Evolution of the Lancashire economy

Employment - Overview

There are no discrete steps in this evolution but perhaps four key events can be identified. The second event in particular continues to shape the local economy as the original reason for the establishment of sites that provide many of Lancashire's present day high value manufacturing jobs. Moving on into the 21st Century and to the present day, the local economy continues to evolve in response to new technologies and emerging markets. 

  • The demise of the textile industry
  • The Second World War
  • The early 1980s manufacturing recession
  • The development of a broad economic base  

The textile industry  

The textile industry was at its zenith in the county in first quarter of the 19th century and in many Lancashire manufacturing towns accounted for 80% and more of all local insured employment.  At its peak the sector both defined and dominated local economic activity to a degree scarcely imaginable today.  

The industry's contraction over the course of much of the 20th Century was relentless, posing huge structural and social issues for the communities affected. Symbolically, "King Cotton" lost its premier industrial employment position in the County in 1979. This demise has been of historic proportions and it is probable that there are very few geographical areas of such a size that have ever undergone the contraction of its single basic industry on such a scale as that experienced by the Lancashire textile industry. A number of Lancashire's towns still have the unmistakable physical stamp of this earlier manufacturing era, however it is possible to make good commercial use of this remarkable industrial legacy for purposes that include tourism, housing and retail sites that can attract significant visitor numbers

Second World War 

Economically the Second World War was also a defining period for Lancashire because under government direction large numbers of strategic industrial activities were established or relocated to the region. These included very big chemicals and munitions plants employing tens of thousands of people and many new kinds of activities across a whole range of sectors that were not previously present in Lancashire, including central government white collar activities. Perhaps above all else, Lancashire became a pivotal centre of aircraft and aero-engine production. The county's unique aerospace 'know-how' and stretches back to the world's very first registered aerospace company. 

Post-war, many of these activities were run-down but a lot remained and formed the basis of a major and remarkable diversification of the economy helping to ameliorate the continued decline of textiles that continued to shed several thousand jobs year-on-year. This welcomed diversification was done on a scale that simply would not have been possible under normal peacetime conditions. It could be interesting to speculate what kind of future might have faced Lancashire had it not had the benefit of this process. Of particular note was the establishment on a war-time site of a major nuclear fuel manufacturing facility, giving Lancashire a stake in this new science-based industry. 

The retention of an important local aerospace capability has over time resulted in Lancashire becoming a large and strategically important centre of aerospace production. This is reflected in the large number of Lancashire companies that are nowadays members of the North West Aerospace Alliance.   

The 1980s manufacturing recession  

The third important defining event was the manufacturing recession of the early 1980s. The recession that hit manufacturing in the early 1980s was of an altogether different order from the predictable decline of textiles. Over the space of just 2-3 years, whole sectors of industry we had taken for granted simply disappeared. 

This period saw few industries unaffected, but in particular it witnessed the total eclipse of coal mining and the fishing industry. It saw too, the demise of both large plant man-made fibres production and the manufacture of textile machinery. The vehicles sector was also seriously affected: there was a virtual collapse in export markets and Leyland Trucks, once the largest and most profitable commercial vehicle manufacturer in Europe, was brought to its knees and never really recovered. 

Examples of other manufacturing sectors that were very adversely affected by the early 1980s recession include leather and leather goods, and chemicals and chemical products, which had its roots in Lancashire in the presence of local raw materials, particularly large salt deposits, and had links with the textile industry. In all, nearly 60,000 jobs disappeared from Lancashire's manufacturing sector at this time – a fall of more than a quarter and a larger loss than the whole of the previous 25 years. 

Unemployment rates shot up to 16%, with some manufacturing dominated towns having rates of 30% or more. The share of manufacturing employment in the economy was reduced to under a third. 

The development of a broad economic base 

These recession years were very difficult for the Lancashire economy and the social and economic costs imposed on a large section of the workforce were dire. In retrospect, however, what can be said is that the enforced changes and unwinding of hitherto large industrial clusters represented a sharp acceleration to the long-term fundamental shift in the nature and structure of the local economy. 

Lancashire nowadays has a number of large major employers in both the public and private sectors, but the defining characteristic of today's economy is no longer the domination by very large vertically integrated enterprises. Now, 90% of local businesses are small, employing fewer than 10 people.  

Whilst much reduced in size, manufacturing still retains a key presence, providing almost one fifth of GVA wealth creation and more than an eighth of total employment in the Lancashire-14 area in 2014. The manufacturing base has an important high-technology content, and a big slice of this is contained within the aerospace and associated industries.  

Despite the importance of high tech their remains an historical structural bias towards lower growth more mature and lower value added activities across a wide range of Lancashire manufacturing and service sectors.  

Around 80% of employees in Lancashire are now allocated to the various service sectors – everything from retail, distribution and hotels, through financial and business services to health, education and public administration activities and personal and community services. 

Unlike manufacturing, Lancashire has few specialisations in services but where they are to be found they are invariably in low value/low wage activities and include mail order and fulfilment services, call centres, contract packaging, hotels and bars and basic administration/clerical-type occupations. 

Lancashire is one of England's largest shire counties and still contains an important agricultural sector. Livestock and dairy farming is far more important than arable production in the broader Lancashire area, but there is a large amount of top grade farming land in West Lancashire means that the area is a significant producer of field vegetables and crops under glass/plastic.

Page updated 29 July 2016