News - Midlands
Ready for next generation
There is never a quiet day in the NEC rumour mill, but the rumours have certainly been getting much noisier of late.
Most recent speculation was kicked off by the surprise announcement that "new" group chief executive Andrew Morris would be stepping down for family reasons - because his family is still based in London and he was unsurprisingly spending most of the week in the Midlands.
But what was surprising was that this was the same Andrew Morris who took over 18 months ago in a blaze of publicity promising big, bold and brave new plans for the NEC group.
The conspiracy theorists allege that Morris had his eye on a long-mooted privatisation of the group - which also includes the International Conference Centre, National Indoor Arena and Symphony Hall - and left because he realised there was little support for the move where it mattered.
However, there doesn't appear to be great substance to the speculation - and there's a note of frustration in attempts by NEC Group officials to quell it. But it's unlikely to disappear, given the importance of the NEC Group to the region and its public ownership.
The loss of the flagship Motor Show last year was a particular spark that set off the current wave of speculation. The Motor Show was the NEC's biggest earner since it was switched from Earl's Court to Birmingham in 1978, only two years after the huge exhibition centre was opened. But the Society of Motor Manufacturers and Traders (SMMT), which runs the show, wanted to reduce admission costs and get numbers up - and criticised the NEC for not accommodating these attempts. One SMMT official said the NEC's attitude was "you've got to come here because nowhere else is big enough", but this year the show opened at the ExCel exhibition centre in London.
NEC Group's director of communications, Deborah Smith, said the loss of the Motor Show has been offset by the exhibitions it has picked up in what has been its best-ever year for new business. The sales operation has been revamped, with Michael Watton installed as sales director in March 2006.
"More than 30 new exhibitions have been signed up over the next two years," said Smith. "They indicate that the NEC is a very popular venue.
"These new shows will join around 160 trade and consumer exhibitions already staged at the NEC each year, which together already attract more than three million visitors and 40,000 exhibiting companies. The loss of the Motor Show was a long time ago. We have almost completely plugged the gap."
In April 2006 Morris announced he was stepping down as chief executive because living away from his family had become too much to bear. Morris, who came to Birmingham 18 months previously, was credited with revamping Olympia and Earl's Court - and according to Sir Albert Bore, the Labour councillor who has been an NEC board member for 20 years, had injected new momentum at the NEC as well. Smith and Bore both insist that Morris's reasons for leaving must be taken at face value.
"We were very upset by the news, but respected Andrew's honesty and his commitment to his family," said Smith. "Thanks to Andrew's leadership, the NEC Group is a robust organisation with a bright future and we will continue the work he set in motion to reshape this organisation for the future. Andrew has no current plans beyond enjoying his remaining months at the NEC and only then intends to look for opportunities to use his skills to help a range of organisations in the future."
The search for Morris's replacement is on, with interviews scheduled for the remainder of summer 2006. Morris will only leave when his successor has been appointed - and in the meantime, said Bore, "is working with the NEC to ensure that the new momentum is not lost".
In the meantime, Bore admits that the failure of the Solihull supercasino bid - based on the NEC - to make it on to the Casino Advisory Panel's eight-strong shortlist was "terribly disappointing". Birmingham City Council (BCC) had come in for fierce criticism for getting behind the Solihull proposal rather than Birmingham City Football Club's rival bid, not least from Karren Brady, the club's chief executive.
Supporters of the club's bid pointed out that the Solihull area wasn't in need of regeneration to the same extent that Birmingham was. Backers of the NEC could point to its 30 years of experience in running facilities, transport links and the fact that it is situated away from large populations, reducing the risk of problem gambling. It's a moot argument now because neither made the supercasino shortlist, though the NEC is shortlisted for a smaller casino on the site.
"The NEC board will have to look at the implications," said Bore. "I'm terribly disappointed we're not on the list, but the NEC will recover."
Smith said: "We are delighted that Solihull is on the shortlist for a large casino and our aim now is to convince the Casino Advisory Panel of the compelling merits of our location. Whilst this would not have the same level of impact in terms of jobs and regeneration as a regional casino, we still believe it would be an important next step to further strengthen the vitally important business tourism sector in the West Midlands and revitalise our economy.
"Given that we knew we only ever had a one-in-27 chance of securing a regional casino, we have also focused on ensuring that our core businesses were robust and growing healthily. In addition, about six months ago we began looking at a masterplan for the NEC site that encompasses a range of other innovative and exciting future additions to the NEC site. In addition to pursuing the option of a large casino we intend to reveal more about this masterplan in September (2006)."
As with the Greater Manchester councils' ownership of Manchester Airport, BCC's ownership of the NEC Group appears anomalous to some, a product of a bygone corporatist age. It is probably from these quarters that talk of it being sold off emanate. To others it seems entirely sensible for such an asset to be in public ownership.
Smith said selling off the NEC is "not on the cards and not the subject of any talks". Bore said rumours of a sell-off are nothing more than speculation. And across the political divide, Mike Whitby, leader of Birmingham City Council, is equally dismissive.
"It has never crossed our minds to sell off any part of the NEC, which is one of the city's major assets," he said. "We can't imagine where such an ill-founded rumour came from."
Even if it had any substance, the NEC Group's finances are not perfect. In 2004/05 turnover was £3136.4m and operating profit £342.6m. But after interest and asset rental charges, the company had a deficit of £32.5m, with a further £35.5m being set aside for loan repayments.
The cyclical nature of the exhibition market and the large borrowings historically incurred by the NEC Group to pay for expansion are to blame for the loss. They mean that BCC has to make up the shortfall. But Bore doesn't believe this to be a problem.
"There is nothing unusual about this. In strict accounting terms there is a loss but in wider economic terms the group brings into the region a huge number of jobs and activity that wouldn't otherwise be there."
Smith said that the company expects to move into profit by 2012. A £340m, three-year investment programme is already underway to bring improvements to the NEC. The first phase has already been completed with an £38m facelift of the piazza. "The NEC needs to get back its competitive edge," said Smith.
The £340m was released through a refinancing in April 2005 in which the holders of £3215m of NEC stock exchanged it for new BCC bonds maturing in 2030. As well as producing money for investment, the refinancing generated £340m of revenue savings for the council over a five-year period.
"Our priority for the long term is to move the business out of the deficit position which it has lived with for 30 years due to the loans taken out by the city to build our five venues and in doing so create jobs and revenue for the region," said Smith.
"In addition to the investment programme, we are already starting to achieve this by encouraging innovative launch shows to come to the NEC, increasing the number of shows we put on ourselves through our new joint venture with Clarion Events and by creating a leisure destination on the NEC site that is attractive to business and leisure visitors."
One historical legacy that is beginning to attract attention is the relationship between Birmingham Chamber of Commerce and the NEC Group. In the early 1970s the chamber and the council set up a company to mastermind the exhibition hall plans. Ever since, four NEC Group board members have come from the chamber.
A chamber spokesman said there were "private arrangements" between the chamber and the NEC Group, adding that the chamber provided certain services relating to publicity and marketing for the NEC Group. "It is entirely up to the NEC if they want to make use of them," he said.
According to a study by KPMG in 1999, the NEC Group generated £3711m in personal and business expenditure in a 12-month period, supporting 21,844 full-time jobs. Marketing Birmingham's updated figure is £31.3bn, generated by five million visitors a year. A deficit of £32.5m seems a small price to pay.
"Birmingham is now recognised as one of Europe's busiest meeting points and hosts more major events than anywhere else in the UK," said Ian Taylor, Marketing Birmingham's commercial director. "The NEC Group is a great asset to Birmingham."
Most recent speculation was kicked off by the surprise announcement that "new" group chief executive Andrew Morris would be stepping down for family reasons - because his family is still based in London and he was unsurprisingly spending most of the week in the Midlands.
But what was surprising was that this was the same Andrew Morris who took over 18 months ago in a blaze of publicity promising big, bold and brave new plans for the NEC group.
The conspiracy theorists allege that Morris had his eye on a long-mooted privatisation of the group - which also includes the International Conference Centre, National Indoor Arena and Symphony Hall - and left because he realised there was little support for the move where it mattered.
However, there doesn't appear to be great substance to the speculation - and there's a note of frustration in attempts by NEC Group officials to quell it. But it's unlikely to disappear, given the importance of the NEC Group to the region and its public ownership.
The loss of the flagship Motor Show last year was a particular spark that set off the current wave of speculation. The Motor Show was the NEC's biggest earner since it was switched from Earl's Court to Birmingham in 1978, only two years after the huge exhibition centre was opened. But the Society of Motor Manufacturers and Traders (SMMT), which runs the show, wanted to reduce admission costs and get numbers up - and criticised the NEC for not accommodating these attempts. One SMMT official said the NEC's attitude was "you've got to come here because nowhere else is big enough", but this year the show opened at the ExCel exhibition centre in London.
NEC Group's director of communications, Deborah Smith, said the loss of the Motor Show has been offset by the exhibitions it has picked up in what has been its best-ever year for new business. The sales operation has been revamped, with Michael Watton installed as sales director in March 2006.
"More than 30 new exhibitions have been signed up over the next two years," said Smith. "They indicate that the NEC is a very popular venue.
"These new shows will join around 160 trade and consumer exhibitions already staged at the NEC each year, which together already attract more than three million visitors and 40,000 exhibiting companies. The loss of the Motor Show was a long time ago. We have almost completely plugged the gap."
In April 2006 Morris announced he was stepping down as chief executive because living away from his family had become too much to bear. Morris, who came to Birmingham 18 months previously, was credited with revamping Olympia and Earl's Court - and according to Sir Albert Bore, the Labour councillor who has been an NEC board member for 20 years, had injected new momentum at the NEC as well. Smith and Bore both insist that Morris's reasons for leaving must be taken at face value.
"We were very upset by the news, but respected Andrew's honesty and his commitment to his family," said Smith. "Thanks to Andrew's leadership, the NEC Group is a robust organisation with a bright future and we will continue the work he set in motion to reshape this organisation for the future. Andrew has no current plans beyond enjoying his remaining months at the NEC and only then intends to look for opportunities to use his skills to help a range of organisations in the future."
The search for Morris's replacement is on, with interviews scheduled for the remainder of summer 2006. Morris will only leave when his successor has been appointed - and in the meantime, said Bore, "is working with the NEC to ensure that the new momentum is not lost".
In the meantime, Bore admits that the failure of the Solihull supercasino bid - based on the NEC - to make it on to the Casino Advisory Panel's eight-strong shortlist was "terribly disappointing". Birmingham City Council (BCC) had come in for fierce criticism for getting behind the Solihull proposal rather than Birmingham City Football Club's rival bid, not least from Karren Brady, the club's chief executive.
Supporters of the club's bid pointed out that the Solihull area wasn't in need of regeneration to the same extent that Birmingham was. Backers of the NEC could point to its 30 years of experience in running facilities, transport links and the fact that it is situated away from large populations, reducing the risk of problem gambling. It's a moot argument now because neither made the supercasino shortlist, though the NEC is shortlisted for a smaller casino on the site.
"The NEC board will have to look at the implications," said Bore. "I'm terribly disappointed we're not on the list, but the NEC will recover."
Smith said: "We are delighted that Solihull is on the shortlist for a large casino and our aim now is to convince the Casino Advisory Panel of the compelling merits of our location. Whilst this would not have the same level of impact in terms of jobs and regeneration as a regional casino, we still believe it would be an important next step to further strengthen the vitally important business tourism sector in the West Midlands and revitalise our economy.
"Given that we knew we only ever had a one-in-27 chance of securing a regional casino, we have also focused on ensuring that our core businesses were robust and growing healthily. In addition, about six months ago we began looking at a masterplan for the NEC site that encompasses a range of other innovative and exciting future additions to the NEC site. In addition to pursuing the option of a large casino we intend to reveal more about this masterplan in September (2006)."
As with the Greater Manchester councils' ownership of Manchester Airport, BCC's ownership of the NEC Group appears anomalous to some, a product of a bygone corporatist age. It is probably from these quarters that talk of it being sold off emanate. To others it seems entirely sensible for such an asset to be in public ownership.
Smith said selling off the NEC is "not on the cards and not the subject of any talks". Bore said rumours of a sell-off are nothing more than speculation. And across the political divide, Mike Whitby, leader of Birmingham City Council, is equally dismissive.
"It has never crossed our minds to sell off any part of the NEC, which is one of the city's major assets," he said. "We can't imagine where such an ill-founded rumour came from."
Even if it had any substance, the NEC Group's finances are not perfect. In 2004/05 turnover was £3136.4m and operating profit £342.6m. But after interest and asset rental charges, the company had a deficit of £32.5m, with a further £35.5m being set aside for loan repayments.
The cyclical nature of the exhibition market and the large borrowings historically incurred by the NEC Group to pay for expansion are to blame for the loss. They mean that BCC has to make up the shortfall. But Bore doesn't believe this to be a problem.
"There is nothing unusual about this. In strict accounting terms there is a loss but in wider economic terms the group brings into the region a huge number of jobs and activity that wouldn't otherwise be there."
Smith said that the company expects to move into profit by 2012. A £340m, three-year investment programme is already underway to bring improvements to the NEC. The first phase has already been completed with an £38m facelift of the piazza. "The NEC needs to get back its competitive edge," said Smith.
The £340m was released through a refinancing in April 2005 in which the holders of £3215m of NEC stock exchanged it for new BCC bonds maturing in 2030. As well as producing money for investment, the refinancing generated £340m of revenue savings for the council over a five-year period.
"Our priority for the long term is to move the business out of the deficit position which it has lived with for 30 years due to the loans taken out by the city to build our five venues and in doing so create jobs and revenue for the region," said Smith.
"In addition to the investment programme, we are already starting to achieve this by encouraging innovative launch shows to come to the NEC, increasing the number of shows we put on ourselves through our new joint venture with Clarion Events and by creating a leisure destination on the NEC site that is attractive to business and leisure visitors."
One historical legacy that is beginning to attract attention is the relationship between Birmingham Chamber of Commerce and the NEC Group. In the early 1970s the chamber and the council set up a company to mastermind the exhibition hall plans. Ever since, four NEC Group board members have come from the chamber.
A chamber spokesman said there were "private arrangements" between the chamber and the NEC Group, adding that the chamber provided certain services relating to publicity and marketing for the NEC Group. "It is entirely up to the NEC if they want to make use of them," he said.
According to a study by KPMG in 1999, the NEC Group generated £3711m in personal and business expenditure in a 12-month period, supporting 21,844 full-time jobs. Marketing Birmingham's updated figure is £31.3bn, generated by five million visitors a year. A deficit of £32.5m seems a small price to pay.
"Birmingham is now recognised as one of Europe's busiest meeting points and hosts more major events than anywhere else in the UK," said Ian Taylor, Marketing Birmingham's commercial director. "The NEC Group is a great asset to Birmingham."