Last week’s announcement that 540 well paid jobs were under threat at Zimmer Biomet in Bridgend is a body blow to the local economy, following on from the decision by Ford in 2020 to close its engine plant after forty years of production in the town.
If Wales is focusing on bringing in inward investing businesses, then Zimmer Biomet is exactly the type of business it needs to attract and retain. Operating in the medtech sector, its global team designs, manufactures and markets effective, innovative solutions that support orthopaedic surgeons and clinicians in restoring mobility, alleviating pain, and improving the quality of life for patients around the world.
What seems to be concerning is that reports suggest that the news came as a complete shock to local and Senedd politicians despite the business being a major employer in the local area.
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This takes me back to an interview I had with BBC Wales in 2010 when a similar closure was being discussed, namely that of Bosch in Miskin near Cardiff. At the time, there was also surprise that the business had decided to do this even though it was clear to those in the automotive industry that the alternators it made at the factory could be cheaper elsewhere.
I made the point that if the Welsh Government is not put into a situation where it tries to shut the stable door after the horse has bolted, then such decisions mustn’t come as a surprise and there must be regular dialogue between officials and senior management within such businesses.
This would enable both parties to ascertain what could be done to support their strategy rather than scrabbling around for solutions after a multinational board has made its decision.
For example, could a case have been made to the Bosch board to develop other areas of their businesses or providing financial support to develop new products at the plant?
At least if such conversation had been in play well before senior executives put forward plans to close the plant, alternatives could have been considered and costed. Instead, the impression was of politicians and civil servants being caught out with an announcement that cost hundreds of well-paid jobs.
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Whilst there is never any guarantee that any business will change its plans, surely the time to make the case is before a final decision by the senior board and not afterwards when all that can be done is to develop retraining packages for workers that have lost skilled jobs.
There was also a certain naivety over the scale of operations by the business at the time. Whereas the loss of 900 jobs were a body blow to the local economy, it was simply a small efficiency gain in a worldwide business that employs over 400,000 people, as was with the case with Bosch.
The same is not necessarily true of Zimmer Biomet which has 18,200 jobs worldwide but as this potential closure only accounts for less than 3% of its workforce, you can see why executives would see this as acceptable in a global business looking to makes itself more productive.
Yet it would seem that there was no prior dialogue between Welsh Government officials and the senior management within the business prior to this announcement which is worrying given that the business received £700,000 in public funding in 2016 to create a European Centre of Excellence for Porous Coating to support the manufacture of orthopaedic implants.
Surely if taxpayers’ money has been provided to any inward investor, then must be a better way to manage the relationship so there is considerable prior notice given to the Welsh Government about any changes to the conditions of that grant?
Indeed, the company’s senior vice-president for global operations and logistics said at the time that “the company’s recent investments in the Bridgend plant would not have been possible without the government’s support and without the dedication of the Zimmer Biomet employees in Bridgend”.
If this is the case, then it cannot simply be a one-way process in the future with no consequences if tens of millions of pounds are being spent on overseas businesses to locate and expand here in Wales.
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Yes, I am deeply passionate on supporting and developing home grown firms and there needs to be more done to ensure the creation, growth and development of Welsh firms in a more strategic way.
However, we also mustn’t forget also that the 475 large foreign-owned businesses in Wales employ around 117,000 people across the nation and generate over £37 billion in turnover every year. They are therefore important contributors to the Welsh economy and gathering regular intelligence on their operations should be a priority.
Certainly, Welsh Government ministers shouldn’t be put into a position where they seem to be the last people to find out what is going on and, as a result, must then resort to last minute negotiations to keep those businesses in Wales.
Therefore, a more constructive approach to managing relationships with major employers is important in the future especially if they are in receipt of public funding.
This is not only critical in dealing with such potential closures but could also result in a stronger and more fruitful partnership between the public and private sectors in supporting the future growth of those large businesses that invest into Wales and maximising their impact on the economy.