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DOCUMENTS "COM"
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Vol.1980/0127

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COMMISSION
OFTHE
EUROPEAN COMMUNITIESCOM (80)353Final
Brussels,25june1980
FOROFFICIALUSEONLY
GeneralSecretariat
REQUEST FOR ASSENT ,PURSUANT TOARTICLE 56.2aOF
THE ECSC TREATY TOGRANTING ARECONVERSION LOAN
TOR.H.M. FOODS Ltd.,U.K.
(submitted bytheCommission totheCouncil )
COM (80)353Final

COMMISSION
OFTHE
EUROPEAN COMMUNITIES
INTERNAL DOCUMENT
COMMUNICATION TOTHECOUNCIL
'Subject:Requestforassent,pursuanttoArticle56.2aoftheECSC
Treatytograntingareconversion loantoR.H.M.FoodsLtd.,
U.K.
I.
y
y
H.ESSENTIAL INFORMATION .
Applicant
Beneficiary
Project
Location
Investment
Loanrequested
Jobscreated
InterestreductionR.H.M.FôodsLimited
R.H.M.FoodsLimited
Expansionofafoodfactory
Greathamnr.Hartlepool,Cleveland,
NorthernRegion
fc8.6M
fc4.3M(+6*804MEUA)
227
3Apointsperyearforfiveyearson
3.4MEUA
CONFORMITY WITHARTICLE56-OFTHEECSC.TREATY
TheapplicationisforassistanceinsupportofaprojectatHartlepool,
Cleveland,partoftheNorthernRegion,whichcoversthecountiesof
TyneandWear,Cleveland,Northumberland ,DurhamandCumbria(excluding
theFurnessarea).TheRegionhasapopulationof3.2millionanda
work-forceof1.3million(approximately 5%oftheinsuredworking
populationoftheU.K.).Ithasahistoryofdependence upontraditional
heavyindustries-coal-mining,shipbuilding,heavyelectrical andmarine
engineering andmetalmanufacture,allofwhichhavesufferedadramatic
declineinthepast25years.Hartlepool'seconomyhasbeenbasedon
ironandsteelmaking,heavyengineering andportactivitiesassociated
withtheexportofcoalandcokeandtheimportofironoreandtimber.
./.
P'-sionoIoddress:RuedelaLoi200,B-1040Brussels–Telephone350040-358040–Telegrophicaddress:«COMEURBrussels-»–
Telex:.COMEURBRU 21877»

-2-
InNovember1979,thenumberunemployedintheRegionwas114,515
(including78,468males),apercentagerateof8.2%(9.3%males)
comparedwiththenationalaverageof5.5%(6.3%males).Unemploy­
mentisparticularly severeatHartlepool,with12.1%(13.7%males)
oftheworkingpopulation unemployed .
Hartlepool'sdeep-seated unemployment problemhas'beenexacerbated
bytheclosureinDecember1977oftheironandsteelworksat
Hartlepool bytheBritishSteelCorporation,affecting1,900malejobs.
Ironandsteelproductionisincreasingrapidlyatthetechnologically
.advancedsteelworksatRedcar(alsopartofClevelandCounty).The
U.K.'slargestblastfurnace(capableofadailyoutputof10,000
tonnes)hasrecentlycomeonstreamatRedcar.HoweveratTeesside,
theimpendingclosureofanelectricarcfurnaceandmillsinDecember
1979willresultinapproximately 1,200redundancies ,althoughsome
internalredeployment maybepossible.InadditionBritishSteel
Corporation,Teesside,haverecentlynotifiedManpowerServicesCommission
oftheirintentiontodeclareapproximately 600redundancies atthe
ClevelandBlastFurnace.
Thehighlevelofunemployment intheRegioningeneral,andHartlepool
inparticular,underlines theneedforpromoting andassistingprojects,
suchasthatproposedbytheapplicant,whichwillcreatejob
opportunities forredundantsteelworkersandencouragefurtherdevelop­
ment.
TheU.K.Government hasdesignatedcertainareasofhighunemployment
"assistedareas"wherefinancialincentives areprovidedinsupportof
projectswhichwillcreateorpreservejobs.ThewholeoftheNorthern
Regionhasbeensodesignated,andHartlepoolisa"specialdevelopment
area",i.e.anareawhichattractsassistance atthehighestlevels
permissible .TheBritishSteelCorporation hasrecognised thesevere
problemsfacingHartlepool asaresultofsteelworksclosures,andis
offeringthroughitssubsidiary,BritishSteelCorporation (Industry)
Limited,technical,marketing andotheradvicetocompaniescontemplating
settinguporexpandingintheHartlepool area.
III.THEUNDERTAKING
R.H.M.FoodsLimitedisultimately ownedbyRanksHovisMcDougallLtd.
whichisaholdingcompanyquotedontheLondonstockexchange.The
principal company.Ranks,wasfoundedin1875andthepresentholding
companyhasevolvedsincethatdate.Itisalmostwhollyinvolvedin
themanufacture orprocessingoffood.Theinsuredsharecapitalis
fc75millionandgroupreservestotalafurthert197million.
RanksHovisMcDougallLimited'hasanumberofdivisions,oneofwhich
isR.H.M.GeneralProductsLimited,andwithinR.H.M.GeneralProducts
Limitedthereisasub-division ,R.H.M.FoodsLimited.
R.H.M.FoodsLimited,withheadofficeinLondon,hasanumberof
principallocations,producingproducttypesasfollows:
./.

-3-
Greatham
Ashford
Wythenshawe
MiddLewich
CuparSuet-cannedfoods,bottledfoods,potatostarch .
Energenproducts.
Stuffings.
Sait-Bisto.
Oats.
Nottingham and
associated packing
stations -Flourandflour-based mixes.
IV.THEPROJECT
TheR.H.M.FoodsfactoryatGreatham,atpresentemploys441people.
Thefactorysiteconsistsof295acresoflandwith537,000square
feetofbuildings;54%ofavailableproduction spaceiscurrently
unused.
Theproblemofthesiteisthatitisunder-utilised andunprofitable .
Thecompanybelievesthattheonlymeansbywhichthenecessaryviability
atGreathamcanbesecuredwouldbethroughthecreationofadditional
manufacturing facilities producing newproductsnotcurrently madeat
Greatham.Furthermore someupgradingofthepresentfacilities would
alsoberequired.
Inconsequence thecompanyconsidersinvestingatleastt6.8Mat
currentpricesinthefixedassets.Takingintoaccountinflation,
theactualfigurewillbeaboutt8.6M.
ProposedInvestment Programme
NewProducts Investment t:*000NewJobs
Smokedeels 781 35
Softicing 200 10
Cannedpaste 350 31
Cateringreadymeals 275 17
ProductsCurrently Marketed
Tablesauces 405 10
Frozendough 10 6
Retailcannedreadymealsandsauces 710 29
Smalljàrsaucesextensions 270 15
Exportchutney 350 18
Toastedcrispbread 1,039 25
Bottledsoftdrinks 1,095 31
5,485 227

continued
Investment fc000
Investmentinbuildings 351
Investmentinsitegeneralplant 970
6,806
Reserveforinflation 1,779
8,585
»
Theinvestment programmeisexpectedtobecompletedbytheendof
1984.Themajorityofcapitalcostswillbeincurredin1981and1982.
V.SOCIALCONSIDERATION
Theexpansion programmewillcreate227newjobopportunities .The
detailedanalysisoftheprojectshowsthefollowingbreakdownof
gradesofpersonneltoberecruited.
Manager 1
Supervisors 9
Qualitycontrol 7
Tradesmen 11
H.G.V.drivers 4
Operatives 191
Administration 4
227
TheGreathamfactorysiteis2-3milesfromtheBritishSteelCorporation
Hartlepool Plant.35ofthecompany'spresentworkforceof441have
previously workedforBritish'SteelCorporation .Thecompanyisofthe
opinionthatofthe227newjobsthereareonlytwowhichmaynotbe
suitableforex-steelworkers:onemanagerforthesoftdrinksdepartment
andonetechnical manforthesmokedeelssection(microbiologist ).
Organised companytraininginaccordance withR.H.M.'swellestablished
rulesandprocedureswillbecarriedoutthroughout theprogramme.
Atrainingactionplanisbeingdrawnuptoimplementtheinvestment
programme,andprovidingtheappropriate requirements aremet,support
willbesoughtfromCommunity Fundsandlocal'authority schemes.

VI.ENVIRONMENTAL ASPECTS
ThepresentoperationattheGreathamfactoryandallprojectsin
theinvestment programmeareconcernedwithfoodmanufacturing and
packaging.Therefore,ingeneraltermsthereisnoquestionofany
toxicorLethalemissions .
Thesitehasamodernsludgeeffluentplantandtheperformance
characteristics comfortably satisfytheconsentconditionsofthe
RegionalWaterAuthority,TheNorthumbrian WaterBoard.
Tfiepresentthroughputoftheplantis100,000gallonsperday,but
ithasacapacityfor500,000gallonsperday.
VII.THEMARKET
Thecompanybelievesthatwiththeproposedinvestment programme an
acceptable rateofreturnoncapitalemployedcanbeachievedand
theGreathansitewillbecomeviableandemploymentwillincrease.
Allprojectsintheinvestment programmeconcernthegrocerymarket
andR.H.M.alreadyhavehighlyefficientsalesanddistribution
networkswhichhavethecapacitytoservicetheproductsconcerned.
Thecompanyalsospendsagreatdealofmoneythroughgrocerymarketing
agenciesinordertohaveacompetitive impact.
Lastyearthecompanystrengthened itseffortsintheexportmarkets
byrecruiting andpostingmarketingpersonnelinthecountrieswith
majorpotential.Anumberoftheproductswithintheinvestment
programmewouldbemanagedbythesamemarketing team.
VIII.FINANCIAL ASPECTS
Thesummaryfinancingplan(1980-1984)forR.H.M.'soperationatthe
Greathamsiteisasfollows:
• ' « ,
Requirements (fc000) Resources (fe000)
Fixedcapital 8,585 .Ownresources 12,859
WorkingCapital11,224
ECSCloanR.D.G
I.R.G1,150
1,500
4,300
19,809 19,809

IX.CONCLUSION
TheCommission considersthattherequestcomplieswithArticle56.2a
oftheECSCTreatyandthattheproposedinvestmentiseconomically
sound.Inconsequence theCommission hasapproved aloantoR.H.M.
FoodsLimitedforitsprojectatGreathamnr.Hartlepool,Northern
Region,foramaximumamountoffc4.3M(+6.804MEUA)oritsequivalent
amount.Interestistobereducedby102,000EUAperyearforthe
firstfiveyearsafterthepaymentorpaymentsoftheloan.
TheCommissioninvitestheCounciltogiveitsassenttotheforegoing
decision.