Quality of workforce is the priority in the Management Today and Black Horse Relocation Best Cities survey.
A post-election joke tells of a phone call to the former chancellor, Kenneth Clarke: 'Ken, you know that elusive feel-good factor you used to talk about? Well, it's just arrived.' And whether or not the advent of the new government has anything to do with it, this year's survey of Britain's Best Cities for Business, which was sent out on election day for return a month later, reflects a buoyant mood. Over 27% of respondents say they are seriously considering relocation over the next five years, compared with just over 20% last year; of these, 30% point to expansion as their motivation, while a further 18% say they have run out of space in their current sites. Relocation is no longer a case of right-sizing the accommodation to match a downsized staff, and only 7% give cost-reduction as the primary reason for wishing to move.
Perhaps not surprisingly, London, Birmingham and Manchester have held on to their positions as the top three destinations overall for the second year running, but there are some interesting movements in the detail.
For example, London, in the grip of a cultural and entertainment revival, has jumped into joint third place for quality of personal life. Sunderland, meanwhile, well-endowed with sites, incentives and low overheads, has continued its rise up the overall list, moving into 11th place on the back of its success in attracting call centres. Sunderland should perhaps beware of becoming a victime of its own success: witness Belfast which this year has dropped out of the top five for cost and availability of property, hit by a boom in property and rising prices.
The survey, the fourth of its kind, was carried out by Business & Market Research, an independent agency, on behalf of Black Horse Relocation Services and Management Today. Response to the survey continues to grow, with replies from senior executives in 920 companies, a response rate of 10%. The balance has shifted slightly towards the medium-sized sector: companies with a turnover of between £2 million and £50 million account for 41% of responses, while 27% have a turnover of more than £50 million. Around 80% conduct business internationally, so that potential local clients are once again deemed of less importance than other factors in the choice of location. The sample itself spans the full spectrum of industrial and service sectors (with the exception of mineral extraction), but 53% of respondents are in manufacturing.
One further proviso: this annual survey was never intended to come up with a league table; rather, its aim is to explore the factors companies consider when they choose a destination. Respondents are asked to evaluate the relative importance of eight business priorities, which this year they have placed in the following order: availability of a quality workforce; cost and availability of property; overheads; transport network; overall business environment; quality of personal life; government incentives; and the quality of potential local clients.
This year's respondents were also asked more detailed questions on what exactly they understood by the business environment, from which it has emerged that the 'general atmosphere' of business, the attractiveness of the area for relocating employees, opportunities for networking, and the presence of suppliers are most important (the last factor applying particularly to smaller companies). Distribution channels are important to those in retail, distribution and catering. Local education facilities and the proximity of universities are deemed critical for medium-sized businesses, while the openness of local government towards the business sector is most important to companies with over 5,000 employees and those with more than 200 sites.
While the priorities remain unchanged from last year, slight differences of emphasis are revealing. The quality of personal life has been gathering momentum, whereas the importance of government incentives appears to be diminishing. But for both, some qualification is in order.
With regard to government incentives, a director of a company that has relocated to the North East comments simply: 'I don't think people are telling the truth. The sort of money being thrown at you in some regions is unbelievable.' Andrew Finney, managing director of Hambro Countrywide, quotes evidence that supports this impression: far and away the most significant relocation of the last year was made by South Korea's Lucky Goldstar into Newport, and while the incredible size of the available site (equivalent to 100 football pitches) was obviously vital, the £247-million package of state aid must played its part.
With regard to the quality of personal life, it is very much a matter of personal taste. 'The quality of life in London is getting worse every year,' laments one respondent. 'We do not have a regionally based clientele, and most of us want to move towards civilisation (ie north),' writes a second. To others, the fact that, for example, on any one night there are countless cultural events in London, not to mention the plethora of inviting, stylish restaurants, compensates for the absence of bracing but provincial fresh air. And indeed, as mentioned already, London now ranks joint third with Cambridge in quality of life terms, behind Edinburgh and Oxford, and followed by Exeter.
Nevertheless, companies point to the quality of the available workforce as far and away the most critical factor. London ranks highest in this respect, with 25% of all respondents agreeing that the capital city has the most to offer in its choice of personnel (compared with 21% last year).
As the London First centre points out, companies in London can draw on a total regional labour pool of nine million, the largest in Europe; one in five workers in London possesses a university degree or equivalent, the highest proportion in the UK; and London has a larger share of high-level occupations than the national average, as well as attracting international specialists in such sectors as financial services, media, the law, medicine, scholarship and the arts. London is followed in this respect by Birmingham (judged top by 19% of respondents), Manchester (16%), and then by Leeds together with Newcastle in joint fourth place, and by Cambridge, Glasgow, Sheffield and Bristol in fifth.
A number of respondents point out that judging the quality of the available workforce depends very much on the company's particular needs. Thus, for example, the US car rental company Alamo chose Brighton for its European customer service centre primarily because it needed a ready supply of well-educated linguists, who could be recruited without paying an exorbitant premium. 'We wanted not just linguists, but native speakers - there are a lot of young Continentals in Brighton,' explains director of sales Nick Harwood. The only other centre that Alamo considered seriously was London. Recruits there would have cost the company considerably more to employ - some £5,000 or £6,000 more for each employee.
Or consider Clintrials Research, a Nashville-based company that conducts research and drug development for pharmaceutical and biotechnology clients.
The company has its European headquarters in Maidenhead, but has chosen Glasgow for its new research and clinical data management centre because it was looking for high quality graduates: 70% of employees will be graduates or graduate equivalent, and Glasgow has a pool of 15 Scottish universities and a thriving healthcare sector to draw on. 'Given the excellent education opportunities in this area and the availability of staff, we felt this is one of the few areas where we could achieve our objective of reaching 240 staff in two years,' comments Peter Motteram, vice president and general manager Europe.
One 2 One, the mobile phone service, chose Doxford business park located on the outskirts of Sunderland for a number of reasons, one of which was the calibre of local people. 'It takes a particular sort of individual to undertake the training we give our customer service advisers,' says human resources director David Sayers.
Companies also take into account the future supply of appropriately qualified employees, at suitable salaries. One company hesitated over Leeds, precisely because the city now has 25 call centres and runs the risk of wage inflation.
And such has been the success of Sunderland (up in the overall league from 13th place to 11th) in attracting call centres, that One 2 One is thinking hard about where next to expand.
When it comes to the cost and availability of property - the second most important factor - Newcastle, Sunderland and Manchester are rated joint first, followed by Cardiff then Liverpool. The North East's success owes a lot to the partnership between efficient local government and enterprising developers (Doxford business park now boasts the world's first solar office), but Manchester's achievement has a particular poignancy, given the city's determination to turn the IRA bomb disaster of 1996 into opportunity, through redrawing the city centre, increasing the retail and commercial floor space, and rendering the streets more friendly to pedestrians and accessible through public transport. Belfast has dropped from third place last year to below the top five because of the recent property boom and rising prices. It has similarly dropped from the top ranks in terms of overheads, which leaves Newcastle in first position, followed by Sunderland and then Manchester, Cardiff and Swansea in joint third place.
Birmingham, as ever, is rated the city best served by its transport network.
No surprises there. London as runner-up, meanwhile, may startle those unfortunates trapped in traffic jams or wedged sweatily aboard the Underground.
But its links with the rest of the world are what count, and London - or, more precisely, Heathrow - remains the largest hub for international air travel.
Finally, turning to the overall league table, note that Leeds owes its progress to fifth place to its strong performance in transport, the overall business environment and the quality of potential local clients; that Sunderland continues its steady ascent up the rankings (thanks to its plentiful supply of sites, low overheads, and generous grants), as does Sheffield (thanks to a higher rating for its workforce). And spare a thought for Brighton, down to 48th place - partly, perhaps, because of the bias towards manufacturing among respondents. 'Brighton suffers from a number of misconceptions,' maintains Rob Lewtas, business and investment officer at Brighton and Hove Council. Thinking of it as a centre for tourism and culture, people forget that its economy is not based on 'candy-floss': 'Financial and business services now employ twice the number working in the tourism and conference industries.' Outsiders assume it is costly, whereas wages are the lowest in the South East, and house prices are below the national average. The trouble is that executives planning a relocation tend to make their own shortlist and think only in terms of that, he says. A trip to the seaside, to the home of the European HQ of American Express, TSB Trust Card, Sphere Drake insurance and pensions watchdog OPRA, might blow away some misconceptions.
THE UK'S TOP 48 CITIES FOR BUSINESS
Rank ('97) Rank ('96) City
1 1 London
2 2 Birmingham
3 3 Manchester
4 4 Newcastle
5 6 Leeds
6 8 Edinburgh
7 7 Cardiff
8 5 Glasgow
9 10 Milton Keynes
10 9 Bristol
11 13 Sunderland
12 16 Sheffield
13 17 Liverpool
14 14 Cambridge
15 12 Nottingham
16 15 Swansea
17 11 Belfast
18 18 Oxford
19 21 Plymouth
20 20 Warrington
21 29 Newport
22 28 Coventry
23 30 Leicester
24 22 Reading
25 24 Aberdeen
26 31 Exeter
27 23 Norwich
28 36 Wigan
29 25 Swindon
30 26 Peterborough
31 37 Northampton
32 33 Southampton
33 39 Derby
34 19 Dundee
35 27 Bradford
36 38 Bolton
37 35 Rotherham
38 42 Barnsley
39 32 Hull
40 41 Stockport
41 34 Wolverhampton
42 43 Portsmouth
43 44 Doncaster
44 40 Stoke-on-Trent
45 48 Walsall
46 46 Halifax
47 45 Dudley
48 47 Brighton
ORDER OF IMPORTANCE OF RELOCATION FACTORS
Factor Mean rank:
Availability of quality workforce 6.7 6.7
Cost and availability of business/property 5.4 5.5
Overheads, eg rates, wages 5.2 5.4
Transport network 4.9 4.8
Overall business environment 4.2 4.2
Quality of personal life 3.9 3.7
Government incentives 3.0 3.3
Quality of potential local clients 2.9 2.6
8 = most important, 1 = least important.