Welsh industry's year of highs and lows

It has been a year in which the economy of Wales has arguably seen more radical change than perhaps any time since the early 1980s, writes BBC Wales's business and industry correspondent Miles Fletcher.

A combination of adverse economic forces has cost at least 5,000 jobs in manufacturing.

Many of those were lost in the steel industry, which has resumed its long decline as a major employer.

While all of Welsh plants survived one restructuring programme, which saw widespread redundancies in 2000, it is widely forecast that Llanwern outside Newport will face the axe in 2001.

If the plant closes, it will have serious local economic consequences for south east Wales.

Significantly, membership of the euro stopped being seen as a panacea to industry's troubles

Miles Fletcher, BBC Wales's business correspondent

The steel industry has been caught in a simple but devastating economic trap.

Raw materials purchased in expensive dollars, are then turned into steel priced in sterling and have to compete against cheaper Euro-zone competition.

These same circumstances have taken a toll in other industries, such as motor components, consumer electronics and textiles, with major firms like Krupps Camford, Sony, Alcan, Panasonic and Courtaulds all being forced to cut back heavily.

Significantly, membership of the euro stopped being seen as a panacea to industry's troubles.

The UK enjoyed a healthy trade surplus against euro-zone economies; evidence that, despite the travails of manufacturing, "UK Plc" continued to enjoy a period of relative buoyancy.

Steel town: The industry's fortunes have waned

Here in Wales, the onward march of the call centre revolution continued with major investments by One to One, Lloyds Bank and the Irish company Conduit.

High-technology industry also enjoyed a good year.

BAe Systems at Broughton in Flintshire is to build the wings for the new Airbus A380 "superjumbo" airliner, having overcome a very public row with the National Assembly over grant-aid.

Ubiquity Software, an international telecoms award-winner, and Surface Technology Systems, a leader in microelectronics, showed that Welsh companies can compete on a global scale.

The big challenge remains that of fostering more home-grown success stories like these.

Past reliance on inward investment by multinational corporations to create large numbers of manufacturing jobs has ended with many of those same jobs transferring to the low-wage economies of Eastern Europe.

New development priorities from the National Assembly, coupled with increased European funding, place greater emphasis on the role of the small to medium-sized enterprise.

Ironically, this was also the year that Wales's biggest company, Hyder, fell victim to a hostile take-over and ignominious break-up.