South Wales: Iron and Steel industrial location and industrial decline/ redevelopment

This is one of your case studies for economic activities, focussing on industrial location, you will receive hard copies of this from your teachers. Cheers LEB

Background:
South Wales has experienced both growth and decline as an industrial area.
During the 19th Century Southern Wales became a vitally important industrial area, for both iron and steel production. The steep valleys, with their fast flowing rivers, provided power and transport. The hills were rich with raw materials, such as coal, iron ore and limestone, and the area was close to the ports of Cardiff and Swansea. In 1860 there were over 30 iron works in the valleys of South Wales. They provided vital employment for the local villages, which became almost solely dependent on the new industries.

NB: This image will be given to you on a case study card by your teacher (Mr B)

The modernisation of the iron and steel Industry
During the next 40 years improvements in the smelting process, meant that the production of iron was replaced by steel manufacture, which was more profitable.The natural resources needed were the same.By the 1990's only two steelworks were left in South Wales, and both of them were on the coast. The coal and iron ore deposits of South Wales have long since run out or become too costly to get at, so both of these raw materials are imported from places such as Africa and South America. The closure of the mines in the Valleys of South Wales caused huge social problems.

The new works were integrated steel works, which imported their raw materials from abroad. These aimed to make the industry more efficient and competitive in a growing world market. Not only is there competition form other countries but also form other materials that are increasingly being used instead of steel. Materials, such as aluminium and plastics.An example of one is the integrated steel works at Port Talbot. Opened in 1954, it is an integrated steelworks, which is one in which all processes of the steel making industry occur under one roof. It has created employment opportunities in the area, and has encouraged further investment and growth.

Locational Advantages of Port Talbot:
· There is a large area of flat land at the coast
· Proximity to the sea for importing and exporting purposes.
· Near by is a large workforce
· access to the entire British market through the excellent motorway links.

Hi-tech Industries and the future of the Valleys:

·Following the closure of the coal mines in the valleys of South Wales, there arose many social problems. The lack of jobs led to the negative multiplier effect; people had no money to spend so the shops and service shut down.

·The Welsh Development Agency was set up in 1976 with the aim of encouraging business to locate in the area.

·The organization worked to secure entrepreneurial growth in Wales by increasing the number of startup businesses and by persuading multinational companies to relocate or open subsidiary facilities in Wales.

·Part of their remit was also to develop infrastructure to tempt industry into the area.

·At the time there was a growth in Hi-tech Manufacturing industry, which could be considered ‘footloose’ in the fact they didn’t need to locate near raw materials but only needed to be near to decent communication links like airports and motorways.

·In order to encourage such industries further down the M4 than where they would have traditionally looked the WDA used cheap land rates, grants for businesses, tax breaks and a large workforce as attractions to multinational businesses.

·Companies such as Sony, Bosch, HP, LG and Toyota have all re-located to South Wales.

·In its 20-year history, the Welsh Development Agency has helped more than 1,000 companies establish operations in Wales.

·Although only 5 percent of the UK population in Wales, it has attracted about 12 percent of the nation's international investment.

TNC example: Lucky Goldstar (LG)

Lucky Goldstar (LG) is a South Korean multinational (MNC), or transnational corporation (TNC). Transnational corporations are companies that have operations in several countries and they dominate the hi-tech industry.

Why locate in Newport South Wales:
·Proximity to the market (good for UK and Europe)
·Low wages costs and a large workforce nearby ready to work
·Excellent communication links: M4 nearby as well as large port (Cardiff) in order to import components and export finished goods
·Subsidies from the WDA OF £180 million ( which works out as about 30 000 per job created)

Impacts of LG Locating in South Wales:
6100 Jobs created for local people directly in the new LG plants and further indirect jobs through links with LG, i.e. suppliers, contractors etc. As well as this the area has become a more attractive place for people to live: disposable income for many households has gone up therefore meaning a positive multiplier effect on the surrounding area as shops and services will flourish.

Hope this helps
Mr B