Some Welsh factories are shrugging off their traditional role as assembly operations for multinational corporations by becoming innovators in their own right.

Kevin Morgan, professor of city and regional planning, University of Wales, Cardiff, told last week's Regional Studies Association conference in Gothenberg: "It is clear that some of these plants have much more to offer their headquarters than the latter have acknowledged to date."

The assembly plants have been a step ahead of their headquarters on issues like multiskilling and supplier development.

At Robert Bosch, the Stuttgart-based corporation, described by Professor Morgan as "one of the most training-conscious firms in Europe", local managers have been involved in informal knowhow exchange with Japanese companies in South Wales.

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Professor Morgan said: "They have learnt far more about lean production than the headquarters at Stuttgart."

This come as something of a surprise to the engineers in Germany, accustomed to regarding Britain as an unlikely source of serious innovation.

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He pointed to the advantages of Wales: "It is a small world and people meet often, either formally or informally. It has in relative terms experienced a great deal of inward investment, so there is a considerable variety of expertise."

But there are important potential implications for the development of Wales.

"We know too little about the process of learning and information knowhow exchange, about the reasons why some regions atrophy and the extent of the scope for innovation and learning in less-favoured regions.

"But we need to understand this potential. Not to do so would be to foreclose the possibility of less-favoured regions becoming something else," said Professor Morgan.

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He noted that inward investors had already had a profound impact on the region - with the demands made by Bosch providing a powerful stimulus to further education.

The Welsh Development Agency had been forced to change its corporate culture by the demands made on it.

"Staff who could tell you about the cost of sites, local pay rates and union attitudes suddenly found themselves asked about the quality of local further education, staying-on rates and technical competence.

"The process of change is far from completed, but they have adjusted," he said.

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