COUNCIL OF EUROPE CONSEIL DE L'EUROPE

Strasbourg, 4th November ±L>63 Restricted AS-CPL/IQ (63) 14 Or» Pr. CONSULTATIVE ASSEMBLY

EUROPEAN CONFERENCE OF LOCAL AUTHORITIES

JOINT COMMITTEE COEQ16823 ON EUROPEAN REGIONAL PLANNING

ECONOMIC DECLINE

The industrial conversion of a depressed area of : the Hainaut

Report by Mr. P. Persoons, Deputy Director of the Bank of Brussels, Advisor to Socorec, presented to the EEO Conference on Regional Economies in December 1961 and now submitted by Mr. Molter for the information of the Joint Committee

A81.818 - 2 - AS/CPl/Am. (63) 14

FOREWORD

The present report is based on an economic development study undertaken by Socorec, a regional development company set up in 19 59 by a number of Belgian industrial associations to assist with the conversion of regions affected by the closing down of colleries.

The study was directed and financed with the help of the ECSC High Authority. Research work was carried out by the following specialised bodies, under the guidance of the first-named: Société d'économie et de mathématiques appliquées, Paris, its Belgian branch Sobemap, the Economic and Social Research Institute of the University of Louvain, the Solvay Institute and the Hainaut Institute of Economic Research.

Socorec has this study available for those wishing to consult it o It comprises ten volumes and approximately 2,900 pages, but there exists a 150-page surmia.ry.

In the present report we have tried to bring out the planning features of the study and to underline the European context in which it was carried out. _ 3 - AS/CPL-/An (63) 14

CHAPTER I

T.he significance for Europe of the region's obsolescent character

This report is essentially concerned with the industrial strip of the Belgian Hainaut, which is divided up into three regions, from West to East; the Bori-nagé-, the. Centre, and the region of Charleroi with its £jrolongation, the Basse-Sambre»

This industrial region grew up around the coalfields in the 19th century„ It constitutes a comparatively autonomous and homogeneous part of the' industrial zone which extends from the region of liège, along the' Meuse, the Sambre and the rivers, and except for a break near Namur, down to the region of Valenciennes and the coalmining district of Northern Prance, which, like the Charleroi region is known as the "Black Country". Important in itself (1,060,000 inhabitants at the end of 1959)? the region we are going to discuss is also highly significant in relation to the problems of old coalfields in general. The industrial revolution began in these regions, and brought about a sudden influx of population»

Housing, though it may have been an advance on the average conditions of the time when it was builty is now in a dilapidated condition and very much below modern standards.

The extremely arduous working conditions of the 19th century have left their mark on the minds of the people and the whole economic and social environment has been unfavourable to an adequate birthrate.

In addition orientation towards better planned industries has been hindered by a series of factors such as the isolation of the region from external markets in 1914 - 1918, the fact that industrial enterprise was confined to an economy necessarily based on certain types of manufacture ana the increasing shortage of manpower following the decline in population. AS/CPL/Am (63) 14 - 4 -

A further factor was the rapid fall in coal production, on which the whole economy was originally based.. But even without the coal crisis the need for re-planning an industrial region more than a century old would inevitably have arisen.

The re-planning of coalmining areas is not a problem confined to the TIainaut. ' It is arising in other European countries and a few years hence the majority of industrial regions will have to cope with similar problems. The present practice of building new appendages to the old' industrial, centres and piercing improved lines of communication, which, moreover, are unable to keep pace with the continually swelling stream of traffic,'will no longer suffice.

These regions must be planned on entirely new lines. That is why I hope that several regions in Europe will find an echo of their own problems in this report devoted to the industries of the Hainaut. - 5 - AS/CPL/Am. (63) 14

CHAPTER II

The industrial problems of the Hainaut

(a) The extent of the economic decline 1. The comparative population of the "districts of , Thuin, Soignies and Charleroi increased rapidly ^by • immigration between 1850 and 1880 from 9$ to 13$ of the . total population of Belgium. It remained constant between 1880 and 1920" and during, the. last .40 years has gradually reverted to its 1850 proportion (9$)- in spite of an influx of foreigners constituting 15$ of the population. i 2. The- coal production of the Hainaut, which was 17?500,000 .tons in 1910, that is to say 72$ of national production, ; is at present 9 ? 500,000 tons or 40fo of national production (I960). ' 3. Since 1947 total employment has fallen by 22$ in the Borinage and 11$ in the Centre, a loss of 35,000 jobs. The figure for the Charleroi region is only 79000, or 3.5/°. During the same period, the total .level of employment remained stable in the country as a whole.' Between 1957 and 1961, the number of workers employed in the Borinage fell by. 14,600, including 12,500 miners and 1,500 workers in other industries. In the Centre, the number employed fell by 10,600 „ The tertiary sector continued to grow but the number of miners fell by 10,500 and other industrial workers by 1,000. Since 1957 the fall in employment has also affected the region-of Charleroi which has lost 13,000 workers or 6$ of the total population. This percentage is obviously lower than in •••the Centre- '(12$) and the Borinage. (15$)5 and it explains why.we continue to make a distinction between the two regions where the situation is really critical and the region of Charleroi. The figures .seem to indicate, however, that Charleroi is following, at some 10-years' distance, the same process of decline which is at present undermining'the Centre where it did not begin until 10 years later than in the Borinage.

The situation with regard to immigrant workers in the Centre and the Borinage deteriorated between 1957 (when the immigrants exceeded the emigrants by 6,500) and 1961 AS/CPL//un (63) 14 - 6 -

(when they numbered 1,000 less than emigrants, a fact which illustrates the few job?- offering in the region. miners' wages were relatively ...high, this development had an appreciable effect on the average standard of living m the region. 4. The total regional income of the Borinage and the Centre fell from 22,400 million Belgian francs in 1957 to 20,000 . million in 1961, a drop of more than 10$, whereas the • national' income rose during the same period by 9.5$•> Per capita income fell by approximately 9f° and is at present only 80$.of the average for the country. Per capita income also fell in the Charleroi area between 1957 and 1961, though less seriously than in the other two regions ('2.5$).

CONCLUSION When the working population falls by 12 or 15$ in 5 years and the -per capita income by 9 or 10$, the economic consequences of such a sudden movement cannot be immediately assessed.

The Centre and the Borinage are accordingly in a position where they have not yet felt the cumulative process of t.^e decline. Indeed, this process, might be arrested altogether if the economy could, be stabilised at its present level.

In order to achieve this aim, which might appear a modest one, but which is, as we shall see, foughc with difficulty, it is necessary to set out briefly the general causes of the decline. (b) General causes of the economic decline

1. Declining Population The Hainaut has long suffered from an unduly low birthrate, principally owing to the economic- and social conditiono surrounding its growth in the 19th century. The population problem was later considerably worsened by the depression o the Thirties to the extent that today half of the Belgian inhabitants of the Hainaut are over 40 years of age. In ^ Belgium as a whole, however, the proportion of the population over 40 years of age is only 43$, in spite of the fact that it .has one of the lowest birthrates in Europe» As a comparison, it might be mentioned that in the Netherlands the proportion is only 35$. The fall in population has been partially offset by immigration from abroad. Foreign workers represent 17.5/° of the manpower employed in industry in the Hainaut. 70/° of them are Italians. They form a young section of the ./. - 7 - AS/CPL/Am (63) 14

population, less than 25% "being over 40 years of age. However, only a small number of foreign workers are. married to Belgian nationals. Many have left their fam-ilies behind in thier own countries, which shows that they have no desire to settle permanently* in their present place of . work. In 1957, when coal production was at its height, about 10,000 foreign workers left the country as against approximately 20,000 who entered it.

It is a fact that those foreign workers who are accompanied by their .families usually ha,ve a number of children. Among the foreign population, the under-15 age group represents 27% of the total, as compared with 21% for the local population.. • The exodus of foreign workers following the closing-down of.mines will thus have a twofold effect: in.the short term the disappearance of an important body of consumers (l); and in the long term the loss of -a vital factor offsetting the downward population trend. In spite of an improvement in the birthrate during the post-war period, the average number of births is still 10% below the national average. It would therefore be wise to practice a policy of welcoming foreign workers and encouraging them to settle in the region, on the one hand in order to keep the labour force up to adequate strength and on the other hand to counteract the fall in population.

2. Closing down of Mines

Between 1947 and 1961, 19,00.0 miners were laid, off in the Borinage, 12,600 in the Centre and 16,000 in the Charleroi region. These figures may be expressed as decreases of 657S 60% and 40%, respectively, in'relation to the. total number of. miners recorded in 1947»

In the Charleroi region the loss of employment has been partly offset by the creation of 9?000 new jobs in other industries but in the Centre, practically no new jobs .have been so created.

In the Borinage, in addition to the reduction in the number of miners,, more marked here than in the other two regions, other industries have laid off 3,800 workers, i.e.,5% of the total. ./. (l) Even though a large part of the wages earned were exported to the home country. AS/CPL/Am (63) 14 - 8 -

The fall in employment is caused "by two factors - lower production and increased productivity - of which the former accounts for 2/3 and.the- latter for 1/3. The increase in productivity "between 1954 and. I960-was as follows:

Borinage • + 50$ Centre + 8$ Charleroi + 17$

A quite spectacular improvement has been obtained in the course of, the last three years, partly by the introduction of more efficient methods, but mainly by the closing down of the least economical pits, A careful choice of seams and, latterly, the more efficient use of manpower, also played a part. No statistics are available for assessing the relative importance of each of these factors, but, roughly speaking, only one third of the improved average output in the Hainaut . is the result of improved efficiency in the coalmines still in operation.

It is therefore scarcely possible to expect in the future any. improvement comparable to that achieved between 1958 and 1961. '

We have been unable to assess the indirect consequences of the closing down of mines. The incomplete date, available on the orders passed with industries in the region by collieries now closed suggest that -.the discontinuance of such orders corresponds to a loss of no more than one thousand jobs..

3. Sociological and Psychological Factors•

Obsolete economic and social structures, the deterioration of housing and the inadequacy of communications all have their effect on the outlook of the people. As a result, negative reactions are discernible .among employers, the middle class, and workers. Even without the shrinkage of employment and income it would be necessary to change over to other types of production and reorganise the whole region if-only to avoid such sociological and psychological consequences. In particular, the feeling of being unjustly placed at a dis­ advantage in relation to other regions and other countries is becoming widespread. There is a temptation to blame external factors for a situation which is also to a large extent the' result of narrow mindedness, complacency and a reluctance' to accept new notions of business and labour organisation, etc. _ 9 - AS/CPL/Am (63) 14

The attitude of employers as well as of trade unions often to fight stubbornly to retain what benefits they have acquired. In..other old—established industrial regions such as Verviers.similar phenomena are to be seen» On the. one hand., there is the employer class, sorae of whose oldest families bask in a glory which, in the case of at least half of then,, is perhaps no longer justified. On the other hand, there are the trade union organisations which often continue to press demands the need for which- is no longer felt in modern industrial regions, whence a definite trend to emigrate towards those new regions. •The life of a region often depends on the .leadership of a. small number of prominent citizens. In all justice, praise is due to the initiative taken in.certain_quarters on behalf of the Hainaut, in particular, the action^taken by the minister, Mr, Urbain, to attract new industries to the Borinage, and the efforts of provincial -and intermunicipal bodies. On-the whole, however, chere is a lack of the dynamic and sustained leadership so much needed in these regions. It may be added moreover, that the proximity of Brussels has the effect of making the industrial region of the Hainaut much less independent economically and socially than, for example, the liège region.

4. Transport Transport on the navigable waterways is still, very slow on account of their limited capacity. Moreover, the ORNI freight which are rigidly fixed at a level higher than the international scale place a heavy burden on all traffic between the Hainaut and. the port of Antwerp.

However, the final stage has been reached in a--vast modernisation scheme which will raise the capacity of the Char1eroi/Brussels canal to 1,350 tons and enable full use to be made by means of the works on the Upper Scheldt and the Ghent "Ringvaart", of the canal from Nimy to Péronnes on the Scheldt, whose capacity has also been raised^ to ^ 1,350 tons. The modernisation of the canal from Havre to Houdeng in the! Centre region will make it possible to link up these two main waterways. This scheme, .however,' would appear to be for a later date. In order to derive maximum benefit from the modernisation of the Cha.rleroi/Brussels canal, it is necessary si the same time to improve the Sambre and the ports' in the Charleroi region. AS/GPL//un (63) 14 - 10 -

The regional road network is likewise inadsquate, both as regards main arteries and branch roa.ds (local and provincial authorities). The plan to built' a Brussels/Paris motorway with feeders from La Bouvière and Charleroi will irrorove the regional network, but communications with the North"of Prance JS T?estMrn Jernany will remain poor as long as the projected . alio on motorway .has not been built. • The inprovei-ient of secondary roads must also be regarded as a matter of : great importance, for internal communications are often bad.

Those regions are not composed primarily of old established towns but .rather of a conglomeration of mining villages and industrial districts interspersed with a few scattered urban areas. The latter, for example Charleroi and La Bouvière, have been expanding rapidly in recent years.

With regard to- railways, the- zone is served by an adequate neowor^ which is, however, in a serious state of disrepair (in particular, that part of the Paris/Liège line v/hich runs through the region*•and the line connecting the Centre with -Bru s s els )..

5» Deterioration of Housing v, * -u ereas in Belgium as a whole in 1958 only 34$ of dwellings had been standing for more than eighty years, the corresponding proportions m the Borinageand in the Centre were 55^ and 41$ respectively. '

On the other hand, .houses less than fifteen years old which represent YJfb of the total for the country as a whole, represent only 7/<= in^ the Borinage and 8$ in the Centre. The standard of housing is poor as a result: for example, 80$ of workers hoQ.es have outside lavatories with no running water.

(c) Factors masking the seriousness of the situation The economic decline described above has not been accompanied, by any considerable rise in unemployment.'

_ The principal reasons for this are the decline in the Belgian working population, the departure of foreign workers and the granting of invalid pensions to former miners. lo Decline in the Belgian working population • • Three factors are responsible: - 11 - AS/CPL/Aq (63) 14

- the ageing of the population; - the raising of the school leaving age and the extension of-the old-age pensions; - emigration. In the Borinage, these three factors reduced Belgian working population "by 13?000 between 1947 and 1959°

- emigration .. 00 c • 7,000 - the raising of the school leaving age - and the extension of old-age pensions .. 2,000 - ageing of the population ...... 4,000 .

2<> Award of Invalid Pensions to ex-miners and departure of foreign workers. Por pit miners, the number of those retired with old—age or invalid pensions plus the number of departures of foreign workers represents 80°/° of the total o

' (d) Porecasts for 1965 . 1. Unless very effective new steps are taken, it may be expected that by 1965 the number of workers employed will haven .fallen by 12,000 in the Borinage, 13,000 in the Centre and 19,000 in the Charleroi region, that is by 44,000 out of a total of 391,000, or 11$. The closing down of collieries will be the main factor, accounting for 38,000^ of these redundant workers. Employment in other industries will thus fall by 6 ,.000 only. Some people who still believe in the possibility^of keeDing a large proportion of the Hainaut collieries in operation consider that we areunduly pessimistic in assuming that coal production will eventually be' completely abandoned in the Centre and in the Borinage._ Estimates have been worked out of the cost of maintaining a. given production capacity in the Hainaut coal mines. These figures show the average annual subsidy that would be required to keep mines in employment, having regard lo the number of sub-marginal jobs maintained, and chis for a given type of working (specific coal-field and type of coal).

To maintain 1,000 such jobs, the annual cost per miner in the following types of mine would be; AS/CPL/Am. (63) 14 - 12 -

- anthracite at Charleroi ...... 7 ,500 Belgian francs o - low volatile bituminous coal and o o lean coal in the Borinage ..12 - high and medium volatile bituminous

coal at Charleroi .eo..».....».....» ..14 o o o - high and medium volatile bituminous r o o o

coal in the Centre region...... 15 so - low volatile bituminous coal and lean coal in the Centre region .,22 ,000 #

It can be seen that a policy of subsidies extending to the more remote-areas should give preference to low volatile bituminous coal and anthracite in the Borinage or the high and medium volatile bituminous coal in the Centre» On the other hand, the least costly to subsidise would obviously be the anthracite workings of Charleroi.

On. a less radical basis,assuming that the relative cost of production (1) can be brought down by 15$ - which would' mean an improvement in output of approximately 25^ - it would be possible to keep 11,000 more miners in employment . ./. (1) In view of the geographical protection and comparative scarcity of anthracite, it seems not unduly optimistic to consider that an improvement of 15$ in the relative cost of production would render it competitive, as will once more be necessary' when the isolation of the Belgium market (at present authorised by ECSC) cones to an end.- It is the relative cost of production that must be improved by 15$ because any increase in productivity achieved in other countries (for example, in the Ruhr) must first be compensated, and an extra effort must then be made to improve the existing situation. It is to'be noted that the average output in the Hainaut .has increased by only 25$ in three years as against 26$ in the Ruhr.

(2) Since the completion of the investigation on .which the present report is based, the trend of coal production in the Hainaut has become more ..apparent. It is obvious that in '1 the Centre coal production will cease completely, except for one isolated "pit, and the rate of extraction will be gradually reduced in the main Borinage. colliery. In 1965? coal production may be expected to be little more than 5,000,000 tons. 13 - AS/ŒPL/M (63)". 14

In either event, it is.possible to estimate the probable degree of economic decline between now and 1965, namely . a, total fall in the number of employed of between 33 and 44,000,.or approximately 10$.-

2. During the same'period, the spontaneous movement of the . working population, as deduced from recent figures-, • will' probably result in a reduction of 40,000-,. comprising 21,000 of Belgian origin and nearly 19,000 foreign workers.

In each of the regions under consideration therefore,' the: probable decrease in the working population thus corresponds to the probable fall in the number of jobs offering. ' This is in the short term a.nd takes no account of cumulative factors of decline, the effects of which might be felt for ten years or more. '

Our employment figures forecast, it is true,- an increase of 4?000 in the number of persons employed in administration and services. On the other hand, it is considered that the number of self-employed persons, traders in particular, might fall by 9.000 or 8$ of the 1961 figure, as the first effect of the decline-in employment during' the years 1957 - 1961.

3. Out of a. total decrease of 40,000 in the working population, emigration towards other parts of Belgium -will'.' account for.11,500,. including 7,000 of Belgian-origin.

Emigration abroad will account for 11,000 nearly all of them miners returning to their home country.

Moreover the closing down of coal mines results in a. number of workers being retired on pensions early; this means a fall in the working population unaccompanied--'either by unemployment or a. fall in population as 'a whole. •

In the three Hainaut regions 9 ? 500 workers will be. retired early on pensions and most of them will continue to play a. part in the economy as consumers and possible part-time workers. This somewhat attenuates the economic consequences of the fall in employment.

The natural ageing of the population and the raising of the school leaving age combined, account only for a reduction of 7,000 in the working population between 1961 and 1965 . AS/CPL/Agi (63) 14 - 14 -

More than 80$ of the decrease in employment is therefore due to a critical economic situation.

It may be supposed that "if the economy of the Hainaut offered adequate employment, the great, majority of the persons who cease to work would, instead of leaving the region, .stay' there and provide the manpower necessary for the.development of new activities.

CONCLUSIONS

Let us-now sum up briefly the extent of the industrial decline to be expected in the Hainaut between 1957 and 1965.

The number of employed will have fallen from 432,000 to 346,000, a fall of 82,000 or approximately 20%, By 1965 the Borinage and the Centre will have lost more than a quarter of the workers employed there in 1957. The regional income in the Borinage and the Centre will have fallen by one-fifth and. the average standard of living1of the inhabitants by about 15$.

Luring the same time it is expected that in Belgium as a whole, a country where economic expansion is by no means exceptional, employment will have increased.by 6$ and per capita income by 27$. Such disparity between, the national economy and the economy of an important region representing 11% of the country as a whole, raises numerous problems and it is inevitable that they should sometimes be given violent political, expression.. It may seem strange that such a serious economic decline should not be.reflected in serious unemployment. The ageing of the population partly explains this phenomenon. It may be assumed, however, that at present two-thirds of the workers affected by the reduction in employment would have been glad or willing to accept other work in the region and are obliged either to move.elsewhere or to enter the ranks of the unemployed. - 15 - AS/CPL/Am (63) 14

CHAPTER III

The aims of' a Policy of Regional Reorganisation

(a) Need for such a Policy. The usual reason for requesting large-scale intervention by the authorities to assist a given region is the existence of a high rate of unemployment.' However, the economic decline of industry in the Hainaut has not brought about this result o Admittedly, the I960 rate of unemployment in the two most seriously affected parts of the Hainaut - the Borinage and the Centre - was equal to the national average. Having regard to the way other regions have developed and the fact that the probable reduction in the working population will be somewhat less than the fall in available employment, it is reasonable to say that by .1965 the rate of unemployment will be appreciably higher than the national average.

However the gravest consequence of a laisser-faire policy lies elsewhere. By 1965 some of the consequences of the decline from 'which these regions have been, suffering for the last eight years will still not have been felt and it may be feared that the downhill process will continue." The main reasons for a policy of economic and. social reorganisation are therefore not directly the need to reassimilate manpower or prevent unemployment. It is important primarily:

- to exploit an advantageous • geographical • ••• situation and valuably existing communications and other basic services 5 - to make efficient use.of a labour force with a strong industrial tradition whose productivity is suffering from basic defects in the regional economy; - to forestall the social, economic and financial consequences- of a cumulative process of economic decline.

(b) Definition of such a Policy

The problem is one of structures and. population. Its solution'-'lies essentially in creating all the conditions AS/CPL/Am (63) 14 -16-- necessary for the establishment of a new economic and social structure » No appreciable or lasting increase in the employment available or. .in. the regional income can be achieved until some years have been devoted to this work. '

There is no suggestion of incompatibility between establishing new structures and increasing regional income and. employment s but. if too much stress were laid ^ on the latter aims it might be supposed that the conditions for achieving them already existed. (c) The Policy in terms of employment, regional income, economic orientation and social progress

Three vears ago we still believed that tne future of the Hainaut could be safeguarded by planning specifically for the establishment of new industries to provide alternative employment for the workers who would become redundant with the closing of the coal mines. Today we are convinced of the need for action embracing every aspect of the economic and social life of the region snd it is with this overall need in view that we believe it reasonable to fix as a target the maintenance :in 1965 of the 1961 level of employment. This means accepting the fall of 10fo between 1957 and. 1961 and stabilising employment at level, since the average income of miners is particularly nigh the stabilisation of employment at the 1961 level is not likely to bring the average per capita income up to the 1961 level by 1965. • There is even less possibility of catching up with the national average which will have to rise steadily between 1957 and 1965. (d) Possible objections 1. One may wonder whether the achievement of this aim will not result in a shortage of manpower in the region which could be remedied only by massive immigration. Moreover, the prespect of such immigration would raise certain technical and political problems. It appears, however, from a parallel study, that.one might reasonably hope to find ample local manpower. Because there is no policy for the creation of new jobs at the rate of approximately 8,000 per year, this number of workers has to emigrate or remain unemployed,^ 3 under—employment of women is typical of this region (only 15/° of women of working age are in-employment against an average of 247^ for the country as a whole) , - 1-7 - AS/CPL/Am (6 3) 14

Moreover, the rise in the "birth rate recorded after the war will be felt on the labour market, towards 196.5. By that time economic conditions must be such that young people are not incited to leave the region. A table is appended (Appendix l) summarising the foreseeable trends of the working'population'and employment in the absence - of an extremely energetic policy to'remedy the situation.

' Maintaining the 1961 level of employment implies creating approximately 40,000 new jobs in five years. • The greater part of the manpower• which will be needed if this . aim is achieved can be obtained bjr a more rational use of the available labour force.•

A reserve labour force of some 35?000 could be obtained by cutting down the numbers of workers moving to other parts of the country -as well as abroad employing more women, and at the same time attracting a- certain number of frontier workers who are in any case being driven- back as a result of the growing'population of Prance. 'This figure may be- slightly optimistic, but Appendix 2 • siipports it with figures and shows that even a pessimistic forecast puts the number of workers recoverable at -a minimum of 20,000. We therefore feel that it is not unreasonable to calculate that five-sevenths of the jobs to be created could be filled by persons- at present living in the region. In the immediate vicinity, moreover, and especially in the South, are rural and semi-rural areas which can normally provide additional manpower, especially in view of' present trends in agricultural employment. The creation of 8,000 new jobs per year in the Hainaut thus appears to be an a,in that can be achieved without disturbing the labour market or creating serious socia.l or political complications. 2, That being so, the problem is not so much the alleged impossibility of obtaining the necessary manpower, as -the difficulty of causing action to be taken at once for the- achievement of this employment objective. It does not seem possible at the present time to create five to six thousand new jobs in industry. Indeed, the necessary industrial expansion can take plac.e only when three new factors have begun : to have, a noticeable effect:

- improvement of the major lines of communication making It possible to speed up'transport and reduce costs; AS/CPL/Am (63) 14 - 18 -

- the modernisation' of communal facilities especially housing, without which it will he impossible to make the region attractive to investors; - economic reorganisation to promote expansion (this too will require time).

The effects of the three methods proposed.for stimulating industrial development would, in.our opinion, not make themselves really felt .until 1965.

3» In the meantime, how can one prevent the region from being abandoned by the local manpower which it is hoped to employ in the new branches of industry? In the first place, extensive new housing must be planned. As we have seen above, approximately half the existing housing is more than eighty years old. In order to make up for the inadequate amount of new housing built in recent years to replace buildings that have been standing for more than a century, a ten-year plan for the erection of some 60,000 additional housing units is required. In. addition, provision should be made for another 2,000 units a year to replace housing . which deteriorates in the meantime.

A vast housing programme scheme such as this would achieve three objectives at once namely:

- the employment objective for which it would be particularly opportune, since it could absorb some of the foreign workers discharged because of the closing down of collieries; - an improvement in the aspect and atmosphere of the region which would become modern and attractive, as is necessary to restore-- confidence and attract investments; - the establishment of new industries since a programme of this scope would create a need for new techniques and mean valuable contracts for certain branches of industry in the region (metal work, manufacturers of bathroom and kitchen tiling, sanitary ware, etc. and manufacturers of household electric equipment)„ The following chapter will explain the various aspects of the overall plan of which the housing programme and the industrial reorganisation policy form a part. - 19 - AS/CPL/Am (63) 14

CHAPTER.IV

Implementation, of Regional Reorganisation Policy

A, Regional Planning

(a.) The extent of the economic regression and the • probability that it will continue at an even faster rate demand vigorous and rapid action. The four or five years proposed is a very short time for a programme of rehabilitation ' which., as we have shown, must reach down to., the very roots of the regional economy, .. In these, circum-. stances j no -attempt has been ma.de to; review the programme of basic works; the.ir completion will, simply be speeded up and they will be put into service immediately. The most important features of. that programme are .given in . - Appendix 3.

(b.) In pur opinion the current basic works programme presents'two main advantages for the region:

1. It provides most of the necessary links with the principal development centres whose expansion can facilitate the reorganisation of the Centre and the Borinage,. (However the communications with Prance - especially by water - seem doomed to remain inadequate for some time to come. Since at first glance it appears that- the Hainaiit ha,s more to gain than the North of Prance from the improvement of • ' communications, the matter should be gone into more thoroughly in order tovfind whether..there exist objective arguments capable of convincing Prance of her own interest, Socorec .has initiated research o.n these lines).

2. It facilitates the reorganisation of the region according to. a partly new plan.

The present pattern tends to disperse the population and owing to the absence of large centres, urban services are inevitably poor.

In order to remedy this•state . of. affairs, use .must . . be made of the future main arterial roads, which will en.coura.ge the establishment of light industry in attractive surroundings (this is necessary if the most is to be made of potential feminine labour) the old; industrial area must be weeded out and modernised, congestion in the Brussels area must be relieved, and advantage must be taken of the new industrial and commercial relations v/hich the Common Market has made AS/CPL/Am (63) 14 - 20 -

possible. lastly, the new facilities offered, by the development of transport must be used to site industry more in accordance with .human needs.

The region's main asset in the future will probably be its strategic position on a. major Common Market trade route (between Prance and the Ruhr). This in itself should • encourage the development of various industries and commercial activities.

(c) As a result provisional' priority should be given to regional planning and this fits in with the conclusion reached above, namely that the seemingly•modest objective for 1965 of maintaining the region's working population at the 1961 level cannot be achieved without a vast new housing programme. In addition, raising.the standard of living and the school leaving age and improving public services imply forming the present built-up areas into real centres of urban life. Encouragement should likewise be given to all attempts to confirm La Louvière as the regional capital and to extend the growing importance as centres of Charleroi and Mons.

( d) In..view of the level at which the problems arise and the short time available for their solution, added to the necessary brevity of this report, it has not been possible to present detailed proposals for assistance to industry. We would, however, like to emphasise that in our. opinion "action in this sphere will be most fruitful if, on the one .hand, assistance is given to a small number of existing firms chosen for their value as models and their strategic position in the economic process and, on the other. ..hand, new firms are established in the places and sectors which best lend themselves to changes in methods of management, regional reorganisation and the improvement of social relations.

Consequently the suggestions relating to industry are concerned with two main points: 1 1. the immediate formulation of a policy for the establishment of new industries, the settlement, employment and training of manpower reserves, better urban planning and outside publicity designed to attract new firms; 2. the creation of machinery for pursuing a selective policy of assistance to existing firms designed to encourage the adoption of ideas end methods which at present are practically unknown in the region. - 21 - as/cpl/am (63) 14

B. The Basic Works Programme (a) The planned modernisation of the canals is an • essential condition for maintaining the competitive capacity of the existing heavy industries (metallurgical industry- and cement works in particular)» It will? moreover, encours-gc- these firms to carry ouu their piano for extension on the spot. It must he 6to.ded tnat in order to derive full benefit from this modernisation some . . improvements to the ports (especially on the SaiiiDre) will also "be needed. Moreover, it is most important: - to press neighbouring countries for the improvement of the Maubeuge-Paris waterway and to built a canal joining the Meuse and the Rhino, . (It is thought that Rhine traffic may have rendered the limit of its capacity by 1970/1975 and this fact might provide -an argument) ; — to revise legislation and regulations applying to boatmen in such a way as to alter their present semi—independent status and enable maximum use to be made of the advantages offered by-the new waterways. The speeding up of the work already begun and the new measures suggested can have none but favourable repercussions on the regional economy, (b) Even more important is the construction of a Walloon motorway. In the Common Market, the Centre .and the Borinage regions, are situated on one of the•principal trade routes betwe.en Prance and Germany. In view of the rapid growth of Community trade and the strategic position of the regions in question on the route between Paris and the Ruhr, the'rapid building of 'Walloon motorway, joining the Brussels-Paris motorway and the main. Aachen-Busseldorf and Aachen-Cologne routes seems to be one of the most urgent features of a regional planning policy. (c) Whilst the Walloon motorway will form a backbone for the establishment of new light industries and a' vital element in the future urbanisation of the regions concerned, waterways, roads and railways linking the Hainaut (in this connexion Charleroi cannot be dissociated frcn the Centre and the Borinage) with Brussels and Antwerp will remain the principal freight routes.. AS/CPL/Am (63) 14 - 22 -

Pirms engaged in heavy industry will /be established chiefly on the canal from Charleroi to Brussels, north of Gosselies „ Light industries will "be spaced out along one Walloon motorway and will require a rapid outlet towards^ Brussels and Antwerp, whence the need to build the motorway to Brussels at the same time as the Walloon motorway. Up to the present the Hainaut has not enjoyed advantageo of this kind. The completion in the near future^of the work already be&in on roads and waterways will no doubt ha^e a considerable influence on the possibility of modernising industry in the region. It may be expected •that when the plan is completed it will still be possible to take advantage of the industrial expansion and shortage oi employment in North-West Europe as well as of decisions bound up with future of the Common Market. (d) We have not been able to study in detail all the points of. the communications programme which_might be speeded up if additional funds were available, It is hoped thct waterways scheme (increasing capacity bo 1,35 be completed without any difficulties other_than technical ones by 1965» It concerns the waterway joining Charleroi 0 Brussels and its extensions to Houdeng •(Boel) "^ t?^®ort Meuse by way of the Sambre and will cut by half the transpor time from Houdeng and Charleroi to Antwerp, In addition, the canal from Obourg to^the Sciie^ ^^4 have a capacity of 1,350 tons as far as Antwerp. _ canal joining up these two branches will be built later. It would seem possible over the. next five years to build, a number of priority motorways, including: - the Walloon motcrway from Ghlin to Gosselies, - the Brussels-Paris motorway, from Brussels to its junction with the Walloon motorway, and - two feeders, one from La Louvière and the other from Châtelet via the north of the Charleroi region. In all approximately 128 kms. of road at a probable total cost of 3^750 million Belgian francs. Reference to the map will show how all the basic works -1 • 1 __ : 4-T-. ^ v, «-s TO /-\ -Î-"to o "V* i n £1 7.n"TlP are concentrated and link up with one another in a zone situatedlated to the north of the Centre region andana forming ca^ 15 km side equilateral triangle; Nivelles, Houdeng, GooselxO > _ 23. ~ AS/CPL/Am (63) 14

This is where new industries must be encouraged. At the centre of the triangle lies Seneffe, equidistant from the dense industrial zone South of Charleroi and the new industrial area, in the North of the .Borinage. The Centre region will thus oenefit most "by the prograiam© . Additional features are. the electrification of the railway from Brussels to La Lourière where a raaiQ. regional station will he erected. All this work on communications will cost some' 12,000 million Belgian francs (including interest). Further expenditure for the exploitation of the new faciliti.es will not amount to so much; preparing the industrial sites themselves and linking them up with the lines of communication will cost at the most 1,000 million francs.

C. Preparation of Industrial Sites A survey of the principal sites available for new factories led to the following conclusions; (a) The following sites.would he suitable for thé establishment of industry on a scale large enough to promote the building of new housing as is^desirable ana to reverse the tendency towards the creation of dormitory zones fed more and more by Brussels; - sites at Ghlin-Baudour (Nord) in the Borinage - sites at Seneff-Manags and Peluy-Ecaussinnes in the Centre - sites at Luttre-Obaix in the Charleroi region. ..

These cover an area of 200—500 hectares, and borcier on the canals to Antwerp and .Ghent. . They lie on the route between these regions and Brussels and are or will e close to railways and roads. The area around Peluy and Luttre is obvious farming land since the Charleroi.--Antwerp canal runs through such undulating country that factories cannot be established along the banks, except at some places in the built—up area which are already in use. Industrial sites are being prepared m the Ghlin- Baudour district where several factories are to be built. AS/CPL/Am (63) 14 - 24 -

("b) The following sites in the vicinity of old-established towns would he suitable for active but sna.lj.er firms capc-.ole of influencing their more backward neighbours by virtue of examples ' - sites at Ghlin-Baudour (Sud), Elouges and • in the Borinage; ... - sites at Seneffe, Bracquegnies and FamiHeureux in the Centre; - sites at Gosselies, Frasne-s-lez-Gosselies and Heppignies in the Charleroi region; - sites at Spy and Franieres in the Lower Sanbre valley. These cover an area from 50-200 hectares and are situated close to existing lines of communication and the future motorways. Here the cost of preparing the sites would be relatively low, and the new firms could employ the local manpower available and attract- frontier workers. (c) For the establishment of light^industries in attractive sites likely to promote the desired employment, oi available female labour; - sites at Elouges, Ghlin-Baudour (Sud) and Framerxes in the Borinage; - sites at Peronnes, Piéton and Roeulx in the Centre; - sites at Gosselies, Nalinnes and Fleurus in the Charleroi region; - sites at Velaine in the Lower Sanbre valley. These cover an area of 25-75 hectares and a.re situated in semi-rural regions along existing roads; pleasant working conditions would be the decisive factor in recruiting women workers. D. New Housing

(a) AÎSË The housing backlog is considerable. To replace housing more than 100 years old, a ten-year programme providing for 80,000 new housing units is require . would represent 15% of the national housing programme w i_s ./. 25 AS/CPL/Am (63) 14 the population of the region is only 11% of the.total. It should he pointed out, however, that during the.last 15 years building has been going on at only half the rate for the country as a whole. Upon completion of the ten-year programme the proportion of houses less than 25 years old would once more be equal to the national average. Since old houses would be falling vacant, this policy would only be effective if accompanied by a parallel demolition plan, to avoid a glut of housing. About 6,000 old houses would have to be demolished each year, and compensation paid at about 50,000 francs per unit, that is to say 300 million francs per annum.

The annual cost of the operation would therefore be as follows ;

- erection of new housing 8,000 x 350,0.00 2,800 million francs compensation for demolition' of o.ld housing 300 million francs

The regional wage bill for the execution of the programme would amount to about 925 million francs.

What would be the effect of the proposed housing policy on employment?

• -We think it might be advisable to concentrate effort -••• in the initial years before the new industrial impetus has begun to ; affect the leJbour market and build 10,000 new housing units a, year until 196 5? thereafter reducing the number to 7,000. Taking into account the introduction of new techniques, this -programme, calling for the erection of 7,000 supplementary housing units a year until 1965 and 4,000 thereafter, would make it possible to employ 14,000 additional workers until 1965, a figure which would thereafter be reduced by a,bout 5,000.

(b) Organisation

The building industry as a whole is not well run in v Belgium. One is struck by the- costly and often heavily- built middle-class homes.

Workers' housing suffers from, the division of labour and absence of standardisation. There are practically no large town-planning schemes. Building is in the hands-of AS/CPL/Am (63) 14 26 -

local bodies generally influenced by political considerations. There is little regional co-operation and new housing is added haphazardly to'existing residential districts.

Action is needed to treble the rate of building while at the same tine old housing is demolished, and new housing sited in relation to the new geographical layout; new industrial areas in the north of the Centre region and the Borina.ge, possibly, also around Charleroi and improved development of services in regional capitals and. better planned residential areas.

This programme would appear to call for the concentration of some of the new housing at specific points, mainly along the Northern fringe of the old Walloon industrial basin. It raises the problem of the pattern of the industrial zones of the future. In this case, space is not lacking, and the region to be developed consists of attractive green and undulating country. For social reasons, as well as efficiency, the problem is one which must be dealt with at regional level,

E. Economic Réorganisation in Industry and other sectors The Working Population and Branches of Economic Activity

1. Industry ha, s an important place in the regional economy. Out of a total working population of 425^000 in 1959? 260,000 were employed in industry. In the Centre and Charleroi regions workers employed in industry represent 71$ of the' total employment figures. This is of course due to the comparatively insignificant proportion of agricultural workers (5$ of the total) and the fact that proportionately fewer workers are employed in administration and other services than in the urban centres. Moreover, the fact that both private enterprise and administrative services are concentrated in Brussels has a definite effect on the Hainaut region.

The total regional income amounts to approximately 46,000 million Belgian francs, derived mainly from value added by processing in the various branches of industry.

In 1959 the principal branches of .industry from the point of view of employment and turnover, were the following:

0 j o - 21 - AS/CPL/Am (63) 14

Turnover in 000,000 Yfo rice rs Belgian Branch employed francs

Coalmines 67,000 8' Iron and Steel 32,000 18 Metalworking 42,000 12 Glass 14,000 4 Cement works and quarries 5,000 2 Tiling and earthenware 5 ,000 1 Chemicals • • - 5 ,000 Miscellaneous (clothing, shoes, etc.) 5?000 The above branches were defined after surveys and the totals arrived at cover the greater part of industrial employment. They are especially significant in that they reveal the importance of the basic industries of the region, A number of traditional industries which were once flourishing have now virtually disappeared; ^ tanning, shoe manufacture,- textiles, potteries. This is one .of the main differences between the development of. these regions and that of the North of Prance, whose, economy was originally built up on the same basis. • In view of the extensive closing down of collieries^ which used to employ more than a quarter of all workers' in' industry and provide 16$ of family incomes, it would seem necessary to spread over all the other sectors the compensatory effect sought by a policy directed towards •basic economic recovery. As has been said, in. the short term the housing , policy appears to be the most urgent, the most effective and at the same time the most promising^means of restoring vitality to the region and making it attractive. It must be used as a springboard to the development of other branches of industry. 2. However,- the effort might usefully be extended^to non-industrial sectors; since agriculture represents only 3.2$ of family incomes in the region, it is capable of _ _ further development. The land in these regions is especially fertile and- in several places market gardening, at present practicably non-existent,, could be, introduced. AS/CPL/Am (63) 14 - 28 -

.The food industry is represented at present chiefly "by the Breweries "but it could he developed further.

Commerce and other services are inadequate in the region. This must "be taken into account in the housing programme, which must, not only provide additional .housing, "but also in organising the means to a fuller and more sophisticated urban/life. That is why we attach great importance to the value of the new residential centres as examples, to be seen as part of the pattern of a new regions,! economy. •

3. The authors of the s.tudy on which this report is' based have sought to discover how far this depressed area enjoyed assistance from the State and public authorities. They were surprised to find that far-from receiving assistance, the region made an unexpectedly high contribution, to the State in view of well-known large defic.it in Belgian public finances.

The Centre and the Charleroi region pay a net contribution to the State of 2,830,000 francs. On the other hand, the Borinage receives 1,070,000 francs. In order to appreciate these figures the national deficit must be taken into account. If it is agreed that this deficit can and.must be shared proportionally among the different regions of the country, one arrives at the conclusion that the accounts between the Borinage and the State practically balance, whereas the Centre and Charleroi provide a.-relative contribution of 5?000 million francs to the State.

There is naturally something artificial about calculations of this kind. However, they support the argument that the old industrial regions have long contributed to the prosperity of the country whose economy they practically launched. They are still doing so, moreover, although they are no longer.in the same favourable economic, position. The regions with which we are concerned have, in fact, paid.a heavy tribute to national development.

The arduous nature of work in the heavy industries continues to take toll of the workers' health. The sickness rate among male workers over 40 years o.f age is 80$ .higher^ in the Borinage that the national average.

Cultural development is still insufficient; and, people waste the best, part of their lives in dreary mining villages, whilst more recently developed regions offer, with' the financial assistance of the State, infinitely more agreeable surroundings. - 29 - AS/CPL/Am (63) 14

F, Organisation of Industry

( a) G-eneral Features of the Regional Industry

1 « Causes of the industrial crisis

(i). Most of the industrial plant, dates from the period 1850 - 1890, when the very rapid growth of the coal industry .was cabling for capital' goods in increasing quantities; ... • - Sectional -iron - Cast steel - Me tab girders - Rolling stock , The stagnation of coal production since 1920 (in spite thé investment programmes carried out • in the short period 1954 - 1958) has held up the development of these branches of industry, especially when in .addition a crisis occurred in the export market (rolling stock). •

(ii) The fact that these firms, which work mainly as suppliers to the imajor industries (mines, iron and steel works) have been so long in existence, is possibly the reason why some of them tend to remain small and to ..have inadequate facilities for technical and commercial research.

(iii)lt should be noted that after the period of great, prosperity for the collieries, no-one was successful in establishing the new branches of industry -that grew up with the 20th century; •

- organic chemistry ( except for .the development of carbon chemistry which in our opinion, could be taken still further) - motor manufacturing - precision instruments and machine-tools - household electrical goods. On the other hand, the ACEC successfully introduced electronics, and the development of this company constitutes the only really- important industrial innovation in the region for some 50 years. Moreover, the company is still alone in.its field. AS/CPL/Am (63) 14 - 30 -

( iv) As a result, many regional activities are now in a critical situation and are more or less unfitted for the new demands of economic competition.

2. Principal problems facing firms

(i) Difficulties inherent in. the type of production

For the branches at present declining or expanding very slowly, competition for the markets created by the developing countries is becoming more difficult and indeed almost impossible. The only hope for these firms is to reduce and concentrate production, whilst modernising plant and • methods.

(ii) Individual difficulties

It is typical of firms in the region that recent innovations in the matter of management, market research and technical processes, have made but little impression on them. They have taken small part in the general move towards modernisation, although they have had as much opportunity as firms elsewhere. Some managers will need more than mere general information or training to bring them out of their rut.

(b) General measures proposed

It would be wise to concentrate efforts on the few firms known to be capable of rapid assimilation, and to help them by proposing to share the cost of employing organisation experts, engineering experts and market research specialists. This will result in a number of concrete examples of conversion. For the rest, one can rely on the spirit of emulation if these methods are crowned with success.

Care must be taken to avoid:

- treating problems in too general a context, as this makes them more difficult to solve; - too much localisation' of the help given by regional bodies: the industrialists of the Centre need to be brought out of their narrow world; - discussing problems with the lower grades of staff before the employers have fully grasped them; » j a - 31 - AS/CPL/Am (63) 14

- saving everyone at any price: this would "bar the way to the effective modernisation of industry "because of the shortage of manpower; - relying on-"reserved" markets, . . On the other hand, the establishment of new^industries should be encouraged by sharing out industrial sites and . factories for rental. The idea that a region has a special vocation is a dangerous one. It is only by preventing excessive• . specialisation in the new industries that the monolithic structure which is such a handicap at present can be broken down. In conclusion, the reform of industry must be based on:

- the activation of a few firms (planning and research or shares in capital); - the establishment of new firms, if possible from elsewhere ; - the consultation of outside experts, with_the,aim of creating a new type of pioneer industrialist through contact with specialists with different backgrounds and acquainted with modern industrial methods. (c) Institutional implications Tangible results could be expected after three or . four years of effort on the above lines to place research, organisation, and business relations on an entirely new basis: 1. Economic and technical research (knowledge of market trends, of technical innovations, access 'to centres of scientific, technical and economic research); 2. Factory management (further training for managerial staff and technicians - emphasis on knowledge of foreign countries,- new management methods (production and sales) and new manufacturers, development of contacts between young employers and young executives, liaison between them and their counterparts abroad); 3. Relations with potential foreign investors, persons of influence in growing markets, new methods and attitudes in the developing countries. AS/CPL/Am (63) 14 - 32 -

A regional fund should "be set up to cover 50 to 60$ of the cost of developing, for the benefit of a small number of firms., the.above mentioned functions of planning and research, factory management and business relations.

The work could be carried out by specialised..bodies (planning and organisation institutes, laboratories, universities, etc»). , Administration of the fund should be entrusted provisionally to a company capable of directing firms to the appropriate specialised bodies„•

Auditing would be carried out annually by the national or supranational authorities responsible for financing the fund. Socorec already has experience of a. number of assistance schemes of this kind. A great step forward will have been made once this work of industrial modernisation and improvement can be financed by a sound regional investment company, which,should not, however, have a monopoly in the field of assistance to industry.. It would have an interest in a limited number of firms only in which it would play an active.part calling for the training of technical and administrative staff.

It would be useful if such' staff could be placed at the disposal of any firms interested, regardless of whether the regional investment company .had shares in their capital. In any case, it would seem preferable to have some functions carried out by bodies with a voice in the management of the firms concerned. The selection of research projects and the thoroughness with which they are -carried out benefit when the person responsible is bound to act on his own conclusions. . In our opinion, there should be a regional investment company for the Hainaut a,s a, whole (though there is no reason why it should not extend its activities to the Walloon part of Brabant and the region between The Sambre and the Meuse). It should,moreover, be a semi-public company, on the pattern of the French development companies far example.

Gc Manpower policy It is hoped that the new jobs to be created by the implementation of this programme will for the most part be filled by persons living in the region» By arresting the flow of -workers towards other parts of Belgium, by limiting - 33 - AS/CPL/Am (63) 14

emigration, "by employing the potential reserve of women- workers, "by relaxing certain regulations regarding pensions, by welcoming 'workers who wish to settle in the region, we believe that it will be possible to achieve this result.

However, the new jobs will demand skills which such workers will certainly not possess. Action must be taken to inform the workers available as vacancies occur and to provide them with travel facilities and technical training. What has already been done to train miners for other -work must be regarded as a failure. A great deal still has to be done in the field of vocational•training, in particular securing the assistance of firms in the region, '

There are two basic requirements in connexion with this manpower policy. The first concerns foreign workers, especially Italians. With the closing of the mines it is hoped to absorb some of the redundant workers into building, under the housing programme, Italians make particularly good builders' labourers. Certain regulations will need to be made and such workers must be helped to settle by extending to them the facilities available to Belgian workers in the matter of building or renting homes.

The second requirement concerns women workers. It must be discovered why so few women are employed: pattern of -industry,• type of factory, . husbands' working hours, memories of old-style industry, etc,

H, Institutional aspects of a regional planning policy

• Among the present public authorities there, is no body capable of planning and carrying out within the desired time, a policy such as that•outlined above.

Experience over two years of industrial conversion has g'radually confirmed us in the opinion that two new bodies are needed - one for regional planning and the other for-assistance to firms.

The regional planning body should have the technical qualifications and legal power to contribute to defining the general policy applicable to the region-and to co-ordinate the action of the various -authorities concerned with regional communications (to the exclusion of national, international or purely local communications), the preparation of industrial sites and their linking up•with railways, roadswaterways, and other -communal facilities (schools, sanitation, cultural services). It should also AS/CPL/Am (63) 14 - 34 -

"be empowered "to implement the. housing programme. The- "body in.question should have considerable freedom , of action. ' "it should he so composed as to he able to change, the face of the region, if necessary in spite of conservative reactions and vested interests, of an economic, social or political nature.' In these matters it is not- necessarily . the most representative.organisation- whicn is the most effective and which, in.particular, possesses the necessary freedom to act rapidly. It is clear from our remarks about the regional outlook (common to people of all -classes and persuasions) that uhere is a need for new blood and new methods. Moreover, it is a question of restoring confidence and this cannot be done without, the close and loyal co-operation of the dynamic forces of the region m une plans for its reorganisation. These are principles which accord with the method of entrusting specific tasks to existing organisations Un particular inter-municipal bodies) - but in must be taken to avoid the narrow outlook so prevalent in the region and so undesirable.- or with the creation of o new type of organisation, for example ' equipment companies provided for .m the Ac b of loth Jul^Jpy» but in that case technical work of this kind must form part of a definite policy under a'general regional planning authority. .. In view of the multiple implications and the importance of the regional plan, one central body should be given sole . responsibility for decisions. It might be composed of representatives of central departments and of regional authorities, provisionally .the members of intermunicipal councils. The private sector should be consulted whenever ITelves a guarantee of effective, action. This body would . be fompetenffor all questions of .housing, communal services, industrial sites, their linking with lines of communication, and public relations. The institutional implications of the .housing policy proposed above require special attention. It calls tor. . 1. adequate powers over the whole of"the region, order to be able to site new industries (in accordance with economic- development) and. clean up the old built-up areas, - 35 - AS/CPL/Am (63) 14

by demolishing obsolete and insanitary buildings and turning over the sites thus recovered to town planning purposes.

2. a building industry capable of .handling a. programme of such wide scope and of achieving the desired ends of stimulating at the sane time employment and other industries in the region.

Too many local firms share the housing contracts at present, and in the circumstances we think it wise to leave the building in the .hands of a sms.ll number of companies perhaps of a semi-public nature, which can be relied upon, to introduce new techniques to settle their workers locally and to carry out such le.rge scale work efficiently.

It will no doubt be necessary to interest firms outside the region in the scheme. Their attention should be drawn in particular to the possibility of employing Italian workers who have left the mines, desirable both from the point of view of their skills and inclinations. - 36 - AS/CPL/Am (63) 14

CHAPTER V

Estimated Total Cost

The proposed policy embodies the following features;

1. Doubling the speed at which the communications programme is being carried out. This is a question not so much of obtaining a greater share in the :Belgian 10—year programme as of securing a higher priority, though it may be necessary'subsequently to allow other regions whatever priority may be justified by their situation.

2. Preparation of industrial sites in order to exploit to the full the major communications thus created.

3. The 'implementation of the housing and town-planning, programme as a provisional means of achieving the employment objective and helping the region to adjust to the new-situation.

4* A specific manpower policy: the recuperation- of local manpower, designed to ensure the achievement of the employment objective can only be effective if the workers available are trained for the new or expanding industries. .

5. Selective assistance to industry.

6. The adoption of a regional planning programme and the formation of a regional investment company.

The measures proposed in the sections of this report dealing with the above 6 points are set out in the appended table (Appendix 3).

It will be seen that the cost of the proposed programme would be 7,400 million Belgian francs per year.

In order to appreciate this figure it must be compared with the gross national product and the gross rate of capital investment in 196 2, the middle year of the programme.

In 19 58 the national product, as estimated by the working party on the national budget, was equal to 578,000 million Belgian francs (Cahiers économiques de Bruxelles, October 1959). Growing at a rate of 37° per annum it would be approximately 650,000 million in 196 2. AS/CPL/Am (63) 14 - 37 -

A gross capital investment..rate of 18% in relation to the gross national product would seen to "be attainable, if the priority accorded t.o investment "by. the Belgian authorities is.respected.• Gross capital investment in 1962 would be of the order of 117,000 million francs. The programme proposed for the region would thus represent 6.3f° of total national investments.

The present studies do not rçvea,l, however, the gross amount that :will- be. invested in the Hainaut by private enterprise and by the -State apart from the proposed scheme.- This amount must be added to the cost of the scheme for valid comparison with the national, total. It must,- however, be emphasised with regard t.o the communications programme, that there is no question of •. modifying the programme of investments in the region provided for under the 10-year plan, but merely of.speeding it up.

On the other hand it should be noted that after 1965-1966 the annual assistance given will fall to 5?000 million francs and the priority we consider to be necessary for the Hainaut during the period 1961-1965 might be reconsidered subsequently. Priority given to this region from 1961 to 1965 would make it possible to. avoid an irrevocable -acceleration of. the present, economic decline. -38- AS/CPL/AM (63) 14

CHAPTER VI

European implications

(a) Integration of the- economies of the North of Prance and the Belgian Hainaut. The economies of the Hainaut and the North of Prance are more competitive than complementary. The removal of customs "barriers will intensify competition "between the regions, although it is impossible to foresee which side would gain most. As. a result of the parallel nature of the two -economies certain types of production are entirely lacking. ^ authorities in the departments of the Nord and the Pas-de- Calais are consequently pursuing an active policy of diversification. The Hainaut already possesses ce-rta.in types- of _ _ industry which do not exist in the North of Prance (hydraulic smelting, ore-briquetting, public works^and builciing supplies , ' timber-working'machinery, sanitary-ware , metal furniture, hardware, .hand tools, electrical equipment of certain kinds). There is thus scope ffor complementarjr development if suitable action is taken. Finally, there are branches of industry which have^ virtually disappeared from the Hainaut, ( oextiles, tanning, shoe manufacturing, etc.) and which are represented in -che North of France by numerous firms, many of which-have branches in Belgium, in the Courtrai—Tournai area. • The more rapid growth of productivi fcy in several^ branches? in the North of France, as well as the effects of two devaluations, have given this region a certain advantage over the Hainaut.from the point of view of wages costs. Other -factors.favourable to the North of France arei greater... concentration of production, cne proximity o^ t. e rapidly expanding port of Dunkirk and the prospect of abundant.manpower in the coming years» AS/CPL/Am. .(63) 14 - 39 . -

Transport routes on either side of the frontier are scarcely complementary at present, Tout improvements are planned. No Franco-Belgian railway is yet electrified, "but the following improvements are'to he made shortly; .

the Paris-Jeumont line will, "be electrified in 1963, the Mons.-Brussels line will he electrified in 1962.

The decision to electrify the former line was taken in I960, With regard to roads, the Common Market Commission has emphasised the importance of the Brus sels-Paris motorway which might he completed in 1964. The hull'°, • Willoon motorway is timed for the years 1960-1964 I Liege x Northern') and 1965-1969 (northern Ardennes-La Louvier.).

With regard to waterways, there Is little hope of an improvement in communications between Prance o,nd Belg _ , ing since French efforts are concentrated_ac present on mc.eas g the capacity of the Valenciennes-Dunkirk canal.. (b) Exploitation of the geographical situation

The geographical position of the Hainaut is very^good although there are better positions ^o,be :Ltwerpthe _ .1 nj-p,a iMOTth—West Europe. In spelaoion to Antwerp, Srtlnd^farllroi Sgon is at the far end of a co^unxeatxons route. Without coal, it would not have grown up as u has.

If communications with the North of Erance p.®nt+^ly so improved' that there-might never .have been^a frontier, B western part of the Hainaut - namely the orinage " k stand in a similar relationship to communications with Dunkirk.

These regions are at present able .to offer^good supplies of gas and electricity, o.f which production capacity eq.^-ls 25/o and 35/° respectively, of Lotal Belgian capacity. : @ • ""closing down of the collieries-raises the problem of °^lets and it would be useful if they could ^ found TOlte° On the other hand, the present crude oil pipe-lines roule places the Walloon industrial zone at a disaiivanHS®/ Attention should be drawn to the advisability

These'regions have the"advantage of "being situated on a line of • 'connunication between Prance and the Ruhr and are well placed for exploiting irr competition with the Paris region, all the markets of Northern Prance as far as a line from Amiens to- Rheins, as well as the whole of Belgium and Southern'Hollandj and even the fringes.of Western Germany»

To enable the expanding branches of industry (among them the motor industry) to make the most of this geographical position, a. good road network is- obviously necessary and the motorway programme seems to fill this need quite adequately.

Even now it is evident that a certain number of foreign industrial firms, which are thinking of establishing - their Belgian branches along the Albert Canal, or on the Brussels/ Antwerp route, will be interested in the Hainaut, It is as well situated as these other regions on the Benelux market - . and in a'much better position with regard to the North of France, The realisation' of the Common Market and the gradual disappearance of fears of masked protectionism on the,part of the French will no doubt have 'a decisive effect. There are probably few regions in the European Community which will undergo a reorganisation as radical . as the regions lying on either sid.e of the • Franco-Belgian frontier, from Maubeuge to Ypres.. The problem is so immense tha.t all the possibilities for future action should be thoroughly gone into by those responsible for regional problems, whether in national or Community institutions, ( c) Contacts with institutions and European interpénétration, in the technical sphere, of men and capital There has long been a considerable degree of inter- penetration between the industries situated on either side of the Franco-Belgian frontier. Examples of partnerships with works on both sides of the frontier are provided by metallurgical firms, such as La Providence, Baune-Marpent, ACEC, Boël, etc. A certain number of medium sized Belgian firms including glass and machine tool manufacturers, have recently set up branches in the North of France. Such interpénétration seems so perfectly natural that it may be expected to develop even when the disappearance of Customs barriers .has removed one of the reasons for it. There AS/ CPL/Am (63) 14 - 41 - was a_tine' when nearly all French banks had branches in Belgium, In-this field too it se ens natural to expect a ' move towards closer association within the next ten years.

There -seem's, however, to be a need for catalysing agents;' a first attempt was made with the constitution of the Regional Economies Liaison Committee for Western Flanders Northern Hainaut and the Pas-de-Calais.

• Much more needs to-be done, .however, more methodically and -with more ample means. Contacts between industrialists, for the purpose of comparing their expansion plans, would seem to be particularly indicated since the ' two economies, are, as we have seen, complementary„

In the long run there should be a move towards some sort of planning body for all of these regions, though it will not be necessary for some time to give it more than advisory functions. Simply by making the problems known the presence of a active co-operation body with technical competence will certainly facilitate agreements regarding concentration on or specialisation in certain types of manufacture as well as new joint projects. Nothing can be expected of an organisation that is too unwieldy and official. On the other .hand if it is discreet a.nd technical in character it will certainly be most useful and it is to be hoped that the European Economic Community may one day give thought to the part it could play in this connexion. - 42 - AS/CPl/An (63) 14

CHAPTER VII

Sunning up and Conclusion

The problem of the economic decline of industry in the Hainaut is of significance for Europe'.

What is happening there is also happening in other parts of Europe wherever the structure of industry is antiquated. The sane synptons will gradually appear in other regions as they age. Whilst a certain falling off in the relative importance of these regions has to be accepted, it is both possible and urgent to reorganise then econonically and socially. The nain lines along which this should be done have been described above and it has been shown how such a reorganisation would nake it possible to exploit the geographical situation of the Hainaut, to maintain employment at an adequate level and to provide the attractive environnent necessary for the vitality of industry and .human happiness» If the present crisis is significant for Europe then so, by the sane token, is this programme. It ought to be ne.de an essential feature of a general reorganisation of the economies of the regions lying on either side of the Franco-Belgian frontier and so serve to demonstrate the effectiveness of the European idea and the Community institutions„