Skip to main content

By John Bryson, Director of City-REDI

The economy of the West Midlands is in a continual state of restructuring. In June 2015, Goodyear announced plans to close its only UK manufacturing plant with the loss of 330 jobs. Goodyear has been part of the economy of the West Midlands since 1927. The loss of the Wolverhampton plant reflects an on-going process of restructuring for Goodyear as the company has concentrated production across Europe, Middle East and Africa. The establishment by Wolverhampton City Council of a Goodyear taskforce to assist workers affected by the closure is a welcome development.

The Goodyear decision should be placed in the context of the regional economy which continues to restructure around advanced manufacturing and engineering, digital and creative industries and financial services. These three sectors are key growth sectors and are closely aligned with UK national economic policy. In 2014 the West Midlands had the largest increase in overseas exports (11.2%, £28.4bn) making the region the third largest export region in the UK after London and the South East. China is the region’s primary export market followed by the US and Germany; the area is the only English region to have a trading surplus with Asia. In the year ending September 2014 exports from the West Midlands to China increased by 49.1% and to the US by 13.4%. This was by far the largest increase in exports to China by an English region with exports in road vehicles increasing by 60.2%. In 2013 more than a third of the UK’s exports to China came from the West Midlands and the region had a trading surplus with China of more than £1.74bn.  Jaguar Land Rover (JLR) accounted for over half of this growth in exports. Nevertheless, many smaller firms also experienced significant increases in their exports to China. Thus, Brandauer, a small precision stamper, producing parts for kettles has experienced a 15% increase in exports to the Far East over the last three years. The region’s export performance highlights the continued dynamism and competitiveness of firms located in the West Midlands.

The dramatic growth in engineering exports, profitability and local employment is playing an important role in the transformation of the regional economy. There are major problems that still need to be addressed. The workforce in many advanced manufacturing and engineering firms is ageing and firms find it difficult to recruit. This aging of the workforce is a major challenge for manufacturing firms. Business requires some degree of certainty. The majority of firms are trying to enhance certainty or manage uncertainty. The EU referendum provides businesses with additional complexity and uncertainty. Nevertheless, for some firms in the West Midlands, the European economy is less important compared to the US and China. It is important that firms focus on what they do well – the development and production of innovative products and supporting services.