ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(79)614
Vol.1979/0209

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(79)614final
Brussels,12November1979
FOROFFICIAL USEONLY
REQUESTFORASSENT,PURSUANT TOARTICLE56.2aOF
THEECSCTREATYTOGRANTING ARECONVERSION LOANTO
ERFLIMITED-UNITEDKINGDOM.
(Communication fromtheCommission totheCouncil)
C0M(79)614final

COMMISSION
OFTHE
EUROPEANCOMMUNITIES
INTERNAL DOCUMENT
COMMUNICATION TOTHECOUNCIL
Subject:Requestforassent,pursuanttoArticle56.2aoftheECSCTreaty
,tograntingareconversion loantoERFLimited,UnitedKingdom.
I.ESSENTIAL INFORMATION
Applicant :ERFLimited
Beneficiary :ERFLimited
Project :Newassemblyplantforheavycommercial
vehicles
Location :WrexhaminNorthWales
Investment :b11,659,000
Loanrequested :b5,000,000
Jobscreated :669
Interestreduction :222,000EUAperyearforfiveyears.
II.CONFORMITY WITHARTICLE56OFTHEECSCTREATY
Theprojectislocatedinindustrial NorthEastWales,animportantindustrial
areacenteringaroundtheWrexhamcoalfields andalongDeeside.Theindustrial
development ofWrexhamwasbaseduponcoalmininguntilthelate-1960s.Since
1962thecoalminingindustryhasbeeninveryrapiddeclineand7,000jobswere
lostinthe15yearsupuntil1976.Todaythereremainsoneminestilloperating
atWrexham,andcoalminingisarelativelyunimportant sourceofemployment.
Despitetheintroduction ofnewmanufacturing industryintotheWrexhamareaithas
notbeenpossibleyet,toreduceunemployment significantly andespecially unem­
ploymentamongex-miners.
OnDeesidetheproblemhasbeenoneofanarrowmanufacturing basewithemployment
centredon3majorcompanies,insteel,aircraftproduction andtextiles.
Employmentinmanufacturing onDeesidehasbeendominatedbytheBritishSteel
Corporation plantatShottonbuttheveryrecentannouncement bytheCorporation
thatitistoceasesteelmakingattheplantwouldresultinadirectlossof
6,000jobs.TheemploymentpositioninDeesidehasalreadybeenadverselyaffected
bythedeclineinthetextilesector.Theeffectofthesteelclosureisthere­
foreboundtohaveagraveimpactonemploymentinthispartoftheCountyand
emphasises theneedforafirmerbasisforindustrial employment throughout North
EastWales.
•••/•••
Provisionaladdress:RuedelaLoi200,B-1049Brussels–Téléphoné7350040/7358040–Télégraphie address:"COMEURBrussels'–
Telex:"21877COMEU B

-2-
Unemployment inMay1978intheWrexhamTraveltoWorkAreastoodat12.2%witha
malerateof13.8%.TheMay1979figuresshowanoverallrateof11.2%withthe
malerateat13.3%.Theactualnumberofregisteredunemployedovertheperiodhas
fallenfrom5,028to4,612.TheunemploymentrateforShottoniscurrently6.5%
whichisbelowtheWalesrateat7.6%.
III.THEUNDERTAKING
ERFLimitedisaUK-basedcompanymanufacturing heavycommercialvehiclesforsale
throughouttheworld.ItspresentassemblyoperationsareatSandbachinCheshire.
ThiscompanyisthewhollyownedsubsidiaryofERF(Holding)Limited,apublic
companyquotedontheLondonStockExchange.Thedirectors'(includingtheFoden
family-E.R.Fodenfoundedthecompanyin1933)have43%ofthecompany'sordinary
sharesandtheHawkerSiddeleyGroup(enginemanufacturers )hold8%ofthe
ordinaryshares.Theremainderisinpublicownership.
IV.THEPROJECT
Thecompanyisdeveloping anewrangeofunitstocoverthe16tonto24ton
commercialvehiclemarketandanewassemblyplantisneeded.Thepresentassembly
plantatSandbachcannotbeexpandedtomeettheincreasedneeds.
Existingproductionisrunningattherateof13vehiclesperdayandthenewplant
willenableoutputtobedoubledto26perday.Theexistingrangeofvehicles
haveabout16%ofthetotalUKmarketandthecompanyanticipatesobtainingabout
12%ofthatpartofthemarkettobecoveredbythenewrangeofvehicles.Ifthis
isobtainedthefullproductionpotentialofthenewassemblyplantwillbeutilised.
Inordertoprovidetheessentialengineering back-upfortheexpanionprogramme,
theengineeringservicesforthewholecompanyaretobetransferredtoanewlocation
atMiddlewich.Thiswillbeconcernedwithresearch,development andtestingfor
thenewrangeofvehicles,aswellasforimprovingtheexistingrangeofvehicles.
Theneedfortheengineeringservicescentreistoformanintegralpartofthe
expansionprogrammeandanessentialelementofthenewessemblyplant.
Otherinvestments includetheestablishment ofacomprehensive computersystemso
thatthethreelocationscanbeproperlycontrolled.
Themajorityofthecostswillbeincurredduring1979and1980whentheassembly
operationswillbeestablished.Thereafter,additionalcostswillbeincurredas
thesalestargetsareincreasedandtheprojectshouldbecompletedbytheendof
1983.Theplannedcapitalexpenditureisasfollows:
Land
BuiIdings
Plant
Tooling
Vehicles
Reserveforinflationb440,000
fc5,523,000
fc2,564,000
fc1,926,000
107,000
1,099,000
b11,6i>9,000

-3-
V.SOCIALCONSIDERATIONS
Theexpansionofoutputwillcreatethefollowingjobsopportunities :
Middlewich Wrexham Total
Seniorstaff 15 7 22
Staff 142 90 232
Workers 110 305 415
267 402 669
Existingemployment 1,234 -1,234
Newtotal 1,501 402 1,903
ThemanpowerrequirementatWrexhamwillbemostlyforsemi-skilled workers.
ContactshavebeenmadewiththeBritishSteelCorporationatShottonanditis
anticipatedthatmanyoftheemployeeswillcomefromthere.Ofthetotal,
thecompanyisoftheopinionthat370ofthejobsaresuitableforex-ECSC
workersandappropriatetrainingschemesarebeingprepared.
VI.THEMARKET
Ofthecurrentoutputsome85%isdestinedforthehomemarket.Thecompanyis
oneofthefewremainingspecialisedsuppliersofheavycommercialvehicles.
Thepolicyofconcentrating onthehomemarketanddeveloping astronghomebase
hasensuredtheviabilityofthecompany.
Generallyspeaking,themarketforthetopendofthemarkethas-beenbuoyantand,.
withBritishmanufacturers unabletomeetthedemandimportshavetakenan
increasingmarketshare.
Whilsttheworld'struckmarkethasbeensaturated,theoperatorshavebecome
moreselectiveintheirchoice.Highpremiumvehiclesarethereforeingreater
demandandthisistheareainwhichERFspecialises .Historically ERFhas
concentrated onthe30ton8wheelerand32tontractormarketswheretheynow
have17%and15%respectively oftheUKmarket.Inaddition,itisapparentthat
the16-24tonrangehasnotbeenwellservedbytheindustryandthisisthearea
atwhichthenewrangeisbeingdirected.
Improvingthepresentrangeandintroducingthenewrangewillgivethecompany
amuchstrongermarketfronttomeetthemarketrequirements .Thelonger-term
plansprovideforincreasedexportstootherEECcountrieswherethedistribution
networkisconstantlybeingimproved.
■••/••■

-L-
VII-ENVIRONMENTAL ASPECTS
ERFsoperation doesnotcreatanypollutionorhaveanydetrimental effect
ontheenvironment otherthanthatwhichisnormalwithametal/plasticetc.
assemblyoperation.
VIII.FINANCIAL ASPECTS
Thesummaryfinancingplanfortheprojectisasfollows:
Requirements (b'000) Resources (b'000)
Projectcosts 11,659 R.D.G. 1-621
4,679 I.R.6. 1.700Otherfixedasset
costs
WorkingCapital 6,824 Leasing 513
ECSCloan 5,000
Bankloan 1,500
Ownresources 12,828
23,162 23,162
IX.CONCLUSION
TheCommission considersthattherequestcomplieswithArticle56(2a)ofthe
ECSCTreatyandthattheproposedinvestmentiseconomically sound.Inconse­
quencetheCommission hasapproved aloantoERFLimitedforitsprojectat
Wrexham,NorthWalesforamaximumamountofb5,000,000 (+7,400,000 EUA)or
itsequivalent amount.Interestistobereducedby222,000EUAperyearfor
thefirstfiveyearsafterthepaymentorpaymentsoftheloan.
TheCommissioninvitestheCounciltogiveitsassenttotheforegoingdecision.