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 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
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 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.
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.
• ???
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
28.7
30.0
26.6
20.0
15.0
10.1
10.0
6.4
6.9
5.9
4.3
5.0
8.0
2.7
Pe
rs
Ag
en
cy
di
re
ct
ly
th
em
ap
pr
oa
ch
ed
om
pa
ny
C
st
ar
te
d
th
ei
ro
w
n
co
m
pa
ny
co
m
pa
ny
th
e
Th
ey
Th
ey
ap
pr
oa
ch
ed
sp
ap
er
/in
te
rn
et
…
N
ew
il y
,c
(fa
m
on
al
co
nt
ac
ts
C
ol
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ge
/L
SC
ol
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ag
ue
s…
)
/tr
ai
ni
ng
Fa
ir
Jo
b
C
en
tre
0.0
Jo
b
Percentages
25.0
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
Percentages
60
50
40
30
20
10
0
Manufacturing
Construction
Services
Distribution, hotels &
restaurants
Transport &
communications
Wave 3 employed respondents - 2008
Finance, IT, other
business activities
West Midlands - 2006
Public admin,
education & health
Other services
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…
to
fi n
d
w
in
th
ei
r
ifi
ca
ti o
ns
do
so
m
et
hi
ng
3.3
To
3.3
Su
gg
es
te
d/
O
ffe
re
d
3.8
sa
ti s
fa
ct
io
n
5.0
Se
l f-
fi n
an
ci
al
in
jo
ce
bs
nt
bu
iv
es
tn
ot
sa
tis
fie
d
w
ith
th
em
th
ei
rq
ua
l
ne
m
pl
oy
ed
7.7
Fo
un
d
ith
th
e
w
U
t
10.0
by
f ie
ld
re
qu
ire
m
en
15.0
At
tra
ct
ed
or
k
Jo
b
25.0
na
bl
e
th
ei
ro
pp
or
tu
To
ni
ti e
ch
s
an
ge
ca
re
er
/v
oc
at
io
n
in
cr
ea
se
35.0
U
To
5. Training and policy support
Reasons for deciding to retrain/study.
40.0
34.6
30.0
23.6
20.0
12.6
7.1
2.7
1.1
0.0
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
47%
46%
36%
56%
68%
66%
40%
56%
25%
30%
30%
7%
Using same skill
Now working in services
Had training since leaving MG Rover
Travel distance
Median income
Proportion who increased their
income
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?