Dealing with strategic change: a trio of automotive industry closures in the West Midlands

Abstract

Abstract This paper looks at the public policy response to dealing with strategic change in the case of a trio of automotive industry closures in the West Midlands, the outcome of restructuring in the auto industry. It shows that what is essentially a reactive response is related to the scale of the closure and the character of the closure. Falling sales and exchange rate volatility, plus production inefficiency, led to Jaguar moving production from Coventry to Castle Bromwich in Birmingham. Neither the scale of job loss at Browns Lane, nor the impact on the supply chain, was as great as it was at Peugeot's Ryton factory when production was moved to a low labour cost location in Slovakia. In the case of MG Rover, its long‐term failure to develop new models, among other factors, saw MG Rover being sold to Nanjing Auto and its machinery shipped to China. A Task Force swung into action to deal with the loss of 6000 jobs and the loss of business to firms in the supply chain. Its budget was bigger than in the case of the other two closures. However, it is not only the difference in public policy response that is of interest, but also the challenge the closures pose for the understanding of structural change. While the classic reasons for closure are to be found in the closures, in the aftermath Ford is continuing to shed its European acquisitions. This questions the process of capital concentration. The loss of production capability to the West Midlands also blows wide the auto cluster in the West Midlands and makes it more likely that we can see a merging filiere developing in the ever‐changing geography of production. Copyright © 2008 John Wiley & Sons, Ltd.