Page last updated at 13:00 GMT, Wednesday, 6 July 2005 14:00 UK

Where now for the Welsh economy?

Company logos
Nearly 2,000 jobs are under threat in a cluster of companies

Nearly 2,000 south Wales jobs have come under threat in a matter of a week.

First there were 650 Sony jobs in Bridgend and nearby Pencoed and on the same day nearly 200 with the closure of the nearby Altoid sweets factory.

Then, 900 jobs were in the balance at Bridgend-based Christie-Tyler.

A bad week, then. But as politicians, workers and unions spoke of their shock, others said the problems have merely followed a long-term decline in manufacturing.

Ray Pearce from Bridgend Council, for instance, said the problems dated back 30 years.

The government has taken its eye off the ball
Peter Black, Lib Dem AM

But the local authority's head of economic development was more optimistic for the future and predicted workers would be retrained for new, high-skilled jobs.

One economic expert, Professor David Brooksbank, said the focus for Wales as a whole had to be on creating a knowledge-based economy with "value added," as well as on entrepreneurs.

He emphasised that although he had been a "constructive critic of things like call centres and screwdriver assembly plants," he did support foreign investment.

But the professor of entrepreneurship at the University of Glamorgan, Pontypridd, said Wales had to follow a twin track approach, by encouraging both foreign investors and indigenous firms.

Sony workers
Sony workers in Bridgend have received redundancy notices
Bridgend has been held up as one of the economic success stories of south Wales in recent years.

Independent research by analysts Business Strategies found that, in the 10 years up to 2001, Bridgend had the second fastest growing economy in Wales and ninth fastest in the UK in terms of jobs created.

But Mr Pearce said that growth had been based on a shift away from manual work.

"In 1997, 16,400 people were employed in manufacturing in the borough, now it is around 12,000," he said. "I would not be surprised if the decline continues."

Liberal Democrat Assembly Member Peter Black claimed the Welsh Assembly Government and Welsh Development Agency (WDA) had been complacent because of Bridgend's success in attracting new growth.

"The government has taken its eye off the ball with regards to Bridgend," he said.

But the growth in other sectors has already offset these (manufacturing job) losses
Ray Pearce, Bridgend Council

"This has been a very successful area in terms of attracting and retaining employment.

"I believe that the government and the WDA have taken that for granted and failed to do the work of sustaining that success."

The claim was denied by the assembly government, which pointed to massive job losses in the steel industry to illustrate. In 2001, when the steel manufacturer Corus announced thousands of job losses at its plants in Wales, the assembly government launched a multi-agency task force to tackle the problem.

Task force

Team Wales as it was known, brought together officials from the assembly, the WDA, local authorities, the job centres and the training agencies, to limit the impact on the workforce.

An assembly government spokesman said that, of the thousands of staff targeted in the Corus lay-off, only 200 were made redundant.

Shanghai skyline
Low labour costs in countries like China attract investors
The rest were retrained for other jobs or prepared for opportunities in other companies or supported in setting up their own businesses.

The Team Wales task force has already been mobilised to help staff who are leaving Sony and Wrigley and is standing by in case redundancies are announced at Christie-Tyler.

The council said a strategy was already in place for a changing global market. It said attracting manufacturing to Wales was becoming more difficult, as many companies looked to Eastern Europe or further afield, where labour costs were much lower.

Inevitably at some point those sort of industries have to respond to globalisation
Prof David Brooksbank
"But the growth in other sectors has already offset these (manufacturing job) losses," said Mr Pearce.

High tech future

It is an approach already being mirrored by the assembly government, where a spokesman said: "Though manufacturing in Wales remains important, what we're trying to build in Wales is a high knowledge, highly skilled economy, which is driving the knowledge industry in Wales.

So is it just too optimistic to believe that this latest round of job losses is part of a shift into a more highly-skilled phase for industry in Wales?

Or is it simply a case of losing valuable manufacturing industries to cheaper eastern Europe?

Prof Brooksbank said attracting foreign investors such as Sony and Panasonic was the correct response to coal and steel job losses in the 1970s.

"For the past 25 or 30 years they've been supporting those businesses and they have to some extent become embedded in the heart of the Welsh economy," said Prof Brooksbank.

"But they are not the high end of the value added Welsh economy: they are assembly plants in the main, and inevitably at some point those sort of industries have to respond to globalisation."

He said the inevitable move for these companies to move their manufacturing to countries with lower costs.

Politicians urge 'hope and help'
04 Jul 05 |  Wales politics

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific