Phoenix companies could be the saviour of Britain’s industrial towns

When Margaret Thatcher launched her assault on Britain’s industrial towns in the 80s suspicions that the country’s coal output may be on the decline were already there for all to see. Much of continental Europe had started to wind down their operations and the view from the Conservative benches was that the UK must follow suite. The problem was that they had nothing to put in its place, and so the benefits culture that still exists today was created.

With several prominent manufacturers already threatening to quit Britain if Brexit negotiations don’t go their way the warning signs are there again for a ruling Conservative party, and if the threat materialises May could find herself in the same position as Thatcher did where towns that emerged on the back of industry are plunged into darkness when it up sticks and leaves.

You don’t have to look far to see examples of how such an eventuality might materialise. In Turin, at the heart of Italy’s industrial north, manufacturers are increasingly putting a strain on the supply of jobs as they look to more desirable locations elsewhere in Europe. Whirlpool, the US appliance maker, has recently confirmed plans to lay off almost 500 staff and shift production to Slovakia, a move that comes hot on the heels of disruption caused by some of the city’s biggest and most relied upon firms.

Once dubbed the “City of Fiat”, Turin put Italy in the league of industrialised nations on the back of its car output. At one point over half a million people worked for the now American-owned Fiat, but today just a couple of thousand of those employees remain, and prospects look increasingly bleak for the city’s skilled workers. Fiat Chrysler announced earlier this year that it is to cut working hours at its Mirafiori plant in Turin by almost 60 per cent after previously halting production of the Levante for several days last year. The reduction in hours works out as an equivalent of 2,080 jobs lost, the union said, and will come as a huge blow for a city that is so reliant on car manufacturing.

But if Turin is the City of Fiat, is not Sunderland the City of Nissan? Is Oxford not the City of BMW? Is Solihull not the City of Jaguar Land Rover? With Brexit negotiations still ongoing, several UK cities are in jeopardy of having their lifeblood stripped away from them with no alternative left in its place. Some 7,000 Nissan workers could lose their jobs if Theresa May gets Brexit wrong, according to the latest reports, and a hard Brexit will cost Jaguar Land Rover an untenable £1.2 billion a year the company’s CEO has said. And if they go, what takes their place?

The answer may lay in “phoenix companies” that obtain new life by arising from the ashes of their predecessors. In Turin, Lavazza has prospered as other manufacturers have declined in the area and has been able to call upon a surplus of skilled labour in order to fuel its expansion. Its new headquarters, dubbed the Nuvola Lavazza, showcases its strong ties to the region and its high propensity for innovation giving a smart new converted look to the Aurora district in a bid to inspire people, foster dialogue and offer cultural, social, business and food experiences.

Group Vice President Giuseppe Lavazza explains: “We wanted the Nuvola Lavazza to be much more than the efficient and innovative headquarters of a modern company. It’s a huge portal linking our Company, the city where we were founded and over 90 countries in which Lavazza operates. It is in Turin and its Aurora district where we decided to continue to grow. This is why Nuvola is also an expression of our determination and will to become leaders in innovation, growth and prosperity to the community and the place with which we come in contact. Nuvola gives a renewed and energetic continuity to the Lavazza business: a symbol of openness and sharing where people mix, working together, producing, exchanging ideas, discussing and communicating with the world.”

With the UK home to a plethora of skilled labour the impetus on May in the run-up to Brexit negotiations isn’t just to future-proof current industries but also to pave the way for companies who can strive where others can’t survive.  The Media City redevelopment in Salford’s old dockyard is a good example of where this has happened in the past, and with many northern cities embracing new tech this could provide an innovative backbone.

But an economy bereft of manufacturing is one that is ultimately susceptible to global tremors of instability. GMB, the manufacturing union, has responded to a ‘worrying’ fall in manufacturing output today after ONS figures showed a fall in manufacturing and construction as part of the latest GDP update. In the words of its General Secretary Tim Roache, it shows that “the Government’s haphazard approach to Brexit – coupled with Trump’s protectionist steel tariffs, are putting high quality UK jobs on the line”, with “families unable to make long terms plans because they’ve no idea if their jobs are safe”.

For manufacturers in Britain the future is less than certain. Disruption from the East married with uncertainty from the West is creating a perfect storm of economic instability as the government squabbles over their plans for Brexit. Unless plans are put in place May could be up against the same industrial decline as Thatcher. Let’s hope that this time there are firms waiting in the wings to help our industrial cities rise from the ashes.

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1 Response

  1. Nick

    That’s not the meaning of ‘phoenix company’.

    A phoenix company is formed when the assets of an insolvent company are purchased by the company’s directors during administration.

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