Future for York after Terry's goes

SO now we know. Two hundred years of proud manufacturing history has been weighed in the balance against harsh economic reality, and has lost. Decisions made by a multi-national corporation on the other side of the world have consigned Terry's to the scrapheap, and condemned 316 workers to an uncertain future.

The new global economy is a hard place, where tradition and loyalty count for little and profitability is all. So how can a city such as York compete? And how can we make sure other multi-nationals, such as Nestl, won't one day decide they can operate more cheaply elsewhere? We canvassed a few opinions...

The trades unionist

The global economy is a fact of life, says Paul Jagger, TUC regional secretary for Yorkshire and Humberside. So large multi-national corporations such as Kraft will continue to take decisions from a distance that make hard economic sense in terms of their global profits, but which can have disastrous consequences for local communities.

The only way to prevent that happening would be to return to a command economy - something which isn't going to happen.

So how does York ensure that more of the city's jobs are not lost to competition from low-wage overseas jobs markets? As a trades unionist, he would like to see better legislation to protect staff from dismissal. But that is only part of the picture, he concedes. To succeed in the global jobs market, a city such as York has to play to its strengths.

"It would have been nice if Kraft had decided to keep the Terry's factory in York but in the hard reality of the global economy they were unable to do that," he says.

"So we've got to look at that and look at ways of making it easier for favourable decisions to be made on behalf of employees in this area."

There are two ways to achieve that, and they don't necessarily involve expecting local people to work for pittance wages. A highly-skilled workforce may cost more, but it also produces a higher-value product, and industry recognises this.

That's where York should be competing, he says: for hi-tech, high-skilled, high-value jobs. It would have been good, for example, if instead of abandoning York altogether, Kraft could have thought about doing some research and development on new confectionary lines here.

To be able to succeed as the kind of city where employers think of solutions like that, York needs to create an attractive economic environment for business, with good communications and infrastructure so that big companies want to come here. That involves providing a well-trained and qualified workforce, ready to fill new jobs.

And for those in more traditional manufacturing jobs, such as soon-to-be redundant Terry's workers? Proper training and re-training to tackle their "skills gaps".

Not everything about the global economy is bad, Paul points out. It may make the international competition tougher but if Britain can win the fight for skilled jobs and leave the dirty manufacturing jobs to others, it will be a far nicer and cleaner place to live.

The council leader

WHAT we are seeing in York, says council leader Steve Galloway, is a fundamental change in the profile of jobs in the city.

A larger proportion of the workforce in future will be employed in areas such as the biosciences, technology and higher education.

"If I were looking 20 years ahead I think we would have a quite different profile in terms of jobs - with hopefully varied, good quality, well-paid jobs," he says.

The closure of Terry's is hugely disappointing. But overall, York is coping with a changing jobs market very well. "We have good communications, a good environment, and over recent years we have seen the economy diversifying.

"We're no longer dependant on confectionery, the railways and tourism."

This is not to give up on manufacturing entirely, he insists: although any jobs in traditional industries will probably be more specialist than in the past. Rail maintenance rather than manufacturing, for example, if indeed Network Rail do base a big maintenance operation at the former Thrall site on Holgate Road, bringing 250 jobs to the city.

Another possible jobs boost for York in the near future - and one perhaps more typical of the city's new profile - would be the relocation of 250 civil service jobs here, though this has yet to be confirmed.

So York is doing pretty well. There is no room for complacency, however, Coun Galloway says. Yorkengland.com - formerly the York Inward Investment Board - has a budget of about £1 million a year, and is working hard to attract business to the city, promoting sites such as the new business park at Monks Cross.

Other challenges have to be faced. The need to provide the right kind of housing for York's new, wealthy labour force, for one; and the need to provide the right training and education opportunities so people can take advantage of the new skilled jobs (and to ensure we have a sufficiently skilled workforce to attract the right kind of employers).

Coun Galloway accepts that Terry's workers will be worried. But in Future Prospects the city has an organisation with a strong track record on helping people acquire new skills, he says.

"We've done it before with people such as those at Terry's," he says. "It can be done."

The most important thing now for the Terry's site is to ensure that it is used to generate fresh jobs to replace those lost; Coun Galloway believes the site was underused and could even generate up to five times as many jobs as the 300 that are going.

There is never a good time for a blow such as the closure of the old chocolate factory, he concedes.

But with the economy buoyant and unemployment low, the city is still in good shape.

The economist

We are at least as much winners from the global economy as we are losers says Steve Watson, senior lecturer in marketing at York St John College. It's not only the US that has multi-nationals operating all over the world: the UK has them too.

Plus there are advantages to the global economy in terms of the kind of lifestyle we all want to lead: wide consumer choice in the local supermarket, for example, at prices we can afford.

Nevertheless, the global power and reach of the multi-nationals causes conflict between the well-being of communities and the demands of economics.

The fluid movement of capital around the world allows multi-nationals such as Kraft to make strategic decisions about 'cost advantage' that are far removed from the human consequences.

In short, the interests of shareholders come before those of society itself.

Governments can do little to alter that, Steve says, because they don't want to be seen to be interfering in free trade.

Doesn't there come a point when they should do so? Possibly, he says, but the impetus of the modern global economy is towards free trade.

Any attempts to interfere with that - such as, for example, offering subsidies to budget airlines to use local airports - tend to be frowned on. With capital free to flow around the world, it is difficult anyway to see what national governments can do.

The emphasis, therefore, tends to be on encouraging economic development rather than protectionism.

He agrees with Paul Jagger that the solution for a city such as York is to play to its strengths

"We have to accept that capital will move around the globe," he says.

"But it still has to land somewhere. We have to take measures to make ourselves sufficiently attractive that they the big multi-nationals want to locate their business here."

One way of doing that over the past 20 years has been the increased flexibility of the labour force.

York has other cards to play. It is a beautiful city, with excellent communication links, a thriving hi-tech sector, and excellent educational institutions to provide a high-skilled workforce. This all plays to the city's advantage.

He would also like to see more of an entrepreneurial spirit and better opportunities for starting small businesses. That is already happening, he says. We may think we live in a global economy dominated by the big multi-nationals. "But most businesses now are small to medium-sized."

Updated: 09:52 Wednesday, June 23, 2004