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: HEERLEN/KERKRADE 2015: • Population 2003->2016: -6.7% • Social distress (vs +5% NL) • Unoccupied shops and buildings • Low levels of education; high drop-out • Age 2003->2016: <20 years -20% rates >65 years +40% • 3rd generation unemployed • Unemployment above average • Poor health (physical/mental) From a rich mono-industrial • Alcohol and drugs abuse economy, to an ailing • (youth) criminality + gangs service/industrial complex • High support for populist parties - Significant shift to services (60%)
THE DUTCH COAL MINING REGION
• Cheap coal from USA and South Africa • ECSC (European Coal and Steel Community) policy: reduce coal production in Europe 7 REASONS TO • Imports of oil CLOSE AN INDUSTRY: • 1960: natural gas resources in Netherlands discovered VERY LITTLE • Energy consumption more efficient OPPOSITION • 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 REALITY Mining industry responsible for Reluctance; state mines vs. private execution mines State support and coordination Ministry of Economic Affairs supporting; hkhkhkhkhk Financial and Social Affairs reluctant Gradual closures and transition Accelerated closures There will be timely alternative jobs Delays and failures No negative social effects due to success Unpreparedness of the above
TIME LINES PERIODS: SIGNIFICANT EVENTS: • 17 December 1965 decision to stop (“ 1e Mijnnota ”) • 1958-1965 • political and economic indecisiveness • 1973: OPEC enacts oil embargo: unexpected “oil crisis” • (new) companies went bankrupt; second time • 1966-1974 loss of jobs • closure of all mining activities; central 1974: last colliery closes • government coordinated 1975: Regional Development Institution (LIOF) • • 1974-1978 1977: new provincial governor • • ad-hoc repairs; growing influence province “I will not leave this office until the day that and politicians • Limburg gets what it is entitled to” • 1978-1990 • 1978: first all-encompassing plan to restructure (“ Perspectievennota Zuid-Limburg ”) • planned restructuring; province in the lead • 1965-1990: 10 national coalition governments (tenure 2,5 years average; changing colors)
FIGURES & FACTS EMPLOYMENT (1966): ALL MINES CLOSED (1974): • 75,000 employees: • Of 45,000 direct employees: • 45,000 direct + 30,000 suppliers • 7,500 (17%) new job, new skills • 16,650 (37%) early-pension or • 15% of provincial work-force deceased • some communities 50% • 20,700 (46%) unemployed, sheltered work, in welfare programs Unemployment (official): • 30,000 suppliers: no records (!!) 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 1965-1972: ~€500M state support companies): (1,1 billion Dutch Guilders) : • Tax reductions, price reductions • €135M for early retirement • Guaranteed loans • €250M direct support for mining • 25% investment support companies restructuring • Relocation of central governmental • €55M (re-)education/employment agencies to the region services • Attracting existing companies • €55M interest, and 1 closure without restructuring • Improving industrial infrastructure • Job creation projects 1965-2016: total support estimated • Agreements with private owned mines €3,200M (foreign investors) • Evaluation 2015: “sloppy spending” • (re-)education, career counseling, employment services
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
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