The paper relates the recent growth of small firms in the UK to the simultaneous growth of small plants and stabilization of large firms in the late 1970s and early 1980s. It argues that the growth in small firms and small plants can be partly understood as the result of large firm fragmentation strategies in response to increasing demand and innovation risk and crisis over control of the labour process. Consequently much small firm employment growth should be regarded as employment transfer, often entailing job losses. The paper goes on to examine the recent fragmentation strategies of three large manufacturing companies in the North West. In conclusion, it is argued that such large manufacturing firm dominated regions as the North West are likely to suffer most from the fragmentation process.