Tuesday, March 17, 2009

My sources in conflict!!

This is a very odd story. Some of my most reliable sources tell me that a car parts business, named Shimuzi, is to move a substantial part of its production from its plant in Telford to its plant in Welshpool. But another equally reliable source tells me that this is not the case. I'm sure things will become clearer over the next few days. In the meantime, there are no facts that I feel able to rely on.

But there's a context to this story which makes it noteworthy - the differing business support structures in Wales and England. This was recently raised by the MP for Shrewsbury who felt that businesses were being attracted over the border into Wales by a more generous grant structure. Personally, I did not consider this to be a significant problem, mainly because the only recent example of a cross border jobs move that I know of was the decision by Stadco Powys to move work from its plant in Llanfyllin to its plant in Shrewsbury, putting 106 Montgomeryshire employees out of work.

Because there seems to be some uncertainty about what is actually happening at Shimuzi, its not possible to comment specifically about this business tonight. But there must be lots of questions being asked in boardrooms across the country. We have so much hyperbole pouring out of Government, both at Westminster and Cardiff about taxpayer's money being ploughed into job retention and creation, that there must be temptation to test the water, and find out whats available. For five years in the early 90s I was Chairman of the Development Board for Rural Wales, and it was our job to promote economic development in Mid Wales. But it was never my aim to persuade businesses to move from another part of the UK, leaving redundancies in their wake - unless there was some specific reason why they needed to move. Bearing in mind what has happened to the economy of Welshpool over recent months, extra jobs in the town would be great news - but I would not feel it a cause for celebration, if it resulted in redundancies in Telford.


MH said...

We'll see what truth there is in the story, Glyn. But isn't a need to cut back your operation from two sites to one enough of a "specific reason why they need to move".

And what's wrong with us making Wales a more attractive place than England to do business, so that any company in that unhappy situation chooses to base themselves here?

Put it another way: if the Welsh Government didn't offer such incentives, I could think of many who'd loudly complain that they were useless at doing their job. Devolution in action. Just think of how much more we could do to encourage business in Wales if our Government had more fiscal autonomy.

Glyn Davies said...

MH - Lets leave the specific business aside. Jobs moving across borders is never easy to manage for a development agency, (and the sane would apply within regions of England). The need to centalise operations is certainly a reasonable arguemnet, which is why there was no great criticism amongst the sadness when Stadco announced its move. And of course there is straight forward competition when new jobs are being created. What is problematic is if jobs relocate across borders simply for some financial incentive. Another problem is that if the Assembly Government started being seen as 'poaching' jobs, there would be retaliation, which would benefit no-one. And remember that 'Fiscal autonomy' works both ways

MH said...

You talk about "retaliation" and "poaching", yet if we were talking about a company that had operating centres in Germany and Wales, I'd find it odd if you used the same analogy.

The UK's "fiscal autonomy" with respect to Germany is the main tool at its disposal to establish an economic climate that makes it more attractive to do business in the UK rather than Germany. True, the UK Government might not succeed in doing so, but we'd all expect them to at least TRY ... and, of course, expect the Germans to do the same.

That needn't be mutually destructive. The idea is that each country can take advantage of its own unique circumstances to set a fiscal regime that suits those circumstances, rather than rely on a one-size-fits-all solution. Would you put an end to the ability of different EU member states to set their own levels of tax, etc.? Would you want to see uniform tax rates across the whole EU? Of course you wouldn't.

Glyn Davies said...

MH - I'm not sure what you are getting at. I can see nothing with which we disagree.

Anonymous said...

can give you examples in south powys of companies leaving for hrefordshire and vice versa - it is strange what goes on in the grant giving, attract investmnet world.

MH said...

Then I'm glad, because I'm not looking for a disagreement, Glyn.

Just substitute "Wales and England" for "the UK and Germany" in my last post. Then explain why the first might be a problem that involves poaching and retaliation that would benefit no one, but the second isn't.

I just don't see why "relocating jobs across borders simply for some financial incentive" is a problem in one case, but accepted as normal, healthy competition in the other. Every UK politician will talk about improving Britain's competitive edge in the global economy, why can't Welsh politicians do the same for Wales?

Glyn Davies said...

I'm British as well well as Welsh.