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
1. Introduction / background 2. The MG Rover research project 3. Surveys of workers and the spatial impact of plant closure 4. Overview of workers in 2008-2009 5. Training and policy support 6. Different pathways, different stories 7. Conclusions and policy recommendations

WEST MIDLANDS LOCATION

Birmingham and West Midlands: traditionally the UKs 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

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

Place Renewing leadership

(Bailey and De Propris, 2010)

Entering and securing high-value market segments Cross-sector fertilisation Repositioning within the global value chain

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?

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

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

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?

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.

3. The respondents and the spatial impact

Our respondents were representative of the MG Rover workers 90% male Mostly in the 40s and 50s 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.

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.

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

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.

4. Overview of workers
For 70% of workers, personal connections and own initiative played an important role in finding a job.
How respondents heard about their job?
35.0 30.0 25.0 28.7 26.6

Percentages

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4. Overview of workers
Still a high proportion of manufacturing work but a conversion towards services
Employees jobs by industries: Wave 3 respondents versus West Midlands economy.
90 80 70 60
Percentages

50 40 30 20 10 0
Manufacturing Construction Services Distribution, hotels & restaurants Transport & communications Finance, IT, other business activities Public admin, education & health Other services

Wave 3 employed respondents - 2008

West Midlands - 2006

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.

4. Overview of workers

54% increased their commute time to work

Longer Commute
better job quality more skill use more autonomy more challenge at work less anxiety

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

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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 sent on 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%

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.

Different pathways to work

In job 3 months after the closure 8 months after the closure 3 years after the closure

Age Qualification level Managerial position Using same skill Now working in services Had training since leaving MG Rover Travel distance Median income Proportion who increased their income 30% 30% 7% 40% 56% 25% 56% 68% 66% 47% 46% 36%

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 exworkers 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

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.

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

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?