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

3 thoughts on “The diamond wins again

  1. Very interesting.As I remember the engine plant was placed in Bridgend by FORD following representations by our Prime Minister at time,i.e Mr James Callaghan when he met the owner of the massive car manufacturing entity. The competition for the plant was severe as all the large European countries wanted the investment,however the site was recognised as one of the best in Europe and the rest is history. A similar story can be told about the SONY plant which employed thousands and came to Bridgend following representations made by the Prince of Wales when he visited Japan and spoke to CEO of the Sony Corporation.The decisions by very large multi national corporations are always taken for the benefit of ‘shareholders’ who own the business’s and with globalization and open markets the drive for greater efficiencies will accelerate and lead to greater integration/lowering costs as we can see in the possible sale of General Motors plants in UK.It’s interesting that mention is made of the growth of the east midlands as a centre due its central location to markets and I can confirm this with my visit to family who now live in Northampton,which historically was a town very similar in construction/ economic/social terms to Bridgend,which is marching in completely reverse direction.Its interesting that there is major road building projects all around the east midlands,whilst here in marginalised Wales we are more concerned about ‘newts’ than building a first class east/west road system,so as to connect us to the economic powerhouse that will be England in coming years.

  2. “a diamond formed by London-Southampton- Bristol-Birmingham-Manchester-Leeds-London is remorselessly gathering into itself the bulk of manufacturing and distribution activities”
    Try as I might I could not construct a compact diamond shape with those vertices. A highly irregular polygon was the best I could do.
    Anyway, I doubt if the scale economies in the manufacture of crisps and pies justify such extreme centralisation which is unlikely to preserve quality. We already see a multiplicity of craft brewers emerging in pubs and supermarkets and cheese producers too. Wales has to go for low volume, high end quality products in those circumstances and try to build brands reflecting that positioning. It has succeed in branding and selling salt and water (Halen Mor, Ty Nant etc) for heaven’s sake so we should be able to sell anything! We have to foster the locally-based mid-sized companies who can do it. When it comes to volume mass production, we are marginal at best. The Welsh car sector is certainly under pressure now as a result of Brexit. If we lose Ford and gain Aston Martin, though, that could be sold as part of a low volume, high end strategy.

  3. Very interesting and well argued. Its why wales should be concentrating on its indigenous base. The car industry in civilised ove populated centres is doomed anyway. We should be thinkin laterally about mass public transport systems which will retain a jobs base, manufacturing base and prove more environmently beneficial. Unfortunately whilst the current unsustainable political structures remain in wales we will never see any dynamic fresh thinking. Geting rid of the huge and self interested cost base as local authorities and the assembly are now to business and citizens is the first prioriy.
    Brxit will prove a brilliiant opportunity to rid ourselves of some of these giant corporations and allow new home grown enteprenuership to blossom.

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