Using 'arm-twisters' to help industry tackle joblessness
Newcastle-upon-Tyne, England — Friday noon. On a steep brick street between warehouses, a half-dozen working-age men play soccer in the wan sunlight. Tough-looking, friendly, they stand aside quietly for the occasional car. But the ball doesn't stand still, and they keep kicking it uphill so that it won't bound past them into the River Tyne below.
In his office in the city above them, Dr. John Bridge of the North of England Development Council faces a similar challenge: to find jobs to keep the north's unemployed off the streets. For him, too, it is an uphill pitch. Unemployment in the north (including Cumbria, the mountainous western county) stood at 117, 713 for December 1979 -- officially. Unofficially, because of all those who don't register with the Department of Employment, it may be half again as large.
While there are successes (a new Findus Foods plant at Longbenton will employ 1,600), there are also disappointments -- the closing of a Courtaulds textile plant in Cramlington or a Howard Rotovator factory in Washington. Month by month the unemployment figures show only a slight change. "We're running to stay in place," he admits.
The area, Dr. Bridge estimates, needs 20,000 new jobs each year. A typical new firm makes room for 50 to 100 employees. At that rate, the north needs to attract two new firms every day to succeed -- if the expansion of established firms is not considered.
The task is formidable. But the Development Council -- and the crush of overlapping county and district agencies that elbow one another to develop industry in the north -- have some powerful armtwisters on their side:
* Location. The northeast coast, dotted with ports, looks out lucratively toward Europe -- a market that, with 260 million people, is larger than the United States. British membership in the EC gives American, Scandinavian, and Japanese companies locating here a tariff- free entry in that market.
* Land and buildings. The north has 20,000 acres earmarked for industrial use, a number of secondhand buildings for sale or lease, and a vigorous program of advance factory building. In Cleveland County, units range from 27,000 -square- foot plants, available immediately, down to 750-square-foot industrial units in converted inner-city terraced houses.Such "nursery factories" -- designed for starting new small ventures -- have proved popular: Tyne and Wear County Council has 150, of which 148 are occupied and for which there is a waiting list.
* Labor. Unlike most northerners, industrial promoters find a use for high unemployment figures. They mean a ready pool of workers eager to staff new plants. The north has a working population of 1,436,000, a large variety of skills, and a centuries-old industrial tradition that readily accepts shift work and overtime.
* Financial incentives. The entire north is designated a development area, and a large chunk within it is a special- development area. New buildings and machinery in these areas qualify for a 22 percent grant from the central government. In addition, there are grants of up to L6,000 ($13,200) for each job created, tax-free grants to transferred employees of L1,500 ($3,300), five to seven rent-free years in government factories, 100 percent depreciation on most plant and machinery in the first year, and a bevy of tax relief packages that, in 1977-78, reduced the actual average rate of tax paid on company profits to less than 6 percent. Local areas ice the cake: Industries coming to Cleveland (much of which is too successful to be given special-development-area status) may find up to 80 percent of their moving costs underwritten by the local authorities.
Why, then, the persistent high unemployment? Part of the reason is the last- hired, first-fired syndrome of the north. Many firms with branches here have headquarters in the south of England or overseas -- a fact reflected in the surprisingly low proportion of professional service firms (law, insurance) here. When the business cycle dips, the plants to be closed are those away from headquarters. And, perversely, the attractive financial incentives perpetuate the problem. Given the low cost of setting up branches here, it can be well worthwhile for, say, an agricultural implements manufacturer to move in, take advantage of five or six boom years, then clear out when the market sags -- or when the rent on the factory is suddenly due.
Another reason for undiminished unemployment is the kind of work being created. Of the 1,600 jobs coming in with Findus Foods, half are for women. Copper Tools, making Weller soldering equipment in Washington, employs 120, with women making up 95 percent. Both companies, working in foods or fine wires, prefer women over men. Inevitably, they attract some employees who never were part of the work force and whose working does nothing to reduce unemployment figures.
But a central problem lies in the nature of capital-intensive modern industry. The seven-year-old Tolag engineering firm in Cramlington employs 20 men -- and six L100,000 ($220,000) precision milling machines. The more they invest in robotics and computer numerical control, the fewer people they will need to turn out their special orders of high-gloss aluminum or stainless steel components. They may be harbingers of the industrial future here. Much that is now done by hand could, with some investment, be done by machines -- which, as employers know, don't mind overtime and aren't programmed to strike.
Would that throw even more laborers out of work? Few here want to think that far ahead. They are more apt to wonder whether the north has the necessary ingredients -- the skilled labor, the engineering expertise, the sophisticated middle management -- to rival the United States and Japan in microchip technology. The successful experience here of such branch firms as Timex, RCA, Littlefuse, and Philips suggests that it might. But whether it can take the next giant step toward new firms headquartered here -- the step that could stem the drain of the region's bright young folk toward the south and retrain the work force to use fingertips rather than back-muscle -- remains to be seen.