Inward investment into the West Midlands 2009/10 – a local analysis

In 2009/10 there were 84 inward investment successes in the West Midlands and another four knowledge-based investments. These investments created over 1,500 new jobs and safeguarded another 4,300.

Although these 88 investments represented the lowest number of jobs created or safeguarded since 1992/93, they also represented the 7th highest total number of projects since 1991.

Pie chart shows 38 inward investments in West Midlands metropolitan areas and 49 inward investments in the shire counties over 2009 to 2010Inward investment is usually spread reasonably evenly between the West Midlands metropolitan areas and the shire counties. In 2009/10 the shire counties attracted the majority of inward investment projects (55%). See left.

However, the metropolitan areas of Birmingham, Coventry, Solihull, Dudley, Sandwell, Walsall and Wolverhampton have attracted perhaps just over half of the projects over the years – see below. The number of jobs created and safeguarded also generally follows a similar pattern.

Stacked bar chart shows percentage of inward investments into West Midlands metropolitan areas versus shire counties between 1991 and 2010

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The multiple risk factors of worklessness

By isolating the ‘risk factors’ and certain combinations of ‘risk factors’ associated with a person’s chance of being out of work, new analysis from the West Midlands Observatory can help decision makers get to grips with the complex interplay of issues behind the current high rate of worklessness across the West Midlands.

The research is already informing the Department for Work and Pensions in its review of welfare policy, as it provides insights into the major factors influencing a person’s chances of being in or out of work. It shows that these chances can vary greatly according to the individual’s background and personal characteristics. The research demonstrates how combinations of factors such as having no formal qualifications or a long-term health problem or disability, or being a lone parent, affect a person’s chance of being out of work.

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Observatory is regarded more highly than ever by customers

Customer satisfaction with the West Midlands Observatory is at its highest ever level according to a recent customer survey. Satisfaction with the Observatory has been rising year on year since 2006, and this year reached its highest ever score (3.19 on a scale of 1=low to 4=high).

Rosie Paskins, Chief Executive of the Observatory, said:

With current turbulence in local and regional governance, it is easy to lose sight of the role of evidence in overcoming the deep-seated problems and challenges faced by the West Midlands.

We are encouraged by this endorsement of our work by our customers, and I urge partners to realise the increased importance of evidence based decision-making in a time of increased budgetary pressure.

The Observatory will continue to provide authoritative and high quality research to help decision makers target limited resources and do more with less.

Other highlights of the survey included the highest ever ratings for the awareness and reputation of the Observatory. And over 93% of users said they regard the Observatory’s research to be independent and objective.

The high customer rating follows on from the Observatory being recognised as an “Excellent” organisation by independent assessors Investors in Excellence earlier in the year.

Jerry Blackett, Chief Executive of the Birmingham Chamber of Commerce and Industry, said:

We are in desperate need of hard facts and a cool assessment of what the facts tell us. It is too tempting to manage by anecdote and the Observatory helps stop this. In a world of Local Enterprise Partnerships, we still need the Observatory output.

Read a summary of the Observatory’s work over 2009-10 (pdf, 750kb)

Up-skilling and diversification are key to growth and job creation across the West Midlands

Targeting investment on higher value added sectors such as digital media and medical technologies, and developing a workforce with the right skills to service those sectors would significantly increase job growth and the prosperity of the West Midlands according to new research.

The research (pdf, 498kb), undertaken by the West Midlands Observatory, shows that the potential benefits of targeting investment are substantial. If workforce skill levels in the West Midlands were increased to match the England average, growth in Gross Value Added (GVA) — the measure of economic output per head of population — over the next 5 years would increase by 2 percentage points from 10% to 12% and net new job creation would nearly double from 11,000 to 21,000. If in addition more businesses in higher value added sectors and clusters were attracted to the West Midlands, so that their share of economic activity reflected the position nationally, GVA would grow by some 23% by 2015 and more than 200,000 net new jobs would be created.

Local authorities, business groups and other key partners across the West Midlands are looking to achieve sustainable economic growth in jobs and GVA over the next 5 years. This new research shows how, in a time of austerity and funding cuts, the Observatory can provide authoritative and objective research to help decision makers target limited resources and do more with less.

The research (pdf, 498kb) provides an insight into the region’s existing and likely future skill needs. It has been produced to inform the development of skills and investment priorities that focus shrinking levels of public sector investment in areas that will maximise  impact.

A range of key investment locations across the region, including Longbridge and Eastside in Birmingham, Ansty Park in Coventry, i54 in Staffordshire, Coventry and Wolverhampton city centres and Dudley, Telford, Walsall and West Bromwich town centres, can play a key part in diversifying local economies.

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A tough year for inward investment in the West Midlands

In 2009/10 there were 84 inward investment successes in the West Midlands and another four knowledge-based investments. These investments created over 1,500 new jobs and safeguarded another 4,300.

Of these 88 successes, Advantage West Midlands were involved with just under half but this assistance helped create over 60% of the new jobs.

Some of these inward investments were high-profile including Kraft’s acquisition of Cadbury in Bournville, Birmingham affecting nearly 3,000 employees at their head office as well many more around the country.

Other investments in the news included the acquisition of Birmingham City Football Club by Far Eastern businessman Carson Yeung’s Grandtop International, the continued expansion of the ex-Longbridge car plant by SAIC of China where a new engine test facility is to be built and the taking on 50 skilled engineers by Indian Tata Group’s Jaguar Land Rover.

Some other notable inward investments included:

  • Expansion of Japanese tool-maker Makita‘s manufacturing facility in Telford, which created 70 jobs
  • Expansion of TK Maxx‘s distribution depot in Newcastle-under-Lyme, Staffordshire, which created 100 jobs
  • FourStar from the Netherlands is to open a new UK headquarters in Birmingham employing over 250 people to provide employment and skills training to the unemployed

Two other investments from the United States also catch the eye. Remotec in Coventry, a subsidiary of Northrup Grumman, expanded its facility designing and manufacturing robotic bomb disposal units.

But it’s the opening of a new computer games design studio in Digbeth, Birmingham by Microsoft-owned Rare Games that’s hoped will give a boost to games design in the Midlands. 90 new games designers will be employed there.

Analysis of West Midland inward investment

Further analysis of the inward investment figures show that, with 88 investments, 2009/10 saw the fewest number of investments in the  West Midlands since 2005/06 when investment numbers were still recovering from the falls in global investment since 2001. This highlights the fact that the global economic crisis began to seriously affect investment decisions.

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NESTA offering local authorities £30k to spend with digital businesses on open data projects

Cutout figures connected by green light

Brian MacAulay, Director Innovation Index at NESTA, mentioned the Make It Local initiative to encourage collaboration between local authorities and digital media developers. It’s timely in the light of our open data: challenges and opportunities event last week and the government’s consultation on underlying data publication announced today.

Make It Local, the NESTA initiative, aims to:

…encourage collaboration between local authorities and digital media developers, to provide innovative, web-based services for their communities.

Make it Local is encouraging local authorities to release publicly-owned data in a linked way which allows developers an opportunity to build new services using the information.

Local authorities hold significant amounts of public data– such as transport, carbon emissions, population and crime data – which may help to power a range of useful, digital services. In developing partnerships between local authorities and digital media businesses, NESTA wants to show the value to local authorities of releasing their data to developers who can make use of it.

NESTA is calling for digital agencies with ideas for new applications to approach their local authority and encourage them to enter.

NESTA is offering three local authorities up to £30,000 to spend with a digital media business in their area.

The criteria for applications, application process and application form are available on the NESTA website.

Speakers and slides: roundup of ‘Open data: challenges and opportunities’

The Observatory and Andrew Mackenzie co-produced an event called Open data: challenges and opportunities, held in Birmingham on 15th July.

Oliver summarised the event and asked for comments on practical steps, particularly ‘ways that the more able authorities and organisations might be able to help the less able, through sharing tools and techniques with the wider public sector.’

The hashtag for the day was #wmod10 – there’s an archive of tweets available.

In this post below, we’ve shared all of the presenter’s slides and, where available, provided the presentations with audio.

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West Midlands sees large fall in unemployment

The latest regional labour market statistics (zip, 2.9mb), released by the Office for National Statistics, show a large quarterly fall in the unemployment rate in the West Midlands, down 23,000 people to 230,000 (8.6%) in the quarter to May. This is the largest fall of any English region.

Unemployment in the West Midlands rose sharply at the beginning of the recession and peaked in April to June 2009 at 284,000 people or 10.5% – the highest unemployment rate of any English region.

Since then, unemployment here has fallen, whereas other regions have continued to see a rise. The West Midlands now has the fourth highest unemployment rate of English regions.

There’s also been a fall in the number of people claiming Jobseeker’s Allowance, the unemployment benefit. The number of claimants in the West Midlands fell to 159,800 in June, a fall of 2,800 people. This is a smaller decrease than in previous months but is 24,800 claimants fewer than the peak in October 2009.

Within the West Midlands, nearly all local authorities have seen a fall in the number of people claiming Jobseeker’s Allowance over the last year. The biggest decreases have been in areas like Cannock Chase and Redditch which saw large increases in Jobseeker’s Allowance rates at the beginning of the recession.

Our interactive map shows how Jobseeker’s Allowance rates differ between local authorities.

The fall in unemployment has been accompanied by a rise in employment. The employment rate in the West Midlands is now 71.2% with 31,000 more people in employment than in the previous quarter.

Nationally the rise in employment was largely due to a rise in the number of part-time workers. Data on part-time workers at regional level is only available up to September 2009 (national data are for the quarter to May 2010) but does show that the number of part-time workers in the West Midlands increased during the recession even though the number of people in full-time employment fell.

More information on changes to the labour market during the recession are available in our economic inclusion annual report 2010 (pdf, 929kb).

Related links

The new optimists

Written by leading scientists from the West Midlands, The new optimists is a book detailing the reponses of over 80 scientists to the question”What are you optimistic about?”

The scientists who feature in the book are leading medics, life scientists, engineers, chemists, computer and digital media scientists, environmental and energy experts, all of whom work in the West Midlands.

The official book launch is on 14th September at a celebration dinner in Birmingham, on the evening of the first day of the 2010 British Science Festival which is being held in the city.

New support aims to help young people “Think Enterprise”

At its launch last month, the 3% campaign – developed by the Young People’s Enterprise Centre of Expertise – outlined its ambitious aim to create 5,000 young entrepreneurs by 2012.

The campaign, backed by Advantage West Midlands and Business Voice WM,  was based on research highlighting a number of barriers young people face when it comes to starting a business and accessing support in the West Midlands.

The research found that:

  • Relatively small amounts of funding can be instrumental in enabling young people to start productive businesses, but there is a gap in provision for those who do not meet the Prince’s Trust deprivation criteria or those not on student enterprise schemes.
  • Young entrepreneurs have short work histories and require business advisers and mentors who have relevant business experience to provide essential knowledge.
  • Young entrepreneurs highlighted the loneliness of working on their own when starting a business and the need for a pro-active support network.
  • Application forms for support are perceived as excessively bureaucratic and jargon-laden, deterring young entrepreneurs not familiar with the terminology and business.
  • Although a culture change is reported, many of our young skilled entrepreneurs are entirely disengaged from school.
  • Enterprise activities in schools are highly valued and supported, with the emphasis on getting young entrepreneurs involved in the Further Education sector.

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Open data: challenges and opportunities

Photo by Andy Mabbett - @pigsonthewing

A star sudded cast of “Open data heroes” graced our event, Open data: Challenges & opportunities, yesterday. Following clear intentions expressed recently by David Cameron and Eric Pickles on opening up public data, it was clear that this was a well timed (and hopefully useful) event. Thanks to everyone who spoke and attended the event – a really great day. Special thanks to Andrew Mackenzie (@djsoup) and Richard Wilson (@rcw1969) for all the help pulling it together.

I was struck by a number of people passionate about using data to make a difference to their community or local area. From Will Perrin’s use of public data on his Kings Cross Environment site to fix street lights, combat drug dealing and remove abandoned cars through to local council officers such as Stuart Harrison at Lichfield District Council using innovative techniques, such as “My Area“, to help people access data from a number of sources.

For now, our Pageflakes page pulls together a lot of the content from the day. Some of the speakers have already shared their presentations (via Slideshare) and they are accessible through pageflakes. We’ll sift through and pull out useful links and information over the next week and will post an update here.

For those that were at the event, or following on twitter via #wmod10, can I encourage comments below on practical steps we might take to move ideas from yesterday forward. In particular, ways that the more able authorities and organisations might be able to help the less able, through sharing tools and techniques with the wider public sector. We discussed writing a crowd-sourced report directed at high level policy makers sharing ideas and practical ways forward.  Do you think this is the best approach? What else did you pick up on? Let’s keep the discussion going.

Transformational change can generate substantial new jobs in West Midlands over next five years

The pace of economic growth in the West Midlands over the next five years is forecast to be modest. Only 11,000 net new jobs (representing growth of 5% in total employment) are expected to be created between 2010 and 2015.

However, the Observatory’s new report The West Midlands economy post recession: key issues and challenges (pdf, 844kb) includes scenarios illustrating the benefits for the West Midlands in terms of new job creation — if action is taken to support fundamental, transformational change.

Scenario one: up-skilling the workforce within existing businesses

If workforce skill levels in the West Midlands were raised to match the England average, it’s estimated that net increase in employment over the next five years would almost double to around 21,000 jobs.

The main beneficiaries would be sectors where skill gaps and shortages act as a significant constraint on growth, such as:

  • ICT
  • High value added business & professional services
  • Wholesale & retail distribution
  • Transport

Scenario two: up-skilling plus diversification of the economy

If more businesses in higher value added sectors and clusters were also attracted to the West Midlands, such that their share of GVA matched the England average, the impact would be much more significant with the creation of more than 200,000 net new jobs.

High value added activities such as high value added business & professional services (where more than 100,000 net new jobs would be created) and ICT (30,000 net new jobs) are notable beneficiaries.

There would also be modest increases in employment levels in engineering (nearly 3,000 net new jobs) and manufacturing (nearly 6,000 net new jobs).

Related links

Read more about the future of the West Midlands economy in our report:

Replacement demand set to be key source of jobs in West Midlands over next 5 years

An under–representation of higher value added sectors means that the pace of economic growth in the West Midlands over the next 5 years is forecast to be modest. Only 11,000 net new jobs (representing growth of 5% in total employment) are expected to be created between 2010 and 2015.

But the Observatory’s new report The West Midlands economy post recession: key issues and challenges (pdf, 844kb) predicts an additional 860,000 job vacancies are expected to arise between 2010-2015 due to ‘replacement demand.’

It’s estimated that nearly 510,000 jobs (58% of all job vacancies) will be due to labour turnover and more than 350,000 jobs (40% of all vacancies) will be due to older workers retiring.

Pie chart shows overall job vacancies forecast in West Midlands between 2010 and 2015

Text description of this chart available. Chart prepared by West Midlands Regional Observatory based on Cambridge Econometrics forecasts and Office for National Statistics Labour Force Survey.

Replacement demand is forecast to be more significant in traditional private sector industries and public sector activities which have an ageing workforce. For example:

  • 59,000 vacancies are expected to arise in manufacturing
  • 50,000 vacancies are expected to arise in engineering
  • 37,000 vacancies are expected to arise in construction

In health and social care, meanwhile, nearly 70,000 vacancies are expected to arise. The figure is more than 45,000 in education and more than 30,000 in public administration.

Many of the jobs on offer due to retirements are likely to require specific skills, qualifications and experience. Around 90% of these jobs are expected to be filled by people already in employment.

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Only modest economic growth is forecast for the West Midlands over the next 5 years

A continuing under–representation of higher value added sectors means that the pace of economic growth in the West Midlands over the next five years is forecast to be modest.

Gross Value Added (GVA)

The Observatory’s new report The West Midlands economy post recession: key issues and challenges (pdf, 844kb) forecasts GVA to grow by just 11% (£9 billion) between 2010–2015. This compares with growth of 15% (£11 billion) between 2000–2007.

While the pace of growth is forecast to be strongest in higher value added private sector activities (such as ICT & telecoms and high value added business & professional services), they account for only a limited share of GVA. Growth is expected to be much weaker in sectors that dominate the regional economy such as lower value added, traditional private sector activities and the public sector.

Geographically, GVA is forecast to grow most strongly (by some 13% between 2010–2015) in areas identified as those with potential to lead the region’s recovery such as Solihull, Warwick and Stratford-on-Avon.

The weakest growth (less than 9% over the period) is expected in areas identified as having long-term issues that may inhibit recovery such as Wolverhampton, Walsall, Stoke-on-Trent and Sandwell.

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Updated resource guide for Local Economic Assessments

Understanding local factors in a local area’s economic development, how these have developed, how they’re predicted to develop, and which factors are (or have potential to be) particularly significant — will be essential in informing developing Local Enterpise Partnerships (LEPs) and economic strategies. Equally, the functional relationships between local areas is likely to become more important in policy-making.

With regions no longer the focus of evidence-gathering and policy-making, and an increased emphasis on local decision-making, Local Economic Assessments are an opportunity to focus the collection of evidence to understand the impact of new national policies and to develop local economic ‘stories of place.’

The intelligence in a Local Economic Assessment can also highlight where resources can most productively be targeted to improve local economic development.

To help Local Authorities prepare their Assessments, we’ve created a new web-based resource guide, building on an earlier version circulated in May. This addition to the Observatory’s resource catalogue signposts resources relevant to Local Economic Assessments produced by a range of organisations, as well as the Observatory’s own research.

The resources are grouped into six areas, based on the themes set out in LEA guidance published in March 2010. While that guidance is no longer statutory, it’s still a useful framework to draw on.

The themes you can search by are:

Within each theme, you can search for:

  • Data sources: datasets and primary research
  • Analysis: interpretation of data and other evidence in the West Midlands and local authorities
  • Guidance documents: examples and methodologies for you to follow if you wish
  • Other resources: examples of research from outside the West Midlands, and useful links to other websites and research networks

We hope you find this resource guide useful. You can be notified when new resources are added via this RSS feed or email alert. If you have resources you think others would find useful, please submit them to our Resource Catalogue (requires login) or contact stephen.howarth@wmro.org.