The Miskin plant in Wales is another casualty of the economic downturn as Bosch decides to close it down.

It has been announced today (15 January) that the German engineering firm Bosch is to close its car alternator factory in Wales next year, adding to the ongoing manufacturing job losses in the UK.

Management told workers at the plant at Miskin near Cardiff yesterday that following three months of consultation, the decision has been made to cease production entirely at the site.

After deciding on the option b scenario of a complete plant closure in summer 2011, 900 jobs will be lost – further consultation into February will ensure that the redundancy packages are acceptable to staff.

The announcement comes after Bosch finalised the study it started in 2007 to investigate the feasibility of the introduction of a new alternator product to Cardiff – they found that a new product could not be competitively manufactured there.

Furthermore, in comparison to 2008, sales in 2009 for the current alternator product in Cardiff dropped by 45% and are forecasted to decrease by a further 65% in 2010.

Now, production at the Cardiff plant will be phased out in line with the reduction in customer demand and the transfer of equipment to Hungary.

This latest factory closure comes after a long line of similar news stories, where manufacturers are forced to seek higher production value elsewhere, usually in Eastern Europe and Asia. Another German-owned manufacturer Arntz Belting is on the brink of closing its factory in Pennyburn, Northern Ireland, and Kraft’s potential purchase of Cadbury could put up to 30,000 jobs at risk. But what are the long-term effects of such decision-making?

Depending on one’s socioeconomic and geographical position in the world, such redistribution of production can have varying effects, and there exist arguments that value and support outsourcing, offshoring or nearshoring.  Whilst jobs are removed from the UK or the current location of production, more are being created in a poorer, underdeveloped or developing nation.

The injection of employment into such areas is a positive byproduct of this cost-cutting initiative, but only if managed carefully and with respect for new employees. Much attention is focused on any company who fails to develop the wellbeing of its new host communities, and woe betide any brand that outsources to a sweatshop or anything even close to resembling one.

Globally, we have experienced an economic downturn, and it is this recent activity that is being blamed for the cutbacks and factory moves. Yet it is surprising how many organisations appear to lack the forward planning and contingency funding to deal with these corporate risks, and how inept some seem at managing on their own without bail-outs from either government or other private firms.

To be fair to Bosch, the automotive sector has been hit considerably hard, coupled with the industry’s development of new core technologies – transformed to accommodate demand for smaller, more fuel efficient and less polluting vehicles.

All this has left its mark on the Bosch Group in 2009, which will show a negative operating result for the first time in sixty years.

In response to the closure in Wales, the President of the Starter Motors and Generator (SG) division of the Bosch Group, Germany, Mr. Asenkerschbaumer, said:

“I deeply regret that we could not find a solution for the Cardiff plant. I have spent time in a previous role as Plant Manager in Cardiff and I know first-hand the dedication and commitment of the employees here. Therefore, this is for me personally one of the toughest decisions in my career. However, with my responsibility for the whole Starter Motors and Generators division the economic situation in the market leaves me no other choice.”

What is clear is that this particular decision appears to be unavoidable, and has at least been communicated to those affected in an honest and respectful way, with the intention to do the best by staff during the process of letting them go.

What are your thoughts on offshoring? Is it an unavoidable aspect of capitalism? And does it benefit those new workers in developing countries? Let us know.