- Posted by: Mike Hedges MS
- Category: Pamphlet
Developing our economy
How the economy of the Swansea City region can be developed
Mike Hedges AM
Employment and economic strategy
The City deal
Aarhus and Swansea
Mannheim and Swansea
Swansea bay city region consists of one city (Swansea), three large towns (Neath, Port Talbot and Llanelli), 5 valley communities (Afan, Dulais, Neath, Swansea, Amman and Gwendraeth) and a number of smaller towns and many villages.
If this had been written 50 years ago it would have stated that the key industries were metal, especially steel, tinplate and associated products, agriculture, coal mining and tourism.
Employment has changed with a continuing decline in the number and share of jobs in manufacturing and employment growth in service sectors. There has been an increase in higher-skilled occupations along with growth in some low-skilled occupations, and a reduction in the middle-skilled occupations as the occupational structure has polarised. There has also been an increase in women in employment while amongst men there has been a decline in full-time employment, a growth in part-time employment and self-employment.
This pamphlet looks at the Swansea bay economy, rural wales, the city deal then compares Swansea with Aarhus the second city in Denmark and Mannheim Swansea’s twin city.
Employment and Economic strategy
Historically, the Swansea Bay City region’s economy was built on coal mining, oil, the metal industries (especially steel), along with agriculture including food products and Tourism. Despite the almost complete collapse of coal mining we are still dependent on the other industries and it is important that these are protected and grown. Are we getting maximum economic value from creating food products or from tourism?
We saw a gradual shift in the main source of employment in the post-war period with a boom in the number of inward investment factories setting up including the Ford plant in Swansea and a number of car component factories across the region.
The Swansea Bay economy has also relied on the public sector, with government services such as the DVLA being relocated to Swansea, as well as Local Government and health being major employers in the area.
If the Swansea bay region is to have a successful, vibrant and thriving economy, we need to concentrate on key growth areas and support those industries with grants, incentives and other help. Although everyone will have different ideas on which sectors to support, it’s my belief that we must concentrate on supporting and nurturing the life sciences, ICT, creative industries, advanced manufacturing and professional services.
With around 10,000 people in Wales in over 300 companies employed within the life science sector. The £100m Wales Life Sciences Investment Fund, supported by the Welsh Government, is a key element in the drive to boost our economy. We’ve already seen the fund play an integral role in business growth by attracting new companies to Wales, along with supporting job creation, encouraging graduates to enter into employment in the pharmaceutical and healthcare sectors.
The evidence also tells us that businesses in the life sciences sector can grow very quickly in a global market, with the rewards for success being huge. This means that a small number of successful businesses in the life sciences industry have the power and potential to generate great economic value for the city region creating well-paid jobs.
In the Welsh creative industries sector, we have seen the opening of the Swansea Bay Studios, on the site of the former Ford plant on Fabian Way, where the internationally acclaimed Da Vinci’s Demons was filmed and produced.
Professional and financial services are however sectors where Wales, particularly outside Cardiff, remains weak. We need to develop our professional services and use the flourishing university sector to generate employment in this area. In the 1970s and 1980s, Swansea University was at the forefront of finite element analysis, yet Wales generated very little benefit from it. Professional services in finance and engineering can generate high salaries and also produce clusters of related activity. We have a major and well-respected insurance company in Admiral (one of the biggest private sector employers in Wales), but we desperately need to attract and support more high value and high-wage employment in the financial sector We have also seen Welsh Government investment into the advanced engineering sector with the Materials Manufacturing and Learning scheme, led by Swansea University, which aims to increase the number of people gaining technical skills throughout Wales.
The opportunity exists to develop an energy industry around tidal lagoons, developing the technology and becoming a world leader in harnessing tidal energy with the benefit of creating a highly skilled workforce capable of carrying out the engineering work for all the world’s tidal lagoons
One key industry that is not geographically constrained and has the ability to generate huge wealth is ICT. There is a tendency for ICT companies to cluster together, not just in Silicon Valley in California, but also around for example Cambridge University. In Wales, medium sized enterprises in the sector have performed strongly with a 92.8% increase in turnover between 2005 and 2013. There is a need to turn some of the medium sized ICT companies into large ICT companies. We know that ICT is a high paying sector and that superfast broadband rollout across the Swansea bay region is making it possible for ICT companies to develop.
With the quality of ICT graduates being produced in the Welsh universities, it has to be a severe disappointment that Wales has a lower proportion of its population working in ICT companies than the rest of the UK. If we are to make the Swansea Bay City region an obvious home for such ICT companies, then we need to look at providing the same support that has been available for the life sciences sector.
Developing an economy is about developing and promoting high-value economic sectors. We will not develop a successful economy and high GVA on low pay and seasonal work. We therefore need a strategy for each of these targeted growth sectors. Thanks to the Welsh Government, a lot of progress has already been made in these growth sectors, but the level of commitment and investment needs to continue if we are to really realise our ambition of producing a high wage and high skill economy
Swansea Bay City deal
The Swansea Bay City deal will deliver up to 9,465 new jobs for the region and help produce an increase in gross value added (GVA) of £1.8bn. Whilst highly beneficial to the area it is not a cure all for the economic weakness of the area and it will not solve all the economic problems of the area. Credit must be given to the four local authorities and their leaders for their commitment to these projects. In August 2017, as I write this, some of these projects have already commenced.
It is based around four strands of:
- Internet of economic acceleration.
- Internet of energy.
- Internet of life sciences and wellbeing.
- Internet of smart manufacturing.
Life Science and Wellbeing Village
As part of the wider ARCH (A Regional Collaboration for Health) initiative, a life sciences and wellbeing village is earmarked for Llanelli.
The vision is to put the region at the forefront of life science innovation and be recognised as a “destination of choice” for global investment and enterprise in the fields of life sciences and wellbeing.
The focus will be on integrating business development, education and wellness initiatives, research and development and healthcare initiatives. It will include:
- An Institute of Life Science which will act as a business and start-up incubator in the life sciences sector.
- A wellness hub that will house leisure and sports provision.
- An assisted living village providing care for out of hospital patients.
- A life sciences and wellbeing centre.
The campus network will build on the work on the Institute of Life Science, with innovation hubs and satellite sites created across the region.
A regional digital infrastructure will be implemented to support each of the City Deal’s strategic themes and projects.
The vision is to create a digital infrastructure including gigabit fibre and next generation wireless networks that will enable innovation and entrepreneurship within the region.
It will also include expansion of the provision of 4G and Wi-Fi capabilities to benefit both urban and rural areas.
There are plans for the region to be a testbed for 5G.
Yr Egin digital cluster
The project involves the construction of a creative and digital hub and the development of a creative industry sector cluster. It will create around 200 jobs and help the local economy and support the Welsh language.
The Life Science & Wellbeing Campus project
This project will expand research and innovation infrastructure at the Morriston campus alongside world-leading clinical delivery. In addition, a reconfiguration in real estate will see an expansion of the Singleton Campus where a growing cluster of medical and health technology businesses currently operate and collaborate.
Swansea City and Waterfront digital district
This is a £169m project aims to generate more than 1,300 jobs. It will create 100,000 square feet of new office space on the Kingsway in the city centre for tech businesses and will support local enterprise and entrepreneurial talent.
This project will also create a box village development on the University of Wales Trinity Saint David’s Waterfront Innovation Quarter in SA1. Built from shipping containers, this will provide affordable space for start-up firms with links to the university’s academic programme.
This project will also enable the digitalisation of the 5,000 to 6,000-seat indoor arena planned for Swansea’s St David’s development site, and the development of a digital square with digital screens and digital artworks.
The Factory of the Future project
The aim is to support and continue to build the region’s strong manufacturing base, by creating a network of smart manufacturing innovation centres to provide small and medium businesses (SMEs) with an opportunity to invest in leading edge manufacturing and digital technologies. This project aims to put the region and its enterprises at the forefront of digital and data based manufacturing.
Pembroke Dock Marine
In Pembrokeshire the Pembroke Dock Marine is a £76m project to establish a marine energy centre around the Port of Milford Haven. It will become the centre for marine energy development, fabrication, testing and deployment.
Neath Port Talbot
The Steel Science Centre
Based in Neath Port Talbot, the Centre will focus on providing commercial research and development to address the current and future challenges of sustaining steel-making capacity in the region and the UK. It will work with industry to reduce its carbon impact and place the region at the cutting edge of low carbon production. It will also provide support for the developments in the steel supply chain and downstream operations.
Centre of Excellence of Next Generation Services (CENGS) and Technology Centre
The CENGS project will provide a data analytics capability to turn world class data into commercial systems and solutions. The centre will bridge the gap between research and innovation and the ability to launch, develop and grow commercial opportunities.
Projects for the whole region
The Digital Infrastructure project
The Pembrokeshire-led project aims to improve broadband and mobile continuity underpinning all projects within the deal.
Homes as Power Stations
This project will target both new build housing projects and retrofit of existing housing. Led by Neath Port Talbot council, this project will deliver innovative low carbon homes, supporting carbon reduction targets. The project aims to provide security of housing supply in the region and support a reduction of demand on electricity and gas grid systems. A major aim will be to reduce fuel poverty and its impact on health, together with a focus on digital connectivity and smart metering.
Skills and Talent Initiative
Led by Carmarthenshire, a skills and talent initiative will support skills development for all 11 of the city deal projects spread across the Swansea Bay Region. This initiative seeks to ensure the creation, attraction and retention of a workforce equipped to deliver each of the City Deal projects.
Aarhus and Swansea
The second city, in population, in Denmark is Aarhus and the second city in Wales is Swansea. Whilst Swansea is part of the West Wales and Valleys and the Swansea metropolitan area has according to Eurostat a GDP per capita of 75% of the European average, Aarhus has 107% of the European average so what can Swansea learn from Aarhus and its economy.
Greater Aarhus is a major player in the in the global wind energy market. It is home to some of the world’s biggest manufacturers of wind turbines and constitutes the world’s most advanced knowledge center regarding wind turbines. It has suppliers and subcontractors that cover the entire supply chain and the sector benefits from a solid political backing of wind energy on local, regional and national level. The wind business cluster here has a history of cooperation between manufacturers, suppliers, scientific communities and public authorities
The equivalent for Swansea is the Tidal lagoon where Swansea being the first tidal lagoon can become the world’s biggest manufacturers of tidal turbines but it needs cooperation between manufacturers, suppliers, scientific communities and public authorities just as Aarhus has achieved with wind turbines.
Aarhus University a university founded in 1928 and is Denmark’s largest, with a total of 44,500 students as of January 2013. In ranking lists of the world’s best universities, Aarhus University is placed in the top 100
Swansea Universityis a research-led university that has been in existence since1920 with a total of 17,445 in 2015/16. Swansea University ranks between 300 and 350 in the World ranking. So the challenge is to grow the university both in student numbers and in world ranking. Progress on both has been made in recent years with the bay campus being built but there is still an opportunity for growth in numbers and improvement in its world ranking.
The largest research park in Aarhus is INCUBA Science Park, focused on IT and biomedical research. The organization is owned partly by Aarhus University and partly by private investors and aims to foster close relationships between public institutions and startup companies. IT and biomedical research are two of the current growth industries across the World.
These are areas that the Swansea City region is looking to develop as part of the City region firstly with the programme of Life Science and Well-being. The aim is to place the region at the forefront of life science innovation and to be recognised as a destination of choice for global investment and enterprise in the field of life sciences and well-being
Secondly ICT plans include Swansea city and waterfront digital district, centre of next generation digital services and technology centre, Digital infrastructure creative digital cluster and factory of the future. The above is intended to bring in almost £100 million of private investment into the city region. I believe that the City Deal is the right innovative proposal for our region and it will help diversify the economy of our region by supporting growth in innovative industries including ICT.
As both Aarhus and Cambridge with its Silicon Fen was created in 1970s when a Science Park was formed by Trinity and other Cambridge colleges has shown is that a research park needs to be led by the University.
There is the opportunity to produce a research park in the Swansea Bay City region but it will need the full support of the University as well as local and Welsh Government.
In Aarhus is the headquarters of Arla Foods the largest producer of dairy products in Scandinavia and the fourth largest dairy company in the world with respect to milk volume, seventh with respect to turnover. Arla Foods has three major brands: Arla,Lurpak and Castello cheeses that are sold worldwide.
Whilst there is a successful food park in Cross Hands within the Swansea City region that adds value to the ‘Garden of Wales’ and for those that buy its produce. It is well placed with high quality suppliers based nearby thus reducing food miles for production. An area of growth must be to process more of the food locally and to get more of the economic benefit of processing the food as well of the benefit of producing it.
Whilst no two cities are the same especially when they are in different countries and Aarhus success rests on more than the above, it gives an indication of the direction of travel to have an economically successful city. Whilst the Council with the City deal is moving Swansea in the right direction, economic success for the area cannot be created by the Council alone. There is a need for the Universities, the Welsh Government, the Westminster Government and the private sector to work together to grow the economy.
Mannheim region and the Swansea Bay City region
Mannheim is Swansea’s twin city but that is where the similarity ends. The economic data for the two areas makes interesting, and as a Swansea resident, depressing reading. In Mannheim metropolitan region its GVA is 147% of the European average but in Mannheim city it rises to 210%, compare that to the Swansea Metropolitan region on 75% and the Swansea local authority area on 79%.
What does Manheim do differently and can Swansea learn from its twin city.
The city of Mannheim has been referred to as the first “Smart City” where they have been successful in connecting each household within the city to a smart energy network. Bus stops state when the next bus is arriving and has signs indicating where traffic jams are. Furthermore, in both the city and region, you are able to reach everything simply via bus, tram or train.
Mannheim’s university which is one of the leading research institutions within Germany plays a key role in its economy. The research institutions of the University closely collaborate with a number of national and international partners. Some examples are the Mannheim Centre for European Social Research and the Centre for European Economic Research. Mannheim Business School is Germany’s number one business school offering world class management education.
An institution affiliated with the University is the Mannheim Center for Entrepreneurship and Innovation (MCEI) that provides a founder and incubator platform for students, young entrepreneurs and investors. The institute is supported by the Mannheim Institute for Mittelstand and SME Research (IfM) and the Chair of SME Research and Entrepreneurship at the University of Mannheim. Several successful startups have already been launched at the University of Mannheim or been initiated by former students, for example according to local media sources , Payback (€500m exit to American Express), Delivery Hero (raised $1.4b funding), AUTO1 Group (raised $200m funding),StudiVZ (€85m exit to Georg von Holtzbrinck Publishing Group), Simfy (raised €30m funding), Goodgame Studios (initiating IPO), SavingGlobal (raised $32m funding), Synchronite (sold to LivePerson) and movilizer (sold to Honeywell). The Metropolitan Region is more and more becoming a draw for multimedia and high-tech service providers through SAP and leading major corporations such as ABB, BASF and Roche Diagnostics have set up there.
The above helps explain why Mannheim was ranked eleventh in the top fifteen of the most inventive cities worldwide.
Mannheim also has not lost its historical manufacturing base with the successor to Karl Benz’s automobile manufacturing companies, Daimler AG, headquartered in Stuttgart, has had a large presence in Mannheim and it is in Mannheim that diesel engines and buses are assembled.
The city is also home to major, multinational corporations such as ABB, IBM, Roche, Unilever, Phoenix Group and several other well-known companies. Also there are numerous emerging medium-sized companies, for example, Fuchs Petrolub and Pepperl & Fuchs which operate internationally.
The Creative industries are firmly established, with the famous Mannheimer Schule and the National Theatre. Mannheim also has a long standing cultural tradition. The Popakademie, Germany’s first university for pop music and music business, is internationally renowned. Music festivals such as Maifeld Derby and Time Warp underpin Mannheim’s position as a city of music. There is also the atelier of the fashion designer Dorothee Schumacher and her creations are presented at international fashion weeks.
With the aim of contributing to an environment where many more creative businesses can arise, the Mg: Mannheimer Gründungszentren supports business founders. The centre advises during the foundation process, provides office space and helps start-up companies overcome the challenges they face.
I believe the role the University plays in supporting the development of start-up companies is crucial to the prosperity of the area. Also the idea of having key industrial sectors and supporting them, building on local expertise and areas where expertise has been developed over several years. Mannheim has also kept its manufacturing sector especially based around Mercedes Benz.
Whist Swansea cannot replicate everything in Mannheim building on the Universities especially the bay campus to generate start-up companies via a centre for Entrepreneurship and innovation would be a substantial step forward. Mannheim has made progress on energy and connectivity two areas that Swansea Bay City region can benefit from
Finally building on the creative industries already in the region and also recognizing the continued importance of the metal industries would help take the Swansea Bay City region forward.
Rural Swansea Bay City region
My colleague Eluned Morgan AM has written a pamphlet on Rural Wales-time to meet the challenge 2025 which is available from her office. I do not intend to replicate that interesting pamphlet but only concentrate on the rural areas of Swansea Bay City region.
Outside of the City and three main towns of the region, there are valley communities, small industrial towns, seaside towns and villages, rural and agricultural areas and commuter villages and towns.
What can be done to improve the economy?
Firstly the dormitory and commuter towns and villages prosperity is linked to that of the City and towns that it acts as a commuter area for.
- · Link with Ireland and offer Ireland and Wales holidays
- · Develop high value food and accommodation holidays
- · Develop niche markets such as faith tourism and enhance cycling and walking opportunities
- · The environment and landscape are why most people visit so must be preserved
Rural and agricultural
- · Promote welsh products as high quality
- · Increase the processing of food within the area
- · Develop a Swansea bay city region brand
- · Promote forestry and wood processing
Small industrial Towns
- · Build on local strengths
- · Diversify the industrial base
- · Build on the clean environment to attract industry
- · Build clusters
Swansea and the Swansea Bay City region needs to improve its GVA at least to the British average. We need to support all local commerce and industries, tourism and agriculture will remain important in rural Wales.
There are five key actions that are needed
1) The City deal must go ahead and produce the employment and economic benefits planned for it
2) We need to get either a centre for entrepreneurship like Mannheim or a development park like Aarhus associated with the Universities in Swansea
3) There is opportunity for further University growth and as above for them to focus on innovation and commercialisation
4) We need to support key growth sectors
5) We need to support the existing major employers
6) We need to support agriculture, forestry and the marine environment but also look to add value through processing to the raw materials and build a Swansea Bay City region brand.