Foundations of local attachment: firm location and embedding

This section focuses on understanding why firms in Southern Staffordshire selected this area as a location and how resources within the area have served to embed them. In an economy where production networks can be both concentrated and dispersed (Gereffi et al, 2005), understanding the attachment between firm and locality has become more refined. This has progressed from simple proximity to core marketplaces by incorporating a broader

understanding linking prosaic factors of service and amenity (Molotch & Logan, 1987;

Shearmur, 2011) to their effective utilisation through a set of tangible and intangible

exchanges, specifically around knowledge (Andersson & Karlsson, 2007; Bathelt et al, 2004;

Maskell & Malmberg, 2007; Storper, 1997). Critical to this has emerged the phenomenon of firms becoming both locally embedded and globally connected (Swyngedouw, 1997), bound into a reinforcing and evolving set of exchanges underwritten by the manifestation of key supporting factors accessible to the firm.

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The manifestation of embeddedness across firms provides a key indicator of how they are bound into a local or regional form of spatial economy. The emergence and transition of what are considered critical factors, be they physical infrastructure via road and rail or sites and premises, embedded aptitude in skilled labour, or more ephemeral networks binding local to global (MacKinnon et al, 2002; Peck, 1996; Phelps & Alden, 1999, Potter & Moore, 2000, Swyngedouw, 1997) vary between firms, consolidating and transforming through the demands of changing markets and products with their own set of spatial and functional implications. To examine how this critical infrastructure emerges within Southern

Staffordshire, this section focuses on the two key questions of location and embeddedness.

Taking these individually, it progresses to consider how critical factors also emerge in a plural capacity and the relationship between location and embedding.

5.2.1 Firm location: initial selections

The initial selection of present sites for trading and production in Southern Staffordshire has been influenced by various factors. For the most part these were consistent with orthodox location factors (see Peck, 1996; Phelps & Alden, 1999; Potter & Moore, 2000). None however occurred with uniform regularity across the sample, instead representing a mix of anticipated and more specific principal factors dependent on firm needs and priorities.

Of primary importance was availability of sites and premises, cited by 56% (27) of firms interviewed. Second was the more personally-rooted proximity to owners or senior managers’

homes, accounting for 35% (17) of the sample. The presence of a good transport

infrastructure, incorporating road, rail and air networks, was cited by 29% (14) of firms.

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Following these, consolidation or expansion opportunities for firms was important for 23%

(11), and both cost and an established local presence for 19% (9) (Table 5.1).

Common across these factors was their servicing of firms’ distinct needs. In the provision of sites, flexibility and variation offered multiple options attracting firms from across segments of the sector with different requirements. The availability of designated but previously undeveloped land in a prestige location and at a prestige position offered some firms the opportunity to secure premium sites or invest in bespoke buildings, in certain instances linking with other similar industries to build a highly localised signature cluster. This provision of ‘status’ sites ran alongside more prosaic, cost-based considerations, determined by land value and a broadly available purchase option. This was enforced by a perception of limited options outside of Southern Staffordshire.

Table 5.1: Principal factors in initial firm location

Factor Firms % Firms

Site/Premises Availability 27 56%

Close to Home 17 35%

Transport Infrastructure 14 29%

Consolidation/ expansion 11 23%

Cost 9 19%

Established Local Presence 9 19%

Central Location of area 7 15%

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Site potential was not solely about sites themselves but also about complementary

historically-rooted developments in three distinct places: within the firm itself, across their sector more generally, and through state intervention. Firstly, with 75% of firms relocating from within the Midlands, including Southern Staffordshire, pivotal for any new location was personal proximity for both the convenience of senior management and the retention of key employees, thereby offering productivity gains and maintaining critical knowledge inputs (Clark & Wrigley, 1997b). Second, a legacy of sector-based investment from the former regional production system and the location of key aptitudes amongst the workforce

influenced site selection (Henry & Pinch, 2000; Marshall, 1890). Finally, industrial relocation or brownfield-led urban regeneration policies encouraged relocation outside urban core areas (Dicken, 1982; Hall, 2002; Tallon, 2013); this was supplemented by a flexible land-use offer and accumulated infrastructural benefits, specifically through a broad motorway network.

Firm location within Southern Staffordshire is consistent with orthodox locational factors, emerging particularly around sites and premises and access to transport networks alongside more personal inputs or sunk costs. Whilst frequently recurring, these principal factors manifest in varying ways between firms and the function of location motivated by a

convergence of investments applied by the firm itself, their industrial sector in proximity to their location, and investment by the state.

5.2.2 Firm locations: embedding investment and interest

Whilst critical in firm location, factors encouraging this are not static. Instead, their

interpretation and integration with firm interests is transitional as firms progress from location

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phase to the period of embedding themselves within this location. This embeddedness, serving to maintain firm operations within Southern Staffordshire, was principally

underpinned through the important role of local workforce, cited by 44% (21) of subjects.

This was followed by investment the firm had made within the area for 40% (19), and access to what was considered a high quality transport infrastructure in 38% (18) of cases. Of lesser importance, although commonly cited, was the geographical position of Southern

Staffordshire within the UK and the cost of production and operations within the area, cited by 25% (12) and 21% (10) of firms respectively (Table 5.2).

Table 5.2: Principle factors in retaining firm location

Factor Firms % Firms

Local workforce 21 44%

Investment 19 40%

Transport Infrastructure 18 38%

Central Location 12 25%

Cost 10 21%

Close to Home 9 19%

Industry Specialism 8 17%

Skills Availability 8 17%

Status 2 4%

Consolidation/Expansion 1 2%

Source: Author

A number of embedding factors are themselves historically embedded within Southern Staffordshire through state and firm-led investments. Key workforce skills are bound into a legacy of the Midlands as a manufacturing hub, embedded through a skills base in ready supply and high level of service-years within firms; the latter represented an embedding across firms, with technical capacity at shop floor level as significant as senior personnel

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(Henry & Pinch, 2000). Relocation outside of the local would compromise this resource, essentially locking firms into their location.

These firm or state investments were however contextual to geographical and market

positioning. Southern Staffordshire holds a strong central position in the UK with good road and rail links. The value of both geographic position and infrastructure are dependent on the link between firms and their client base (Peck, 1996), manifesting in a variety of hub-and-spoke style networks (Markusen et al, 1999). Benefits of this connected centrality included strategic engagement with customers across the UK, functional distribution of goods and services across a UK-wide market, and access to key air and seaports for firms in international production chains. Whilst difficult to separate place from resource, the functionality of the location was only achieved through such connectivity; as one participant commented, their location was “nothing to do with (Southern Staffordshire), it’s to do with the transport links”

(CEO, Manufacturing Firm, 16-4-13). Such historical influences translated into certain firms through significant site investment. This partially yielded the orthodox set of sunk costs (Clark & Wrigley, 1997a), but additionally future investment for relocation was a factor; this incorporated the unknown costs of relocation, the cost of production line downtime, and institutional memory of trouble with previous relocations.

Firm embeddedness within Southern Staffordshire is dependent on three principal factors of local workforce, sunk firm investments, and transport infrastructure. This embedding however needs to be reinforced through continued direct and indirect investment in such critical

factors, for which state and sectoral investment provide significant inputs alongside individual

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firms. Fundamental to these investments is maintaining proximity to key markets and clients through localised industrial aptitude or milieu.

5.2.3 Factor transition and firm enabling

The form and extent of integration between firm and locality is an ongoing and dynamic process, locational factors evolving as firms embed within the area and utilise endowments to their evolving needs. As a result, the link between factor and firm is itself in ongoing

transition, dependent on factor application through firm strategy and practice, and upkeep through broader infrastructural investment (Peck, 1996). Alongside this dynamic

reinterpretation, embedding factors are rarely singular instead occurring through a number of interdependent relationships.

In locational considerations, 77% of firms cited at least two principal factors, most

specifically around the role of sites & premises, transport infrastructure, cost and the central location of the area. This plurality was replicated amongst embedding factors, with 81% of firms citing two or more in maintaining investment. Here the key factors were the transport network, the areas’ central position, and the value and replacement cost or impact of

workforce skills. Transition between these two considerations showed some natural genesis, with factors such as sunk costs an outcome of site investment. Alongside this however runs the relational capacity of these factors and their ability to service demands placed on firms emerging from the shifting spatial patterns and production practices of their industry (Amin, 2004; Dicken, 2007; Hayter et al, 1999). In responding to these demands, factors such as the

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provision of niche industrial aptitudes embedded via a production heritage or infrastructure providing easy access to peripatetic markets offered a critical intersection.

The location and embedding of firms within Southern Staffordshire is dependent on multiple factors conforming to orthodox understandings such as physical endowments alongside the accumulation of industrial resource specifically around key knowledge inputs. Although no single factor or set of factors offers an understanding of location and embedding, commonly cited and critical for firms is the convergence of investment opportunities in the shape of employment sites, communications infrastructure offering access to markets, and an

appropriate skills base to interpret and respond to the needs of these markets. Against these, one presumed factor in location and embeddedness absent across firms interviewed was immediate geographical proximity to markets in the form of customers and suppliers, and in particular their presence at the sub-national scale. The location of these markets will be examined in the next section.