Silicon Glen: the miracle that just melted away

BACK in the late 1970s, there came a wondrous change in Scotland's landscape. In the explosive growth of personal computers and the internet there appeared before us a vast new glen: Silicon Glen. Our hopes were lifted, as if to some taunting Valhalla. We could see on the outcrops of its upper shoulders the unmistakable gleam of gold, and, through the swirling mists, to deep blue sky beyond.

Silicon Glen was never recorded on any map. It had no precise location, though some areas did lay proud claim to possession: the Central Belt towns of Bathgate, East Kilbride and Livingston.

The glen linked us to the hi-tech nirvana of California's Silicon Valley, offering a way out of our decaying industrial past, a pathway from an old world to a new. If we could just build critical mass in the production of computer chips and information technology, Scotland could break free of its old economy shackles.

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In the early 1980s, advance factories mushroomed in expectation. For the first time in decades, our future seemed bright. But Silicon Glen was to prove a mirage, a trompe l'œil that would disappear as dramatically as it arrived.

Politicians burbled cheerfully of job opportunities and a booming electronics sector coming to account for 4 in every 10 of our manufacturing exports. Indeed, electronics soared more than sixfold between 1975 and 1990. How could this boom not continue? Such was the confidence, it seemed Scotland's electronics boom would proceed in an unbroken line, turning our economy into one vast pulsating fusion of Mitsubishi, Motorola and IBM.

But as early as 1993 came the first ominous rock fall down the glen. US based Conner Peripherals closed a disk-drive plant at Irvine with the loss of 320 jobs. The Swiss-owned Timex plant in Dundee closed, shedding 350 jobs. GEC Marconi cut 225 jobs later that year. Some began to worry about our dependence on branch-factory operations. A report from the Boston-based US consultancy Monitor warned that Scotland could lose up to 18,000 jobs in electronics through transfer to low-cost production centres in the Far East unless drastic action was taken.

But onwards and upwards we climbed. The Singapore concern PCI opened its European HQ in East Kilbride, bringing 300 jobs. Mitsubishi unveiled plans for a 12 million plant in Livingston, providing the prospect of work for 200 and taking the group's Scottish workforce to 1,700. Motorola, already Scotland's largest single private-sector employer, with some 3,600 staff, injected a further 50 million into its semi-conductor factory in East Kilbride.

By 1996, Silicon Glen was producing 35 per cent of Europe's PCs and 12 per cent of the world's semi-conductors, and employing 55,000. But louder still grew the hype. In 1997 came the fanfare launch of Project Alba. The Californian hi-tech company Cadence was at its centre. It boasted a revolutionary "system on a chip" design and said it would bring a large research and design facility to its new plant at Livingston, linking up with Toshiba, IBM and Scotland's universities.

Business journalists were flown to a razzmatazz press conference in San Francisco. After blasts of rock music and pipers, the rhetoric rose to the rafters. The Cadence chief executive, Jack Harding, talked of building a "metaphorical airport" in Scotland and invited electronics companies of the world "to land the 747s of their technology". Crawford Beveridge, the then chief executive of Scottish Enterprise, spoke of moving Scotland "up the value-added chain" in a semiconductor industry worth $300 billion by the end of the century.

There was much heady talk about this flagship project - it would start with 1,850 jobs, climbing to 4,000, with a further 6,000 in prospect as critical mass built up. Scotland's prospects were compared to the advances that shaped Silicon Valley in the 1980s.

Quipped one analyst: "It means all the houses in Scotland will soon go for a million dollars and the traffic will be horrible."

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But, within four years, the Cadence name had quietly disappeared from the Alba masthead. It was replaced by Tality, a spun-off design subsidiary. It was meant to be floated on NASDAQ, but the dotcom bust put paid to that. Some 350 initially worked at Tality's Alba facility, one fifth of the promised number. Staffing was later halved worldwide, and at Livingston the workforce was cut. Tality disappeared from view.

The scaling down of Alba went largely unnoticed amid a broader and more dramatic collapse across Silicon Glen. From 2001, the hammer blows fell. Some 3,100 lost their jobs when mobile phone giant Motorola closed its factory at Bathgate. In July 2002, Hewlett-Packard shed 650 jobs at its plant in Erskine after the merger with Compaq. In September that year, 600 workers at Inventec's plants in Hillington, Glasgow, and Renfrewshire lost their jobs.

Two months later, Taiwan-based Chunghwa Picture Tubes shocked the country when it closed its 260 million plant at Mossend, with the loss of more than 1,000 jobs, transferring the bulk of its production to China. There had been high hopes that it would create 3,300 jobs. It never got near that figure.

Still, the carnage mounted. Silicon Glen pioneer Samina-SCI closed its plant in Irvine with the loss of 750 jobs. In January 2003, Fullarton Computer Industries at Gourock shed 500 jobs, unable to compete with lower-cost operations in Eastern Europe.

There were invisible losses, too. An empty 150-acre site near Dunfermline testified to faded dreams. Hyundai, the Korean cars and electronics giant, had planned to take up residence in what was to be the biggest-ever investment project in the UK. More than 2,000 jobs were promised. But the project was scrapped and the factory mothballed. Motorola took over the site, with plans to create 1,350 jobs making silicon wafers. It never did.

The attrition continued. Others to go included Inventec Servers in Hillington (370 jobs), which transferred production to the Czech Republic. Lexmark announced the loss of 700 jobs. New product lines, it said, would be manufactured in Mexico and the Philippines.

In only 18 months, there were more than 10,000 net job losses in a sector that seemed to have gone from sunrise to sunset in a trice.

A row exploded about the public money used to lure such companies to Scotland. Motorola received more than 50 million in regional selective assistance, of which the government clawed back 17 million. NEC received a 13 million handout for its plant at Livingston, of which 2.4 million was recovered. Chunghwa got 15 million. Much soul-searching followed about whether we had attracted the wrong sort of businesses. One analyst said at the time: "Scottish Enterprise and the politicians are kidding themselves if they believe we can have any sort of manufacturing job which is sustainable for the long term. We've attracted all the wrong businesses and Chunghwa is a prime example - a low-cost manufacturing business in a high-cost country."

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Between 1998 and 2006, Scotland's electronics industry collapsed in a recessionary rout. The economist Tony Mackay reckons that output over the period slumped by some 70 per cent, or some 2 billion down from its peak. "The two big weaknesses", he says, "were the concentration on manufacturing and assembly work and the branch-plant syndrome".

Job losses over this period were put at more than 20,000. Adding in knock-on multiplier effects on suppliers and other related businesses, the total jobs lost may have been about 40,000.

Silicon Glen vanished in a torrent of excess capacity in chip making and mobile-phone manufacture, a loss of confidence in hi-tech after the dotcom bust, and a shift in manufacture to the low-cost economies of Eastern Europe and the Far East. But was it ever that important to us?

According to the economist Brian Ashcroft, a former head of the Fraser of Allander Institute, not really. Contrary to widespread perceptions of the economic importance of Silicon Glen to Scotland, the true contribution of electronics was, instead, "less than construction, little greater than food and drink and, by 2000, less significant than hotels and restaurants".

Of all the disappearances in Scotland, it is that of Silicon Glen which leaves me with the least regret. It was always a delusion to imagine that computer assembly would have the lifespan of previous manufacturing plants. And today, we have a vibrant IT sector that is a powerful contributor to the economy.

When the Livingston project started, Scottish-based software systems designers were few and far between. Within five years, there were about 2,000. The number of Scottish-based systems design firms doubled in the same period. And the message has got home that information technology is as critical a part of our infrastructure as roads and bridges.

Our economy did not slump with the disappearance of Silicon Glen. Livingston survived and is flourishing as a retail Mecca. Those made redundant in the glen soon found work in other sectors, such as financial services. Indeed, overall numbers employed in Scotland went on to hit a 50-year high. Today, employment stands at 2.5 million, or a post-war record 76.6 per cent of the working-age population, higher than the UK overall and than almost all countries in the EU.

The promises of Silicon Glen disappeared like snow in spring. But our economy proved more resilient in its wake than most had feared. Silicon Glen came and swept us up. But when it disappeared, we did not crash to earth. Those job losses were absorbed. And that may be the more enduring mystery of the Glen that Disappeared.