Ansty Angst as Telecoms giant Ericsson pulls the plug on Coventry R&D and Tata stalls

In a statement the company said that the move "is part of Ericsson's ongoing global cost reduction activities and is subject to consultations with trade unions and employee forums."

Ericsson blamed its poor results on a slowdown in emerging markets and a fall in orders, although it also suggested that City analysts had been over-optimistic with expectations.

The company employs some 4,000 people across the UK, with some 850 of them at its Coventry Ansty Park site.

How do we interpret this dismal news?

Firstly let's remember why Ericsson came to Coventry. Following a disastrous series of takeovers under GEC in 1999 at the height of the DotCom bubble that vastly reduced the firm's value - and its subsequent inability to win any contracts from BT in 2005 - Marconi's assets were split and sold off to Marconi and Telent.

Thereby the crown jewels of British manufacturing - GEC - were effectively laid to waste by a reckless takeover spree in what was probably the biggest management failure in British corporate history. Takeovers usually fail - in this case spectacularly so (take note Kraft and Cadbury shareholders).

Secondly, foreign investment, in the form of the Ericsson takeover in this case, was welcomed as a way of protecting jobs at the remnants of Marconi. Indeed the government made a point of highlighting the "anchor" role of Ericsson at the Ansty Park site and AWM has showcased the latter as a new £40 million Manufacturing Technology Centre.

But with Ericsson pulling out and Tata postponing plans for an R&D centre at the site, that plan currently looks as empty as the Ansty site itself.

Ansty Park was meant to be all about providing a site for pulling in high-tech foreign investors. That's fine as far as it goes, but whilst foreign investment can be welcome in bringing jobs, investment and technology, our over-reliance on it exposes the British economy to strategic decisions made many miles away.

What we haven't seen is nearly as much effort put into to developing home-grown, local innovative talent. Simply relying on big multinational firms leaves us exposed in a downturn as they are more likely to close branch plants and shift activities out of the UK given our flexible labour market laws.

And we are repeatedly told that UK plc can no longer compete in metal bashing and low level assembly work but that the future is in high-tech, research intensive activities. Ericsson has said that it is shifting R&D operations abroad to lower cost locations. If we can't compete in R&D activities, where does that leave us?

Overall, a host of economic failures over the last decade have come together in this sad saga - reckless takeovers destroying value, our over-reliance on foreign investment, flexible labour markets allowing multinationals to pull out of the UK at the drop of a hat, and a lack of support for homegrown innovative talent and firms, especially in manufacturing.

As I've repeated often in these blogs, we need a new industrial policy that not only backs the technologies of the future, but provides long-term finance for firms so that we can grow British based winners. That also means making takeovers more difficult so that firms spend less time on trying to grow through takeover and more time on growing the business organically. To be fair to AWM, its national manufacturing technology centre remains critical in supporting innovative manufacturing.

Monitoring firms' activities should be a key part of that policy so that moves like Ericsson's don't come as a bolt from the blue for the city, region or national government. Slowing such processes down and giving everyone involved time to adjust and move on was a key lesson from the MG Rover closure, as our research showed last year.

Professor David Bailey works at Coventry University Business School and is Chair of the Regional Studies Association. Its 2009 Annual Policy Conference will be held in Coventry on December 3rd on the theme of 'Beyond the Credit Crunch'. Details here.