UK: PETERBOROUGH LOOKS TO LURE MORE INVESTMENT.

UK: PETERBOROUGH LOOKS TO LURE MORE INVESTMENT. - Peterborough proud to be the place the Roman legions liked, looks beyond the recession and to luring more invaders, reports Philip Beresford.

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Last Updated: 31 Aug 2010

Peterborough proud to be the place the Roman legions liked, looks beyond the recession and to luring more invaders, reports Philip Beresford.

Remember the Peterborough effect? The late Roy Kinnear would clank round our television screens in his legionnaire's armour, extolling the 'effect' on the list of multinationals who had invested in the Fenland town. As a campaign, it worked brilliantly. Firms and jobs poured into the then sleepy town, up to then best known as a stop on the east coast main line, home of the Fletton brick and a large part of the British brick industry.

The population exploded from 80,000 in 1968 to its present 155,000. Unemployment, which had peaked at some 15.6% in January 1984 was under 5% six years later. By then, with its fast trains to London and a growing reputation as a financial services centre, Peterborough was firmly anchored into the South East's economy (even though it is as close to Birmingham as London). Major employers such as Pearl Assurance, Royal Assurance and Thomas Cook gave Peterborough class.

Sadly, the south-eastern connection has not served Peterborough well in the current recession. Just as in Basingstoke, Newbury, or any of the other former 'honeypots' along the M4 or M3 corridors, unemployment has soared. Currently, the total stands at some 8.5% and is still rising.

Local bankers talk in terms only too familiar to anyone in the more distressed parts of the South East. House prices, which had virtually doubled in the 1988-89 period, are now down in value by up to 20% from that high point. 'The local construction industry has been badly hit. Speculative builders dropped out of the scene 18 months ago,' says one banker, adding that the going rate for laying 1,000 bricks used to be £200, 'but you can now get the same number laid for £100. Those who jumped on the commercial property boom have been left high and dry. 'Land in the Fengate area which had cost £50,000 an acre rose to £300,000 an acre in the late '80s. In one year the price shot up fourfold,' the banker recalls.

Today, as the property developments come on stream, takers are few and far between and the price has fallen back to £120,000. As Hugh West, chief executive of the Peterborough Development Agency (FDA) puts it: 'A year ago, if someone wanted a building, they faced competition. Now a Rolls-Royce will come round to pick them up with the papers inside.'

The roll-call of local industrial casualties just adds to the gloom. British Sugar recently closed its local sugar refinery, with the loss of 125 jobs (though this has had the beneficial side-effect of removing the nasty smell that used to pervade Peterborough). TSB is set to close its local regional offices and there has been a steady stream of job losses at Perkins Diesels, still the largest private sector employer in the area, with some 3,500 staff.

Still for West, who spent years commuting from Peterborough to London and now relishes the challenge of bringing new jobs to the town, the last year has not been as bad as it might have been. 'The town has a very diverse economy. There has been a little shedding everywhere.' It obviously helps not to be dependent on one major industry but West does worry about what he calls the '1992 effect' where multinational companies look at their European manufacturing operations and decide they need only five plants instead of eight. This usually presages a retrenchment to mainland Europe.

But for all the recessionary gloom, there are straws in the wind which suggest that the old magic of Peterborough effect will return. Even now, in the depths of recession, the local shops appear to be doing surprisingly well by comparison with London. When Management Today visited the Queensgate indoor shopping complex, the shops were doing a brisk trade for a cold November day in the middle of the week.

Spending on the local infrastructure is also beginning to bear fruit. Some £1 billion has been pumped into the area in the 20 years from 1968 to 1988, making the roads seem positively empty to anyone used to the M25. More is to come. The upgrading of the nearby A1 to motorway status throughout its length will plug Peterborough firmly into the motorway network and the new expanded Stansted airport is only an hour away. Peterborough is also handily near to the east coast ports of Felixstowe and Harwich, which take growing portion of British trade as, like it or not, we become more firmly anchored to Europe.

Even the east coast rail link, with its new all-electric service to London and the North is now regarded as a boon for the town, provided, of course, geese or other impediments do not bring down the overhead power lines. With a 47-minute service to London, Peterborough is nearer than more traditional commuting centres such as Brighton or the outer reaches of Kent.

Recession or not, the number of firms looking at Peterborough as a base for their manufacturing or service operations has not diminished. 'We have a millionth of the funding of the Welsh or Scottish Development Agencies,' says the PDA's West, but the lack of grants and incentives has not hindered his work. Peterborough's location and its available, skilled workforce apparently count for a lot. in 1989, for example, the PDA was involved in 10 relocations. In 1990, the figure rose slightly to 12, but in recession-wracked 1991, the figure rose to a 23, which will result in the creation of some 650 jobs.

Here the unemployment and vacant property problems actually work in favour of the inward investor. West can go to companies and say there isn't a labour problem. It's not a stumbling block any more.' In fact, employers can now pick the cream of the local labour market as Coca-Cola and Cadbury Schweppes recently discovered when they announced plans to launch a telesales operation in the town. Some 1,200 people applied for the 170 jobs.

The empty properties make incoming employers quite relaxed about finding factory space. 'We've brought one group of directors over for a new firm starting up. While they plan to start production on 1 January, they hadn't even started looking for a site and didn't plan to before 1 December,' West recounts.

Encouragingly, West now sees more inward investors seeking to exploit Peterborough's traditional strengths in light engineering. Yet unlike nearby Cambridge, Peterborough has not had a huge influx of high- technology companies. Peterborough Software is one exception.

With its gleaming new building situated in the grounds of an old country house, it could easily pass for one of the Thames valley software companies. That is a comparison which makes marketing director Tony Bews wince. 'I live in Rutland which is 21 miles away and it takes me 25 minutes to get to work. I was in Reading for a meeting recently and couldn't believe it. It took an hour to go 15 miles.' And from the company's recruitment point of view, Peterborough made sense in the heyday of the '80s, with an attrition rate of 5% compared to 25% in Maidenhead.

Today of course, attrition is a dim, distant memory. Bews has the pick of graduates and the like to fill the expanding payroll. Next year, Peterborough Software will take 40 to 50 people - 'as we have done for the last two to three years' - Bews can report with satisfaction. there is an apparently insatiable demand for its products, described by Bews as 'human resource payroll systems'. Up to a quarter of the British workforce are paid via a Peterborough Software computer package.

When economic growth does return, Peterborough is likely to face the age only problem of where to expand with out destroying surrounding green belt. James Hopkins, a young Hanson executive and ex-Life Guards officer reckons he has the perfect answer. Hanson, through its acquisition of London Brick, inherited much of the derelict clay pits and surrounding land used in brick production. The gradual slimming of the industry has left acres of surplus land, which Hanson wants to bring back into use.

With the patience of a saint, Hopkins and his team have managed to convince planners that their plans to rescue the landscape from its industrial past and create the Peterborough Southern Township is the best way to allow the city to expand. The scheme, in Hopkins' words 'the biggest private sector development of its kind in Europe', will cost £170 million, creating a virtual new town of 5,200 homes by 2001 for a population of 13,000.

Sensitive land reclamation of this sort will help Hugh West in his marketing of the town and give a little edge to the Peterborough effect. Currently, though 'Peterborough is easier to market from an image point of view than Scunthorpe, we don't yet have the appeal of Cambridge'. Only time will tell.

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