The West Midlands has been faced with significant challenges over the past decade - yet we remain a major global centre for business. Mel Egglenton, senior partner of KPMG in Birmingham, looks at the resilience shown by the region and suggests difficult times ahead could test this further.
The past decade has had an impact upon the shape of the West Midlands – sometimes for the better, sometimes not.
What is evident, however, is that we have managed to face up to these challenges and come out ready to face the next.
By working together, such as the collective effort around the demise of MG Rover, or individually, the region is strong and determined to remain on the global stage.
Adapting to the pressures of the global business arena and facing up to ongoing competitive challenges, remains high on the agenda for both public and private sector organisations.
Indeed, looking back over the ten years of the West Midlands Company Guide, it is clear to see that our local industries have changed in prominence.
Automotive, manufacturing and engineering remain at the heart of the region, but new industries are growing in significance including ICT, biosciences and media.
Through innovation and responsiveness to changes, the region has been able to create a diversity that has resulted in resilience.
We are no longer reliant upon any one sector for our economic prosperity and some of the new industries are less vulnerable to global economic conditions.
As a result, the peaks and troughs of our economic cycle are less pronounced than in previous decades, potentially creating a more stable business environment.
This has been demonstrated recently following the impact upon the global markets of the US sub-prime crisis.
While no one would say we are entirely immune to the consequences of the changing environment, the region has so far held up well, but there are indications that this could change.
Confidence among the region’s businesses currently remains at good levels.
However, we are already seeing confidence levels dropping across the EU, and according to our latest KPMG Business Outlook Survey, which surveys around 2,800 service sector firms across the EU, a further deterioration in confidence among UK service providers is on the cards.
Expectations regarding activity, revenues, new orders and profits were also well down since the previous survey (October 2007), as were forecasts for employment and capital spending.
When you take into consideration the slowing levels of growth in the UK economy, and the fact that there is unlikely to be any let up in cost pressures, it is important businesses continue to modify their strategies to ensure their business remains resilient.
Taking a holistic view of their business, and the market in which it operates, managers need to identify all the issues on the horizon.
This in turn will help identify where cost savings can be made.
In addition, areas where growth can still be achieved – such as new markets, including the emerging nations – need to be investigated and exploited where appropriate.
There really is no need for local businesses to stand still while we weather the challenges ahead.
Instead, they need to adapt their strategies and move forward in the best way.
Within this edition of the guide, we look at some of those key topics, and highlight some areas where growth and business improvement can be made.
It is important to remember that the fundamentals of business will be crucial and elements such as managing people, taxes and governance will play an important role.
Creating solid foundations will contribute significantly to a business’ ability to remain resilient.
I have no doubt that the region’s foundations are firmly in place for the challenges ahead and that the management skills and tenacity of those at the helm of local businesses will ensure that the West Midlands has every chance of remaining resilient.