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Weathering the Storm
Key challenges facing the Gloucestershire
economy
Research briefing
October 30th 2008 Chargrove House
Evidence
National data - local level will reflect to a certain extent
Unemployment data - recent, frequent and detailed
Press releases/cuttings - recent, frequent, patchy, not totally reliable
Individual direct experience - useful but not necessarily representative
Applied to the local context
Projected Labour Supply - Gloucestershire 2007-2026
320,000
310,000
300,000
290,000
280,000
270,000
100% met
Reduced housing 2008-2012
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
260,000
Sector implications
Banking and Finance - Impacts of mergers e.g. Lloyds TSB/HBOS - Lloyds
TSB has 1,900 branches, around 160 of which are C&G, employs 1,360 staff at
HQ in Gloucestershire - effects of consolidation. Estate agents, mortgage
brokers and others in financial sectors. Restructuring of teams is resulting in
smaller redundancies – e.g. Stroud & Swindon and Chelsea Building Society
Construction - no house building and house prices still falling (at September
2008, although rising again now, therefore layoffs and closures. All building
trades affected over the summer, associated services including solicitors,
commercial and residential agents, etc starting to experience
slowdown/redundancies
Retail - spending is less, lots of closures, clothing, food and furniture sales
down, home furnishing Roseby’s with outlets at the Peel Centre in Gloucester
and on Kingsditch Trading Estate in Cheltenham has gone into administration.
Furniture store chain MFI, has been hit by a sharp fall in demand for goods and
went into receivership in April 2009.
Sector implications, cont’d 1
Leisure and Tourism – attractions reporting 10% downturn in visitor numbers,
bookings down, restaurants and pubs closing, cumulative effects after flooding,
poor summer, then credit crunch/consumer spending slowdown.
Associated industries, including independent retailers, arts and crafts, etc also
likely to feel effects of slowdown. A few pubs have beaten the trend to re-open
in Gloucester due to regeneration – e.g. Inn on the Docks (former Sir Colin
Campbell)
Engineering - Car manufacturers sales and profits down. Losses announced
by GE Aviation and further potential engineering cuts in Gloucester due to
restructures/mergers, though ultimately caused by global downturns.
Other reports indicate still healthy levels of engineering vacancies, though
possibly some skills mismatch. (E.g. graduate software engineers not the
same as mechanical operatives/CNC turners, etc) Medical technologies and
aerospace (Gloucestershire’s key sub-sectors) may be slightly more protected
than automotive industry for now.
Sector implications, cont’d 2
Agriculture - Supermarkets pushing prices down, organic sector is struggling,
conversion to industrial units may not be used. Food costs – lay offs in factories
– cheese prices falling, though beef currently holding up. Rising costs of
fertiliser, etc not changing despite falling oil prices
Forestry – moving into recession faster than agriculture owing to building
industry dependence – e.g. saw log & chipboard products. Renewable heating
solutions are demonstrating growing local market share on the positive side
Transport - Airline traffic is reducing with reduction in traffic from Bristol, etc,
and to Gloucestershire Airport in Cheltenham
Further evidence
Business Link Climate Survey (Released Nov 08)
•
Majority of businesses lie between not affected and affected.
•
Still concerned at media hype
•
More optimistic than not
•
Focusing on marketing to attract
•
Fuel/energy still affecting some
•
Nothing too major yet
Local business news for September 2008
38 closures – retail, pubs, printing, insurance, engineering
8 declines – quarrying, car dealership, engineering, law firm
41 creations – mainly retail
28 contracts – printers, solicitors, construction, air conditioners, automated handling
29 mergers – solicitors, IT, architects, engineering
62 growth – medical devices manufacture, engineering, construction, retail
Further issues
Reducing the working week – JCB announced nationally, but local examples now include
Lydney Building Concepts – 2 day week and BPE Solicitors in Cheltenham – 9 local staff
reducing to 4 day week – not a local trend yet, but a model that others may follow
Migrant worker issues – going back to Poland – locally the trend is reported that ‘floating’
workers are returning home, but those with better skilled, higher waged jobs prefer to stay
Mortgage re-possessions and bankruptcies up, in Gloucestershire Court hearings
extended to deal with increase
Eurozone is one of the UK’s strongest trading partners accounting for 50% of British
exports lowing growth even with the devalued pound will have reduced demand
Not all bad news
GCHQ recruiting nationally and locally with focus on high quality
knowledge based jobs
London General Insurance (Forest) is thriving and recruiting
Discount supermarkets increasing - Waitrose and M & S lower than
average sales growth
UK holiday destinations increasing e.g. Pontins have had increase in
bookings
Some telecom companies, property auctioneers, pawnbrokers, market
traders, rat catchers(!) all reporting upturn in trade
Cheltenham high street seeing new retail investment
Longer term – Redeployment of ARRC from Germany to Innsworth will
help to provide new demand on local construction sites plus new job
creations
Effect on Economic Strategy
People
Local Population projection has accounted for reduced migrant flow and reduced house build
rates
The Local Projection accounts for a County population growth of 8.8% or 52,600 between 2007 and 2026
amounting to 647,000 which is 15,000 lower than the ONS projection
Working age population (20-64) will be around 354,400 in 2026 some 2,600 people less than the ONS
projection.
The number of eastern Europeans applying to work in the UK has fallen by 9,000 during the past quarter
backs the revised projection
Jobs
Employment across all sectors may shrink
Advanced engineering vulnerable, decline in markets,
Construction - severely affected by economic downturn, reduced workforce, developments slowed or
ceased
Tourism - hotels, pubs etc closing, food costs rising
Care - if migrant workers leave could be a problem filling those jobs although u/e could take them
Connectivity
Transport sector affected by downturn and additional vulnerability to fuel price changes
Internet retailers suffer reduced shopping
Airlines struggling to stay in business
Large developments e.g. re-doubling the Kemble Swindon line may be put on hold despite
Government go-ahead
Development and Resilience
Environmental and energy related sectors
Multi site regeneration programmes delayed
Future growth for county is Environmental Technologies, especially in Cheltenham
Still too early to know the effects!
These are more likely to be seen in 20102011, when the economy stops shrinking
and we can see what the remaining
issues are.