UK: LONDON CALLING.

UK: LONDON CALLING. - London emerges as the best British city for business in this year's Management Today/Black Horse Relocation survey. Moves elsewhere in the rankings are much more surprising.

by Anne Elliot.
Last Updated: 31 Aug 2010

London emerges as the best British city for business in this year's Management Today/Black Horse Relocation survey. Moves elsewhere in the rankings are much more surprising.

Whether or not the feelgood factor has returned to the British population at large, there are signs that business leaders are feeling tentatively better about the medium-term prospects for their companies. Certainly, this year's survey of Britain's Best Cities, the third of its kind, can be read in this light. A readiness to relocate is one sign of business optimism; and not only were over one fifth of the companies surveyed thinking of moving on within the next five years, but their main reason for doing so was expansion rather than cost-cutting or dissatisfaction with their current premises. Top among the new locations under consideration were London, Birmingham and Manchester.

Richard Day, director of Black Horse Relocation, which commissions the survey jointly with Management Today, points out that the proportion of companies in expansive mood has increased substantially, from 20% last year to 34% this. Furthermore, he says, whereas in 1994, when companies were still feeling bruised by recession, he was actually surprised at the numbers who said they were planning to move on to bigger and better premises, this year these intentions are being borne out in terms of real business: 'We're beginning to see, albeit on a small scale, group moves taking place, particularly among the smaller companies. There is a definite trend.'

As last year, the survey was carried out by Business & Market Research (BMR), an independent agency, with the specific objectives of uncovering which UK cities were judged to have the best business environment; which were considered the most desirable destinations for relocation; and why.

This questionnaire was virtually identical to last year's, so as to make for effective comparisons, but this time it also included some detailed probing into the relative and overall importance of work skills.

The sample covered by the survey has increased, with replies coming in from the senior executives of 740 companies, compared with 540 in 1995.

These companies cover the spectrum of manufacturing and service industries and include a greater preponderance of sizeable players this time: one in 10 companies had over 5,000 employees, while around one third had a turnover in excess of £50 million. In addition, 72% of companies reported doing business internationally.

The participation of larger companies with international links has had some impact on which factors are judged to have the greatest influence on the choice of location (see table, p87). For example, the 'quality of potential local clients', which was considered relatively important by last year's respondents, dropped down to bottom place this year, presumably because most larger companies have a widespread customer base, and are not therefore dependent on a local clientele.

Transport was deemed of rather less significance this year, and ranked below costs, whether related to property or salaries. Quality of personal life, on the other hand, was given slightly more weight. It was seen as the most important factor by 6% of the sample (compared with just 1% in 1995), predominantly in smaller companies and the service industries, the latter mindful, no doubt, that you need to keep your staff happy if you want them to treat customers accordingly. Overall, however, quality of life still hardly looms large in this list of business priorities although, says Day, 'If you talk to HR directors, the value placed on quality of life is much higher. There may be a lack of understanding on behalf of the people who run companies of the importance of keeping staff happy.'

As in previous years, far and away the single most influential factor in deciding where to set up shop is the quality of the available workforce in the city catchment area: 46% of respondents said so this year (compared with 42% in 1995), irrespective of company turnover or number of employees. For the first time, however, respondents were also asked in greater detail what exactly they hoped to encounter in such a 'quality workforce'. They were offered a menu of work skills, and asked to choose three. The table, p88, shows their choices.

The sturdy agreement (among 47% of the sample) on the priority of teamworking skills was to be expected, suggests Day, what with the stripping out of layers of management over the last few years. 'People have to be more involved in decision-making, and they have to get used to working as a unit,' he says. He also points to the trend towards more co-operative relationships between client and supplier, seen in his own line of business-to-business service as much as in manufacturing: this calls for a willingness and ability to get together to foresee problems and sort them out before they arise.

Smaller companies (with fewer than 50 employees in the UK or with turnovers of less than £5 million) were less concerned about teamworking, perhaps because they take it for granted. More surprisingly, the service industries also placed less emphasis on teamworking: one might have thought co-ordination in delivering results was at least as important in organising a conference or arranging a mortgage as in manufacturing a microchip, but there you have it. Even more surprising is the low priority placed on management skills: every team needs a leader, after all, and particularly in industries going through rapid change, with the introduction of new technology and new ways of working, the role of management is of some significance. It could be, however, that this is a judgment made in the context of relocation, and that companies moving on expect to take their key staff with them. Also surprising is the relatively low priority given to customer care skills, which one might have thought would be the driving force behind all companies.

Interestingly, basic numeracy and literacy were ranked second, above job-specific skills and well above computer literacy and IT ability. Computers are becoming so easy to use, one respondent points out, that one hardly needs specialist expertise. The scant regard for foreign language skills, meanwhile, will surprise no one familiar with the Brits' parochial record in this respect, although linguistically able employees are critical to certain companies such as those running international call centres or the UK subsidiaries of continental European firms.

Overall, the demand seems to be for educated, articulate employees who can be trained, who are adaptable, and who can use their initiative. 'Attitude and flexibility are more important than specific skills,' comments David Wallis, logistics manager at BASF (based in Cheadle Hume, Cheshire, and very happy to stay there).

So how did cities rate for each factor? London was voted first on the quality of the available workforce, followed by Birmingham, Manchester and Glasgow (this last up graded from 11th place in 1995); Bristol, Newcastle and Leeds came equal fifth. Newcastle was the winner when it came to costs and availability of property and overheads for the second year running, and also featured strongly in terms of official incentives to set up there. Cardiff, Belfast, Glasgow and Sunderland similarly did well on these financial issues. Birmingham was once again judged best for transport, while London, Birmingham and Manchester were again leaders for overall business environment and quality of potential local clients. Edinburgh, Oxford, Cambridge and (equally) Plymouth and Exeter were once more thought to offer the best quality of personal life. No surprises here.

Indeed, no surprises in the top performers in the overall ranking of cities as business locations. London emerged as leader, largely because of the greater weighting attached to the quality workforce factor, but also because of its overall business environment and client base. The capital city displaced last year's winner, Birmingham, although by only a narrow margin, and was followed, as last year, by Manchester and Newcastle (see table, p85). Glasgow and Cardiff both moved up the scale, the first because of the greater recognition of its quality workforce, the second because of its strong performance on the financial issues.

London's leadership may also owe something to more aggressive marketing by London First, which has succeeded in attracting 27 major investments over the last two years. One such is Delta Air Lines, which opened its European reservation sales centre in Park Royal in January this year, and is now taking some 120,000 calls a month from countries across Europe.

Delta already had a strong presence in the UK, but obviously considered a host of European cities before plumping for London. As Mary Smith, regional director, reservation sales Europe, points out, the 'beauty' of call centres, 'provided they are managed correctly', is precisely that they can be located anywhere, since wherever they are based, customers feel they are speaking to someone on home ground who understands their needs. 'The Netherlands, Ireland and Belgium, for example, all had strong arguments for their country as the best location for call centres,' she says. 'There isn't one country which is best for all.' Delta was looking for a 'large international city' with the key ingredient of an ample supply of native foreign language speakers. 'Some company call centres, such as computer helplines, are providing a technical service over the telephone, in which case it is not so important to have native speakers.

But our employees actually have to sell in the marketplace, which requires mother-tongue quality,' she explains.

So however well-versed in multiple languages the Dutch or the Irish may be, London won out because of its international population. 'We also picked London because it has a strong economy and a reasonable cost base,' she adds. 'The standard of living is higher than in Rome, for example, and the costs of doing business considerably lower.'

Where Delta's cost comparisons were made on an international basis, other companies hoping to save money scan more local horizons - and move in the opposite direction. Legal & General, for example, is setting up its direct-selling operation in Cardiff rather than the South East, where it already owns properties and where the bulk of its operations are based, because the difference in costs is so marked, says John Morgan, spokesman for the company. The new operation in a bespoke building in the heart of Cardiff will employ 150 by the end of 1997 and over 450 eventually.

Official incentives in Wales can be sizeable - around £2.3 million in the case of Legal & General, provided the planned jobs materialise. 'We considered a number of other locations, including the North East and Ireland, but on balance Cardiff won out,' says Morgan.

Again, of course, it was not a single factor which drew the company to Cardiff. 'Cardiff is a good catchment area for high-quality, well-educated staff,' he says, pointing out that the jobs created will entail more than simply answering telephone calls. 'We need people, right across the board, with the ability to understand our financial products, people who are capable of communicating.' In addition, Cardiff's transport is good, 'both internally, for getting people to work, and externally, for linking with the South East and the West Midlands'.

These factors pushed Cardiff up the Best Cities chart from 10th place in 1995 to seventh. Dundee's progress has been even more spectacular - from 30th place to 19th. As with Cardiff, rates and wages are low - according to Dundee City Council, office operational costs are 25% lower than in Aberdeen and up to 37% lower than in Edinburgh - and staff availability is good. Schlum-berger Technologies is currently expanding its Dundee plant; Madison Cable Corporation is investing £8 million in its new European sales and manufacturing headquarters in the city; and Tesco has relocated its national customer services centre there from Hertfordshire. The Tesco Direct unit, which sells wine, flowers and gift hampers via the phone and Internet, and the company's Clubcard helpline desk, which answers enquiries and suggestions from customers, both opened in August in the former William Low head office, acquired in September 1994. In December, these operations will be joined by the customer relations operation, bringing the total staff to over 200. Eleanor Cannon, head of Tesco Link (the new umbrella department linking the three activities), explains the move. 'It was purely a situation of growth. We knew we needed to expand, and we had these fantastic offices in Dundee: William Low had just built a brand new wing which we could customise. They're ideal facilities for a call centre.'

Also ideal for the call centre, she believes, are the people nearby, who came flocking by the hundreds: 'We had a huge response - 1,500 applications after the press release. We recruited more than half the people we were looking for without even having to advertise.' She describes the sort of people she is after as 'very confident, people who understand the needs of the customer, and who want to help them solve their problems; people with a bright disposition, who want to listen.' They will also, unusually for a call centre, be trained to handle any aspects of customer service.

'We will have a multi-skilled workforce, rather than a functional approach: the Link manager who takes the call will be able to respond to any query.' This makes the job both more interesting and more demanding.

Dundee, a city once known for its jute and marmalade, and then for the slide into poverty which followed the decline of those industries, is undergoing a 'bit of a resurge', maintains Cannon.

Other cities, too, have fought back as the map of the industrial world has changed, and forged their way up the league. Both Bradford and Sunderland were in the bottom five two years ago; now Bradford is 27th and Sunderland has risen to 13th. In both cases, progress is the result of active economic development programmes. Bradford's investment marketing campaign started in 1979, and concentrated initially on tourism. This seemed an unlikely enterprise at the time, but is now taken for granted, what with Haworth parsonage and glorious Yorkshire countryside nearby, the city's Victorian architectural heritage (it has 4,400 listed buildings), and imaginative endeavours like the conversion of Saltaire Mill. The emphasis now is on business and corporate investment, explains marketing officer Gary Wood, who points to the £100 million generated from EU, local and private sector funding, which is now being invested in upgrades and redevelopments across one square mile of city centre. Already, the city has attracted Pace Microtechnology (Europe's biggest manufacturer of satellite receivers), Philtronic Comtek (mobile phone components maker), Microvitec (computer monitors) and electronics giant Chase, while Abbey National is to build a new head office (its second largest) in Bradford. 'Bradford is riding on the crest of a wave just now,' enthuses Wood.

Sunderland, meanwhile, has rocketed up from the lower depths to 13th place. The city has, of course, benefited enormously from the Nissan investment.

'Nissan, which employs 4,500 people, is a buoyant car company, so even when things get tough, the local economy here is better than elsewhere,' says Tom Hurst, principal economic development officer at the City Council, who points out that a further 6,500 people work in the local components industry, quite an achievement when one remembers that only 11 years ago the region had no auto industry jobs at all. Hurst believes that the council has played its part by cutting down on red tape and working closely with the private sector as well as by offering financial incentives. 'We've tried to get away from the idea that it takes six weeks to get an answer from the public sector. We try to respond quickly to what companies want.' What they want, he says, is 'quality labour, high productivity, low absenteeism and staff turnover'. Certainly, too, he says, wages here are competitive, not 'slave labour' rates, but lower than in the South East or in Germany or France. The city helps to fund the requisite training, such as the course in soldering for advanced electronics which it is sponsoring jointly with US car components manufacturer TRW, or the sessions on call-centre skills, which are run by London Electricity, whose call centre is based here and whose expertise is well-regarded nationally.

So cities at the bottom of the league can take heart. Their positioning is a matter of perception, and perceptions change. And from Walsall, at the very bottom, comes a comment from Edward Cooper, manufacturing services manager at Boliden MKM, the brass extrusion manufacturer. 'Walsall is not a pretty place. I wouldn't live there. But it is on the outskirts of the West Midlands conurbation: there's a fair pool of labour, and the ability to call on subcontractors to help out in any situation. Overheads are normal. It's close to the train network.' In short, he concludes, 'It's an ideal place to work.' So there.

THE TOP 48 BUSINESS LOCATIONS

Rank ('96) Rank ('95) City

1 2 London

2 1 Birmingham

3 3 Manchester

4 4 Newcastle-upon-Tyne

5 7 Glasgow

6 5 Leeds

7 10 Cardiff

8 8 Edinburgh

9 9 Bristol

10 11 Milton Keynes

11 6 Belfast

12 23 Nottingham

13 16 Sunderland

14 12 Cambridge

15 14 Swansea

16 13 Sheffield

17 18 Liverpool

18 17 Oxford

19 30 Dundee

20 28 Warrington

21 19 Plymouth

22 27 Reading

23 25 Norwich

24 29 Aberdeen

25 22 Swindon

26 21 Peterborough

27 24 Bradford

28 15 Coventry

29 38 Newport

30 32 Leicester

31 26 Exeter

32 39 Hull

33 31 Southampton

34 33 Wolverhampton

35 40 Rotherham

36 42 Wigan

37 20 Northampton

38 37 Bolton

39 35 Derby

40 46 Stoke-on-Trent

41 48 Stockport

42 43 Barnsley

43 45 Portsmouth

44 34 Doncaster

45 36 Dudley

46 44 Halifax

47 47 Brighton

48 41 Walsall

ORDER OF IMPORTANCE OF RELOCATION FACTORS

Mean rank

Factor '96 '95

Availability of quality workforce 6.7 5.7

Cost and availability of business/property 5.5 4.2

Overheads, eg rates, wages 5.4 4.8

Transport network 4.8 5.3

Overall business environment 4.2 4.5

Quality of personal life 3.7 3.2

Government incentives 3.3 3.5

Quality of potential local clients 2.6 4.4

8 = most important, 1 = least important

IMPORTANCE OF WORK SKILLS

Work skill %

Teamworking skills 47

Basic numeracy and literacy 41

Job-specific skills 37

Basic level of skill to build on 36

Ability to work well with others 36

Communication skills 31

Customer care skills 28

Computer literacy/IT ability 22

Management skills 17

Foreign language skills 2

Respondents were asked which three skills were most important.

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