Welsh Journals

7. THE ECONOMIC AND SOCIAL CONSEQUENCES OF THE CLOSURE OF BP LLANDARCY1 Ian Barney, David Blackaby, Paul Latreille, Lynn Mainwaring, Neil Manning, Philip Murphy, Nigel O 'Leary and Jim Twomey INTRODUCTION As the UK's first crude-oil refinery, Llandarcy has a special place in the history of the British petrochemical industry. Since construction began in 1917, the refinery has also played a key role in the West Glamorgan economy. Although it was never to be as important as mining and metals as a major employer, it was of considerable strategic importance. Through the provision of refinery products as inputs, it was a significant factor in the establishment of Port Talbot steelworks and, later, BP's petrochemical complex at Baglan Bay. It also employed large numbers of construction workers as it progres- sively expanded and adapted. The production workforce reached a peacetime peak of around 2,600 in the 1960s. Thereafter employment gradually declined until a major contraction of activities began in 1985 when 700 jobs were lost with the closure of the main fuel divisions (see Figure 7.1). Since 1999 only the bitumen terminal remains. The refinery, so long a landmark of the Skewen area, is being dismantled and the 1,000-acre site remediated and redeveloped. Although the physical rehabilitation of the land will create long-term opportu- nities for the local area, the social and economic consequences of the closure are challenges which have had to be addressed immediately. These socio-economic costs, which take the form of unemployment and loss of income and the personal and community problems that arise therefrom, are in the nature of 'externalities'. Externalities are costs which, traditionally, have not been paid for by those responsible for them, unless compelled to do so by law. Pollution is a well-understood example of an external cost: firms would rarely pay for cleaning up pollution without a statutory obligation to do so. Historically the social costs of industrial closure have also been left to the sufferers to bear. But things are changing. The social dimensions of business