Plant Closures, Multilocational Firms, and the Urban Economy: Sheffield, UK

Abstract

In the United Kingdom, many jobs have been lost through plant closures over the last decade, and many of these have arisen from plant closures implemented in urban areas by multilocational firms. In this paper, a conceptual framework for analysing plant closures by multilocational firms is outlined and this is used to interpret data relating to Sheffield, England. Over the last decade the city experienced the closure of seventy-seven large plants (each with over 100 employees) and nearly 90% of these were closed by multilocational firms. Approximately 20% of these closures arose from a decision by a firm to quit a product line (termed a ‘cessation closure’) but the majority involved the closure of a plant while the firm maintained production of a similar product elsewhere (termed ‘selective closure’). A distinction is made between intraurban and interurban selection and an interview programme (using two different research strategies) is used to identify the factors which influence interurban selective closures. Whereas previous studies have dismissed the influence of the local environment on the closure decision, a small but distinct environmental influence is detected. The plants selected for closure have (compared with another plant in the same firm) one or more of the following characteristics: small product range; low level of productivity; less-sophisticated technology; older buildings and machinery; a smaller number of employees; a greater distance from head-office. Characteristics which arise from the local environment are: site difficulties; poor labour relations; and, less certainly, higher local tax demands.