Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Grounded Firms And Welsh Government Policy

Discusses how grounded firms and the reconnection of regional supply chains can stimulate growth in Wales

Related Books

Free with a 30 day trial from Scribd

See all

Related Audiobooks

Free with a 30 day trial from Scribd

See all
  • Be the first to comment

  • Be the first to like this

Grounded Firms And Welsh Government Policy

  1. 1. Grounded firms and Welsh Government policy Karel Williams Manchester Business School manchestercapitalism.co.uk
  2. 2. What’s in a (company) name • FTSE 100 co. names efface connection with place, product or founding family: Aggreko, Aviva, Capita, Diageo, Evraz, Experian, G4S, Serco, Vedanta, Xstrata (cos. formerly CU, Distillers etc) • Other FTSEs have done a BP and dropped the British: BAE systems, BG Group and BT Group (British Land still uses British) • A world away from South Wales in 60s and 70s with firms and factories that suggested connections: Llanelly Steel (1907), SCOW/ Trostre works, Morris Motors Felinfoel/BMC • A world which survives elsewhere eg in Sweden, Sandvik and Husqvarna ex home towns < 25,000 population
  3. 3. Grounded firms vs ungrounded firms • Some capitalist firms (and many public organisations) are grounded tied to place by roots and branches  supply side: regional supply chain, support services, relevant technical education and human skills; demand side: branch distribution or network configuration ex need to serve population/ tap demand; Underpinning: stable ownership and local management cadre • But financialization undermines stable ownership + magnifies instability + unsustainability….. producing more mobile, ungrounded firms in the private sector; results (a) churning of employment and (b) the missing Mittelstand
  4. 4. Result (1) churning of employment • Moveable employment: footloose, globalised and financialised giant firms have global options and can pull out as Sony did at Bridgend where it once employed 4,000 • Precarious employment: large companies in sectors like food processing respond to retail order switching with plant closures as Two Sisters did with Avana bakeries • Pass the parcel employment: in SMEs, the family sells out and the firm is passed between corporates like Rachel’s Dairy which has successively had American and French owners
  5. 5. Result (2) the missing Mittelstand • Wales’ structural economic peculiarity? the missing Mittelstand with only 2,000 enterprises employing 50 -250 • Dumb bell distribution of firm size: (a) 1/3rd of Welsh employ in micro firms employing less than 2 and with low turnover = largely labour only artisans vs (b) 40% of Welsh employ. in enterprises employing 250 or more i.e. large factories, call centres etc • Missing middle indicates (a) non Welsh supply chains for global PLCs eg Ford, Tata and the rest with branch + legacy plants in the corridors leading out of Wales (b) financialization = exit strategies for local SME owners, leaving adjunct branches eg tinopolis will follow Gocompare, Halo and Rachel’s Dairy
  6. 6. WG’s policy response: Attract the mobile • Seek inward investment by mobile firms + make Wales more attractive with training and infrastructure = long dead WDA still sets the template for WG policy + their Q “ how can we do more for you”? • By 2014 FDI is at new record highs……. with the same old dodgy counting of benefits to produce misleading totals: totals include M and A spend and property investment; no calculation of net benefits after deducting costs like project subsidies and sweeteners including tolerance of tax avoidance  social claims are of jobs created not wages paid; but FDI like Amazon warehouse in Jersey Marine locks in low pay which increases the social bill for child care, housing benefit and pensions “captured” FDI investment too often produces branch plants which do little beyond assembly; 2012 manufacturing supply chain on how “ Welsh based, FDI based companies lack the means and authority to innovate”
  7. 7. Pouring water into a leaking bucket? • WG policy = pouring more water into a leaking Welsh bucket  big firms coming in to Wales only replace the Murcos and Two Sisters pulling out medium firm stock increased by start ups and reduced to branches by M and A eg FTSE 250 Admiral is clearly a consolidation target, esure is 30% owned by 68 year old Peter Wood • Wales does have a handful of technically competent private sector firms operating in competitive sectors eg Ifor Williams trailers; but generally without ownership that protects them from merger and acquisition
  8. 8. Change the frame: our stock of grounded firms • We do have a huge stock of grounded public organisations and private in the foundational economy: tied to localities because demand for basic goods and services is distributed according to population. • 30% of Welsh employment is in public sector organisations and para state firms like nurseries and residential homes delivering mainly tax funded health, education and welfare. • Another 10% is in private sector provision of basic services in the form of pipe and cable utilities, transport, food processing and grocery distribution.
  9. 9. Change the question: raise the ask • Raise the WG ask for all public sector orgns + larger firms:“ what have you done for us” ; specifically on employment and procurement put back in return for tapping local demand • A question not only about construction spend but also about services; not only for local authorities but also for universities and hospitals as for supermarkets and utilities in the private sector • Doing more strategically, what we are already doing half heartedly in LG procurement + what we intend by making Welsh NHS an anchor co. • Wouldn’t Wales be a better place if dom care employers paid a living wage + if supermarkets committed to Welsh suppliers on fair contracts ?

×