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Friday, 18 October 2013

There's dancing in the streets...of brum

This is an edited version of a speech I gave this morning, to introduce the new RAB econometric analysis. the speech took place in Birmingham's iconic new library.

I was asked both to chair the event, and talk by way of introduction about the economy in general, and how we are doing round here

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Good Morning everybody and welcome to the RAB’s Birmingham Launch of “The Missing Millions”. My name is Phil Riley and I am the Chief Executive of Orion media, owners of Free radio – but I am here representing all of the city’s radio companies in welcoming you to the new, iconic Library of Birmingham. It is my job to keep this morning’s packed agenda to time and to introduce you to the number of talented and interesting speakers you will be hearing from.
But before we get to that element of this morning, I was asked by the RAB to share some thoughts with you on the current state of the economy, and in particular, how this region is faring in this increasingly competitive, interconnected world.
I want to start with a radio anecdote. Detroit 1980 vs Birmingham 1980.
My earliest memories of working in professional radio were here in Birmingham at brmb radio, and every time we played a Motown oldie in those days we made great play of the fact we were the UKs motown or motor city – a great comparison to Detroit was made.
Not anymore of course, Detroit is now officially bankrupt – driven to economic ruin by a combination of outsourcing, factory close-downs, and a bloated public sector with associated pension liabilities that was simply unsustainable for the city with the suburban flight of the better educated out of the city’s tax catchment area. Not all of those circumstances apply here of course, but the Prime Minister is right; we are in a global race, and even in a rich country, it is important each city/region recognizes that the fate that befell Detroit could embrace them too if they are not careful. I will come back to our region in a moment, but what about the economy in general.
How deep was the recession? From Q1 2008 economy shrank from peak to trough by 7.2%.
We’ve recovered only half of that, including current indications of growth in Q2.
The OECD and IMF are forecasting growth for the UK of 1.5%-1.8% for the year – good but still below trend.
Tim Harford says in his undercover economist blog “Let’s be clear: the UK economy is suffering the slowest recovery of gross domestic product since credible records began by a colossal margin. Sixty-six months after each began, in the awful recessions of the 1920s, 1930s, early 1970s and early 1980s, GDP had recovered to 5-8 per cent above the pre-recession peak. This time, we are still about 2-3 per cent below it. We are looking back – I hope – at an unprecedented economic catastrophe.”
And what type of recovery will it be. Optimists, including Paul Mason, who spoke at this event in London, are suggesting it might be an innovation recovery, with online, social media, and the creative industries combining to boost growth; others, more pessimistic, suggest the recovery might just be consumer-led, possibly fuelled by a housing boom – followed by a bust.
And credit remains weak. Many firms are still finding it difficult to borrow – or maybe just don’t want to borrow to fuel expansion at a time when the recovery is not set in stone. However, there are huge cash balances on company balance sheets. Many of us in the media would like to see those cash balances put to good use, by investment in marketing – hence today’s presentation.
And we can all talk about our own experiences. From our experience at Orion summer trading i.e. June onwards, is up double digits locally – that’s pretty good in anyone’s book. In October we are going to run out of airtime – that’s bad in the short-term of course but it suggests demand has really started to pick up.
Let me turn to the local picture: Birmingham / Greater Birmingham / West Midlands. We sometimes struggle round here to know what to call ourselves – which is one of our problems.
  • Birmingham provides economic scale – located within a £94 billion regional economy
  • The city and surrounding region is home to 75,000 companies including almost 1,190 international firms
  • Youngest population of any major European city – nearly 40% are under 25
  • Access to over 90% of the UK market within a four hour travel time
  • Most attractive UK regional city for quality of life (Mercer Living Index 2012)
  • Air, road and rail connections provide access to 400m people across Europe
  • Over 140 direct scheduled and charter routes from Birmingham Airport

Let me first talk about Infrastructure. I think we’ve witnessed a decade of transformation in the city – starting with Selfridges and the relaunched Bullring, which opened 10 years ago, The revamped LG arena, which opened its doors 8 years ago, The eastside developments culminating in Millennium point and Birmingham City university. Now we have Edgbaston’s brilliant new stand; the Cube; the stunning, world class QE hospital, and of course the Library we are in today.
And then there’s the stuff happening now
§         The NIA, currently being given a new front and interior, and greater capacity
The NEC itself getting a whole new entertainment complex with Genting’s “Resorts World” development. 
Birmingham Airport’s £65 million runway extension will open up direct routes to countries such as China, Australia and the West Coast of the USA
The £600 million redevelopment of New Street station will welcome 52 million people each year

We’re certainly not Detroit. In fact, quite the reverse; the significant decline in automotive manufacturing that we saw during 70s, 80s and 90s has been reversed. If I can quote the Birmingham Mail’s recent piece on the resurgence in car making:
THE UK is poised for its biggest car boom for more than 40 years – with the West Midlands at the forefront of the production bonanza.
Automotive manufacturers said the industry was on course to break all-time manufacturing records by the end of 2015 following a string of multi-billion pound investments.
The Society of Motor Manufacturers and Traders predicted more than two million vehicles would roll off UK assembly lines by 2015, overtaking the 1972 record of 1.92 million.
JLR, MG at Longbridge, BMWs mini production plant at Hams Hall are all facilities to be proud of, and we mustn't forget the M40 F1 corridor, with 40,000 people employed by companies like Prodrive, adding £billions in value to the regional economy; And when TV and radio news programmes want to talk to motor industry experts, who do they turn to: People like David Bailey of Coventry University, or the team being assembled at the £92 million National Automotive Innovation Campus (NAIC) at the University of Warwick. Or the folks who run the world class testing facilities for MIRA near Nuneaton.  
Advanced automotive manufacturing remains one of the strongest sectors for attracting FDI, and of course we've only just had Tata’s announcement of 800 new jobs at Land Rover in Solihull and 730 new jobs at the Jaguar facility in Castle Bromwich.

More generally, current activity indicators suggest growth is returning to the Midlands.

Unemployment was down in Q2, although in B’ham is still 10.3%, significantly above UK average of 7.8%. Wider West Midlands was much closer to UK average.  Private sector business activity in WM was up, with a PMI score of 58.8 vs UK 59.8. to put that in context, anything over 50 is good.

If I can quote from B’ham council’s September economic update

“Business confidence over the coming 12-month period in terms of turnover and profitability remains positive for both manufacturing and service sectors—with a vast majority of firms surveyed expecting turnover and profitability to improve over the next 12 months.”

And there’s great new quality of life stuff happening here
·   Birmingham has a bid in for the World indoor athletics in 2016 – the result will be known in November.

·       We’re getting free wifi in city centre – it’s being rolled out by  the city in partnership with Virgin

·      Metro Extension Plans Announced - Centro has unveiled plans to extend the Midland Metro through Birmingham city centre from New St station to Centenary Square, the £31m scheme could be open by 2017.

·     And there’s a huge boost to Cycling in the city - The City has been successful in securing £24m in funding to improve cycling infrastructure in Birmingham.

But – there are still significant problems in the region. Gross disposable household income (GDHI) of West Midlands’ residents was one of the lowest among the English regions, at £14,400 per head in 2011. It ranged from £12,470 per head in Stoke-on-Trent to £17,360 per head in Solihull. That’s a 40% difference in GDI from the top to the bottom of the region, a gap of less than 60 miles.
What about people and culture, and how they are making an economic difference;
Well,
§         Birmingham is the youngest city in Europe;

§       It’s also one of most diverse; actually that fact is a major boost in driving future growth in areas such as life sciences

§     Birmingham has more Michelin star restaurants than any other English city outside London and a thriving independent restaurant scene 

§    Birmingham’s reputation as a visitor destination is on the up, and in the Wider West Midlands – Stratford/Warwick are major tourist destinations, along with Ironbridge further afield, and the foodie heaven that is Ludlow. etc etc.

But, again this positive news doesn’t come with a sting in its tail. I might not agree with the claimed benefits of HS2 – but the jokes on TV and letters to newspapers saying “we don’t need it because who ever heard of anyone wanting to get to Birmingham more quickly” are real problems for us, entrenching the clich├ęd belief that this is an ugly city, with a downmarket, poorly educated population with horrible accents and nothing to offer. Nothing could be further from the truth – but shifting that reputation is, I think, one of the key strategic challenges facing the city and region’s leaders.

Lou Glazer, president of the Michigan Future think tank, who is trying to resurrect Detroit, was quoted in a recent Birmingham Post feature as saying “Cities need to be 'talent magnets' to be successful” to quote him directly:
We have come to the conclusion that the places with the greatest concentration of talent are the places that are doing best today and will be the places doing the best going forward.
"In terms of subject skills areas we have found that it is not occupation or degree specific. A lot of people think of the knowledge economy as high technology in focus, but this turns out to be way too narrow a definition.
"The focus for the US Knowledge Economy is around the education; healthcare; financial professional and business services and information, media, IT and communications sectors. It is this broad set of sectors that are driving the US economy today.
"One of the things we've learned in doing this work is that what matters in economic terms is not where you go to school but you where live and work after you graduate. Increasingly, at least in the US, young talent, that is before they have had families, is moving and is the most mobile talent.
"They seem to be settling in urban situations, with 24/7, high density, mixed use, high amenity and activity areas, that are walkable with good infrastructure. They gather in vibrant neighbourhoods where you don't need a car to get around. Those are the places that have become the 'talent magnets' in America.

We need this region to become a talent magnet in the UK.

Let me finish by mentioning three of the sorts of people we should be highlighting as a city – folk that young people can aspire to emulate, who are making their lives and careers blossom here.

Roxana Silbert, the new Artistic Director.of the Rep; Sarah Jane Marsh at BCH; Andy Street, CEO of the  John Lewis Partnership and Chair of Gtr B’ham LEP.

These three are just a small representation of the thousands of inspiring folk helping to build this city, and I suspect the next time Marketing Birmingham want to promote what we have to offer, we need to focus on the people and not just the place if we are to become a true "Talent Magnet" ourselves.