Blogs from the Blackstuff
Blogs from the Blackstuff
Professor John Clancy and Professor David Bailey
Blogs from the Blackstuff
Blogs from the Blackstuff
Blogs from the Blackstuff
By Professor David Bailey
21st September 2026
It needs a new mission.
Perhaps the most important line in the latest debate about JLR is not the announcement of 4,000 job cuts. It is the argument being made by major West Midlands manufacturers that Britain’s automotive supply chain need not necessarily decline: it may simply be in the wrong market.
This matters. If large-scale car production in Britain continues to decline, as industry leaders warn, it is not feasible to defend all the jobs, factories and supply relationships exactly as they are. But neither should we assume that the only alternative is managed decline.
Britain already possesses much of what it needs to build a new generation of industrial capability. The factories, engineers, technologies, skills and supply chains are there. What is missing is the bridge between those capabilities and the new markets in which Britain needs greater capacity, particularly defence, dual-use technologies, aerospace, green-tech and so on.
The recent intervention by major JLR suppliers is therefore about much more than the future of the automotive industry. It raises a much bigger question about whether Britain can learn how to manage industrial transformation again rather than simply reacting to it.
The warning that high-volume car production could face a decade of decline comes against a backdrop of rising energy costs, international competition and growing pressure from vehicle manufacturers to source components overseas.
Yet the capabilities embedded in the automotive supply chain have not suddenly become worthless. They are capabilities in advanced manufacturing, precision engineering, electronics, software, materials, batteries, autonomous systems and complex supply-chain management.
As our research over many years has highlighted, these should not be viewed simply as ‘automotive’ capabilities. They are regional productive assets that can potentially be recombined and deployed in other markets.
This is what we mean by reverse conversion: the deliberate mobilisation and reorientation of established civilian industrial capabilities towards defence and dual-use production.
The idea is particularly relevant now because defence itself is changing. Modern military capability increasingly depends upon technologies and production systems that have strong civilian applications: electronics, communications, autonomous systems, drones, advanced materials, batteries, power electronics, software and sophisticated manufacturing.
That potentially changes the geography of defence. It creates opportunities for regions that may not have traditionally been seen as defence-industrial centres, but which possess the civilian capabilities needed for the new generation of defence production.
The West Midlands is a great example. It has one of the deepest automotive manufacturing ecosystems in the UK, together with universities, innovation institutions, engineering firms and extensive networks of suppliers.
It has also experienced industrial restructuring before. The region’s engineering ‘phoenix industry’ emerged in part from the ashes of the old volume automotive industry, demonstrating that industrial capabilities can be renewed and recombined rather than simply disappearing when an established market contracts.
The current challenge is whether that process can happen again, and whether government is prepared to help make it happen.
The phrase used by the suppliers in their letter is particularly telling: “The capacity exists. The people exist. What is missing is the bridge.”
That bridge cannot be built simply by telling individual automotive companies to go and win defence contracts. Defence procurement operates according to different standards, certification requirements, procurement cycles and relationships with major contractors.
A company may possess excellent engineering capabilities but lack the certification, knowledge, contacts or experience required to enter a defence supply chain.
This means that diversification is not simply a matter of identifying a new customer. It is a problem of regional capability recombination, supply-chain coordination and institutional capacity.
This is where industrial strategy becomes critical.
If government is serious about using rising defence expenditure to strengthen the UK’s industrial base, it needs to think beyond the procurement of individual platforms and contracts. It needs to understand where capabilities already exist and how they can be developed.
In the West Midlands, that could mean systematically mapping regional capabilities and supply chains, identifying firms with realistic potential to diversify, connecting them with defence primes and the Ministry of Defence, coordinating skills and R&D, and helping businesses overcome the barriers to entering defence markets.
It also means thinking about how procurement can generate wider regional economic benefits rather than simply concentrating spending among established contractors.
There is a powerful local precedent for this approach. Following the crisis at MG Rover, the MG Rover Task Force brought together government, companies, skills agencies and other regional stakeholders. Its interventions helped suppliers diversify away from excessive dependence on MG Rover, with our work suggesting that 10,000–12,000 jobs were ultimately protected through diversification into areas including premium automotive, aerospace, defence and medical technologies.
The lesson is not that government can prevent industrial change. It cannot. The lesson is that institutions can make a profound difference to how regions anticipate and respond to industrial change.
Diversification requires organisations capable of understanding local capabilities, identifying new opportunities, building relationships, supporting skills and innovation, and coordinating intervention over a sufficiently long period.
There is a danger here. It would be easy to assume that increased defence spending will automatically deliver regional economic renewal. It won’t.
Defence expenditure is geographically uneven, and stronger regions can capture a disproportionate share of the resulting economic benefits. Without deliberate intervention, the geography of defence could simply reproduce existing patterns of regional inequality.
The question therefore cannot simply be how much Britain spends on defence. It must also be where that money goes, what capabilities it creates, which firms and communities benefit, and whether the resulting investment strengthens the productive foundations of the regional economy.
This is why the distinction between reverse conversion and dual-use development matters. Reverse conversion means redirecting civilian capabilities towards defence production in response to changing strategic conditions. Dual-use development goes further. It means deliberately developing regional capabilities, infrastructure, skills, innovation systems and supply-chain relationships that can operate across both civilian and defence markets.
That offers something more durable than simply replacing one customer with another. It creates a form of regional strategic resilience in which the ability to move between different markets becomes itself an economic asset.
For the West Midlands, this could be significant. Automotive expertise could potentially contribute to military and dual-use vehicles, autonomous and remotely operated systems, power electronics, batteries, energy systems, advanced materials, propulsion, sensors, communications and drones.
But the objective should not be to turn the region into a defence-only economy. That would simply replace one form of dependence with another. Rather, the objective should be to create a more diverse industrial ecosystem in which capabilities can move between civilian and defence applications as markets and strategic circumstances change. That is a much more sophisticated form of industrial resilience.
It also points to a wider problem with the way Britain has traditionally conducted regional economic policy. Too often, national government designs programmes, allocates funding and then expects places to compete for projects. What is missing is a sustained process of building regional productive capabilities.
The question should not simply be, “How do we attract this investment?” It should be, “What capabilities do we need to develop over the next decade, and how can government, business, universities, colleges and civic institutions build them together?”
That is the difference between an industrial strategy based on chasing investment and one based on building capacity.
The current moment therefore provides an opportunity to connect three debates that are too often treated separately: defence, industrial strategy and devolution.
The emerging Defence Industrial Strategy, the wider Modern Industrial Strategy and the evolving devolution agenda all recognise, in different ways, the importance of domestic production, innovation, regional growth and economic resilience.
But their effectiveness will depend upon stronger coordination between national and regional levels. Defence policy cannot simply be a matter for Whitehall if government wants defence spending to contribute to regional industrial renewal.
Equally, regional government cannot deliver this alone. The capabilities, procurement decisions and strategic priorities of national government matter enormously. The government should therefore see the West Midlands suppliers’ intervention not simply as a request for support from an industry under pressure, but as an invitation to rethink how industrial policy works.
The region does not need a rescue package that attempts to preserve the industrial structure of the past. Nor does it need to be told simply to compete harder for whatever investment happens to become available.
It needs a strategy for recombining the capabilities it already possesses and connecting them to the markets of the future.
The choice is increasingly clear. Britain can allow the decline of high-volume automotive production to become another story of industrial contraction, with skilled workers, suppliers and productive capabilities gradually lost or displaced overseas.
Or it can treat the transition as an opportunity to build something new.
That does not mean pretending that every automotive job can be saved or that every supplier can successfully enter defence. It means recognising that industrial capabilities accumulated over decades are valuable assets, and that allowing them to disappear without attempting to recombine them would be an extraordinary waste.
So recent news reports are about more than JLR and 4,000 job cuts. It is about whether Britain sees industrial restructuring as something that ‘happens to’ regions or something that regions can actively shape.
The West Midlands has already demonstrated that industrial economies can reinvent themselves. The question now is whether government will help them do it again. The capacity exists. The people exist. The industrial knowledge exists. What is missing is the bridge.
And if Britain is serious about both national security and economic resilience, building that bridge should be at the heart of its industrial strategy, not an afterthought.
Professor David Bailey works at the Birmingham Business School and is a Senior Fellow at the UK in a Changing Europe programme.
Print version here
John Clancy and David Bailey
Perhaps the most important line in the latest debate about JLR is not the announcement of 4,000 job cuts. It is the argument being made by major West Midlands manufacturers that Britain’s automotive supply chain need not necessarily decline: it may simply be in the wrong market.
This matters. If large-scale car production in Britain continues to decline, as industry leaders warn, it is not feasible to defend all the jobs, factories and supply relationships exactly as they are. But neither should we assume that the only alternative is managed decline.
Britain already possesses much of what it needs to build a new generation of industrial capability. The factories, engineers, technologies, skills and supply chains are there. What is missing is the bridge between those capabilities and the new markets in which Britain needs greater capacity, particularly defence, dual-use technologies, aerospace, green-tech and so on.
The recent intervention by major JLR suppliers is therefore about much more than the future of the automotive industry. It raises a much bigger question about whether Britain can learn how to manage industrial transformation again rather than simply reacting to it.
The warning that high-volume car production could face a decade of decline comes against a backdrop of rising energy costs, international competition and growing pressure from vehicle manufacturers to source components overseas.
Yet the capabilities embedded in the automotive supply chain have not suddenly become worthless. They are capabilities in advanced manufacturing, precision engineering, electronics, software, materials, batteries, autonomous systems and complex supply-chain management.
As our research over many years has highlighted, these should not be viewed simply as ‘automotive’ capabilities. They are regional productive assets that can potentially be recombined and deployed in other markets.
This is what we mean by reverse conversion: the deliberate mobilisation and reorientation of established civilian industrial capabilities towards defence and dual-use production.
The idea is particularly relevant now because defence itself is changing. Modern military capability increasingly depends upon technologies and production systems that have strong civilian applications: electronics, communications, autonomous systems, drones, advanced materials, batteries, power electronics, software and sophisticated manufacturing.
That potentially changes the geography of defence. It creates opportunities for regions that may not have traditionally been seen as defence-industrial centres, but which possess the civilian capabilities needed for the new generation of defence production.
The West Midlands is a great example. It has one of the deepest automotive manufacturing ecosystems in the UK, together with universities, innovation institutions, engineering firms and extensive networks of suppliers.
It has also experienced industrial restructuring before. The region’s engineering ‘phoenix industry’ emerged in part from the ashes of the old volume automotive industry, demonstrating that industrial capabilities can be renewed and recombined rather than simply disappearing when an established market contracts.
The current challenge is whether that process can happen again, and whether government is prepared to help make it happen.
The phrase used by the suppliers in their letter is particularly telling: “The capacity exists. The people exist. What is missing is the bridge.”
That bridge cannot be built simply by telling individual automotive companies to go and win defence contracts. Defence procurement operates according to different standards, certification requirements, procurement cycles and relationships with major contractors.
A company may possess excellent engineering capabilities but lack the certification, knowledge, contacts or experience required to enter a defence supply chain.
This means that diversification is not simply a matter of identifying a new customer. It is a problem of regional capability recombination, supply-chain coordination and institutional capacity.
This is where industrial strategy becomes critical.
If government is serious about using rising defence expenditure to strengthen the UK’s industrial base, it needs to think beyond the procurement of individual platforms and contracts. It needs to understand where capabilities already exist and how they can be developed.
In the West Midlands, that could mean systematically mapping regional capabilities and supply chains, identifying firms with realistic potential to diversify, connecting them with defence primes and the Ministry of Defence, coordinating skills and R&D, and helping businesses overcome the barriers to entering defence markets.
It also means thinking about how procurement can generate wider regional economic benefits rather than simply concentrating spending among established contractors.
There is a powerful local precedent for this approach. Following the crisis at MG Rover, the MG Rover Task Force brought together government, companies, skills agencies and other regional stakeholders. Its interventions helped suppliers diversify away from excessive dependence on MG Rover, with our work suggesting that 10,000–12,000 jobs were ultimately protected through diversification into areas including premium automotive, aerospace, defence and medical technologies.
The lesson is not that government can prevent industrial change. It cannot. The lesson is that institutions can make a profound difference to how regions anticipate and respond to industrial change.
Diversification requires organisations capable of understanding local capabilities, identifying new opportunities, building relationships, supporting skills and innovation, and coordinating intervention over a sufficiently long period.
There is a danger here. It would be easy to assume that increased defence spending will automatically deliver regional economic renewal. It won’t.
Defence expenditure is geographically uneven, and stronger regions can capture a disproportionate share of the resulting economic benefits. Without deliberate intervention, the geography of defence could simply reproduce existing patterns of regional inequality.
The question therefore cannot simply be how much Britain spends on defence. It must also be where that money goes, what capabilities it creates, which firms and communities benefit, and whether the resulting investment strengthens the productive foundations of the regional economy.
This is why the distinction between reverse conversion and dual-use development matters. Reverse conversion means redirecting civilian capabilities towards defence production in response to changing strategic conditions. Dual-use development goes further. It means deliberately developing regional capabilities, infrastructure, skills, innovation systems and supply-chain relationships that can operate across both civilian and defence markets.
That offers something more durable than simply replacing one customer with another. It creates a form of regional strategic resilience in which the ability to move between different markets becomes itself an economic asset.
For the West Midlands, this could be significant. Automotive expertise could potentially contribute to military and dual-use vehicles, autonomous and remotely operated systems, power electronics, batteries, energy systems, advanced materials, propulsion, sensors, communications and drones.
But the objective should not be to turn the region into a defence-only economy. That would simply replace one form of dependence with another. Rather, the objective should be to create a more diverse industrial ecosystem in which capabilities can move between civilian and defence applications as markets and strategic circumstances change. That is a much more sophisticated form of industrial resilience.
It also points to a wider problem with the way Britain has traditionally conducted regional economic policy. Too often, national government designs programmes, allocates funding and then expects places to compete for projects. What is missing is a sustained process of building regional productive capabilities.
The question should not simply be, “How do we attract this investment?” It should be, “What capabilities do we need to develop over the next decade, and how can government, business, universities, colleges and civic institutions build them together?”
That is the difference between an industrial strategy based on chasing investment and one based on building capacity.
The current moment therefore provides an opportunity to connect three debates that are too often treated separately: defence, industrial strategy and devolution.
The emerging Defence Industrial Strategy, the wider Modern Industrial Strategy and the evolving devolution agenda all recognise, in different ways, the importance of domestic production, innovation, regional growth and economic resilience.
But their effectiveness will depend upon stronger coordination between national and regional levels. Defence policy cannot simply be a matter for Whitehall if government wants defence spending to contribute to regional industrial renewal.
Equally, regional government cannot deliver this alone. The capabilities, procurement decisions and strategic priorities of national government matter enormously. The government should therefore see the West Midlands suppliers’ intervention not simply as a request for support from an industry under pressure, but as an invitation to rethink how industrial policy works.
The region does not need a rescue package that attempts to preserve the industrial structure of the past. Nor does it need to be told simply to compete harder for whatever investment happens to become available.
It needs a strategy for recombining the capabilities it already possesses and connecting them to the markets of the future.
The choice is increasingly clear. Britain can allow the decline of high-volume automotive production to become another story of industrial contraction, with skilled workers, suppliers and productive capabilities gradually lost or displaced overseas.
Or it can treat the transition as an opportunity to build something new.
That does not mean pretending that every automotive job can be saved or that every supplier can successfully enter defence. It means recognising that industrial capabilities accumulated over decades are valuable assets, and that allowing them to disappear without attempting to recombine them would be an extraordinary waste.
So recent news reports are about more than JLR and 4,000 job cuts. It is about whether Britain sees industrial restructuring as something that ‘happens to’ regions or something that regions can actively shape.
The West Midlands has already demonstrated that industrial economies can reinvent themselves. The question now is whether government will help them do it again. The capacity exists. The people exist. The industrial knowledge exists. What is missing is the bridge.
And if Britain is serious about both national security and economic resilience, building that bridge should be at the heart of its industrial strategy, not an afterthought.
Professor David Bailey works at the Birmingham Business School and is a Senior Fellow at the UK in a Changing Europe programme.
Print version here John Clancy and David Bailey