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David Bailey, Coventry University Business School, UK

Dealing with Auto Industry Rundown and Closures: A Perspective from Birmingham Challenges facing Mono-Sectoral Cities, Open Days 2010. David Bailey, Coventry University Business School, UK Caroline Chapain , CURS, Birmingham Business School, UK. Outline. Introduction / background

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David Bailey, Coventry University Business School, UK

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  1. Dealing with Auto Industry Rundown and Closures: A Perspective from Birmingham Challenges facing Mono-Sectoral Cities, Open Days 2010 David Bailey, Coventry University Business School, UK Caroline Chapain, CURS, Birmingham Business School, UK

  2. Outline • Introduction / background • The MG Rover research project • Surveys of workers and the spatial impact of plant closure • Overview of workers in 2008-2009 • Training and policy support • Different pathways, different stories • Conclusions and policy recommendations

  3. WEST MIDLANDS LOCATION

  4. Birmingham and West Midlands: traditionally the UK’s auto centre... • One third of jobs in Birmingham in 1960s/1970s estimated to be auto related • But high profile plant closures through 1970s and 1980s, most recent Jaguar (Coventry), MG Rover (Birmingham), Peugeot (Coventry), LDV (Birmingham), plus in related industries • Next: another Jaguar Land Rover plant by 2015 ? • BUT still an important industry in terms of supply chain and R&D

  5. Attempts from 1980s to rebalance / reposition the city • City Centre redevelopment projects – tourism, finance, law, business services... • But ongoing net loss of jobs (Centre for Cities, 2010) • Auto industry: modernise, diversify away from auto and major local manufacturer MG Rover • First ‘Rover Task Force’ – over 2000-2005: advance action ‘saved’ some 10,000-12,000 jobs

  6. ‘Place Renewing’ leadership(Bailey and De Propris, 2010) • Entering and securing high-value market segments • Cross-sector fertilisation • Repositioning within the global value chain

  7. MG Rover case • Closed in 2005, with the loss of 6300 jobs directly, c 3000 more in supply chain • Major economic shock in city and region MGR: turnover = as much as 1% regional GDP £200 million in lost govenment revenue Owed £1.4 bn to creditors; £104m to suppliers - received 1p in £ • How was this dealt with, and what were the outcomes?

  8. Picking up the Pieces Government Package: c.£176 million £50 million: training £40 million: redundancy payments £24 million: loan fund to help otherwise viable businesses £41.6 million: support MG Rover suppliers sustain trading EC: up to £68 million of regional aid could be used RDA: £42 million on redeveloping the Longbridge site RDA: June 2005: £7.5 million on supplier diversification

  9. Business Support 170 component suppliers received cash through the wage replacement scheme; This kept around 3000 workers in jobs during the critical months after collapse, with 1329 confirmed ‘saved’ Advantage Transition Fund: make loans to firms

  10. 2. The workers... Where are the ex-workers 3-4 years after the closure? • Where the workers have found work and where they live? • How the workers have been affected by the closure and how they have coped? • What support they have had, how useful it was? • What work or education or training they have gone onto? • Where they have worked? • Whether they have experienced unemployment? • How they feel about their new jobs? • What has been the impact of the closure on their health?

  11. 2. The workers • ‘Third wave’ survey of ex MG Rover workers in April 2008 based on two previous surveys from the Work Foundation. Follow up, in depth interviews in 2008/9. UNIQUE LONGITUDINAL ANALYSIS • Three Waves: • Wave 1: July 2005 (3 months after the closure) • Wave 2: December 2005 (8 months after the closure) • Wave 3: April 2008 (3 years after the closure) • In April 2008, 204 respondents participated in the survey - 176 from Waves 1 and 2, 9 from Wave 1 and 19 new volunteers.

  12. 3. The respondents and the spatial impact • Our respondents were representative of the MG Rover workers • 90% male • Mostly in the 40’s and 50’s • 80% were married (compared with 42% in the West Midlands) • 93% were home owners (compared with 70% in the West Midlands) • Majority worked in Powertrain and Manufacturing • Variety of occupations with skilled, professional or technical occupations – only 11% had no qualification (compared with 18% for the West Midlands) • 98% worked full-time • Average salary in 2005: £514 a week compared with £444 for a man in the West Midlands.

  13. 3. The respondents and the spatial impact In 2005, MG Rover workers • 44% lived in Birmingham • 24% in the ‘Black country’ • 12% in Bromsgrove • 3% in Solihull • 18% in the rest of the WM and England.

  14. 4. Overview of workers By 2008, 90% were in work, mostly in full-time work. • ???

  15. 4. Overview of workers • Their overall activity rate (in work and looking for work) equaled 95% which is above the regional average (83%) • 86% are on permanent contract However • 65% of the employed and 85% of the unemployed stated having faced difficulty: • Too many people applying for the same job • Age • Lack of skills and experience

  16. 4. Overview of workers • 1/3 of workers in full-time job in 2008 reported having had at least another job before; • This proportion rose to • 70% for those in unemployment; • 100% for those in part-time job; • 75% for those inactive and not looking for work.

  17. 4. Overview of workers For 70% of workers, personal connections and own initiative played an important role in finding a job.

  18. 4. Overview of workers Still a high proportion of manufacturing work but a conversion towards services…

  19. 4. Overview of workers • A mix of upward and downward mobility in terms of occupations • 34% have higher occupational roles • 31% have lower occupational roles • More than 60% have now a different role using different skills • A median annual salary decrease of₤5,640 (adjusted for inflation) • Only 28% think that their current job is better than the one they had at MG Rover but 63% see themselves doing it for the foreseable future.

  20. Longer Commute • better job quality • more skill use • more autonomy • more challenge at work • less anxiety 4. Overview of workers • 54% increased their commute time to work

  21. 5. Training and policy support • Over 60% of respondents have had some form of training since closure • This is a higher figure than that reported in previous studies. Related to the specific and job-relevant nature of training and education taken up? • A majority of these retrained for ‘positive’ reasons…

  22. 5. Training and policy support

  23. 5. Training and policy support • Wide ranging and speedy policy response – 86% made a benefit claim (82% registered within two weeks) • Most used policy support: job fair, information on job opportunities, help from job centre plus, free place on a training course • Most helpful support: free travel to a training course or job interview; a free place on a training course; being senton a training course by a new employer; help with setting up a business. … yet most people who found a new job did so through their own initiative or through personal contacts 70%

  24. 6. Different pathways and stories • Differential overall profile • Workers in full time job: male, younger, worked slightly less longer at MG Rover • Workers in self-employment: older, more qualified, in managerial position at MG Rover and owned their own home • Workers in part-time job: female, higher qualifications, worked longer at MG Rover and now work in services • Unemployed and looking for work: older, lower qualifications and did not own their own home • Inactive: close to retirement age, female, lower levels of education and own their own home.

  25. Different pathways to work…

  26. 7. Conclusions: Work • 90% of ex-workers were back in work 3 years on. Most in full-time job with permanent contract or self-employment. • BUT; interviews in 2009 suggest some have lost jobs again • Difficulties in finding work: age, skills/experience and too many people applying. • Personal initiative and networks have been key to ex-workers finding their current job. • 60% use different skils to those used at MG Rover • Jobs are diversified with only 30% in manufacturing and a mix of lower and higher occupational status. • Different pathways back into work

  27. 7. Conclusions: Income & Well-being • Median salary / wage substantially lower than at MG Rover (minus £5640 adjusted) • A quarter of households in a financially difficult position, but three-quarters financially stable. Two-thirds feel worse off. • Overall, respondents perceive their current state of health as slightly worse than when working at MG Rover. • 45% see job as worse than at MG Rover but most still like job • Those travelling furthest to find work reported more positive ouctomes. • 60% undertook retraining or education; some difference in perceptions of health where people have done training • Families and connections have played a key role in terms of support.

  28. 7. Conclusions:Policy • Policy measures had varying degrees of success • Policy: Proactive and reactive policies required • Advance action and rapid response crucial • Need for institutional capacity (  Regional Task Forces) • Need to support good quality manufacturing jobs • Avoiding sudden closures and try to slow down the process • Ensure that employees have skills to cope as industries change, through high quality, flexible education, training, information and mobility programmes (ability to travel). • Tailored response

  29. Update: 2008-9 Recession • 2008-2010: Regional Task Force • Vulnerable places, businesses and people • Lessons learned from MG Rover experience • Abolition of the English regions: Will this expertise / experience be lost? Wider policy learning?

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