The kyBosch is put on Welsh industry – again

Rhys David laments the loss of another Welsh manufacturing business and suggests more than the same old solutions will be needed if the Welsh economy is to be set on a path of growth.

“FOR SALE or TO LET. Modern factory, less than 20 years old, excellent communications, attractive location, plus 900 skilled and enthusiastic workers. Owner moving abroad. Vacant possession from mid 2011, all equipment will be taken away prior to departure.”

Years ago we all knew why factories in Wales shut down. They were at the top of blind valleys, they lacked space to expand, they had poor links with the main road system, the workforce lacked modern skills, or were too strike prone, they were stuck making products from another era.

Bosch and the many others attracted in the golden age of inward investment in the 1980s and 1990s, were meant to be different. The German components maker was linked into an industry – motor cars – that could only go on growing as the whole world became wealthier. Its plant was located minutes from the motorway, close to the airport and a short drive from Cardiff, with its many attractions from opera and theatre to open spaces, exciting waterfront and sport, its executives could live in the Vale of Glamorgan. The perfect package for the peripatetic plc, one might have thought.

In another way it is not so different, however. Bosch is only one of a number of companies in modern, sometimes high technology sectors that have quit not just Wales but what is supposed to be its most business friendly location, Cardiff. It joins NEG, which stayed an even shorter length of time in Cardiff Bay, and Panasonic in Pentwyn.

From further afield, we have suffered losses in the last few years at Anglesey Aluminium, Novelis Europe in Newport and Alcoa in Swansea, three businesses involved in a sector – aluminium – in which there will continue to be strong demand as far ahead as one can see from a range of user industries. When other big names – Hoover and Hotpoint for example – are added from other sectors it is clear Wales’s pool of top international companies has sprung a serious leak, with few signs anyone understands how to stop the flow.

One important consequence is that the gap in Gross Value Added between Wales and the rest of the UK – the way in which the country’s productive wealth is measured – will certainly not narrow as long as jobs of the quality offered by Bosch are disappearing, and other Welsh economic measures are also going to be hit. Expect another gloomy set of GVA data in December this year. Bosch was also a significant contributor to Welsh exports, with much of its output of alternators – the company made 40m in its first ten years so the total by now may be double that amount – and it almost certainly exerted a positive effect on Welsh productivity levels. In both exports and productivity Wales is a serious laggard when compared with other parts of Britain.

Yet, while it would not be fair, against a background of the remorseless global pressures that bring about decisions like that of Bosch, to blame devolution, or the Labour-Plaid Cymru coalition or the abolition of the Welsh Development Agency for our woes, we ought to be getting more than the usual nostrums the Welsh Government offers on these occasions, before we move on to the economy’s next stomach punch. The Government, we are told, will do all it can to help those being made redundant. We must become a clever country, we must raise our skill levels. The M4 relief road around Newport is a must, the CBI will add, and others will say that while we are at it we must lay on more international services from Cardiff Airport. (The reason Cardiff Airport cannot attract new airlines or overseas routes, incidentally, is that there is not enough demand from the diminishing number of internationally-orientated businesses in Wales).

There are other questions we need to be asking, however, before concluding that if only we try these ideas we will solve structural economic problems that have persisted in Wales for generations. We started the adaptation to comprehensive education in Wales more than 50 years ago, ending a system that focused on the top 15 per cent, and we now have twice as many universities – eight in total – compared with most of the last century. Why are we still lamenting our poor skill levels? Why are our schools still turning out leavers with few or no qualifications, and why are more parents not concerned at their children’s failure?

Most of our universities boast business schools and we know they have gone out – as for example in the case of Swansea – to seek international research partnerships, but how much support and assistance do they offer to Welsh business? Were any of them working on research projects with Bosch, for example? What services are being provided to small and medium sized businesses? Should there now be a complete rethink of the role our universities play within the Welsh economy so that they become a more integral part of it rather than free-standing independently-operating enterprises in their own right?

Similarly, though there is still room for improvement, the Welsh road system has seen significant investment, with good connections to markets over the border along the M4 and A55, and fast roads north south in the south Wales Valleys and along the heads of the Valleys. If businesses in Ireland can grow exports – even though in many cases they have to drive the length of north or south Wales to get to their markets, what is holding back our companies? Why do we always think that the last (i.e. next) bit of infrastructure will make all the difference?

One might also add, where have all the industrialists who might be raising arguments of this sort gone? Those with long memories will recall the days when figures like Sir Alfred Nicholas, Sir Melvyn Rosser, Sir Julian Hodge, Henry Kroch, Sir Zack Brierley, Fred Cartwright and others beat the drum for Welsh industry and insisted to Government in London that Wales receive its fair share of UK industrial investment. Times have changed irreversibly and Governments are much less involved in industry decisions but is our civil service in Wales structured adequately to cope with shaping the future economic landscape of the country?

Considerable emphasis in the first ten years of devolution has been placed on making Wales a sustainable economy, a priority we perhaps now need to look at more closely. By contrast, we have staked only a modest claim to be among the nations participating actively in the manufacture of the many products that will be required around the world if the climate change objectives set out most recently at Copenhagen are to be reached. One can only guess that at least some of the individuals mentioned above would have been demanding we made at least some of the wind turbines we now house around the coast and on our hills.

We need a wide-ranging debate on these issues, particularly as the current round of European support funding will come to an end within the lifetime of the next Welsh Government. Should we perhaps be thinking of seeking to move towards a different approach to rebuilding the Welsh economy, which relies less on individual business effort and more on a direct approach (properly resourced with experienced people and funds) to creating a bigger small and particularly medium-sized business sector that can survive in a globalised world? Should Wales now start to be considered as having some characteristics of a developing economy, certainly in terms of its relatively small private sector and its dependence on the public sector, and how might that affect policy-making in future?

Bosch sadly seems unlikely to be the last big closure in Wales and as in the past we may now need short term moves to buy back some industrial activity to fill the gap it and other closures has left, and while the underlying problems are tackled. Hopefully, someone in the Welsh Government will have noticed that Jeffrey Immelt, one of the most powerful men in the world, who runs a company with very extensive interests in Wales has been in Europe in the past month on a mission to find a location for General Electric of the US’s next wind turbine factory. The company, on some measures the biggest in the world, already owns GE engine maintenance in Caerphilly, and the former Nycomed Amersham plant in Cardiff so should be well-disposed to Wales.

Are there any Welsh cheerleaders – possibly even some of our MPs – who will tell the UK government that it ought to move heaven and earth to secure this investment and that it must come to Wales?

Rhys David is a trustee of the Institute of Welsh Affairs.

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