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The Bleak Country Is Beginning to Achieve a Measure of Success

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The Bleak Country Is Beginning to Achieve a Measure of Success 30 April 1984 Marxism Today THERE HAS BEEN much debate as to The West Midlands was, until recession, the industrial whether Thatcherism offers a solution to the long-term problems of British capital­ heartland of Britain. But the current precipitous decline ism. Those problems are well-known: low is as much a product of global restructuring as the recession itself. productivity, declining profitability, loss of export markets and increasing import penetration. The Government's monetarist Andrew Nickson and Frank Gaffikin strategy has sought to squeeze out the 'lame duck' firms and target for survival those lean and competitive sunrise firms which will form the vanguard of the revival of the British economy. Figures now presented by . the Treasury would suggest that the strategy The Bleak Country is beginning to achieve a measure of success. Average productivity, we are told, agreement about this between much of the and in Coventry ten companies accounted is on the increase. labour movement and business interests in for 70%. In such a tightly-knit regional The problem is that this 'success' has the region. A recent report by the economy, the fortunes of a large number of been produced amidst widespread de- Birmingham Chamber of Commerce had small companies are closely tied to the industrialisation and a massive 'shake-out' this to say on the subject: growth strategy of a small number of large of manufacturing jobs. The process is a 'All the evidence shows that whilst the region's companies to which they supply compo­ complex one. Job loss can be due to problems have undoubtedly been intensified by nents and services. Today most sectors are different kinds of production change, for the national and indeed the world recession. dominated by a handful of large companies. example intensification of labour use, cuts THEY HAVE NOT BEEN CAUSED BY IT. Consequently, detailed investigation of the in capacity or the introduction of new The fond belief expressed by some politicians corporate strategies of these major compa­ and others that the West Midlands economy technology. Productivity gains in Britain, it nies in the region is essential for a more will revive along with the UK's national precise understanding of the dynamics of seems, have been mostly due to shedding fortunes is not borne out by the facts. A the local economy. 'surplus' capacity and increasing labour significant part of the region's manufacturing output in the remaining plants. However, capacity has been destroyed and is beyond In our recent study,3 we focused attention to sustain these improvements the smaller resuscitation. Those who say otherwise are on the activities of ten companies which industrial base which has survived still deluding themselves." have consistently figured among the largest requires higher levels of investment. Yet the In December 1983 the West Midlands employers in the West Midlands in recent Bank of England has recently calculated regional CBI published findings from its years — BSR, Cadbury, Delta, Dunlop, survey of 70 Midlands companies which that once allowance is made for deprecia­ GEC, GKN, Glynwed, IMI, Lucas and TI. revealed an 18% drop in manufacturing tion, net manufacturing investment has output over the past three years, compared In 1977 they employed some 135,000 been negative in the past three years. to a 12% drop nationally. Its director workers in the region, equivalent to 27% of concluded that, 'On current trends and their combined workforce in Britain. While The West Midlands without government action, the UK they are among the largest companies A key focus of the Thatcherite strategy is a manufacturing base will continue to operating in the region, they also feature fundamental restructuring of the manufac­ contract. The West Midlands, in particu­ among the largest companies in Britain. turing base of the economy. As a region lar, will finish up bottom of every league of Nine of them are among the top 200 UK economic performance.'2 with a very high dependence on manufac­ companies, when ranked by world sales. turing, the experience of the West In its report the CBI presents the All are household names in the West Midlands provides a useful test-case of this companies as helpless victims of the world Midlands. strategy. recession and bemoans the fact that the In recent years these 'traditional' West Once a region of relative prosperity West Midlands has been disadvantaged by Midlands companies have increasingly which attracted an inflow of workers on the successive government policies which have internationalised their production through basis of higher than average wages, it has denied it regional aid. In doing so, the CBI the acquisition of a growing number of been hit hard and fast since the late 1970s. appeals for further government subsidy to overseas subsidiaries and associated com­ The unemployment rate is now among the the private sector while sidestepping the panies. This process predated Thatcher­ highest in the UK and wages rates are responsibility of its own member compa­ ism, although it was undoubtedly speeded among the lowest. One in five working nies for the contraction of the industrial up by the abolition of exchange controls in people are now jobless and over half of base of the region. 1979 and the deflationary economic policies these have been unemployed for over a year. of the present government. By 1982 each A thousand jobs a week have gone over the Preponderance of transnationals company owned an average of 39 subsidi­ last four years. In a region where the work Despite the popularly-held view that the aries and associates in 17 foreign countries. ethic once struck a particularly responsive West Midlands economy is based upon At the same time as building up their chord, people are now facing worklessness thousands of independent small to medium overseas operations, these companies have on a hitherto unknown scale. firms, in fact manufacturing employmentin announced massive redundancies in the However the current economic crisis in the region now displays a higher than West Midlands, estimated at a minimum of the West Midlands masks a far more average concentration in a small number of one-third of their combined workforce fundamental problem. This is the rapid large companies. In the late 1970s just ten between 1977 and 1983. Consequently overall contraction of the industrial base. companies accounted for no less than 43% several of them can no longer be considered There is an extraordinary degree of of all manufacturing jobs in Birmingham, as major employers in the region. April 1984 Marxism Today 31 location, as well as the control of production, less and less dependent on geographic distance. Another factor is the development of a technology which makes it possible to decompose complex produc­ tion processes into elementary units in order that unskilled workers can be easily trained to perform them. As a result of all these factors, TNCs are becoming increas­ ingly 'footloose' — and are able to switch the location of production far more easily than hitherto. An example of this trend from the Philippines is the Bataan Free Trade Zone Global restructuring changed pattern of employment. In 1978 (FTZ) where two of the ten companies The underlying shift in the productive base these ten companies employed a combined surveyed — BSR and Dunlop — now of these companies, traditionally concen­ total of 686,694 workers throughout the operate. Free Trade Zones are industrial 1 trated in the West Midlands, to new world, of whom 75% were employed in estates set aside for TNC manufacturing production sites overseas is reflected in Britain. By 1982 the global workforce had plants which typically assemble imported company financial data. Between 1978 and fallen by 23% to 530,275. This fall was components for re-export. These zones 1982 the combined world sales of these ten accounted for, exclusively, by cutbacks in offer the TNCs cheap non-union labour companies rose by 5.3% pa to £13,868m. Britain, where the total workforce fell by kept in check by harsh anti-strike The combined value of their production in 31% to 353,508 in 1982 — a loss of legislation, tax holidays, lax environmental Britain (including exports) however, rose by 160,000 jobs in just five years. Meanwhile and safety controls, and unrestricted only 1.7% pa, while the value of their the overseas workforce of these companies repatriation of profits. overseas production rose by 12.1% pa. rose by 2% to 176,767 in spite of the world Dunlop profit figures in recent years Every single one of the ten companies recession. As a result of these changes, the suggest an obvious reason for the shifting of showed a marked decline in the British British share of the global workforce of production to such zones. In 1972 share of world output. As a result, the these companies fell to 67% by 1982. operations in Africa, Asia and Australasia share of overseas production in the com­ •There is much evidence from opinion accounted for 30% of its global profit. By bined world output of these companies polls that the general public has attributed 1982 they accounted for 95%. The attitude jumped from 30% to 41% in just five the rise in unemployment in Britain to the of Dunlop management to its workforce in years. inevitable consequences of a world reces­ the Philippines is evident from the Overseas sales by these companies grew sion. However, in the case of the West following statement by DAA Osborne, by 9.3% pa compared to a growth of only Midlands this view clearly ignores the President of International Sports, a 1.4% pa for their domestic sales in Britain extent to which a deep-rooted global Dunlop subsidiary which manufactures (excluding exports).
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