As delegates assembled for the CBI Conference in Birmingham this week, many were no doubt still reflecting on the West Midlands economy’s brush with disaster earlier this year.
When BMW revealed its plans to break up Rover and sell the motor manufacturer to the venture capital group Alchemy, a stark spotlight was thrown on the region’s economy. Rover was, and still is, the biggest employer in the Birmingham area and the impact of a savage reduction in output would have been considerable.
A taskforce was quickly put together by the Regional Development Agency, whose mission was to identify how the economy could be diversified to reduce dependence on one employer. The taskforce looked at developing alongside the main A38 road to take advantage of labour location and existing infrastructure. Such a geographic focus would also encourage clusters of activity, a form of economic regeneration said to be particularly favourable for smaller businesses.
The now-averted disaster which Rover faced earlier this year focused minds. But it also showed the West Midlands in the wrong light. Car manufacturing is important in the region – apart from Rover the area is home to Peugeot, Jaguar, Land Rover and JCB – but that is only part of a growing and changing manufacturing base. Higher value and sophisticated manufacturing is a key part of the West Midlands landscape with electronics now the second biggest manufacturing sector after automotive.
Marconi’s recent decision to build a new plant at Ansty is just one of a series of high-tech developments in the region. The movement of manufacturing into higher value areas such as telecoms does not get the recognition it should. This is partly because the newer businesses are not as visible as they are in greenfield developments such as those in the south east.
Manufacturing in the West Midlands accounts for a third of local gross domestic product compared with a national average of about a fifth. While some believe manufacturing is still in decline there is little evidence of that in the West Midlands. Birmingham City Council predicts manufacturing output will increase by a quarter over the next 10 years even though about 15,000 jobs are expected to go as companies become leaner.The shape of the regional economy is changing. Nearly 24,000 jobs have been safeguarded through regeneration projects over the past year, so while the Rover crisis may have cast a shadow across the region the reality is far less stark.
Christine Buckley is industry editor of The Times