Weathering the Storm

1. Weathering the Storm Key challenges facing the Gloucestershire economy Research briefing October 30th 2008 Chargrove House

2. Evidence National data - local level will reflect to a certain extent Unemployment data - recent, frequent and detailed Press releases/cuttings - recent, frequent, patchy, not totally reliable Individual direct experience - useful but not necessarily representative Applied to the local context

8. Sector implications Banking and Finance - Impacts of mergers e.g. Lloyds TSB/HBOS - Lloyds TSB has 1,900 branches, around 160 of which are C&G, employs 1,360 staff at HQ in Gloucestershire - effects of consolidation. Estate agents, mortgage brokers and others in financial sectors. Restructuring of teams is resulting in smaller redundancies – e.g. Stroud & Swindon and Chelsea Building SocietyConstruction - no house building and house prices still falling (at September 2008, although rising again now, therefore layoffs and closures. All building trades affected over the summer, associated services including solicitors, commercial and residential agents, etc starting to experience slowdown/redundanciesRetail - spending is less, lots of closures, clothing, food and furniture sales down, home furnishing Roseby’s with outlets at the Peel Centre in Gloucester and on Kingsditch Trading Estate in Cheltenham has gone into administration. Furniture store chain MFI, has been hit by a sharp fall in demand for goods and went into receivership in April 2009.

9. Sector implications, cont’d 1 Leisure and Tourism – attractions reporting 10% downturn in visitor numbers, bookings down, restaurants and pubs closing, cumulative effects after flooding, poor summer, then credit crunch/consumer spending slowdown. Associated industries, including independent retailers, arts and crafts, etc also likely to feel effects of slowdown. A few pubs have beaten the trend to re-open in Gloucester due to regeneration – e.g. Inn on the Docks (former Sir Colin Campbell) Engineering - Car manufacturers sales and profits down. Losses announced by GE Aviation and further potential engineering cuts in Gloucester due to restructures/mergers, though ultimately caused by global downturns. Other reports indicate still healthy levels of engineering vacancies, though possibly some skills mismatch. (E.g. graduate software engineers not the same as mechanical operatives/CNC turners, etc) Medical technologies and aerospace (Gloucestershire’s key sub-sectors) may be slightly more protected than automotive industry for now.

10. Sector implications, cont’d 2 Agriculture - Supermarkets pushing prices down, organic sector is struggling, conversion to industrial units may not be used. Food costs – lay offs in factories – cheese prices falling, though beef currently holding up. Rising costs of fertiliser, etc not changing despite falling oil prices Forestry – moving into recession faster than agriculture owing to building industry dependence – e.g. saw log & chipboard products. Renewable heating solutions are demonstrating growing local market share on the positive side Transport - Airline traffic is reducing with reduction in traffic from Bristol, etc, and to Gloucestershire Airport in Cheltenham

11. Further evidence • Business Link Climate Survey (Released Nov 08) • Majority of businesses lie between not affected and affected. • Still concerned at media hype • More optimistic than not • Focusing on marketing to attract • Fuel/energy still affecting some • Nothing too major yet • Local business news for September 2008 • 38 closures – retail, pubs, printing, insurance, engineering • 8 declines – quarrying, car dealership, engineering, law firm • 41 creations – mainly retail • 28 contracts – printers, solicitors, construction, air conditioners, automated handling • 29 mergers – solicitors, IT, architects, engineering • 62 growth – medical devices manufacture, engineering, construction, retail

12. Further issues • Reducing the working week – JCB announced nationally, but local examples now include Lydney Building Concepts – 2 day week and BPE Solicitors in Cheltenham – 9 local staff reducing to 4 day week – not a local trend yet, but a model that others may follow • Migrant worker issues – going back to Poland – locally the trend is reported that ‘floating’ workers are returning home, but those with better skilled, higher waged jobs prefer to stay • Mortgage re-possessions and bankruptcies up, in Gloucestershire Court hearings extended to deal with increase • Eurozone is one of the UK’s strongest trading partners accounting for 50% of British exports lowing growth even with the devalued pound will have reduced demand

13. Not all bad news GCHQ recruiting nationally and locally with focus on high quality knowledge based jobs London General Insurance (Forest) is thriving and recruiting Discount supermarkets increasing - Waitrose and M & S lower than average sales growth UK holiday destinations increasing e.g. Pontins have had increase in bookings Some telecom companies, property auctioneers, pawnbrokers, market traders, rat catchers(!) all reporting upturn in trade Cheltenham high street seeing new retail investment Longer term – Redeployment of ARRC from Germany to Innsworth will help to provide new demand on local construction sites plus new job creations

14. Effect on Economic Strategy People Local Population projection has accounted for reduced migrant flow and reduced house build rates The Local Projection accounts for a County population growth of 8.8% or 52,600 between 2007 and 2026 amounting to 647,000 which is 15,000 lower than the ONS projection Working age population (20-64) will be around 354,400 in 2026 some 2,600 people less than the ONS projection. The number of eastern Europeans applying to work in the UK has fallen by 9,000 during the past quarter backs the revised projection Jobs Employment across all sectors may shrink Advanced engineering vulnerable, decline in markets, Construction - severely affected by economic downturn, reduced workforce, developments slowed or ceased Tourism - hotels, pubs etc closing, food costs rising Care - if migrant workers leave could be a problem filling those jobs although u/e could take them

15. Connectivity Transport sector affected by downturn and additional vulnerability to fuel price changes Internet retailers suffer reduced shopping Airlines struggling to stay in business Large developments e.g. re-doubling the Kemble Swindon line may be put on hold despite Government go-ahead Development and Resilience Environmental and energy related sectors Multi site regeneration programmes delayed Future growth for county is Environmental Technologies, especially in Cheltenham

16. Still too early to know the effects! These are more likely to be seen in 2010-2011, when the economy stops shrinking and we can see what the remaining issues are.