ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(79)732
Vol.1979/0246

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COMMISSION
OFTHE
iUROPEANCOMMUNITIES
GeneralSecretariatCOM(79)732 final
Brussels,10thDecember1979
FOROFFICIAL USEONLY
REQUESTFORASSENT,PURSUANT TOARTICLE56.2a)OFTHE
ECSCTREATYTOGRANTING ARECONVERSION LOANTO
"FHSSTAHLVERFORMUNG ",UNITEDKINGDOM"
(Communication fromtheCommission totheCouncil)
C0MC79)732final

COMMUNICATION TOTHECOUNCIL
Subject:Requestforassent/pursuanttoArticle56.2aJoftheECSCTreaty
tograntingareconversion loantoFHSStahIverformung,UnitedKingdom.
I.ESSENTIAL INFORMATION
Applicant
Beneficiary
Project
Location
Investment
Loanrequested
Jobscreated
InterestreductionFHSStahlverformung 6.m.b.H.
:FHSAutomotive Parts,Manufacturing Limited
:Equipmentofan"Advance Factory"to
produceseatcushionsandballjoints
forthemotorcarindustry
:Tafarnaubach Industrial Estate,Gwent,
S.Wales,UK
b1,231,000
fc600,000(941,397EUA)
84
28,200EUAperyearforfiveyears.
II.CONFORMITY WITHARTICLE56OFTHEECSCTREATY
■-– I ■■■ ■ ■
FHSStahlverformung GmbH,aGermany-based companywhichsupplies anumber
ofcarpartstothemotorcarindustry,intendstoestablish anew
company"FHSAutomotive PartsManufacturing Limited"intheUnitedKingdom.
ThechoiceoflocationisTafarnaubach Industrial Estate,nearEbbwVale,
Blaenau,Gwent,inS.Wales.There,thecompanywilloccupyagovernment-
ownedfactorywithatotalfloorareaof25,000sq.ft.Occupancyisplanned
forApril1979withproduction beginningJuly/August1979.
•••/••■
rrovisionoloddress:RuedelaLoi200,B–1040Brussels–Téléphoné350040-358040-Télégraphie address:«COMEURBrussels »–
Telex:.COMEURBRU 21877.

-2-
Formanyyearssteelhasbeenthepredominant employerintheBlaenauGwent
District.InMarch1973theEbbwValesteelworks employedjustover
9.000peopleandrepresented some70%ofmaleemployment inEbbwVale.
Withtheclosureoftheblastfurnaceandthehotstripmi11,employment
inthesteelworks hasfallenfrom9.033inMarch1973to6.661inMarch
1977,alossof2.372jobs.Theclosuresoftheopenhearthfurnacesand
theslabbingmillbroughtaboutthelossofafurther2.185jobsin78/79.
Latestavailablefiguresshowthattheunemployment rateforBlaenauGwent
iscurrently 11.8%butthatmaleunemployment rateis12.2%.Thesefigures
areconsiderably higherthantheWalesrateat7.8%and8.7%formales.
Thepatternofunemployment fortheareahasbeenconsistently higher,
especially amongmales,thantherateforWalesandthepriorityistoreduce
boththisrateandtoprovidenewopportunities foranyincreasesinactivity
rates.
III.THEUNDERTAKING
FHSStahlverformung GmbH,aGermany-based company,isintheprocessof
establishing anewcompany"FHSAutomotive PartsManufacturing Limited"
tooperateitsexistingandplannedUKbusiness.Consequently thebeneficiary
oftheECSCloanwillbe"FHSAutomotive PartsManufacturing Limited".
FHS*businessinvolvesthemanufacturing andsaleofhighlyspecialised
fasteners,transmission parts,gearshiftlevers,polyurethane parts,
polyurethane seatcushions,balljointsandtierodsfortheautomotive
industry.
TheparentcompanyofFHSisUnitedStatesSteelCorporation,Pittsburgh,
USAwhichowns74%oftheissuedsharecapitalofFHS.26%isownedby
Mr.K.H.Schulte,managingdirectorofFHS,whoisalsosonofthefounder
ofFHS.
IV.THEPROJECT
FHSiscurrentlysupplying acarmanufacturer intheUnitedKingdomwith
approximately 16,000carseatsand20,000balljointspermonth.Inthe
pasfUKcustomers haveurgedFHStoestablish aplantfortheirproduct
lineinG.B.ThismeetswithFHS.wishesandintentions tosetupa
productionunitinSouthWalesforitsmostlabourintensiveoperations .
Theprojectwillbeaccomplished intwophases.Phaseone:production
ofseatcushions;phasetwo:productionofballjoints.

Theplantshouldbereadyforphaseonemanufacture byJuly/August1979.
Underphasetwoadditionalequipmentwillbeinstalledtocommence
manufacturing ofballjointsduring1980/81.Thescheduleofplanned
capitalexpenditureisenvisagedasfollows:
Year1Year2Year3Total
1979 1980 1981
Buildings 45 45
Plant&Machinery 526 1515031.180
Commercialvehicles 6 6
1.231
SOCIALCONSIDERATIONS
Themethodsofproductionforeachofthetwophaseswillbesimilartothe
existingfacilitiesattheFHSplantsinGermany.Initiallythemanagement
expertisewillthereforebeprovidedfromtheexistingFHSplants.Itis,
however,theintentionofFHStodeveloptheexpertiselocallyatSouth
Walesandtobuildupamanagement team(withthepossibleexceptionofa
Germanplantmanager)tooperatetheSouthWalesplant.Eachphaseofthe
totalprojectisexpectedtoincreasethefulltimeemploymentasfollows:
Skilled Unskilled Total
1979 2 18 20
1980 15 10 25
1981 4 30 34
1982 5 5
21 63 84
Manpowerrequirements duringthefirstphase(1979)willbemostlyfor
unskilledlabour.Initialstepshavebeentakentobeginwithahiring
programme.Inthisconnection,FHSiskeepinginclosecontactwith
representatives ofBritishSteelCorporation andthelocaljobcentreto
helpintheselectionandemploymentofex-ECSCworkers.
Formostpositionsanonthejobtrainingprogrammeisenvisaged,butfor
afewtrainingwillberequiredinFHS1plantatDassel,WestGermany.

-4-
uiTHEMARKET
1.HiqhRésilientSeat_Cusrnons
Seatcusionsofthistypearemanufactured byusingacold-foam
processandmolds.ThisprocesswasfirstintroducedintheUSA.
FHShasregistered severalpatentsandiscontinuously improving
methodandapplication oftheprocess.Bycontrast UKmanufacturers arestill
usingasystemofhot-foamorcut-foam,wherebyinthelatter
casesinglepartsaregluedtogethertoformawhole.Hot-foam
isnotveryusableforfrontseats,becausethefoamwillsettle
afterarelatively shortperiod.Therefore,presentproduction methods
callforhot-foamrearseatsandcut-foam-gluedorwithmetalheart-
frontseats.
GiventhequalityofitshighresilientseatcushionsandanUK
automarketincreaseof5%perannum,FHSbelievesthatitcanincrease
itsalreadyexistingmarketshare.MajorUKcarmanufacturers have
indicatedtheirinterestinhighresilientseatcushionstobeused
intheirnewmodels.TwomajorUKfoamcompanies havealsoapproached
FHStodiscusspossibleco-operations .
2.BailJoints
OnemajorUKcarmanufacturer ispresentlybuyingabout50%ofits
requirements fromFHS.Thepresentwagedifference betweenG.B.
andGermanyandpossiblesavingsinfreightandstorageexpenses
makeiteconomically advisabletoproduceanddeliverballjointsfrom
G.B.OtherUKcarmanufacturers havealsoexpressedgreatinterest
inFHS*planstosupplyBritishcustomersfromaUKbase.
VII.ENVIRONMENTAL ASPECTS
Thecompanywillbeworkingwithmetalsandchemicalswithapolyurethane
basis.Toassurethattheenvironmental aspectsaremet,allnecessary
anti-pollution equipmentwillbeinstalledtomeetthestandardsestablished
bygovernmental authorities .Inthisrespectthecompanyhasfoundthehelp
andfullsupportoftheAlkaliInspectorate fortheCardiffarea.Basedon
thelong-timeexperience withthesameproduct(s)initsplantinGermany,
thecompanycanstatethattheanti-pollution equipmenttobeinstalled
willbeofsuchqualitythatintheeventoffailurenocontamination risk
topersonnelorsurrounding areasshouldexist.
VIII.FINANCIAL ASPECTS
Thesummaryfinancingplan(1979-1983)fortheprojectisasfollows:

(bthousands)
Requirements Ressources
Capitalexpenditure 1,231 ECSCLoan 600
Workingcapital 1,090 Internalfinance 660
Externalfinance 1,061
2,321 2,321
FHSStahlverformeng GmbHasparentcompanyofFHSAutomotiveParts
Manufacturing Limitedwillprovidethesharecapital.Anoverdraft
facilitywillbeprovidedbyFHS'bankers.
CONCLUSION
TheCommissionconsidersthattherequestcomplieswithArticle56(2a)of
theECSCTreatyandthattheproposedinvestmentiseconomically sound.
InconsequencetheCommissionhasapprovedaloantoFHSStahIverformung
GmbHforitsprojectatTafarnaubach IndustrialEstateinGwent,South
Walesforamaximumamountoft600,000(+941,397EUA)oritsequivalent
amount.Interestistobereducedby28,200EUAperyearforthefirst
fiveyearsafterthepaymentorpaymentsoftheloan.
TheCommissioninvitestheCounciltogiveitsassenttotheforegoing
decision.