UK: East Lancs spins a new future with diversity.

UK: East Lancs spins a new future with diversity. - Diversity is the hope for an area which has learned bitter lessons since the days when cotton was king. Report by Diane Coyle.

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Last Updated: 31 Aug 2010

Diversity is the hope for an area which has learned bitter lessons since the days when cotton was king. Report by Diane Coyle.

From down the valley comes an eerie hooting and a cloud of steam. It is 5.30pm; the day's last steam train is pulling out of Ramsbottom station. Ramsbottom, southernmost town of Lancashire's Rossendale Valley, is a ghost town but, paradoxically, it is positively bustling. The East Lancashire Railway plies up and down a line re-opened by enthusiasts a quarter of a century after it was deemed uneconomic by Beeching. Last year it had 100,000 users. Cafes and boutiques line the two main streets. Every spare bit of land has had to be turned into a car park. At peak holiday weekends there is a Dickensian market, the stallholders togged out in crinolines or toppers. Victorian nostalgia is superimposed on recent industrial history.

In the days when cotton was king - that is, until 1980 - the little town had 28 weaving and spinning mills. Today there is one, with around half a dozen looms. The cataclysmic recession of the early 80s dealt a death blow to the traditional East Lancashire industries of textiles, textile-related light engineering and footwear. The 90s recession has been finishing off the job.

Out of the ashes has risen a vibrant new business community. The area still depends heavily on manufacturing, but much of it is based on new technologies. Service industries are developing too, thanks to tourism and to the influx of Manchester, Leeds and Sheffield commuters who have snapped up lovely stone houses set amid rolling moorlands a short motorway drive away from their jobs.

One of the newcomers is the BEC Group, a Blackburn-based developer of manufacturing software. The company was founded in 1978 by two local men. Its offices occupy a small corner of the giant site that used to be the British Northrop factory, once the world's biggest manufacturer of looms. Northrop still occupies another corner, selling spares. A model of the old factory stands in the reception area as an industrial momento.

BEC Group's marketing director, Andy Makeham, explains that at least half of their business lies along the M4 corridor. But the premises in their converted mill cost only £3 per sq ft. "And of course the salary bills up here are much less, though we get some very good graduates from excellent centres of education like UMIST and Huddersfield Polytechnic," he adds.

Low costs are also the big attraction for Airtours plc, whose head offices lie a few miles away in Helmshore. The company is one of East Lancashire's biggest employers: 650 staff work there, on the site of yet another mill, and just across the road from the Textile Museum. Airtours' George Marcall waxes enthusiastic about the location: "We are the lowest-cost producer in the travel business and there's the extra value of having a local workforce. They're committed to the company. We look after them and they look after us." He adds: "We've had more coverage in the financial press than any other company in the leisure sector."

Improved communications have certainly been important in the region's regeneration. Though new motorways do not quite fully link up with the M6 and M62, they make commuting from the nearby cities feasible. They also make East Lancashire an easy stopping-off point for tourists heading for Blackpool or the Lake District and parts of the region have a certain bleak beauty. Even those satanic mills look attractive. One long-established footwear manufacturer in the Rossendale Valley has relocated down the road to a small industrial unit in an old dye works. It nestles by a stream, surrounded by fields. The tone mill has been cleaned and there is a cafe in its courtyard. This is industry Tolkien-style.

This manufacturer could himself do with a bit of elfin help. The managing director says the firm cannot compete with cheap labour imports, and cannot easily convert to producing higher quality goods. "This is a volume industry. When you start increasing the price you lose the volume and we need so many units through the factory to recover our overheads. The quality market is a harder market to crack, and the higher level of skills needed doesn't come overnight."

His firm has depended on a DTI Regional Selective Assistance grant for the past two years. Many local shoe and textile firms are currently working two or three-day weeks. The UK textiles industry as a whole has shrunk from one million to 400,000 workers during the past 20 years. This has occurred despite massive investment. With sales down due to the recession as well as unrelenting import competition, the traditional Lancashire industries are still in decline. "It's dreadful," says a textiles manager. "Our factory is turning out less than a third of what it did in 1930. Huge lumps of business are being taken out of the industry and going to Far East suppliers."

The latest recession has affected many of the new firms as well. Several small, high-tech manufacturers complained to Management Today that their banks had pulled money out of their business in 1991. Unemployment has risen to 8.1%. The area has proved vulnerable to closures by national firms that have been forced to cut their workforce. Coloroll was an early and spectacular victim of the harsher economic climate. Coats Viyella has closed Lancashire factories and GEC has trimmed its local workforce. On the other hand, the unemployment rate is below the national average of 9.4% and has increased less than in many other regions of the country. House prices have fallen, though not by much.

The resilience seems to stem from several sources. One is the fact that, as BEC Group's Andy Makeham puts it, "All the fat in Northern companies was slimmed out 10 years ago." Another is the low cost base. A further, perhaps surprising, reason seems to be that much of the new business is very small-scale. Many of these companies have found niche markets. There is also a great deal of support available from central and local government. Until 1993 swathes of East Lancashire have Enterprise Zone status. A range of DTI grants have been available. Several local councils, notably Blackburn and Hyndburn, have highly regarded economic development units. The area's best protection has probably been the sheer variety of businesses it hosts these days. Once bitten, twice shy - it is as if some higher power decided, after the scorched earth experience of the early 1930s, that the area's economy would never again be caught out by over-dependence on one industry.

The ultimate symbol of how much of this part of Lancashire has changed is a handful of smart restaurants in a town where 10 years ago a single Chinese shop was the only bridgehead of diversity. New service industries, from finance to retailing and tourism, are the froth on top of economic redevelopment. The East Lancs tourist attractions like the Textile Museum and steam railway evoke the ghosts of the region's industrial heritage just as it is finally being laid to rest. That steam train pulling out of Ramsbottom station sounds for all the world like a cotton mill's hooter signalling the end of the shift.

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