Centre for Cities update annual index of UK cities

Cover of Cities Outlook 2011 by Centre for Cities

The Centre for Cities have published Cities Outlook 2011 (pdf, 2.4mb), identifying the UK cities best placed for a private sector-led recovery.

According to the report, five cities to watch are Milton Keynes, Reading, Aberdeen, Leeds and Bristol. These cities have high potential to create private sector jobs and are less vulnerable to public sector job losses and spending cuts.

The report identifies five vulnerable cities that may not gain the benefits of national economic recovery for some time: Sunderland, Liverpool, Birkenhead, Swansea and Newport.

Performance of large cities, including Birmingham, will remain crucial in providing private sector jobs.

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Local Enterprise Partnerships need to act to reinvigorate the private sector

Distilling machine CERAM Stoke-on-Tent

Weaknesses in the structure of the West Midlands economy mean that it was hit particularly hard by the recent recession and is likely to see further job losses over the next five years.

Our latest briefing paper (pdf, 408kb), produced as part of our West Midlands Skills Assessment 2010, reveals that the West Midlands has a weaker private sector than other parts of the country. The West Midlands has poorer representation of higher value added activities and high growth firms with the potential to create new, skilled jobs.

As a result the West Midlands has seen its share of jobs in the public sector rise more rapidly than anywhere else in the country. It is particularly vulnerable to job losses from the spending cuts announced by the government.

We forecast that West Midlands Gross Value Added (GVA) will grow by only 8% (£8.8 billion) between 2010 and 2015 and there will be a net fall in employment of more than 38,000 people.

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How can small and medium businesses prepare against climate change?

Burst banks of River Severn amid flooding in Worcester

Photo: Worcester bridge by Russell Trow

Climate change has an impact on businesses. Flooding, hot summers, droughts and severe storms and winds can damage business premises and disrupt suppliers and customers.

Here are just a few examples:

  • Business directly impacted by the 2007 floods took an average of 26 weeks to return to normal operating capacity. Some small businesses can take up to two years to recover from a flood – and some do not survive.
  • Rail commuters in Birmingham endured extensive delays on 17 July 2006 as the extreme heat caused railway lines to buckle. Many services from New Street Station in Birmingham had to be cancelled and some passengers had to wait more than two hours.
  • The flooding in July 2007 was caused by a month’s rainfall in 1–2 hours and caused interruptions to electricity and water supplies, and significant disruption to road and rail networks.
  • After the flooding in June and July 2007, insurers received 165,000 claims in the UK, estimated to total £3bn in insured damages. Economic and social costs were far higher, as not all costs to businesses can be insured.

The West Midlands Climate Change Adaptation Partnership knows that it is crucial that businesses understand the consequences of climate change. This is why they released a practical guide explaining how small and medium businesses in the West Midlands can save and make money from climate change (pdf, 357kb).

Planning and being prepared are the way forward as opposed to just reacting whenever disaster hits. This will allow businesses to save money in the long term, continue operations in spite of the weather and identify potential business opportunities.

The guide provides a series of questions that business should consider around:

  • Insurance
  • Premises
  • People
  • Utilities
  • Information technology and security of data
  • Suppliers, logistics and delivery and products
  • Processes, stock and raw materials
  • Agricultural and horticultural rural business
  • Emergency contacts and important documents

The guide also provides examples of opportunities for small businesses, useful tools and contact details of regional support available.

Photo credit: Worcester bridge by Russell Trow.

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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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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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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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).

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