Diversified economy is region’s strength

May 21 2008 by Andrew Hebden, The Journal

IT is nearly two decades since the government of the time designated an unremarkable 125-acre greenfield site on the outskirts of Sunderland as an enterprise park.

In a region ravaged by the fallout from the decline of the shipbuilding and mining industries, Doxford Park was to represent the future – a centre for employment creation specifically built around the financial services sector and, in particular, business processing activities.

And it has been a success. Private partners have ploughed around £200m into the project – it is home to some major names such as T-Mobile, EDS, EDF Energy, Barclays Bank and, of course, CitiGroup. It has become a buoyant employment sector and a centre of excellence for the contact industry, supported by the innovative training centre run by the City of Sunderland College.

No one ever said that call centres would last forever.

We all know that thousands of firms have chosen to offshore this type of work to cheaper economies such as India and China – although the UK industry has proved more resilient than many predicted a few years back.

There is, however, given its history, a certain irony in the fact that Doxford Park is today at risk of becoming a pertinent symbol of the credit crunch. Far more so, it could be argued, than the financial districts of either New York or London – home to most of the megalomaniac bankers whose greedy strategies are partly to blame for getting us in this mess. Ultimately, it is in places like Doxford Park, where the less glamorous functions of the banking industry are carried out, that potentially the most damaging fallout may be witnessed.

The announcement that 400 jobs are likely to go when CitiGroup – the bank that is arguably most closely associated with the credit crunch – closes its Doxford Park site is in itself a blow. But, by an unfortunate coincidence, Northern Rock (that other name that resonates with the crunch) also has a sizeable presence on the same business park. It has, of course, already warned that around 2,000 workers face the axe.

Together, they represent a seismic blow to the financial services sector in the North East and a symbol of how the credit crunch is now biting very hard so close to home. The speed with which this crisis has unfolded demonstrates how fragile an economy built heavily upon the service industry can be. Shipbuilding and mining, of course, did not disappear overnight.

It is at times like this when we should be grateful for the fact this region still has a diversified economy capable of withstanding the worst of what now seems likely to unfold.