The British Economy in Transition

From the Old to the New?

Royce Turner

• Publisher: Routledge
• Year: 1995
• eBook ISBN: 9781134834013
• Topic: Business
• Subtopic: Business General
• Index: Business

The British Economy in Transition: From the Old to the New? examines attempts at economic regeneration in areas that have experienced the decline in 'traditional' industry of recent years. The contributors also look at the impact of techno and managerial modernization strategies in industries that have survived, but have had to adapt rapidly to do

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INTRODUCTION

Royce Turner

It is a commonplace to state that Britain was once regarded as the ‘workshop of the world’. Such a description has long been consigned to history. When it was used this phrase meant that Britain was renowned for being a centre of manufacturing, producing goods that were traded throughout the world. Particular places within Britain were seen as being centres of world-class excellence in different kinds of manufacturing. The West Midlands, for example, traditionally the second richest region in Britain after the South East, was renowned for engineering products, particularly the production of motor cars and car components. Sheffield, the birthplace of stainless steel, was also a city associated in the popular consciousness with great industry—steel, steel products, and cutlery, particularly—but, paramountly, with quality. The belief, and the actuality, was that a product stamped ‘Made in Sheffield’ would be a quality product. Other places, too, could lay claim to a place in this pantheon of great industrial glory: Clydeside and the North East of England with shipbuilding; South Yorkshire, Nottinghamshire, and South Wales, with coal; Lancashire and the East Midlands with textiles and clothing; some places— Hertfordshire, the North West—with defence and aircraft manufacture.

It is also a commonplace to state that this world of global leadership in manufacturing has long ago passed. There is an array of statistics that could be brought to bear, and that have been brought to bear, which seek to confirm this. The percentage of the world export of manufactures captured by British companies has halved in thirty years, for example, from 16.3 per cent in I960 to 8.4 per cent in 1990. The manufacturing sector within the British economy employs less than half the number of people in 1994 compared to 1966—down from 8.5 million to 4 million. It makes, proportionately, a far smaller contribution to the country’s GDP (Coates, 1994). The share of world trade in manufactures held by companies from the UK fell to 8.6 per cent by 1990. In 1950 it had been 25.5 per cent (Grant, 1993). And so on. That there has been relative economic decline is well known, and needs little rehearsal here.

This book is about these changes in the British economy. If manufacturing has been in relative decline what, if anything, has taken its place? Governments at local and central levels have pursued a plethora of policies aimed at reviving both the national economy and in particular local economies. Essentially, one of the basic objectives of these policies—even if it is sometimes unstated—has been to ‘modernise’ the local and national economies. If the traditional industries—coal, steel, textiles—were ‘sunset’ industries, then the only way forward for an economy such as Britain’s would be to move forward to an economy based on ‘sunrise’ industries and service-based industries which have potential for growth. Has this happened, or is the British economy simply left with a smaller traditional industrial sector and little to take its place? This is the central issue this book seeks to explore. Alongside that, it examines the nature of the changes in the British economy and the economic and political framework within which they have taken place.

There is obviously both a sectoral and a spatial aspect involved in examining economic and industrial change. In other words, particular industries have changed and, in some cases, disappeared. In this context, this book addresses the situation as it has affected coal, steel, motor vehicles, engineering, textiles, and the defence industry. Alongside this, of course, industries were associated with particular regions and particular cities. What has happened to the places associated with ‘traditional’ industries? This book examines two cities—Birmingham and Sheffield—and two regions—Wearside and South Wales—and examines the impact of economic change in each.

The changes in the structure and nature of the British economy in the 1970s, 1980s, and early 1990s have had widespread ramifications of a social, political, and economic kind. For example, one effect of the economic restructuring was that it brought in its wake huge numbers of displaced workers, and removed many employment options from people who might otherwise have expected to work in particular industries. In both coal and steel, to cite two examples, there was inter-generational reproduction of labour. In other words, sons followed fathers down the pit, and sons and daughters (usually) followed their fathers into the steel works. That element of economic security has been disrupted, and in many cases lost. In that sense, the industrial economy exhibits less continuity and less stability. The restructuring has changed—sometimes dramatically, always irreversibly—the economies of many regions and localities within the erstwhile ‘workshop of the world’. There is no shipbuilding on the Wear in the 1990s, for example. The only coal produced in South Wales came from opencasting, small privately owned pits, and a drift mine—Betws—closed by British Coal in 1993 and bought by a private sector group and re-opened in 1994 (The Guardian, 15 January 1994). Here again, the ownership restructuring serves to emphasise the changing fortunes and nature of employment in industry. Betws, a relatively new mine which did not start production until 1978 and which could therefore lay claim to being one of the most ‘modern’ of the coal industry, had employed 700 in the years before its closure. On re-opening in the private sector, it employed only 100.

Britain had been the first industrialised country. In many ways, it was the most industrialised country. The economic restructuring which, in its modern form, began probably in the late 1960s and gathered pace in the following decades changed all that. Hall (1991) commented on this change in the pattern of employment by noting that:

In the mid-1950s the UK had been perhaps more industrialised than any other country in history, with more workers in industry than in all services; yet by 1983 there were almost two service workers for every industrial worker.

Grant (1993) also notes that ‘a greater proportion of the UK workforce is employed in services than in any other major competitor country apart from the United States’. That the relative importance of manufacturing has declined, while the relative importance of services has increased within the economy, is not necessarily undesirable. Despite the fact that fewer services are open to international trade, there may be positive aspects to it. The working conditions of people may have improved, for example.

An entire literature has been devoted to examining the reasons for the decline in the world position of British manufacturing, which is attributed to a variety of causes which range from Treasury ineptitude in economic management, poor managerial performance, militant trade unions, a financial sector within the economy too remote in its own interests from the industrial sector, through to an ‘exceptionalism’ in British social culture which is alleged to have retarded economic progress (see, for example, Aldcroft, 1982; Barnett, 1986; Coates, 1986; Mann, 1988; Pollard, 1982; Wiener, 1981). It is not the intention here to contribute to that already extensive literature in trying to decipher the reasons for the relative decline in the position of British manufacturing. Relative decline is accepted as given.

Nevertheless, what the change in the position of manufacturing did do was to stimulate attempts, as noted earlier—sometimes initiated by governments, sometimes by companies—to modernise the British economy, or at least sections of it. This book seeks to address that issue. Has the British economy been successfully modernised? Has it made a transition successfully from being an economy reliant on the old ‘staples’ of coal, steel, shipbuilding, engineering, to being an economy based on high technology industry or on service-based industries, where the prospects for a sustainable and prosperous economic future are much brighter? A great deal rests upon these questions: the future for individuals, the life chances people have, the economic future for localities and entire regions. Thus as well as examining broad economic regeneration activities, chapter 2 also looks at the post-redundancy experiences of displaced mineworkers.

There are at least two kinds of modernisation that can be identified, and this work attempts to address both of them. The first kind of modernisation relates to what has happened to individuals and localities where an industry or economic activity has ceased or almost ceased. The classic examples would be coal or shipbuilding, and in some cases steel. In most cases, as a response to industrial decline, there has been a flurry of activity by some combination of government, government agencies, local government, and private sector led enterprise agencies to stimulate the local economy and reskill displaced workers. Sometimes this has taken the form of a contracting nationalised industry establishing a ‘job creation’ subsidiary: the key examples would be British Coal Enterprise (BCE), and British Steel Industry. Sometimes it has been local government that has tried, within powers which became more limited as the 1980s and 1990s wore on, to take a leading role at least in co-ordinating economic regeneration efforts. Almost all the large local authorities have economic development departments. Sometimes central government has acted as the ‘stimulator’, establishing enterprise zones, or promoting other policies designed to regenerate the economies of localities. For example, enterprise zones were announced in the ‘coal town’ of Pontefract in 1981 (Turner, 1992), and in the Dearne Valley in South Yorkshire, Mansfield in Nottinghamshire, and Easington in the North East—all areas traditionally heavily associated with coal—in 1993. The ‘steel towns’ of Scunthorpe and Corby had similar assistance granted in the early 1980s. Part of Wearside was granted enterprise zone status after the end of shipbuilding in the early 1990s.

The second kind of modernisation relates to sectors that have survived, but have had to change significantly in order to survive. The most obvious examples are motor vehicles, textiles, steel manufacture, and parts of the engineering industry, including the defence industry. In chapter 3, Morris, for example, relates the story of how the steel industry has been modernised in Wales: modern technology is employed; high value added steels are produced; new methods of working are employed; employment levels have been reduced on a major scale.

All the industrial sectors mentioned above have been significant sectors in the British economy. All have been subject to pressures which have initiated changes implemented by both public sector and private sector owners and managers. Often, the most drastic restructuring was in the public sector prior to privatisation, as exemplified by steel and coal.

The impacts of these changes have, in some cases, been profound, and the ramifications widespread. In many instances there have been plant closures or, at least, reductions in the labour force. In some cases there has been a change in the ownership of at least part of the industrial sector. The most obvious example of this is motor vehicle production with the Japanese multinationals Nissan, Toyota, and Honda establishing bases in Britain for manufacture. Management techniques and industrial relations have also been affected by the wider change taking place in the British industrial economy. The implementation of these changes—which have included a burgeoning of ‘no-strike’ agreements and non-recognition of trade unions—has occurred within an economic and political climate which rendered the introduction of such changes far more easy than it would have been in, say, the 1960s or the 1970s. Quite simply, this was because the massive hike in unemployment from the early 1980s onwards, coupled with legislation that restricted the unions’ power, meant that little resistance could be offered to the changes by Britain’s once strong trade union movement.

Moreover, the political conditions for the owners and managers of industries and other businesses to implement change were also favourable. The Labour Party, which might be expected to defend the gains of the working class movement in relation to job security and workers’ bargaining power, had not won a general election since 1974. The Conservatives, who held governmental office from 1979 onwards, shared the view of some of those who owned and ran British industry that drastic changes were necessary if companies were to survive and compete on a world scale. The central questions in all this, then, are: What has the restructuring achieved? Is the British economy, after sacrifice has been borne by many individuals and localities as a whole, now left with an internationally competitive collection of businesses in the modernised sectors? What has been the politics of the change? Who has won and who has lost in the process? Who has borne the price of change—the workers, the owners of businesses, individual local economies? In short, putting the two aspects of modernisation together, has Britain entered a new era of a modern, vibrant economy, upon which a sustainable economic future can be built? Or, after years of deindustrialisation, is the economy left with a massive reduction in the size of traditional industry, and the numbers employed by it, but with little to replace it on which a sustainable economic future could be built? Quite clearly, there is no single indisputable answer to these questions. In some cases, the authors in this book consider that much is left to be done to ensure a viable industrial future. Geddes and Green, for example, put forward the outline of a strategy as to how the prospects for engineering in the South East might be enhanced (chapter 6). Similarly, Rhys outlines the steps he believes are necessary if the motor components industry is to achieve higher efficiency, and, by that mechanism, survive (chapter 7). Stone considers that the ‘absence of a meaningful industrial strategy at a national level’ has contributed to the weakness of the British economy (chapter 8). Baker also sees advantages in a more pro-active role for national and local government in the modernisation of textiles (chapter 4).

The implications of restructuring can be mixed in terms of overall welfare, and what appears to be positive can disguise negative elements. Geddes and Green note, for instance, that the restructuring of engineering in the South East has had the effect of increasing the relative proportion of the workforce engaged in research and development (R&D) activities. On the surface, that appears positive, given that R&D is a sector which would be associated with a ‘modernised’ economy. The negative aspect to it is that the proportionate rise has been brought about by a shift of the straightforward manufacturing out of the South East. In other words, the R&D has stayed in the South East, but a lot of the manufacturing that used to accompany it has gone elsewhere. As Geddes and Green have it: ‘While a balanced local economy will benefit from the continued presence of R&D, the sudden disappearance of tens of thousands of jobs in manufacturing will be difficult to counteract.’

Similarly, Morris notes that economic regeneration in Wales has had mixed effects (chapter 3). On the positive side, inward investment has been substantial, a considerable number of jobs have been created, and the economy has diversified. On the negative side, wages have fallen further behind those that are being paid in the rest of the UK. A further finding of Morris’s that is worthy of note here is the increasing polarisation of wealth to be found in the ‘new’ Welsh economy: in other words, there is now a bigger gap between rich and poor areas.

It should be recognised that modernisation efforts within the British economy are not at all a new phenomenon. Various governments have embarked on assorted schemes and policies, sometimes associated with new institutional frameworks aimed at enhancing economic performance by companies and within industries. Central to the political debate on this issue is to what extent governments themselves should be involved in directing and implementing the process, and to what extent this should be left to private companies operating within the context of market forces. The answer of the Conservative government first elected in 1979 was clear: government intervention was to be kept to a minimum, and the free market would reign supreme. Within the government, however, there were quite obviously different degrees of emphasis on this by different ministers. Michael Portillo, first as Chief Secretary to the Treasury and subsequently as Secretary of State for Employment, was the standard be...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• FIGURES
• TABLES
• CONTRIBUTORS
• ABBREVIATIONS
• 1. INTRODUCTION
• 2. AFTER COAL
• 3. McJOBBING A REGION: INDUSTRIAL RESTRUCTURING AND THE WIDENING SOCIOECONOMIC DIVIDE IN WALES
• 4. RESTRUCTURING THE TEXTILES AND CLOTHING INDUSTRIES
• 5. OPPORTUNITY OR CRISIS? THE REMAKING OF THE BRITISH ARMS INDUSTRY
• 6. ENGINEERING: COMPANY STRATEGIES AND PUBLIC POLICY IN AN INDUSTRY IN CRISIS
• 7. THE TRANSFORMATION OF THE MOTOR INDUSTRY IN THE UK
• 8. SYMBOLISM AND SUBSTANCE IN THE MODERNISATION OF A TRADITIONAL INDUSTRIAL ECONOMY: THE CASE OF WEARSIDE
• 9. FROM WORKSHOP TO MEETING PLACE? THE BIRMINGHAM ECONOMY IN TRANSITION
• 10. ECONOMIC REGENERATION IN SHEFFIELD: URBAN MODERNISATION OR THE MANAGEMENT OF DECLINE?
• 11. CONCLUSIONS