CASE STUDY: CLOSING DUTCH COAL MINES 1966-1974 SOCIAL AND ECONOMIC IMPACT

Frank Teeuwisse, Berlin 10 October 2018 SUMMARY

• Symptoms of social and economic decay • Context: region and employment • Why close an entire industry (in 1965 context)? • Implementation • What went well? • What went wrong? • In an ideal world ……… DID HEROES TURN INTO LOSERS? SYMPTOMS OF SOCIAL AND ECONOMIC DECAY IN FORMER MINING AREA

AGEING AND SHRINKAGE: /KERKRADE 2015: • Population 2003->2016: -6.7% • Social distress (vs +5% NL) • Unoccupied shops and buildings • Age 2003->2016: <20 years -20% • Low levels of education; high drop-out >65 years +40% rates • 3rd generation unemployed • Unemployment above average • Poor health (physical/mental) From a rich mono-industrial • Alcohol and drugs abuse economy, to an ailing • service/industrial complex (youth) criminality + gangs - Significant shift to services (60%) • High support for populist parties THE DUTCH COAL MINING REGION • Cheap coal from USA and South Africa • ECSC (European Coal and Steel Community) policy: reduce coal production in Europe 7 REASONS TO • Imports of oil CLOSE AN • 1960: natural gas resources in INDUSTRY: discovered • Energy consumption more efficient VERY LITTLE • Lack of personnel (migrant workers!) OPPOSITION • Declining acceptance of occupational health risk (accidents; silicosis) 17 DECEMBER 1965

“no closures of mines without a reasonable perspective of new jobs”

“possibly some will earn less in future, but that will be in exchange for a reasonable certainty that all will find new work” CHOSEN PRINCIPLES FOR CLOSING AND RESTRUCTURING

INTENTION REALITY

 Mining industry responsible for  Reluctance; state mines vs. private execution mines

 State support and coordination  Ministry of Economic Affairs supporting; hkhkhkhkhk Financial and Social Affairs reluctant

 Gradual closures and transition  Accelerated closures

 There will be timely alternative jobs  Delays and failures

 No negative social effects due to success  Unpreparedness of the above TIME LINES PERIODS: SIGNIFICANT EVENTS:

• 1958-1965 • 17 December 1965 decision to stop (“1e Mijnnota”) • political and economic indecisiveness • 1973: OPEC enacts oil embargo: unexpected “oil crisis” • 1966-1974 • (new) companies went bankrupt; second time loss of jobs • closure of all mining activities; central government coordinated • 1974: last colliery closes • 1975: Regional Development Institution (LIOF) • 1974-1978 • ad-hoc repairs; growing influence province • 1977: new provincial governor and politicians • “I will not leave this office until the day that gets what it is entitled to”

• 1978-1990 • 1978: first all-encompassing plan to restructure (“Perspectievennota Zuid-Limburg”) • planned restructuring; province in the lead • 1965-1990: 10 national coalition governments (tenure 2,5 years average; changing colors) FIGURES & FACTS

EMPLOYMENT (1966): ALL MINES CLOSED (1974): • 75,000 employees: • Of 45,000 direct employees: • 45,000 direct + 30,000 suppliers • 7,500 (17%) new job, new skills • 15% of provincial work-force • 16,650 (37%) early-pension or deceased • some communities 50% • 20,700 (46%) unemployed, sheltered work, in welfare programs Unemployment (official): • 30,000 suppliers: no records (!!) 1965 NL 1.5% Limburg 1.0% 1968 NL 3.5% Limburg 6.5% 1975 NL 6.5% Limburg 11.5% 1984 NL 18.0% Limburg 22.0% 2016 NL 5.5% Limburg 6.0% STIMULATING RE-INDUSTRIALIZATION • Incentives (after 1969 also for Service 1965-1972: ~€500M state support companies): (1,1 billion Dutch Guilders) : • Tax reductions, price reductions • €135M for early retirement • Guaranteed loans • 25% investment support • €250M direct support for mining companies restructuring • Relocation of central governmental agencies to the region • €55M (re-)education/employment services • Attracting existing companies • €55M interest, and 1 closure without • Improving industrial infrastructure restructuring • Job creation projects • Agreements with private owned mines 1965-2016: total support estimated (foreign investors) €3,200M • (re-)education, career counseling, • Evaluation 2015: “sloppy spending” employment services WHAT WENT WELL

• Good cooperation between mining companies, unions, and authorities (in general) • However: unions were supportive initially; more critical and effective >1973 • However: all had different goals • LIOF development bank: supportive in creating 30,000 new jobs (after 1975) • State mines attracted new activities (DAF cars (6000), Macintosh textiles, Curver plastics, ……. Etc. • Relocation of governmental agencies (ABP; CBS, Tax offices; Inspections, …..) • Setting up sheltered employment programs (gardening; low qualified jobs) • E.g.: Fonds Sociale Instellingen (sheltered workshops): from 300 to 3000 employees (1966 to 1970) • Very effective informal lobby after 1977 (provincial governor and PM) NEGATIVE EFFECTS - 1 • A general direction only (=closure); no vision on detail • In 1974 parliament asked for educational demand/supply figures: not available • Unions, companies, state, (province): different reasons to support closure • New companies and institutions required different educational profiles and ages • Re-training >40 years age unsuccessful and frustrating • Most miners >40 years; many vacancies required <35 years (DAF cars) • Subsidies and support for weak enterprises: • Initially little control; 50% not earmarked • Financial closure (“pardon”) 1982: “Mining industry fulfilled its obligations” (min EA) • Oranje Nassau group (private; 4 mines) created 500 jobs for 6000 gone (and received €200M) • DSM (former state mines) successful privatization (1996) : from 30,000 jobs in region (1958) to 4,000 (2018) NEGATIVE EFFECTS - 2 • High investments to support economic infrastructure of region (airport, roads, university, congress center, theatres, hospitals, etc.) • Limited investments in innovation • Original mining area gets limited support: • Heerlen (center mining activity) had no plans, no capacity to plan and coordinate, no lobby • “there was no plan; our efforts were insufficient” (dep. mayor Zuidgeest) • (prov. capital) had limited industry and high ambitions • “Heerlen did not use the money, so Maastricht picked it up” (dep. mayor Hoen) • Traditional social support structures disappeared (mining companies; social/sports clubs; church); no immediate replacement • focus national government mainly on Amsterdam/Rotterdam/Utrecht triangle • nothing moved without a strong lobby • several governmental agencies were moved back to central OBSERVATIONS & CONCLUSIONS

• Restructuring took >40 years • weak ventures were attracted by incentives • Part of subsidies not earmarked for specific projects; limited checks, mainly afterwards • Period of closing too long for governance by elected statesmen • Employment was main criterion: hidden unemployment was high • no mechanism to react to deviations from principles, and rapidly changing economic climate • Industrial development bank was established 10 years after start of restructuring • Companies loyal to shareholders • Economic policies successful (eventually); social policies not successful • Policies only aimed at direct employees (not at suppliers) • Many of the good initiatives were arranged informally (political lobbying, pressure groups) • Success came when province took over from central government REQUIRED FOR SUCCESS:

• Strong vision; • criteria for success: matching the vision & robust • A well defined, all-comprehensive and realistic plan • Do not skip the early phases of project management (goal definition, developing options, stakeholder consultation, freezing scope, guaranteed resources) • A program management office: independent and with high mandate (a high commissioner?) • Checks on meeting criteria, and continuous independent reviews (and formally act on them!) • Focus on sustainable ventures and innovation • No scope changes (timing; criteria for success; subsidies, ….) 2018: A NEW GENERATION SHAPES THE FUTURE