ABSTRACT
When it is rationalization through which job loss takes place, the geographical pattern of employment decline is determined by the kind of criteria used to decide where capacity is to be cut. Instead of the usual ‘location decision’, where to put a new plant, the question here is which factories, or parts of factories, to close. At its simplest, rationalization follows a straightforward scrapping model. That is, in some notional pure form, the abandonment of capacity will take place according to a profitability criterion, with the least profitable capacity being scrapped first. In order to get any further with understanding the geography of decline under rationalization, then, it is necessary to identify the main determinants of the level of profitability. These can be grouped into two types. First, there are those that are ‘internal’ to the production process: characteristics of the factory itself. Second, there are those that are ‘external’: characteristics of the factory’s location. Among the former – characteristics of production – all kinds of things may be important. In their investigations of shifting patterns of employment amongst US cities, Varaiya and Wiseman (1978) found clear indications of a pattern of scrapping based on age and labour productivity, with serious implications for employment prospects in the older cities of the North-East states. Size of plant may also be important; in a previous study (Massey and Meegan 1979a) we found that, because of economies of scale in both production and management, small outlying factories were often most vulnerable to closure, as companies concentrated their remaining production in their main factories. Clearly, in that precise form, this is an option only open to multi-plant firms. A similar result may well be arrived at, however, in a sector entirely composed of single-plant firms if they are of different sizes, and there exist economies of scale. The second group of influences on profitability consists of those that relate to location. These may include such things as geographical variations in labour type, militancy and cost; they may include rent levels, and the various sorts of accessibility, for instance to market.
