The West Midlands economy has a record of resilience and embracing change and these will be vital strengths as we tackle the challenges we will face in the coming decades.
The ability of our region to absorb major economic blows in recent years such as the closure of MG Rover and Peugeot shows just how resilient our economy has become.
It is almost impossible to read a newspaper or watch or listen to news reports without being confronted by predictions of tumbling property prices, fuel shortages and credit concerns.
But rather than speculating on what might happen, we are devising strategies based on fact – sound, comprehensive research conducted by the West Midlands Regional Observatory.
For the first time, thanks to the work of the Observatory, we have a clear picture of the challenges we face and know we have to work hard with our partners to address the region’s £10 billion output gap.
This figure amounts to £2,000 for each person living in the West Midlands and provides clear emphasis of the important work we need to do.
I emphasise the need for partnership working because the strength in depth that we have in the region, whether it is the knowledge base in our universities and colleges, the creative vision of our entrepreneurs or the pedigree of our many world-renowned companies, will be vital to the success of the West Midlands.
Analysis of the West Midlands economy reveals that the productivity gap is caused by two factors: the region’s business base is skewed towards sectors where GVA per head tends to be low and, of even greater significance, there are generally lower levels of productivity in these organisations.
Traditionally we are under-represented in high-value sectors such as pharmaceuticals, and oil and gas, so we recognise the importance of increasing research and development activity in the region.
Working with Aston University and the University of Worcester we have helped to fund the country’s first ocular allergy centre so that the West Midlands can be at the forefront of research into increasingly common conditions such as hay fever and dust allergies.
Other funded projects include research into bio-fuels in Staffordshire, and a joint research project between Coventry and Birmingham universities on the use of hydrogen as a fuel source.
These projects build the international reputation of Birmingham Science City, our higher education institutions and the region as a whole.
Research and development brings high-quality jobs and this is the reason we often have to make difficult decisions when negotiating with companies keen to move into developments such as i54 in Wolverhampton or Ansty Park, Coventry.
It would be easy to take some of the first attractive offers that come along, but we prefer to take a long-term view and ensure we attract the right kind of employers to the region.
It’s a bold strategy but one that is working and we’re delighted to look back on a record year for inward investment with 2,792 jobs created and 469 safeguarded respectively.
Successful projects include the decision by Ericsson, the Swedish telecommunications giant, to set up a research and development facility at Ansty Park, moving 650 jobs, and Shanghai Automotive Industry Company creating and safeguarding 350 jobs by establishing the SAIC Motor Technical Centre in Warwickshire.Small and medium-sized enterprises, such as Dutch mail order company IGO Post and Indian-based electrical component manufacturer Victory Electricals have also been attracted to our region citing the excellent central location and transport opportunities.
Channel 4’s decision to make Birmingham the UK commissioning hub for England and Wales for their new Four Innovation for the Public fund (4IP) is further evidence of the emerging activity in ICT.
The £10 million fund includes a £5 million investment from AWM matched with £5 million from Channel 4.
Investments such as these often have a cluster effect – similar smaller companies spring up around them as the market increases in size and confidence and builds a resilient economy. Channel 4 is an interesting and exciting brand that will change many people’s perceptions about our region.
Another key factor in establishing growth in our economy is addressing the gap in skills.
As a region we face two significant problems at each end of the skills spectrum: we are not retaining enough of our graduates and we do not have enough employees with basic skills.
The Regional Skills Partnership (RSP) is addressing these issues on a number of fronts.
We know that graduates are more likely to stay in the region when they have spent time with companies so the RSP is working with our universities to increase the number of work placements through the Graduate Advantage scheme.
As well as holding onto our best talent, a critical factor is developing the skills of our leaders and managers. There are about 500,000 leaders and managers who have a direct influence over two million employees and a GVA of around £77 billion annually in the West Midlands.
As vacancies are expected to grow by around 170,000 in the next decade, it’s vital that we provide the best training for our managers and leaders because we are investing in our future.
After a successful pilot scheme, Business Link West Midlands has rolled out the Leadership, Management and Entrepreneurship (LME) programme.
LME advisors visit companies and give tailored advice unique to each firm to plug the gaps in training needs.
This could involve recommending a university or college course, or a series of management exercises, or could be as simple as taking managers to another firm to observe best practice in action.
Of course, this is just a selection of the vital work taking place across the region that will help to build a resilient economy.
Regeneration projects shaping our region are the refurbishment of New Street Station, the Edgar Street Grid in Hereford and the University Quarter scheme in Stoke-on-Trent.
Birmingham Science City will be critical in building a research base and an international reputation for our region and our regional marketing strategy will help to communicate the fantastic advantages of working and living in the West Midlands.
There is much hard work ahead, but emerging sectors such as ICT, and the work of our partner agencies in furthering the cause of business, enterprise, innovation, transport and skills will ensure we can compete and thrive.