Inside the Rust Belt: An Analysis of the Decline of the West Midlands Economy. 1: International and National Economic Conditions

Abstract

The decline in manufacturing employment in the West Midlands Region of England has been dramatic. This paper situates the changes in the economy of the region in the context of the changing international and national economies. It is argued that the shift in trading patterns from the old Empire towards Europe and North America made manufacturing sectors more vulnerable to competition both in the home market and in the overseas markets. This vulnerability has been exacerbated by the high value of sterling at certain crucial periods. National economic conditions and policies have also had detrimental effects on the regional economy, especially demand-management policies, which concentrated on consumer credit. The development of the vehicle sector has been disrupted by frequent and sudden changes in credit regulations. In addition to these problems, there is evidence that credit and labour-market conditions have both hampered development, and there is some evidence that land shortages in the conurbation have been a hindrance. National government policy towards particular sectors has been applied without major attention being paid to its regional impact. Given the high level of integration of the regional economy, shocks to one part of the economy transmit themselves rapidly to others.

The Growth and Decline of the West Midlands Region: An Integrated Evolutionary Perspective

“…The region had the second highest GDP in the UK in 1971 and the lowest in England by 1981. A quarter million jobs were lost between 1976and 1981, and the unemployment rate increased from under 2% in 1967to almost 20% in 1981(Flynn and Taylor 1986aSpencer et al 1986). The West Midlands population experienced a 2.5% decline between 1971 and 1981.…”

“…An increasing divide between owners of capital and workers resulted in the Winter of Discontent, a series of crippling national strikes between 1978 and 1979, led by the West Midlands trade unionists (Flynn and Taylor 1986a). Increased incomes, increased local competition and a major influx of Commonwealth immigrants facilitated urban flight with much of the original population migrating out to the urban periphery and to other regions (Boddy and Parkinson 2004).…”

Foreign direct investment in the West Midlands: An analysis and evaluation

“…Between 1980 and 1983 the WM had the highest regional increase in the unemployment rate, the worst long-term unemployment and the greatest contraction of the employment base (see Healey and Clark, 1984). It is generally agreed that the process of economic change which culminated in the crisis of the early 1980s, in the WM as a whole and the West Midlands County (WMC) area in particular, had begun in the mid-1960s (Spencer et al, 1986;Flynn and Taylor, 1986). In analysing the process of change considerable attention has been given to the strategies of the largest manufacturing companies who dominated manufacturing employment in the region.…”

The Restructuring Thesis and the Study of Public Services

“…Early work in the private sector was very much concerned with restructuring as a response to the need to control the work force (Massey and Meegan, 1978), and it was argued that this was much less important in the context of services. Recent work on restructuring in manufacturing has widened our knowledge of the range of factors which induce restructuring and has again developed parallels with the study of services (Flynn and Taylor, 1986).…”

“…Just as Massey's initial threefold classification of intensification, investment and technical change, and rationalisation has been modified and extended (see Flynn and Taylor, 1986), so there is clearly considerable scope for modification of Urry's typology in the context of services. It is immediately apparent, for example, that there is considerable overlap between many of the categories.…”