The diamond wins again

A slew of recent announcements tells us much, Rhys David argues, about the way big business operates and its effects on areas at the periphery

To the layman, Ford Motor company’s announcement that beyond the next 2-3 years it can only see a reduced workload – resulting in possibly 1,000 job losses – for its Bridgend engine factory is puzzling. If the plant made diesel engines the reasoning would be more obvious. These are now being blamed for noxious emissions that are causing pollution and premature death in Europe’s congested cities. Those who were persuaded that diesel cars were less polluting are now complaining that the resale value of their vehicles has been cut and many people now will think twice before choosing a diesel-engine car.

But Bridgend produces petrol engines and, in theory, in as much as diesels have as much as half the market in many countries, logic would suggest sales of petrol engines should double, creating a viable future for Bridgend. But, we are told, the plant’s engines are mostly designed for larger vehicles and prospects are affected by the switch to smaller more fuel -efficient, vehicles and to electric cars. Ford’s senior planners seem not to have visited many supermarkets lately where the preponderance of SUVs and other 4x4s makes it quite difficult to squeeze a smaller car in, or heard of the requests being made for local authorities to expand the size of parking slots to accommodate the modern behemoths.

Sadly, in a status-driven society, car size is the key signifier after the size of one’s house, and it is going to take more than fuel prices to reverse this. One is left with the conclusion that we may be seeing once again the ritual dance that occurs every time Ford (and other multinational corporations) come to an investment juncture. Threats of moving elsewhere can usually bring the Government cheque book or other commitments out, as has already happened, it would seem, at Nissan in Sunderland. Ford has been supported before by the Welsh Government so it would be no surprise to see it happening again. Let’s hope the price to taxpayers is not too high and employment at the plant can be maintained at current levels or even increased.

Several other announcements made at the same time cast light on modern-day business. Greggs, the bakers, is rationalising production and moving away from a system where all its factories make a mix of foods towards specialisation. Up to 600 jobs could be at risk at the company’s nine bakeries, including a complete closure in Norwich. A total of 355 jobs have already been cut following earlier closures as part of the same efficiency drive. But there is good news for Treforest, which will concentrate on bread and sandwiches. Beneficial, too, no doubt, to the Greggs bottom line but hardly an environmental positive. It all points to pies being trucked much greater distances across the country from one site, and bread and sandwiches from others, meaning more lorries on the road, more pollution and more food miles.

Fellow food manufacturer Walkers Crisps, part of the US PepsiCo group, is also concentrating production, closing a factory in Peterlee, Co. Durham, with the loss of 380 jobs. PepsiCo has form in closing plants around the country, its Swansea factory employing 250 people closing 12 years ago. Yet the North East is no more likely to be a crisp-eating desert than south west Wales. Again, the move is all about concentration in huge factories, in this case in the East Midlands, from which crisps can be trucked out to all quarters.  

This is modern Britain, in which a diamond formed by London-Southampton- Bristol-Birmingham-Manchester-Leeds-London is remorselessly gathering into itself the bulk of manufacturing and distribution activities for reasons of cost and efficiency, and acting as supplier to the poorer regions outside. Despite being outside the central motorway grid, Cardiff and south east Wales and Wrexham and north east Wales secure a share of the spoils – occasionally – but the rest of Wales struggles.

The benefit to the consumer is cheap food and other products but this gain is illusory given the added environmental and social costs that then have to be picked up by the taxpayer and not the shareholder. Policy-makers need to recognise this trend and find ways to compensate for it or counter it. Somehow the case for local production, particularly of high volume products such as food, needs to be made. Otherwise, talk of re-balancing the UK economy will be just that.

Rhys David is a former senior writer with the Financial Times and an Honorary Fellow of the IWA

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