Looking in
Big inward investment wins are the holy grail for the Midlands’ cities and towns. Not only are all these places competing against each other, they are also competing against cities and towns all over the country.
Public sector relocation from London – following the recommendations of the Lyons Report – is the ultimate aim, but it is fair to say this is taking a long time to come to fruition in any meaningful way.
Whether public or private sector, what is the right strategy to employ to snare ‘a big one’? What most serious inward investment bodies agree is that the Field of Dreams approach – if you build it they will come – cannot work in isolation. Mike Loftus, manager of Locate in Birmingham, thinks a more focused outlook is needed. “It is finding out about the goodness of fit,” he says.
Birmingham’s effort is focused on four areas: science and knowledge, the implications of a changed world, the international dimension and government relocation. In the first of those, Locate in Birmingham is aiming to leverage its Science City status.
“We are working with the universities and the researchers there,” he says. “They have contacts with the commercial world in areas such as meditech and environmental engineering. We are also doing work on advanced materials, which also involves medical technology. A great example in Birmingham is The Binding Site group, which manufactures the leading diagnostic tools in the bone marrow cancer field.”
Loftus says Birmingham can leverage off the expertise of the University of Birmingham and the new Birmingham Super Hospital.
The changed world strand of the inward investment strategy looks at pressures for cost reduction in the financial services area in particular. “Generally there is a lot more outsourcing now,” adds Loftus. “And we are pressing our capacity and skills in that area. A great example of that is what Deutsche Bank has been doing since it came here a year ago. It is very much a new model of a back office.”
Loftus says a big US finance company, which has recently visited Birmingham, was “blown away” by what Deutsche Bank is doing there. “It is about us understanding what the problem is and what the solution is,” he says.
The international dimension of the strategy is China and India. The Chinese minister of commerce was a recent visitor to Birmingham, and Indian trade missions regularly visit the city. A Birmingham Day is planned to take place in Delhi later this year.
On the government/public sector relocation from London side, Loftus says the pressures on public expenditure are enormous and will increase in the run-up to the General Election.
“One thing we always have in our favour is that we are only an hour or so from London,” he says. A Ministry of Justice relocation requirement for 250,000 sq ft of office space has been in the market for some time but few believe a decision will be made this side of the General Election.
Not that Loftus is lacking irons in his fire.
“I’ve never been as busy as in the past few months with serious live enquiries,” he says. “For us it’s not about saying: ‘Come to Brum, it’s wonderful’; it’s about trying to understand what businesses are going through in the change process. It’s about how we position the city to best gel with what they need.”
Derby has also been honing its inward investment approach. John Forkin, director of Marketing Derby, says: “Our Derby Embassy in London is recognition that we don’t have the sort of resources for advertising on the tube, but we want to reach our target audience. It is a way of putting on meetings in decent locations with good speakers and third-party endorsements from the likes of Eurostar and Derby County Football Club.”
As you may have guessed, the Derby Embassy isn’t a real building. “We have had some really successful forums since our first one at the House of Commons nearly two years ago,” he says.
In terms of target markets, Forkin is clear about the sort of companies Derby is trying to attract: “We have a retail and a food and drinks strand, and there are certain brands who are not here. It is a shopping list. It is reasonably straightforward to attract people from companies that aren’t here, such as Karen Millen and Carluccio’s, to meetings.
“The second strand is offices. This is the priority for the city for the next two years. This is more difficult so we use agents to help us put Derby on the radar. We need to make sure the agents know about Derby.
“The market is moving towards only considering options that exist but very few developers can build speculatively so there has to be a decent sniff of a pre-let. A few years ago there wasn’t 1 sq ft with planning permission in Derby city centre and now there is 900,000 sq ft with planning permission. So our role is to add muscle to the market.”
Forkin suggests that Derby’s reputation as a base for IT and high-tech jobs is a double-edged sword. “Twelve per cent of people here work in high-tech businesses. The challenge is not to be put on an advanced manufacturing shelf but to show Derby is a market that is much more office-based,” he says.
“So we are chasing white collar jobs, high tech or not. A good example of this is Citibank with Egg on Pride Park. This is a real mixture of skilled and less skilled jobs.”
He adds: “The strategy is to diversify the economy. We need to get across to people in London that Derby is in a large travel-to-work area. We don’t talk about a 250,000 population but about accessing 600,000 people within a 45-minute drive.”
In Leicester, Nick Carter, chairman of economic development body Prospect Leicestershire, has had to come up with a detailed inward investment approach pronto.
“The company was launched only in March this year. We knew we had to come up with a new proposition quickly because we had inherited a delegation going to the annual development convention MIPIM,” he says.
“Our edge is that Leicester and Leicestershire is the only area in the UK with an economic alliance between the city and county councils. This multi-area agreement makes it easier for potential inward investors to find opportunities here.”
Carter says sectors Prospect Leicestershire thinks it can attract are food and drink, pharmaceuticals, business services, science, technology and creative. “The creative sector is interesting for us because Leicester is developing a cultural quarter,” he says. “We are trying to encourage organic growth but also creating opportunities for investors.
“There is also a need to be more targeted. You want to be across the table from the person making the investment decision. It’s about identifying strengths and working through contacts and lobbying. So events such as MIPIM have real value. The conversation is what we are after. The ‘no boundaries’ idea is about getting people to think again.”
