As the North East economy emerges from the challenges of the current recession, focus is increasingly turning to what the future holds. ANDREW HEBDEN hears from some of our 2020 Vision partners about what our region has to look forward to over the rest of the decade
WHAT should the North East economy look like come 2020? What can we hope to achieve in the next eight years? What should be our region’s priorities and aspirations during this time?
In truth, the date is a somewhat arbitrary one but, just like the millennium 12 years ago, 2020 feels like a landmark moment in history. So, as we launch a new campaign today focused on the North East’s future, it seemed like an appropriate moment come which time we should be able to measure our progress.
How might we do that? What will success look like? Is it enough to aspire to have grown the North East’s GDP, got more people into employment and increased the number of businesses? Or should we go deeper than that and examine our region’s export performance or even look at social measures such as educational achievement, indexes of health and wellbeing or even happiness? You could easily fill the 32 pages of this supplement with an analysis how some or all of these measurements interconnect. But it’s probably appropriate for us to be a bit more focused.
And so our 2020 Vision will unashamedly focus on the North East economy – its strengths, weakness, the opportunities and the threats. Which sectors have the potential to grow most over the next eight years and could they provide mass unemployment in future? Can we become world class in these areas? And if so what do we need to do in order to capitalise on these opportunities?
We launch our 2020 Vision at a time of huge challenges. The North East economy has undergone profound change in the last 30 years and the legacy of that transformation lives on. In some parts of the North East, particularly the former coalfields, communities have never recovered from the collapse of the industries that once employed thousands of men. And we are still seeing the demise of those major employers, with the recent closures of Alcan in Lynemouth, Northumberland, and BAE Systems’ former Vickers site in Scotswood Road, Newcastle. These were companies that offered their staff a well-paid job for life. Now they’re gone.
It is easy to feel downbeat about the region’s prospects when you see stories such as those or read unemployment statistics which are the worst in the UK. And in pockets of certain areas, the scale of the challenges is profound – young people don’t just need to be given the skills to find work, we need to raise their aspirations and awareness of what opportunities are out there.
But opportunities there most certainly are.
The North East is especially well placed in the UK to become a leader in areas such as renewable energy thanks to its rich engineering heritage and natural assets including its three main rivers and access to the North Sea.
But the North East can also lay claim to being the leading region for car manufacturing in the UK, is home to most of the country’s process industry, and can also boast five universities including two members of the prestigious Russell Group. And that’s before we even mention two UNESCO World Heritage Sites, some of the UK’s finest scenery and, in Newcastle, a city that has undergone a remarkable renaissance to become established as a leading cultural and leisure destination. It is these virtues that should give those charged with ensuring the North East has a bright economic future confidence, according to Gill Southern MBE. As chief executive of manufacturing firm Wessington Cryogenics, she knows all about the region’s industrial prowess but in her new role on the board of the North East Local Enterprise Board, she’s charged with seeing the bigger picture too. “I have long believed that we in the North East must be confident and ambitious about our economic future,” she says. “This confidence and ambition is by no means misplaced. We have countless assets: business strengths in a number of areas; strong universities and public sector; an innovative and effective voluntary sector; passionate people, identity and heritage; and of course our beautiful coast, countryside and vibrant urban areas. These assets give us a truly unique offer to build upon.
“We must move away from an implicit expectation that others will help us, and instead move towards a more entrepreneurial and innovative economy. Key to this, I believe, is effective skills provision that meets the future demands of the economy.
“An entrepreneurial approach doesn’t only mean increasing the size of our business base, but also doing things differently, and ensuring a more fleet of foot and risk-taking approach is embraced across our institutions and organisations.
“Ultimately, my vision is of a diverse, productive, highly-skilled and well connected economy with a globally competitive edge. Critically, instead of being labelled as a ‘lagging’ economy, we will rightly be viewed as a significant contributor to UKPLC.” And there’s plenty of evidence that the North East is already fulfilling that role. It’s a point worth repeating that the region is the only area of the UK with a positive balance of trade, meaning it does more than anywhere else to boost Britain’s export performance.
John Marshall, senior partner at leading law firm Dickinson Dees, agrees that there is much potential to be realised. And eight years from now we should be reaping some of the benefits of the hard work that’s now under way.
“2012 will be seen as the turning point for the North East economy,” he says. “The foundations have been laid for economic recovery following the recession, and work carried out in 2012 will mean that the North East should become an industrial and commercial powerhouse once again.
“The region is ideally placed to become a hub for the low-carbon, offshore and renewables sector. In 2020, companies will want to locate here to take advantage of the availability of industrial sites for development, the abundance of natural resources, supply chain benefits as well as a skilled and adaptable workforce.
“There will be world-class processing industries to the North and the South of the region. We will become a world leader in all forms of transport: automotive (Nissan), rail (Hitachi) and public transport (Deutsche Bahn), linked together by virtual connectivity and the first class infrastructure of the ports and airports.”
For John Anderson CBE, chairman of the North East Business and Innovation Centre (BIC) in Sunderland, this will be reflected in a more confident region which is home to a new generation of businesses.
“Investment in emerging sectors such as software and life-sciences has encouraged the development of a new breed of businesses in the North East,” he says. “This combined with the region’s exporting success has significantly helped to re-define perceptions of the area.
“Building upon these achievements, 2020 will see a more confident North East; one which capitalises on public and private sector partnerships in order to encourage not only its home grown businesses but also the entrepreneurs of tomorrow.
“This will be achieved by cutting down on bureaucracy and ensuring a clear regional growth strategy is communicated and embraced by organisations throughout the supply chain.
“Measures will also be taken to improve the infrastructure, this will include looking at airport routes to ensure we can build upon relationships with places like Scandinavia and fast broadband to ensure our businesses can compete globally.
“It is these investments that will help to call a halt to the brain drain and secure the future of the next generation of North East businesses and beyond.”
Professor Sharon Mavin, Dean of Newcastle Business School at Northumbria University, believes that the region’s performance during the current downturn gives us reason for optimism looking ahead.
“There is evidence that the region has managed an export-led avoidance of the worst aspects of recession and in general businesses are feeling more positive,” she says. “This can only continue as confidence and the economy grows stronger.”
She believes the fact that some of the world’s best known brands such as Domestos, Fairy, Greggs, Sage, Fenwick, Barbour are based or have their origins in the North East should inspire the next generation of business leaders.
“Whilst some of these may have moved on they still have a positive and strong identity in consumers’ minds,” she says. “We should learn from the success of these brands to reinforce the North East as a region fit for business. The sustainable energy sector has huge potential to be a driver for growth and position the North East as a centre of excellence.
“I would also hope to see more businesses working in partnership with us to retain our UK and international talented graduates and strengthen the region in developing a dynamic workforce.”
Robin Ghurbhurun, deputy principal Newcastle College, agrees that continuing to invest in skills is crucial to the success of the economy.
“The key priority is to build a foundation of both basic and higher level skills to ensure the workforce is progressively equipped to meet the future needs of our economy,” he says. “This will provide a platform for employability and ensure we have a highly trained and competitive labour market.”
He says the region should “continue along the trajectory of building its strong reputation for manufacturing and engineering whilst leading national growth in exports of world class products”. He adds: “By 2020 the vision for a low-carbon ‘green’ economy should be in top gear, capitalised on the growth of STEM whilst providing a boost to the knowledge economy through research, development and innovation.”
The important role that the region’s local authorities have to play in bringing about that transformation is not lost on South Tyneside Council leader Iain Malcolm. But he is confident they can work together to deliver a brighter future for the entire North East.
“Local authorities across Tyne and Wear have a strong history of working together in partnership, and there is clearly an opportunity for closer joint working to add value to our economy and communities,” he says.
“In challenging economic conditions, this kind of collaboration is more important than ever. By coming together with the private sector through Local Enterprise Partnerships (LEPs), we can add value through coordination, potentially securing additional powers to pursue our priorities together.”
Coun Malcolm believes there is “much we can learn” from the success of the 10 Greater Manchester authorities working together to drive economic growth and job creation through its City Deal.
“In South Tyneside, our highly skilled workforce, strong supply chain and excellent transport links, including the Port of Tyne international logistics gateway, mean the borough is ideally placed to develop as the region’s hub for advanced engineering and manufacturing, while neighbouring areas build on their own strengths, like biotechnology in Newcastle and the automotive sector in Sunderland,” he added.
His counterpart at Sunderland City Council, Coun Paul Watson, is equally upbeat about the future.
He said he was proud of what his own city and its people had achieved and believed the city was now established as a leading location for businesses looking to invest. “Sunderland offers a remarkable range of opportunities for businesses, from entrepreneurial start-ups to globally successful businesses that have chosen Sunderland as their UK headquarters,” he says.
“In 2011 the City Council helped to create more than 2,300 jobs and secure around £500m in new business investment into the city. We’ve worked hard to keep momentum driving forward, safeguarding the future of local businesses and boosting Sunderland’s economy.”
Coun Watson said Sunderland was one of only a handful of UK cities to develop a 15-year masterplan for economic growth, setting out the direction of the economy and the roles its business, university, college, public and voluntary sector partners can perform by working together.
“Sunderland is proud of its manufacturing roots and hardworking, enterprising culture. It offers world-leading levels of productivity, unrivalled connectivity and choice of business premises and space. It is a city which embraces change and opportunity,” he adds.
Ian Gilthorpe is one of the best known figures in Tyneside’s professional community having worked for several of the largest law firms in the region. Just over a year ago, he launched a new firm from scratch – the aptly-named Square One Law – which he is now in the process of building up into a major player.
Asked what he thinks the North East economy might look like come 2020, he insists he is very positive about the future. “Yes, the next eight years in the run up to 2020 will be challenging and likely to see more change than the last 20 years, but as a region we need to embrace change if we are going to succeed,” he says.
“At times it is easy to underestimate the significant progress we have made as a region over the past 20 years. The key to our future success will be to focus on growth in the private sector. Many of the jobs created in the region have been in the public sector to date, however, with the inevitable reduction of public sector jobs, the creation of a bigger and stronger private sector rooted in the region and working on a national and international basis is absolutely essential to create more jobs and wealth in the North East.”
Understandably, he thinks that the role of the professional community is critical to this process. “We all need to look at ways of adding more value to help support these businesses,” he says. “Our solution at Square One Law is to create a different model for a law firm, one that is leaner and more agile. Businesses understand they are going to have to be more creative to stay competitive and to grow and professional services need to be doing the same.”
Charles Reynard, partner in the Newcastle office of law firm Eversheds, is equally optimistic.
He says: “I see the North East economy already moving in a new and positive direction towards its 2020 self: a manufacturing-led economy, stimulated by our universities, comprising a flourishing supply chain, for both goods and services, focussed towards renewable energy – especially offshore – oil & gas and automotive sectors together with new export markets. Opportunities in the offshore energy sector have game-changing potential for the region and should be seized. This economy will require a thriving professional and financial sector which will also generate jobs and spending power to stimulate the leisure and tourism sector and enhance quality of life and opportunities for this generation and beyond.”
The potential opportunity for the region in areas such as low-carbon vehicles and renewable energy has been evident for some time. But even bigger prizes may lie in wait if we can identify other emerging markets. For Mike Morgan, business development manager at Changing Age for Business at Newcastle University, the ageing demographic of the population is one such trend.
“Predicting the future is notoriously risky,” he says. “However, I can predict with confidence that in 2020 the average age of the population of the North East will be older than it is now. This is because currently life expectancy is increasing by five hours a day.
“Our vision is that by 2020 the North East will be a world leader in delivering age inclusive solutions and services and also a great place to live as you age.
“Many people assume that ageing will place a major burden on society. Whilst we agree it will have challenges we also believe that it will create many opportunities. The North East will have older consumers; they will be living longer and healthier than ever before. Even today the over 50s in the UK own 80% of the wealth yet only receive 10% of marketing focus.
“The Newcastle Initiative on Changing Age is focused on delivering world-class research around ageing that also delivers social and economic impact.
“We believe the North East has the foundations in place to replace the declined industries of shipbuilding and mining with a new industry focused on the emerging market created by an ageing society.”
Communities have never recovered from the demise of the industries that once employed thousands
Work carried out in 2012 will mean the North East should become an industrial and commercial powerhouse again
There is clearly an opportunity for closer joint working to add value to our economy and communities
Businesses understand they are going to have to be more creative to stay competitive and to grow