalandsteelandthedeclineof
theseindustries overtheyearshasfundamentally changedthecharacterof
employment andthenatureofthelocaleconomy.ThewholeofBlaenauGwent
isaSpecialDevelopment AreaandBlaenavonformspartoftheDevelopment
AreaofSouthEastWales.TherecentlossofjobsatEbbwValehasfurther
•••/•••
Provisionoladdress:RuedelaLoi200,B–1040Brussels–Téléphoné350040-358040–Télégraphieaddress:«COMEURBrussels»–
Telex:.COMEURBRU 21877•

-2-
reducedthenumberofemploymentopportunities availablewithinthe
areaanditisclearthatnewinvestmentisrequiredforthewholeof
theareatogeneratenewemploymentandtoraisethelevelofincome.
Since1966atotalof50manufacturing establishments areknowntohave
openedintheBlaenauGwent/Blaenavonarea.Theseestablishments currently
provideemploymentfor2.100people.Thisfigureislessthanthenumber
ofjobslostwiththeclosureofsteel-making attheEbbwValeSteelworks,
andclearlyillustratestheneedbothtoreplacelostjobsandprovidefor
newentrantsontothelabourmarket.
Likemostoftheothervalleyareasthegrowthanddeclineofthepopulation
hasbeenassociatedlargelywiththefortunesofcoal-mining,andmore
recentlywithsteel-making .Since1951thepopulationofthedistrictof
BlaenauGwenthasfallenfrom96,600to85,600in1971,andanestimated
83,000in1976.Mostofthelossofpopulationhasbeenthroughmigration
outofthevalleyareas.Thisprocesshastendedtochangethestructureof
thepopulationwithabiastoagreaterconcentration amongthoseof
pensionable ages.
Thesub-region,asdefined,isrelativelyself-contained andthe1971Census
showsthataround17%oftheworkforceofBlaenauGwentcommuntedoutof
theareatowork.Atthesametimesome11%ofworkerswithinBlaenauGwent
commutedinfromotherlocationsincludingBlaenavon.Netoutwardcommuting
doesnotappeartobeaverysignificantfactor.Butthecurrenthighlevelof
unemployment remainsunsatisfactory andtheneedtoretainthepopulationcalls
forgreaterinvestment.
Latestavailablefiguresshowthattheunemployment rateforBlaenauGwent
is11.8%andthatthemalerateis12.2%.Thesefiguresareconsiderably
higherthantheWalesrateat7.6%andtheGreatBritainrateof5.2%.
Thepatternofunemployment fortheareahasbeenconsistently higher
especially amongmalesthantherateforWalesandthepriorityistoreduce
boththerateofunemployment andtoprovidenewopportunities foranincrease
intheactivityrate.Thisnewprojectshouldmakeasmallcontribution to
achievingbothoftheseobjectives.
III.THEUNDERTAKING
Theapplicant,DanielDoncasterSSons,aSheffieldbasedengineering group,
isengagedintheformingandmanipulation ofmetalsfortheaerospace,
vehicle,andengineeringindustries.Specialities includetheforgingofhigh
strengthsteels,heatresistingnickelbasedalloysandtitaniumalloys.
ResearchandDevelopmentlaboratories centredatHeadOfficecontinually
evaluatenewmaterialsandprocessessuitableforfutureproduction.At
presenttheGroupemploysabout3,200ofwhichsome230areemployedat
DoncasterBlaenavonLimited,oneoftheGroup'soperatingsubsidiaries .The
ECSCloansoughtwillcontributetothemodernisation andexpansionofforging,
machining,finishing,andinspectionfacilitiesatDoncasterBlaenavon
Limited.

-3-
DanielDoncaster &SonsisawhollyownedsubsidiaryofIncoEuropeLtd.
TheultimateholdingcompanyisIncoLimitedwhichisincorporated in
Canada.
IV.THEPROJECT
Theproductsmanufactured atDoncasterBlaenavonLimitedincluderolled,
profiledandsizedringsupto3metresdiameterand1,800kgweightand
shapedforgingsupto1,800kginweightfortheaerospace andgasturbine
industries;flanges,tees,cones,tubeplates,weldfittingsandspecial
forgingsfortheHydrocarbon andChemicalProcessindustry.
Astheaeroengineindustryisgearingupforthenewgeneration of
aircraftwhicharebeingintroduced bythemajorairframemanufacturers
inthecomingyears,DanielDoncaster havedecidedtoexpandandmodernise
theirexistingplantatBlaenavoninordertomeetincreasing demandoftheir
majorcustomerslikeRollsRoyceandotheraero-engine manufacturers .The
proposedinvestmentprojectwillincreasethebusinessfromb10Msalesin
1979tob17.75Msalesby1984in1979prices.
Theprojectinvolvesthepurchaseandinstallation ofa250TonRingMill
withuse-making andringflatteningplanttogetherwithassociated handling
andfurnacingplantinanewForgeBuildingwithofficestobeporchst-
«edfromtheWDA.Itisalsointendedtopurchaseandinstallsuitable
machining andproductinspection andpackingfacilitiesinexistingbuildings.
Tomoderniseexistingsteamhammersandconserveenergyitisplannedto
discontinue operationof3Lancashireoil-fired steamraisingboilers.New
compressedairfacilitieswillbeinstalled andtheexistinghammersanda
newhammerwillbeconvertedforairpower.
Additionalsiteservices,electricity,gas,waterdrainsandroadsareto
beprovidedtosupportexpandedactivities .
Thetotalcapitalcostwillbeb4.7Mandexpenditureisforecasttotake
placeasfollows:
Year b000's
1979
1980
19811,761
2,921
18
4,700

-4-
V.EMPLOYMENT
Thedescribedprojectwillprovide107newjobsofwhich65willberequired
by1981,42by1983.InviewofthelocationoftheBlaenavonfacilities,
i.e.onthesiteoftheoldBlaenavonIron&SteelWorks,whichfallswithin
theimmediateareainwhichthecoal-miningindustryandsteel-making
industryarebeingclosed,itislikelythataconsiderable numberofthe
newjobswillbeopentopeoplewhohaveworkedinthecoalandsteel
industries .
Thetrainingprogrammesfornewemployeeswillbedeterminedinthelightof
thebasicskillsrequiredandtheskillsandexperiencepossessedbynew
recruits.However,intheProduction andEngineeringareasthecompanyhas
established inductionandbasicskillon-the-jobtrainingprogrammes .whichit
willsupplement byusingthefacilitiesofthelocalGovernmentTraining
Centresasrequired,particularly formachinists.
Forthetechnicianandtechnologist positionsthecompanywillberecruiting
peoplewhoaretrainedinbasicdisciplines andwhowillthenundergointernal
on-the-jobinductionandongoingtrainingprogrammes.
WagelevelsatDoncasterBlaenavonLimitedareinlinewithEngineering
Industrywagepatterns.
WiththeassistanceofthelocalofficeoftheDepartmentofEmploymentthe
companywilldevelop closerlinkswithsteelandcoalorganisations
wellinadvanceofitsrecruitment programmestoensurethatitsrecruitment
planscanbephasedinsensiblywithanylay-offprogrammesofECSCworkers.
VI.ENVIRONMENTAL ASPECTS
Theprocessescontemplated areessentially hotworkingandmachiningand
willnotgiverisetosolid,liquidorgaseouspollutants.Thecompanywill
operatesafeworkingmethodsandprocedures andusetheacknowledged safety
protectiveequipment,i.e.gloves,boots,goggles,earmuffs,etc.
VII.FINANCING
Thetotalfinancerequired(1979-1981)is:
b000's
Building
Plant&Machinery1,200
3,500
Workingcapital 2,925
7,625

-5-
Thesourcesoffinanceenvisagedare:
fc000's
ECSCloan 2,350
410 InterestReliefGrant
BankloanRegionalDevelopment Grant
InternalResources650
2,752
1,463
7,625
VIII.CONCLUSION
TheCommission considersthattherequestcomplieswithArticle56(2a)
oftheECSCTreatyandthattheproposedinvestmentiseconomically sound.
Inconsequence theCommission hasapproved aloantoDanielDoncaster &Sons
Ltd.foritsprojectatBlaenavon,SouthWalesforamaximumamountof
b2t35M(jl3^796MEUA)oritsequivalent amount.Interestistobe
reducedby54,000EUAperyearforthefirstfiveyearsafterthepayment
orpaymentsoftheloan.
TheCommissioninvitestheCounciltogiveitsassenttotheforegoing
decision.