I kind of lived through this effect with the decline of the British coal industry which was nationalised at the time. It became uncompetitive mostly because British coal was hard to get at compared to say open pit mining in Australia, so money was lost on each ton dug up. But the argument against closing it was the miners needed jobs, it was hard for them to switch to other work, sacking them would kill the economy in mining towns and so on. It was easier for the government to pay the losses from taxes on the general population who didn't complain very much, than to fire a bunch of miners who would complain very loudly. And who did of course when Thatcher eventually fired them.

With hindsight it would have been better for the industry to decline gradually than laying off everyone at once.