CASE STUDY: CLOSING DUTCH COAL MINES 1966-1974 SOCIAL AND ECONOMIC - - PowerPoint PPT Presentation

CASE STUDY: CLOSING DUTCH COAL MINES 1966-1974

SOCIAL AND ECONOMIC IMPACT

Frank Teeuwisse, Berlin 10 October 2018

SUMMARY

• Symptoms of social and economic decay
• Context: region and employment
• Why close an entire industry (in 1965 context)?
• Implementation
• What went well?
• What went wrong?
• In an ideal world ………

DID HEROES TURN INTO LOSERS?

SYMPTOMS OF SOCIAL AND ECONOMIC DECAY IN FORMER MINING AREA

AGEING AND SHRINKAGE:

• Population 2003->2016:
• 6.7%

(vs +5% NL)

• Age 2003->2016:

<20 years -20% >65 years +40% HEERLEN/KERKRADE 2015:

• Social distress
• Unoccupied shops and buildings
• Low levels of education; high drop-out

rates

• 3rd generation unemployed
• Unemployment above average
• Poor health (physical/mental)
• Alcohol and drugs abuse
• (youth) criminality + gangs
• High support for populist parties

From a rich mono-industrial economy, to an ailing service/industrial complex

• Significant shift to services (60%)

THE DUTCH COAL MINING REGION

7 REASONS TO CLOSE AN INDUSTRY: VERY LITTLE OPPOSITION

• Cheap coal from USA and South Africa
• ECSC (European Coal and Steel Community) policy:

reduce coal production in Europe

• Imports of oil
• 1960: natural gas resources in Netherlands

discovered

• Energy consumption more efficient
• Lack of personnel (migrant workers!)
• Declining acceptance of occupational health risk

(accidents; silicosis)

17 DECEMBER 1965

“no closures of mines without a reasonable perspective of new jobs” “possibly some will earn less in future, but that will be in exchange for a reasonable certainty that all will find new work”

CHOSEN PRINCIPLES FOR CLOSING AND RESTRUCTURING

INTENTION  Mining industry responsible for execution  State support and coordination hkhkhkhkhk  Gradual closures and transition  There will be timely alternative jobs  No negative social effects due to success

• f the above

REALITY  Reluctance; state mines vs. private mines  Ministry of Economic Affairs supporting; Financial and Social Affairs reluctant  Accelerated closures  Delays and failures  Unpreparedness

TIME LINES

PERIODS:

• 1958-1965
• political and economic indecisiveness
• 1966-1974
• closure of all mining activities; central

government coordinated

• 1974-1978
• ad-hoc repairs; growing influence province

and politicians

• 1978-1990
• planned restructuring; province in the lead

SIGNIFICANT EVENTS:

• 17 December 1965 decision to stop (“1e Mijnnota”)
• 1973: OPEC enacts oil embargo: unexpected “oil

crisis”

• (new) companies went bankrupt; second time

loss of jobs

• 1974: last colliery closes
• 1975: Regional Development Institution (LIOF)
• 1977: new provincial governor
• “I will not leave this office until the day that

Limburg gets what it is entitled to”

• 1978: first all-encompassing plan to restructure

(“Perspectievennota Zuid-Limburg”)

• 1965-1990: 10 national coalition governments

(tenure 2,5 years average; changing colors)

FIGURES & FACTS

EMPLOYMENT (1966):

• 75,000 employees:
• 45,000 direct + 30,000 suppliers
• 15% of provincial work-force
• some communities 50%

ALL MINES CLOSED (1974):

• Of 45,000 direct employees:
• 7,500 (17%) new job, new skills
• 16,650 (37%) early-pension or

deceased

• 20,700 (46%) unemployed, sheltered

work, in welfare programs

• 30,000 suppliers: no records (!!)

Unemployment (official): 1965 NL 1.5% Limburg 1.0% 1968 NL 3.5% Limburg 6.5% 1975 NL 6.5% Limburg 11.5% 1984 NL 18.0% Limburg 22.0% 2016 NL 5.5% Limburg 6.0%

STIMULATING RE-INDUSTRIALIZATION

• Incentives (after 1969 also for Service

companies):

• Tax reductions, price reductions
• Guaranteed loans
• 25% investment support
• Relocation of central governmental

agencies to the region

• Attracting existing companies
• Improving industrial infrastructure
• Job creation projects
• Agreements with private owned mines

(foreign investors)

• (re-)education, career counseling,

employment services 1965-1972: ~€500M state support (1,1 billion Dutch Guilders) :

• €135M for early retirement
• €250M direct support for mining

companies restructuring

• €55M (re-)education/employment

services

• €55M interest, and 1 closure without

restructuring 1965-2016: total support estimated €3,200M

• Evaluation 2015: “sloppy spending”

WHAT WENT WELL

• Good cooperation between mining companies, unions, and authorities (in general)
• However: unions were supportive initially; more critical and effective >1973
• However: all had different goals
• LIOF development bank: supportive in creating 30,000 new jobs (after 1975)
• State mines attracted new activities (DAF cars (6000), Macintosh textiles, Curver

plastics, ……. Etc.

• Relocation of governmental agencies (ABP; CBS, Tax offices; Inspections, …..)
• Setting up sheltered employment programs (gardening; low qualified jobs)
• E.g.: Fonds Sociale Instellingen (sheltered workshops): from 300 to 3000 employees (1966

to 1970)

• Very effective informal lobby after 1977 (provincial governor and PM)

NEGATIVE EFFECTS - 1

• A general direction only (=closure); no vision on detail
• In 1974 parliament asked for educational demand/supply figures: not available
• Unions, companies, state, (province): different reasons to support closure
• New companies and institutions required different educational profiles and ages
• Re-training >40 years age unsuccessful and frustrating
• Most miners >40 years; many vacancies required <35 years (DAF cars)
• Subsidies and support for weak enterprises:
• Initially little control; 50% not earmarked
• Financial closure (“pardon”) 1982: “Mining industry fulfilled its obligations” (min EA)
• Oranje Nassau group (private; 4 mines) created 500 jobs for 6000 gone (and received €200M)
• DSM (former state mines) successful privatization (1996) : from 30,000 jobs in

region (1958) to 4,000 (2018)

NEGATIVE EFFECTS - 2

• High investments to support economic infrastructure of region (airport, roads,

university, congress center, theatres, hospitals, etc.)

• Limited investments in innovation
• Original mining area gets limited support:
• Heerlen (center mining activity) had no plans, no capacity to plan and coordinate, no lobby
• “there was no plan; our efforts were insufficient” (dep. mayor Zuidgeest)
• Maastricht (prov. capital) had limited industry and high ambitions
• “Heerlen did not use the money, so Maastricht picked it up” (dep. mayor Hoen)
• Traditional social support structures disappeared (mining companies; social/sports

clubs; church); no immediate replacement

• focus national government mainly on Amsterdam/Rotterdam/Utrecht triangle
• nothing moved without a strong lobby
• several governmental agencies were moved back to central

OBSERVATIONS & CONCLUSIONS

• Restructuring took >40 years
• weak ventures were attracted by incentives
• Part of subsidies not earmarked for specific projects; limited checks, mainly afterwards
• Period of closing too long for governance by elected statesmen
• Employment was main criterion: hidden unemployment was high
• no mechanism to react to deviations from principles, and rapidly changing economic climate
• Industrial development bank was established 10 years after start of restructuring
• Companies loyal to shareholders
• Economic policies successful (eventually); social policies not successful
• Policies only aimed at direct employees (not at suppliers)
• Many of the good initiatives were arranged informally (political lobbying, pressure groups)
• Success came when province took over from central government

REQUIRED FOR SUCCESS:

• Strong vision;
• criteria for success: matching the vision & robust
• A well defined, all-comprehensive and realistic plan
• Do not skip the early phases of project management (goal definition, developing options,

stakeholder consultation, freezing scope, guaranteed resources)

• A program management office: independent and with high mandate (a high

commissioner?)

• Checks on meeting criteria, and continuous independent reviews (and formally act on

them!)

• Focus on sustainable ventures and innovation
• No scope changes (timing; criteria for success; subsidies, ….)

2018: A NEW GENERATION SHAPES THE FUTURE