Companies are on the move again, according to a survey carried out for Management Today and Black Horse Relocation. And when it comes to deciding where to go, the skills level of the workforce and standard of the infrastructure leave quality of life far behind.
Aside from right-wing challengers and disgruntled backbenchers, it must have been the gruelling length of the recession and the apparent difficulty with which British companies are struggling to emerge from it that has tormented John Major more than most issues during the last 12 months. Reassuring platitudes from the Chancellor, the deputy Prime Minister and the President of the Board of Trade about Britain's economic recovery have signally failed to impress the electorate. Statistics which give rise to hopes of better economic conditions are all too often dashed by others which show, for instance, higher than expected borrowing requirements in the public sector or a further slump in the property market. The Government's much-vaunted recovery seems to be staggering from pillar to post; on course, perhaps, but far from steady.
The climate in business is still one of caution. The bruises which came after the expansive boom of the 1980s are still tender and, despite low inflation and falling unemployment, business managers are not yet ready to take the Government at its word.
There are, nevertheless, signs of a gradual return of confidence. The most encouraging conclusion of a survey on relocation conducted for Management Today and Black Horse Relocation by Business & Market Research is the increase, during the last year, in the number of companies which are planning to move premises. Even more heartening is the main reason cited for relocation: business expansion. The survey was commisioned with a specific objective: 'To determine which UK cities are the most desirable to locate to, which cities have the best business environment and the likelihood of relocating in the near future.' It is based on a detailed analysis of 540 questionnaires. The vast majority of the respondents were managing directors, chairmen and chief executives of large companies throughout the UK.
Respondents were offered a list of 48 UK cities so that an even distribution of locations (determined both by population size and geographical distribution) effectively covered the UK. They were asked specifically whether they planned to relocate their businesses within the next five years. They were asked which of the 48 cities they would like to move to and why - what criteria determined suitability for a business location?
No fewer than 27% of respondents said they were either very likely to relocate within the next five years or quite likely to do so. This figure is an increase of five percentage points on last year's and appears to substantiate Black Horse's view that company relocation is back on the agenda after being wiped off it by the recession.
'It is a very high figure and a remarkable percentage increase on the year before,' says Black Horse's Richard Day. 'And a large number of companies still cite expansion plans as the main reason for moving. This can only be good news for business.' In fact, the percentage of executives this year who put their relocation plans down to expansion is lower than last - 34% last year as against 20% in this survey. But a further 18% this year admit that they plan to move because they have run out of room on their current site. And whereas in the early 1990s the main reason for moving seemed to be financial cost savings, only 6% in this year's survey say they plan to move in order to reduce costs and overheads.
In deciding their preferred location, the executives were asked to rank the importance of factors which influenced their decision. The vast majority, 42%, said the quality of the workforce in the city they moved to was far and away the single most influential factor in determining where they would go. A further 18% said transport network, 11% said overhead costs and a further 11% said the overall business environment. Strikingly, only 1% said the 'quality of personal life' was the most important reason for moving business. Respondents were then asked to name which two cities of the 48 on offer was best for each factor. Top of the tree for the two most important relocation factors - quality of workforce and transport network - came Birmingham. Manchester and London followed close on Birmingham's heels and Leeds came in fourth.
London, Birmingham and Manchester were judged to offer the best overall business environment as well as the maximum potential for local sales. Newcastle was perceived to be the best city for overheads while several others - Belfast, Cardiff, Glasgow, Newcastle and Swansea - scored well on issues such as overheads, the availability of government incentives, and the cost and availability of business property.
When it came to the quality of personal life - a factor which, as has been said, is not a great determinant of business location - Edinburgh came first, followed by Oxford, Cambridge, Exeter and Plymouth.
After taking into account the factors influencing business decisions on relocation, Black Horse and Management Today came up with a weighted ranking of cities as business locations. Very much as expected, the established business centres, where infrastructural arrangements are typically the best, have come out on top.
Birmingham heads the league of business locations, followed by London, Manchester and Newcastle upon Tyne. The news comes as little surprise to David Boole, director of communications and public affairs at Jaguar Cars. In July the company announced it had agreed to build its new small car at Castle Bromwich - Jaguar's X200 project will bring thousands of jobs to the area and involves a £500 million investment.The Government is helping to the tune of £80 million - a figure which has caused some concern among the bureaucrats in Brussels. 'The Greater Birmingham area has communications advantages in terms of road, rail and now air. Birmingham airport provides access to most of Europe and the States, where we have a huge market,' says Boole. 'There is obviously a long tradition of car engineering and manufacturing, so we have the skill base. It's also an attractive place to live. I have worked in London - spent some 10 years there and there are things that you miss such as the sheer choice of entertainment and restaurants.
'But things have developed pretty well. Birmingham is no longer the poor relation. It does have some outstanding cultural institutions such as the RSC at Stratford, the Sadlers Wells ballet and the City of Birmingham Symphony Orchestra.
'Everything is a little bit easier up here. You obviously miss the bustle of London. But for those who don't know Birmingham, it's a wonderful city. ' London has its fans, too, in the guise of Sir Neville Purvis, chief executive of the British Standards Institution, which has moved staff down from Milton Keynes to a new central base in west London as part of a rationalisation programme. 'We've moved into an 18-storey building in Chiswick,' he says. 'The location was very carefully chosen. We have thousands of visitors, many from overseas, and 60% of them come through Heathrow. It was essential that we had good communications. In Chiswick, we can afford to have a large park for 400 cars on our doorstep so that we never have to turn people away. We were looking at moving everything to Milton Keynes two years or so ago but then, because our business is so international in character, we decided it was sensible to be within striking distance of Heathrow.
'We used to have a number of separate sites in London as well as the one in Milton Keynes and we had to rationalise them. We were outgrowing our various buildings but that's not all. We were in offices that were not appropriate. They were delightful but in many ways quite useless. Now there are about 600 staff down here in Chiswick; we have five floors of committee rooms and conference centres and the best conference facilities of any standards body in the world.' The British Council, meanwhile, has moved staff from central London to Manchester where it has found that rents are lower and clerical staff are easier to come by. Brian Humphreys, resources manager at the British Council, says a number of other locations were considered. 'We moved 700 clerical jobs in 1992 and the move was predominantly finance-driven. We had too many buildings in London and vacated some of them because Grosvenor Estates, the landlord, wanted more money than we could afford. At one time we thought of a complete move, taking all staff. But we decided to keep our headquarters in London near Trafalgar Square with around 700 people and to move the rest.
'We had considered Glasgow, Leeds and Manchester. We wanted good Continental communications and a strong staff base. Glasgow met most of the criteria but it was not good enough for us with regards to the airport. And Leeds came low down on transport. We looked at fringe areas of London but there were problems. We did not feel we would get the rent advantages we wanted; there would be horrific commuting problems for staff.
'We managed to move 250 staff from London to Manchester. We gave them the best terms available within the civil service. The rest of the staff up here we have recruited.
'We were having a very difficult time in the late 1980s and early '90s recruiting and training clerical staff. Most people were having to pay very high fares to commute. But in Manchester travel is so much easier and there is car parking for all our staff. The building is built to our own specifications. It has a range of very impressive facilities. Its atrium is astonishing. The British Council has a large art collection, so we can now show some of it off to good effect. There are also creche facilities and video-links for simultaneous conferences with London. 'There are always regrets and some people have gone back. We are near Moss Side so have had to invest heavily in security at the building. To encourage people, we offered everyone a three-day facility visit and showed them the city, warts and all, working very closely with the Manchester Development Corporation. It was a magnificent opportunity and we went for it.' Just as Birmingham came top of the list, so Stockport was perceived as the worst business location by the 540 executives who gave their view. This may be a problem of perception. Stockport Borough Council argues quite reasonably that it is within shouting distance of Manchester, which scored so well. Indeed, the council highlights a report, published last year by the Henley Centre for Forecasting, which singles the town out for its economic potential. 'This survey seems to fly in the face of the Henley findings. Stockport shed its old mill-town image years ago,' says a council spokesman. 'Now the town has completely moved into the 1990s in many ways.' Business & Market Research, which carried out the survey and is itself based in Stockport, defended its findings. 'This survey is based on people's perceptions, not on the actual place itself,' says the company's Andrew Vincent. 'What the Henley Centre has probably done is use local statistics. But if the business executives we have surveyed think a place is dreadful, they won't even bother to look at it on a map, let alone its statistics.' Brighton, somewhat surprisingly, comes second from bottom in the ranking. Coincidentally, the Alliance & Leicester is in the throes of moving its workforce out of the Hove area. Annette Wrigley, a spokeswoman for the company, explains: 'The Alliance merged with the Leicester in the mid-1980s and, with the acquisition of Girobank, the problem was that we ended up with a number of head office sites in Bootle, Hove and, of course, Leicester.
'We wanted to pull together as much as possible and for us, as a base, the best place geographically was Leicester. We are building a very large headquarters on the edge of Leicester and in the long run we will have 2,500 staff at that head office. It involves moving about 800 people out of Hove. It's not that we have anything against Hove - there is nothing wrong with the staff or the facilities. It was just felt that Leicester was the better of the two locations for the group as a whole.' Rob Lewtas, business investment officer at Brighton & Hove, accepts that Brighton is not always regarded in the best light. 'After an independent market research project, we are aware that Brighton is often perceived as being "out on a limb" for companies considering relocation,' he says. 'The historic image of a tourism and conference resort can be detrimental to Brighton's role as the regional commercial and cultural capital on the south coast. But the pending merger of Brighton & Hove in 1997 will create one of the largest non-metropolitan cities in the UK. There are already several substantial organisations expressing great interest in office accommodation.' Stoke-on-Trent, too, comes off badly in the survey. Ray Garside, principal policy and strategy officer at Stoke-on-Trent City Council, agrees that the town is blighted in many businessmen's eyes. 'Stoke perhaps does not promote itself as a location for industry as actively as some boroughs,' he says. 'There is not a lot of land at its disposal. Much of it is redundant industrial land which is expensive to convert so you are looking at government funding.
'If you do have government money to hand over as a cash incentive to get people to come to the area, it is very different. We have never been an assisted area and that is why we have suffered. There is also a perception that Stoke-on-Trent is full of smoke, bottle ovens and God knows what else. But that actually hasn't been the case for a long time. People see it as an old industrial area but if they came and had a look they would quickly change their minds. I would like to suggest that if we have the same survey in five years time, we would have moved up.' As a final gesture, the survey asked its respondents which of the 48 cities they would prefer to relocate to if they had a free choice. The replies tended to ignore the practicalities or lack of them: such matters as overheads, transport and labour forces were, for the purposes of this exercise, immaterial. Overall, Bristol and Oxford were seen as the most desirable cities to relocate to (Bristol also came out top in answers to this question in 1994).
When compared to the weighted ranking which incorporates the importance the executives place on the practicalities of business, these two cities were placed 9th and 17th. The last question suggests that executives spend plenty of time dreaming about the spires of Oxford: they would dearly love to relocate to an attractive university town. But when it comes to the crunch, the probable destination will be more prosaic: somewhere such as Birmingham, London or Manchester.
The top 20 business locations.
4 Newcastle upon Tyne
11 Milton Keynes
Base: All 540 respondents
Britain's Best City ranks business locations based on a weighted
calculation of the most important factors to influence a relocation
decision. Respondents ranked eight relocation factors and selected
those cities they believed were best for each factor.
Relative importance of relocation factors
Factor Mean rank* % Most important
Quality of workforce 5.7 42
Transport network 5.3 18
Overhead costs 4.8 11
Overall business environment 4.5 11
Quality of potential local clients 4.4 6
Cost & availability
of business/property 4.2 6
Government incentives 3.5 2
Quality of personal life 3.2 1
Base: All respondents (540) Mean rankings: 8=most important, 1=least
Cities Performing Best on Each Factor
Factor Best City % .
Quality of workforce
1st Birmingham 17
2nd London 13
3rd Manchester 11
4th Leeds 7
5th Bristol, Cambridge 6
1st Birmingham 33
2nd Manchester 18
3rd London 15
4th Leeds 9
5th Coventry, Milton Keynes 7
1st Newcastle 12
2nd Belfast 9
3rd Cardiff, Glasgow, Swansea 6
Overall Business Environment
1st London 24
2nd Birmingham 20
3rd Manchester 16
4th Leeds, Milton Keynes 7
Quality of Potential Local Clients
1st London 30
2nd Birmingham 25
3rd Manchester 18
4th Leeds 7
5th Glasgow, Edinburgh 4
Cost and Availability of Business Property
1st Newcastle, Belfast 9
3rd Birmingham, Cardiff,
Glasgow, Manchester 6
1st Belfast 19
2nd Newcastle 11
3rd Cardiff, Liverpool 9
4th Glasgow 6
Quality of Personal Life
1st Edinburgh 15
2nd Oxford 12
3rd Cambridge 11
4th Exeter, Plymouth 10
Base: All 540 respondents
Most desirable UK cities
=1 Bristol 14
=1 Oxford 14
=3 Cambridge 13
=3 Birmingham 13
5 Edinburgh 12
6 Manchester 11
=7 Leeds 9
=7 Southampton 9
=7 Exeter 9
=10 Nottingham 8
=10 Plymouth 8
=10 Milton Keynes 8
=10 Northampton 8
14 Swindon 7
=15 Newcastle 6
=15 Peterborough 6
=15 Sheffield 6
=15 Reading 6
=19 Glasgow 5
=19 Leicester 5
Base: All 540 respondents
Copies of the 1995 Management Today/Black Horse Relocation survey can be obtained from Charlotte Williams, Black Horse House, 59-60 Thames Street, Windsor, Berks SL4 1TX.Tel: 01753 834000; fax: 01753 854940. Price £30.