ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)176
Vol.1980/0054

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COMMISSION
OFTHE
EUROPEANCOMMUNITIES
GeneralSecretariatCOM(80)176 final
Brussels,8thApril1980
FOROFFICIAL USEONLY
REQUESTFORASSENT,PURSUANT TOARTICLE56.2aOFTHE
ECSCTREATYTO<GRANTING ARECONVERSION LOANTO
"ROCHEPRODUCTS LIMITED"U.K.
(Communication fromtheCommission totheCouncil)
C0M(80)176final

COMMISSION
OFTHE
EUROPEANCOMMUNITIES
INTERNAL DOCUMENT
COMMUNICATION TOTHECOUNCIL
Subject:Requestforassent,pursuanttoArticle56.2aoftheE.CSCTreaty
togranting areconversion LoantoRocheProductsLimited,U.K.
I.
II.
InScotlandasawholeitisestimatedthatabout230,000jobshavebeen
lostinthepast20yearsinthekeyindustriesofcoal,shipbuilding ,
steel,railwayvehiclemanufacture,textilesandagriculture alone.The
losseshavebeenpartiallyoffsetbygainselsewhereinmanufacturing and
services.Butinthedecade1966-1976therehasbeenanoveralllossof
50,000jobsdespitestrengthened regionalpolicymeasuresinthe1960s
andtheimpactofnorthseaoilinthe1970s.
Strathclyde,whichcontainsabouthalfofScotland'spopulation,presents
themostformidable problemofregionaldevelopment inScotland.The
principalindustrieswithdecliningemployment,notablyshipbuilding ,
textiles,steel,coalmining andheavyengineering,areheavilyrepresented
inthisarea.From1966-76employmentinmanufacturing fellbyabout
180,000(16%)morerapidlythaninScotlandasawhole.Unemployment
hasbeenconsistently aboutone-fifthhigherthaninanyotherregion
oftheU.K.andcurrentlystandsat10%(male11%).Theproblemsof
industrialdeclineareparalleled bypoorhousing,environmental and
socialconditions whichhavepersisteddespitemassivehousebuilding
anddevelopment programmes .Consequently some22,000peopleperannum
havebeenmovingawayfromStrathclyde,i.e.about1%perannum. ,
■–- •--- - ■/ *'
•ici.cncss .Rueds!aLo<200,B–1040BrusselsTcIcphcno350040-35£040–Telegraphicaddress:«COMEURBrussels"–
TefQ*:-COMEURBRU 21877-ESSENTIAL INFORMATION
Applicant
Beneficiary
Project
Location
Investment
Loanrequested
Jobscreated
InterestreductionRocheProductsLimited
RocheProductsLimited
ExpansionofRochefactorytoproduce
Vitamin C/SodiumSulphate.
Dairy,CunninghameDistrict,Strathclyde Region,
Scotland.
t125.3 M(+194MEUA)
fc20M(+30,9MEUA)
430 ■
180,000EUAperyearforfiveyears
Conformity withArticle56oftheECSCTreaty

-2-
TheKiIwinning/Datrylocaltravel-to-workarea,withinwhichthe
applicantcompany,RocheProductsLtd.islocated,hassuffered
fromevensharperadversetrendsthanStrathclyde asawhole,and
istheareaofhighestunemployment onthemainlandofScotland.
Theaverageannualrateofunemployment intheareahasmorethan
trebledfrom ,4.6%(male5.6%)in1969to15.5%(male15.8%)in1979.
IrvineNewTown,indeed,lessthan10milesfromDairyandthesource
ofmuchofthelabourforceinthedistrict,suffersmostseverely
frommanyoftheproblemsthatoneassociateswitholderurbanareas.
Highunemployment (about15%),poorhousingandsocialconditions
existdespitegovernment attemptstofosterinvestments innewtowns.
Between1969and1976employmentincoalmininginScotlandfell
byabout11,000(28%)andinironandsteelmanufacture byabout
6,900(17%).IntheimmediatevicinityofRocheProductsLtd.,
theGlengarnock SteelWorks(BritishSteelCorporation )closedand
some700jobswerelosttothedistrictinDecember1978(about2%
ofthelocalworkforce).Similarlytherehasbeenagradualdecrease
inemployment throughout theareaoverthepastdecade.Asthis
trendisexpectedtocontinue,theprobLemsof
theareagiverisetosomeanxietyforthefuture.Thereislittle,
ifany,scopefortheabsorptionofredundantsteelandcoalworkers
withintheindustries andtheextenttowhichtheycanbere-employed
elsewheredependsontheavailability ofalternative employmentinthe
areaandonthesuitability oftheindividuals affected,someofwhom
possessveryspecialisedskills.
Ill.TheUndertaking
Theapplicant,RocheProductsLimited,isalimitedliability company
withtheirheadadministrative off.i.ce-at-We.lw.yn.GardenCity,Hertfordshire .
Thecompanyisengagedinthematuifacture ofpharmaceuticals ,fine
chemicalsandmedicalelectronicdiagnostic equipment andoperates
twofactoriesintheU.K.;oneattheaboveaddressandanotherat
Dairy,Scotland.Labouremployedatpresentis1,720.
Thecompanyisawholly-owned subsidiaryoftheSAPACCorporation
Limitedwhichisanassociate companyofF.HoffmannLaRoche&Co.AG.
Theworld-wide Rocheorganisation consistsoftwogroupsofcompanies
underthetwoholdingcompanies :F.HoffmannLaRoche&Co.AGof
BaselandSAPACCorporation Ltd.,incorporated inNewBrunswick,
Canada(butwithitsprincipalofficeinMontevideo,Uruguay).
F.HoffmannLaRocheSCo.AGoriginated asalimitedpartnership in
1896,butexperienceinthefirstworldwarsuggestedthataflexible
organisation ,adaptabletoworldpolitical changes,wasrequired.
ThisledtothecreationofSAPACin1926.TheSAPACgroupcomprises
theBritish,American,FarEasternandPacificinterests.SAPACisan
associate companyofF.HoffmannLaRocheSCo.AGinthatshareholders
ofF.HoffmannLaRoche&Co.AGarealsoshareholders ofSAPAC,each
shareofF.HoffmannLaRoche&Co.AGbeinginseparably linkedwith
aSAPACshare.
IV.TheProject
TheprojectforwhichECSCassistanceissoughtisanexpansionofthe
Dairyfactory.Itprovidesforthemanufacture ofVitamin'C'(ascorbic
acid),whichisanewactivityonthesite,andforsodiumsulphateas
aby-product oftheVitamin Cproduction process.SofartheDairy
factoryhasmanufactured VitaminB5andVitaminB1.
./.

-3-
Thenewactivityrequiresinvestments infixedassetsworthsome
b125Moverthenextfouryears.
LandandLandimprovement
Buildings
Machinery andequipment
Processpipingandinstallations
Allowanceforinflation116M
fc16M
fc40M
fc36M
b17M
Thetimeschedulefortherealisation oftheprojectisenvisaged
asfollows:
CivilEngineering andSiteDevelopment-mid1979toend1981
BuildingConstruction
PlantInstallationend1979tomid1982
beginningof1981toend1982
Commissioning ofplantandinstallations -1983
StartproductionofVitamin C mid1983.
Basedontheassumptionof200workingdaysperannumtheproduction
capacitywillbe:
8,000tonnesperannumofVitamin C
13,200tonnesperannumsoldiumsulphate.
Itis,however,intendedtoincreasetheoutputbyextendingtoathree
shiftoperationby1987.Thiswillraisethelevelofoutputto12,000
tonnesperannumofVitamin.C.>•withapro-rataincreaseinsodium
sulphate.
V.Employment
Thenewoperationwillprovideforabout430jobsofwhich40willbe
forproductionstaff,21forlaboratorystaff,24forengineering staff,
24foradministrative staffand321forhourlypaidpersonnel.Detailed
schedulingforrecruitment isnotyetcompleteandisdependent onthe
progressoftheconstruction andinstallation teams.Itis,however,
estimatedthatthehigherlevelappointments ,suchasplantchemicals,
etc.,willtakeplaceduringlate1981orearly1982.Thisisdueto
thehightrainingcontentoftheseappointments .Otherpositionswill
beprogressively filledthroughout 1982andshouldbecompleteby
spring1983.
AllemployeesrecruitedforVitamin Cproductionwillundergoanintensive
inductionprogrammetofamiliarise themwiththecompany'smethodsof
operation,products,safetyprocedures etc.Aconsiderable amountof
trainingwilltakeplaceinGermanyfortechnical andsupervisory
personnel.Anoff-the-jobtrainingprogrammeofabouttwoweeks'
durationwillbefollowedbyallprocessoperatorrecruits.Thiswill
deal,indetail,withtheindividualunitoperations associatedwith
theproductionofVitaminC.Subsequent on-the-jobtrainingwillbe
conducted bytrainedinstructors .
Inrespectoftherecruitment offormerECSCworkers,thecompanyhas
contactedBritishSteelCorporation (Industry)Ltd.
./.

VI.Environmental Aspects
Twosolidwasteswillarisethesebeing:spentnickelcatalystand
spentcharcoal/watersuspension.Thespentnickelcatalystwillbe
recoveredandthespentcarbon/watersuspensioneitherincinerated
orputtoalicensedlandfillsite.
Theliquidwasteswillbestrippedofsodiumsulphateinarecovery
plantandtheeffluentneutralisedinaneffluenttreatmentplantpriorto
dischargetomunicipalsewers.Solventtrappingandstrippingsystems
willalsobeinstalledtoeliminatetoxic/explosionhazardsinthesewer.
Thecomposition ofliquideffluentisacceptabletotheBritishAuthorities
fordisposaltosewer.
Asforthegaseouspollutants,allventsystemswillbetrappedwith
appropriatepollutionabatementequipment,i.e.activatedcharcoal/
coldtrapsforcondensibles,bagfilters/electrostatic precipitators
forparticulates .ThesemeasureswillensurecompliancewithBritish
legislation .
Onlyonematerial,diacetone-keto-gulonicacid,whichisaplantgrowth
retardant,couldhaveasignificanteffectontheenvironment .The
equipmenthandlingthismaterialwillbeprotectedwithbagfilters
andelectrostatic precipitators toensurethematerialdoesnotescape
totheatmosphere.Thenatureoftheprocess,andchemicalsemployed
thereinarewellknowntoRocheandpresentnootherspecialhazards.
Thematerialsandprocessesarewellestablished andpresentnospecial
contamination riskstopersonnel.Inadditiontheprocessesare
enclosedandonlystandardchemicalplantprecautions arenecessaryto
protectpersonnel (i.e.gloves,overalls,eyeprotection).Emergency
equipmentsuchascompressedairbreathingapparatus,chemicalsuits
andairsuitswillalsobeprovidedtogetherwithtrainingintheiruse.
VII.Market
AccordingtoRochethelatestestimateofworlddemandis21,000tonnes
perannumwiththeU.S.A.representing slightlyhalfofthistotal.
Demandisapproximately equallydividedbetweenpharmaceutical andfood
additiveapplications .Ithasbeenrisingsteadilyatabout6%per
annumcompoundandisprojectedtocontinuetoexpandatthisrate.
Nomajorchangesinenduses,orgeographical distribution areanticipated
withtheexceptionoftheSovietblock.ThereVitaminCisonlyusedin
pharmaceutical applications atpresentsothatthepotentialforsales
asafoodadditiveissubstantial .
TheRocheGroupisoneofthemajorsuppliersofVitamin Cintheworld.
TheirinvestmentprojectatDairyoughttobeseeninthecontextofthe
growthinworlddemandforVitaminC.
AsfortheU.K.market,alltheVitamin Crequirements oftheU.K.are
importedatpresent,sincethereisnolocalproducer.TheRocheshare
oftheU.K.marketisslightlyunder50%andisnotlikelytoriseonce
thenewplantisputintooperation.
VIII.Financing
Attheendof1983whenfinancingrequirements reachthepeak,theproject
financingisenvisagedasfollows:

5-
Requirements(bmillion)
Leasedassets 40
Capitalcost 85.3
Workingcapital 9,5
134.8
Resources (tmillion)
Leasingarrangement 40
Equi.tyfromparentcompany 38
LoanfromHoffmann LaRoche 10
Loansfromthirdparties 8.4
ECSCloan 20
RDG 18.8
IRG 18
Loss/depreciation (18.4)
134.8
IX.Conclusion
~'–1 #
TheCommission considersthattherequestcomplies .withArticle56(2a)
oftheECSCTreatyandthattheproposedinvestment-is economically sound.
Inconsequence theCommission hasapproved aloantoRocheProductsLimited
foritsprojectatDairy,Strathclyde Region,foramaximumamountoft20M
(+30.9MEUA)oritsequivalent amount..Interestistobereducedby
180,000EUAperyearforthefirstfiveyearsafterthepaymentorpayments
ortheloan.
TheCommissioninvitestheCounciltogiveitsassenttotheforegoing
decision.