It's great that the best of Birmingham and the Black Country is again being showcased in a special event at the House of Commons . Hats off to our local MPs for backing it.
For while Birmingham and the Black Country are known the world over for their industry and creativity, the powers that be here in the UK sometimes fail to recognise quite what a manufacturing powerhouse Greater Birmingham and the Black Country really is.
It’s true that Birmingham and the wider region took the biggest output and employment hit of any UK region in the last recession, in part because of a collapse in world trade (Birmingham is, after all, the ‘city of a thousand trades’ in many senses – including as a major exporter).
But since then the city and the wider region has powered back more quickly than elsewhere in the UK. This bounce back has been seen in improved performance across many sectors in the region but manufacturing activity in particular has spurred growth.
Sectors such as automotive, aerospace, power-generation and the production of specialised precision components are all driving ahead, as the West midlands Economic Forum (WMEF) has recently highlighted.
Infrastructure improvements such as the runway extension at Birmingham Airport, the upgrading of the M6, the M54 reconfiguration and the Birmingham New Street development are all likely to boost growth in the city and the wider region.
As a result, West Midlands’ regional growth on a nominal Gross Value Added (GVA) basis is expected to outstrip UK national performance by at least two percentage points in 2014 and 2015 on some estimates.
The performance and flexibility of the region’s automotive industry in particular sets a great example for other sectors. The sector has seen more than £6 billion of investment over the past two years, with much of that here via Jaguar Land Rover and supply chain firms such as GKN (whose Birmingham-based, world-beating Driveline business division has just posted bumper profits).
Indeed, it’s great to see the region’s manufacturers leading the way in re-shoring, rebuilding the supply chain, innovating and boosting output and jobs.
There is a palpable sense of confidence in several manufacturing sectors including automotive and aerospace. Order books extend well beyond 2016. “There’s never been a better time to be in manufacturing” one chief of a major local manufacturer told me in Birmingham recently.
This confidence is reflected in the nascent trend of reshoring, which is seeing manufacturing activity come back to the region. Our recent research with SGH Martineau on the reshoring of the region’s manufacturing base found some 16 per cent of the region’s manufacturers actually doing reshoring and another five per cent actively considering it. The trend may well be less pronounced than some have claimed but there still seems to be something actually happening on the ground.
Top of the list of drivers for local firms in ‘bringing it home’ are transport costs and quality issues overseas, followed by supply chain resilience, exchange rate shifts, rising wages overseas, the need for rapid turnaround, as well as the need to offer a service alongside manufacturing.
There are, of course, barriers to further repatriation. It’s the skills issue, along with access to finance (especially for smaller firms down the supply chain) and high energy costs which provide some of the biggest barriers to an even faster manufacturing upturn and a boost to growth locally.
Overcoming some of these challenges, for example on accessing finance, are already key goals for local LEPs and the Manufacturing Advisory Service through its ‘Reshore UK’ initiative. They should be a greater focus for the Government’s industrial strategy as well.