City Growth Strategy. Plymouth - Main Strategy. purpose,vision & strategy

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1 City Growth Strategy Plymouth - Main Strategy Plymouth Haringey London South Central Heathrow London City Fringe St. Helens Nottingham purpose,vision & strategy

2 City Growth Strategy Plymouth - Main Strategy Plymouth Haringey London South Central Heathrow London City Fringe St. Helens Nottingham

3 PLYMOUTH CITY GROWTH STRATEGY Contents EXECUTIVE SUMMARY INTRODUCTION WHAT IS THE CITY GROWTH STRATEGY? INTRODUCTION TO PLYMOUTH COMPETITIVE ADVANTAGES AND DISADVANTAGES VISION AND STRATEGIC OBJECTIVES CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT BUSINESS ENVIRONMENT ISSUES ACTION PLAN ANNEX 1 - LIST OF STRATEGY TEAM MEMBERS ANNEX 2 - NOTES Plymouth City Growth Strategy 1

4 PLYMOUTH CITY GROWTH STRATEGY Executive Summary Introduction What is the City Growth Strategy? Plymouth City Growth Strategy is a new agenda for business and economic growth, based on a model developed in the United States. The Strategy covers the whole of the City of Plymouth. It identifies and seeks to develop business clusters local concentrations of interconnected firms and institutions in related industries that gain competitive advantages from being located close together. Development of the Strategy has been based on a detailed programme of research, with a strong focus on engaging businesses in identifying strategic priorities and ideas for action. Challenges and Priorities Plymouth faces substantial economic and social challenges. These include widespread and severe deprivation, very low rates of self employment and entrepreneurship, relatively low levels of skills and qualifications, low levels of wages, incomes and output, and a dependence on major employers, including mobile multi-national companies and call centres. However, the city also has substantial competitive advantages, which form the basis for the development of this strategy. These include the city s natural setting, scale and sub-regional presence, its ability to offer a high quality of life, the size and diversity of its HE/FE sector, and strengths in marine and medical science, and in the defence, marine, medical and engineering sectors. Key priorities for the strategy are to: Increase the city's prosperity; Tackle deprivation by encouraging wealth creation and ensuring that it reaches people in deprived areas; 2 Plymouth City Growth Strategy

5 EXECUTIVE SUMMARY Stimulate rates of entrepreneurship, by encouraging and helping more people to start businesses; Encourage the development of indigenous businesses and local supply chains to broaden the business base and reduce reliance on major employers and overseas firms; Encourage the development of higher value-added, knowledge-based activities and occupations and reduce reliance on low cost operations such as call centres and assembly plants; Build on local competitive advantages to maximise opportunity and develop a stock of businesses that benefit from being located in Plymouth and are embedded in the local economy. A Vision for Plymouth s Economy Our vision is for Plymouth to develop: A more prosperous, dynamic and competitive economy that provides opportunities for all of its people; A stronger, more diverse and growing business base that benefits from the city s natural assets and competitive advantages, and takes a central role in the development of the city; A new culture of entrepreneurship, innovation and aspiration. Strategic Objectives To achieve this vision, four main objectives have been identified for the City Growth Strategy: A. To achieve business growth through the development of clusters and target sectors; B. To increase the rate of business startups, by promoting a culture of entrepreneurship and supporting the formation of new businesses; C. To improve the delivery and co ordination of business support and economic development initiatives; D. To ensure that the right conditions are provided for business growth, by working with partners to enhance the city s infrastructure, image and environment. Cross-Cutting Principles There is also a series of cross cutting principles that run through the strategy, are central to its success, and underpin each of its objectives. Many of the proposed actions are based on these themes. They are: 1. Business Engagement involving businesses more closely in the economic development process, and ensuring that actions under the strategy take account of their needs and priorities and harness their expertise and experience; 2. Changing the Culture a common theme is the need for Plymouth to change its culture to raise its aspirations, confidence and self esteem, and project a positive image to the outside world; 3. Partnership a recurrent theme is the need for organisations concerned with business support, economic development and regeneration, as well as the private and voluntary sectors, to work together to develop new Plymouth City Growth Strategy 3

6 EXECUTIVE SUMMARY programmes and enhance the effectiveness of existing ones; 4. Economic Inclusion it is important that actions under the strategy provide opportunities for all of Plymouth s citizens and employees, help to tackle deprivation, and benefit disadvantaged communities.the strategy recognises that these communities represent an untapped resource and that business formation in these areas can provide significant economic and social returns; 5. Sustainability the strategy needs to be economically, socially and environmentally sustainable, achieving continuing business growth that does not place excessive demands on the public sector, benefits all sections of society, and maintains and enhances the quality of Plymouth s environment. Clusters and Priority Sectors for Development A variety of criteria were used to identify the following six priority sectors for the City Growth Strategy: Advanced Engineering; Business Services; Creative Industries; Marine Industries; Medical and Healthcare; Tourism and Leisure. external and internal perceptions making it harder to attract and retain tourists, investors, entrepreneurs and employees; Urban environmental quality, which does not do justice to the city s natural setting; Low rates of entrepreneurship, affecting the vibrancy of the local economy and the business opportunities it offers; A poor track record in engaging businesses in the economic development process; Labour force issues including shortages of skills in engineering and certain specialised occupations and difficulties in attracting and retaining key personnel. While focusing on business and economic growth priorities, CGS needs to link with other strategies and initiatives aiming to address the wider cultural, infrastructural and environmental factors affecting the business environment. Plymouth CGS Action Plan An action plan, setting out a series of actions under the four strategic themes, is being developed, and will be completed by the end of June The Business Environment Major issues affecting the business environment in Plymouth include: Poor transport links and services between Plymouth and other UK and international cities; The image of the city, with negative 4 Plymouth City Growth Strategy

7 SECTION 1 1 What is the City Growth Strategy? 1.1 City Growth Strategies City Growth Strategies (CGS) represent a new approach to the regeneration of cities, developed in the United States and now being implemented in England. CGS aim to stimulate the regeneration of deprived urban areas by focusing on their economic strengths and competitive advantages, rather than their social weaknesses. They place a strong emphasis on business growth and wealth creation as the best means of tackling the social and economic problems of city areas, and seek to engage business closely in developing and implementing programmes of action. An important part of the process is the identification and development of business clusters local concentrations of interconnected firms and institutions in related industries that gain competitive advantages from being located close together. Development of the strategies is based on a detailed programme of research, to identify local strengths and challenges, analyse key clusters, and establish a sound evidence base from which to identify strategic objectives and priorities for action. CGS are based on the work of Professor Michael Porter of Harvard University, who founded the Initiative for a Competitive Inner City (ICIC), a not-for-profit organisation established to pioneer new approaches to the regeneration of inner cities in the US. In 2002, the Government announced that CGS would be piloted in seven areas of England Nottingham, Plymouth, St Helens and four parts of London. The work of the pilots has been co-ordinated by the Small Business Service, with the advice of consultants from ICIC in the US. 1.2 Plymouth City Growth Strategy Plymouth was selected as one of seven CGS pilot areas in spring Plymouth s proposal to become a CGS pilot emphasised both the significant economic challenges faced by the city, and the competitive advantages and market opportunities of Plymouth as a business location. Central to the proposal was the need to understand the reasons for low rates of recorded entrepreneurship in the city, and to develop and implement actions to address these. The City Growth Strategy covers the whole of the City of Plymouth the Unitary Authority Area. The decision to develop a strategy for the city as a whole rather than a more restricted inner city area - was made in the proposal, on the basis that this gives the strategy the required critical mass and reflects the structure of the local economy. 1.3 Partners and Work Programme The development of this strategy has been overseen by a Strategy Team, made up of key players in the private and public sectors. It has been based on the following key research tasks: A scoping study to review available evidence and identify the research required to complete the strategy; A cluster study - analysing the Plymouth economy and business base to identify, prioritise and profile key business clusters for development; A study of entrepreneurship in Plymouth, Plymouth City Growth Strategy 5

8 SECTION 1 to identify the reasons for low recorded rates of entrepreneurship and possible measures to address them; A detailed business survey and series of focus groups, to involve business people in identifying the key priorities for the strategy and developing proposals for action; Widespread consultation with businesses and stakeholders, to refine and finalise the strategy. 1.4 Link with other Strategies The overall economic development framework for the Plymouth Travel to Work Area (TTWA) is set out in the Plymouth Sub-Regional Economic Strategy ( ) 1, which is due for revision in Key objectives are diversifying and restructuring the economy by targeting investment in growth sectors and on cluster development, raising levels of entrepreneurship, and creating the business infrastructure and support measures needed to promote economic growth. Plymouth CGS is closely linked to the subregional strategy, but has a narrower focus, both in geographical terms (covering the City) and in its remit (as a business-led growth strategy rather than one concerned with the wider infrastructure of economic development). The CGS will therefore fit within, and help to inform the revision of, the next sub-regional strategy. Plymouth CGS also links with the Regional Economic Strategy 2, which defines the overall economic development agenda for South West England. In supporting business growth, the RES prioritises five current sectors (Advanced Engineering, Food and Drink, ICT,Tourism and Marine) and three emerging sectors (Creative Industries, Biotechnology, Environmental Technologies). Local sector development initiatives in CGS complement efforts to develop these wider regional clusters, 6 Plymouth City Growth Strategy

9 WHAT IS THE CITY GROWTH STRATEGY? while wider business support initiatives also need to tie in closely with action at the regional level. Plymouth City Strategy is being developed by Plymouth 2020 Partnership (the Local Strategic Partnership) to improve service and investment delivery in the city. Following consultation, a revised vision and transformational goals have now been formulated, and the Partnership is currently developing the accompanying action plan. 3 The City Strategy calls for the development of a strong economy that can grow sustainably and improve the standards of living for everyone, and the promotion of cultural opportunities based on local pride, the maritime heritage, location, arts and leisure opportunities. Plymouth CGS fits under the umbrella of the City Strategy and aims to deliver its objectives with regard to business growth. Since the CGS has highlighted a range of business issues relating to Plymouth s image, environment, culture, infrastructure and service delivery, it will help to inform, and needs to link closely with, the wider City Strategy. Making Waves - A Cultural Strategy for Plymouth has been developed by the Plymouth Cultural Partnership, local stakeholders and experts. Key themes that relate to CGS include: enhancing civic pride to make residents celebrate the city, its strengths and achievements; enabling the city to compete for investment and people based on excellence in cultural activities and facilities; and promoting cultural and urban renewal which recognises that architecture, high quality shopping and visitor attractions are essential for attracting investment and visitors. Public consultation and a more detailed identification of objectives and actions are taking place. 4 Again, these objectives closely mirror some of the major concerns expressed by businesses in the development of the City Growth Strategy, so there are clear links between the two. The Tourism Marketing and Development Strategy for the 1990s sought to encourage sustainable tourism activities to enhance the economy, amenities and environment of Plymouth. Whilst the strategy is now in need of renewal it identified a number of objectives that overlap with those of the CGS, including maximising economic retention within the local community, maximising local and inward investment in tourism ventures, and increasing tourism volumes and market share. Revision of the Strategy will need to link closely with the CGS. The Neighbourhood Renewal Strategy for Plymouth identifies objectives and targets for regeneration of deprived areas of Plymouth 5. These include increasing prosperity by reducing worklessness, including by increasing the levels of small business formation in the worst performing wards of Plymouth. Plymouth CGS complements the Neighbourhood Renewal Strategy by setting out a city-wide business growth agenda that will help to tackle deprivation in Plymouth. The Neighbourhood Renewal Strategy has a key role to play in helping to ensure that the opportunities derived from business growth in the city are accessible to the most deprived neighbourhoods. The Plymouth Learning and Work Partnership Strategic Workforce Development Plan set out a sector-based framework for workforce development in Plymouth TTWA, designed to raise job-related and entrepreneurship skills and qualification levels and to provide high quality, integrated training support for SMEs and micro-firms. Following research Plymouth City Growth Strategy 7

10 WHAT IS THE CITY GROWTH STRATEGY? into the skills requirements of 14 sectors, action is now focusing on three Marine/Maritime, Creative Industries and Healthcare/Medical with PLWP now collaborating with these sectors to draw up workforce development plans. The plans are therefore closely linked to and complement Plymouth CGS. 1.5 Action Planning This strategy is based very much on the views of businesses and other local stakeholders, as well as the work of the Strategy Team and consultants. It sets out the key issues and priorities for business and economic growth in Plymouth, and outlines a vision and series of strategic objectives for future action. The next priority is to develop a detailed action plan to implement the strategy. We would like businesses, stakeholders and local people to offer their ideas about actions that can be taken to encourage business growth in Plymouth, and suggestions about how businesses and local people might become more involved in delivering a brighter economic future for the city. 8 Plymouth City Growth Strategy

11 SECTION 2 2 Introduction to Plymouth 2.1 History and Setting Plymouth s outstanding environment and setting in one of the world s finest natural harbours - have shaped its economic and social development for centuries. The city has a rich maritime history, having played a prominent role in exploration, global trade and naval warfare. The city s role in trade started in the 1200s, with an initial focus on the English regions, the Baltic countries and Northern Europe, but becoming increasingly oriented towards transatlantic trade from the 1500s. Plymouth has also been the departure point for many explorers, amongst them Drake, Cook and Darwin. However, it is as a naval port that Plymouth has become best known. Although first used as a naval base as early as 1295, Plymouth s importance increased in the 1500s and 1600s as a base from which the Western approaches to the English Channel could be guarded. Famous amongst the incidents of the time was Drake s successful battle against the Spanish Armada off the coast of Plymouth in Further military expansion took place in 1691 with the construction of a major new dockyard, Plymouth Dock (later renamed Devonport Royal Dockyard), followed by additional dockyard construction in the 1700s. 6 By the beginning of the 20th century Plymouth had turned into a major centre for naval related activities, including naval ship building and refitting work, and as a training ground and base for Navy personnel. 7 Plymouth s role as a naval port brought economic benefits and population growth, but also created a vulnerability to changes in defence related spending in the 20th century. The dockyard thrived during the Second World War, but has seen a steady decline ever since. Employment in the dockyard, which peaked at around 40,000, had fallen to 13,000 at the time of privatisation in 1985, and has since decreased to 4,500. Responding to the loss of defence related jobs has been a major economic development challenge for the city. Despite attracting significant levels of manufacturing inward investment in the 1970s, 1980s and 1990s, the city has suffered from high levels of unemployment and widespread deprivation in recent decades. The decline Plymouth City Growth Strategy 9

12 SECTION 2 of the dockyard on which many people s livelihoods depended has had a continuing impact on the local population. New jobs have been created, but there has been less progress in developing a culture of entrepreneurship. Employment in Plymouth has become increasingly dependent on the fortunes and decisions of major multinational employers, and subject to global economic conditions and competition with low cost locations overseas. In recent years, the city has attracted a number of call centre developments, but again there is concern about the quality and long-term future of the jobs that have been created. The City Growth Strategy represents an opportunity to set out a new business growth agenda for Plymouth, based on the city s competitive strengths and locational advantages. One of the key challenges is to find ways of capitalising on the city s environment and location which underpin its maritime history in ways that enable it to compete in the modern economy. 2.2 Population and Demographics Plymouth had a population of 240,720 in 2001, making it the second largest city in the South West region, behind Bristol. The population declined by 1.1% between the Censuses of 1991 and 2001, while it grew in all other local authority areas in the region. The age structure of the population is in line with the national average, and slightly younger than those of Devon and the South West, which have a higher proportion of over 60 year olds. In common with most parts of the region, the population is predominantly of white, British origin, with only 3.5% represented by other ethnic groups, compared to 13% in England as a whole. A relatively high proportion of households have lone parents with dependent children, while rates of owner occupation are relatively low, at less than 64%. 2.3 Labour Market Labour market conditions in Plymouth have improved considerably in recent years, with employment increasing by 14% between 1998 and 2001, outperforming regional and national averages, after sluggish job growth between 1991 and Claimant count unemployment stood at 2.3% of the Table 1: Summary of Demographic Statistics, 2001 Plymouth Devon County South West England Population (000) ,928 49,139 % population change Average age % of population aged % of population White British % of households with lone parent and dependent children % of households owner occupied Source: Census statistics, ONS 10 Plymouth City Growth Strategy

13 INTRODUCTION TO PLYMOUTH working age population in November 2003, above that of Devon and the South West, but in line with the average for England (Table 2). There has also been a welcome reduction in long-term unemployment in recent years. Of more concern are the very low levels of self-employment in Plymouth, at less than 9% of the economically active population, and the low proportion of people employed in managerial and professional occupations (18.1% in 2001 compared to 26.5% across England). A high proportion of Plymouth s Table 2: Summary of Key Labour Market Statistics Plymouth Devon County South West England Unemployment: claimant count as % of working age population (Nov 2003) % of long term claimants (Mar 2002) Self employment as % of economically active population (2001) Employment growth ( , from Annual Business Inquiry) % of people in employment in managerial and professional occupations (2001) % of people in employment in sales/customer service occupations (2001) % of people in employment in elementary occupations (2001) % of people aged with no qualifications (2001) % of people aged qualified to degree level or higher (2001) Source: ONS/NOMIS Plymouth City Growth Strategy 11

14 SECTION 2 population work in sales and customer service activities, and in elementary occupations. This occupational structure reflects the relatively low levels of skills of the population 29% have no qualifications, while only 13.5% are qualified to degree level or above. 2.4 Deprivation Plymouth has relatively high levels of multiple deprivation. Of 20 wards in the City, ten are in the top quartile of the most deprived in England, and three (St Peter, Ham and Budshead) are among the 10% most deprived, according to the 2000 Indices of Multiple Deprivation 8. The more deprived wards are concentrated in the western and southern areas of the city. Levels of deprivation are high compared to those elsewhere in the region, and the neighbouring districts of Caradon, South Hams and West Devon. There are also significant inequalities in the city itself, which has some very prosperous suburbs. There is widespread deprivation in relation to a variety of factors - health, housing, employment, income and child poverty. Across the city, some 19,000 people were classed as employment deprived and 63,000 as income deprived in St Peter ward, which includes Devonport and Stonehouse, is ranked as the most deprived of 1150 wards in the region with regard to employment and child poverty, and the second most deprived in terms of income. 2.5 Wages, Incomes and Output Plymouth suffers from relatively low levels of wages, incomes and output. Average weekly earnings, though ahead of those in Devon, are 14% below the English average and 5% below the regional average. Per capita Gross Value Added (GVA) was 12% below the average for England in Household incomes per head in the late 1990s were significantly below the regional, national and Devon averages, while a relatively high proportion of adults were on income support. Gross Value Added in Plymouth grew by 26.8% between 1995 and 2001, significantly more slowly than regional and national rates of growth. 2.6 Structure of the Economy Plymouth s economy has historically been heavily dependent on the defence sector. Though defence employment has declined substantially in the last 20 years, it remains important to the economy with more than 4,000 employed by Devonport Management Ltd, an estimated 7,500 armed forces personnel, and additional employment in defence administration, suppliers and related businesses. The public sector is prominent in Plymouth s economy, with more than 29% of employees working in public 12 Plymouth City Growth Strategy

15 INTRODUCTION TO PLYMOUTH administration, education and health (Table 4). Employment in manufacturing is in line with the national average, but the distribution, hotels and restaurants, and financial services sectors are underrepresented in Plymouth. New jobs were created in most sectors of the economy between 1998 and 2001, but there was a 5% fall in manufacturing employment, and further losses of jobs in fishing. In contrast energy and water, financial services, transport and communication and other services enjoyed significant employment growth. However, much of this growth has been in call centre jobs, and there are concerns about the stability and career prospects that these offer. Plymouth had some success in attracting inward investment in the 1970s, 1980s and 1990s, and as a result a number of major multinational companies, especially in the manufacturing sector, are located in the city. However, the reliance on foreign owned companies has become a cause of some concern in recent years, as several firms have closed down local operations or shifted production overseas. The economy has become sensitive to remote decisions made in response to changes in global economic conditions. Of further concern is that many of these manufacturing operations involve limited local R&D or input of local knowledge. This can limit the Table 3:Wages, Household Incomes and Gross Value Added Plymouth Devon County South West England Average gross weekly pay, full time workers (, 2003) GVA per head (UK=100, 2001) Household income per head, (UK=100) GVA Growth ( , %, current prices) Income support claimants (% of adult population, Nov 2001) Source: New Earnings Survey, Regional Trends - ONS Plymouth City Growth Strategy 13

16 SECTION 2 value that they bring to the local economy, and the opportunities they offer for local people. It may also mean that they are less embedded in the local economy, more sensitive to low cost competition, and hence more at risk of relocation. In recent years, the increasing reliance on call centres has raised similar concerns. 2.7 Business Densities & Entrepreneurship Low levels of entrepreneurship and business densities are a significant concern in Plymouth. Latest SBS data record 195 VAT registered businesses in the City per 10,000 adult population only half the regional and national averages and 40% of the level recorded in Devon. Rates of new VAT registrations are also very low at 22 per 10,000 population in 2002, barely more than half the regional and national rates 9. Though the VAT data under-record the true rates of entrepreneurship, the conclusion that Plymouth has low numbers of businesses and rates of business start-up relative to its population is supported by other sources of data. With VAT de-registrations exceeding registrations in the mid 1990s, the overall number of businesses in Plymouth has declined slightly since 1994, while it has grown at the regional and national levels. However, there have been significant increases in the numbers of registered firms in business services and transport, and declines in wholesaling, retailing and fishing, and to a lesser extent manufacturing. A detailed study of the reasons for low rates of entrepreneurship, undertaken as part of the CGS research 10, identified the following key factors: Table 4: Employment by Main Industries, Plymouth Industry Employment, 2001 % of % of GB % Change in Employment Employment Employment, Agriculture and fishing % 1.0% -36.3% Energy and water % 0.8% 57.1% Manufacturing 16, % 14.0% -4.7% Construction 3, % 4.5% 4.6% Distribution, hotels 22, % 24.1% 2.1% and restaurants Transport and 5, % 6.1% 42.6% communications Banking, finance and 18, % 19.5% 43.8% insurance, etc Public administration, 33, % 24.1% 15.9% education & health Other services 4, % 5.2% 30.8% Armed forces (estimate) 7, % 0.7% n.a. Total 113, % 100.0% 14.1% Source:Annual Business Inquiry NOMIS; Plymouth City Council 14 Plymouth City Growth Strategy

17 INTRODUCTION TO PLYMOUTH Cultural factors notably low confidence, self esteem and aspirations, an employee culture and a tendency to risk aversion; The structure of the economy especially the dependence on large employers and the public sector; Socio-economic factors, especially deprivation, low incomes, and low rates of owner occupation; Low levels of skills and numbers of managers and professionals; Unrecorded entrepreneurship, and the size of the grey economy. A striking feature of Plymouth s economy linked to its low rates of entrepreneurship and business density is its reliance on major employers. 43% of the workforce is employed in workplaces with more than 200 staff, and only 15% in establishments of 1-10 employees. 2.8 Key challenges and priorities for the City Growth Strategy The review above suggests a number of priorities that the City Growth Strategy must address. These are to: Increase the city's prosperity (in terms of Gross Value Added and household incomes); Tackle deprivation in the city by encouraging wealth creation and ensuring that it reaches people in deprived areas; Stimulate rates of entrepreneurship, by encouraging more people to start businesses and helping them to do so; Encourage the development of indigenous businesses and local supply chains to broaden the business base and reduce reliance on major employers and overseas firms; Encourage the development of higher value-added, knowledge-based activities and occupations and reduce reliance on Table 5: Key Data on Business Densities and Entrepreneurship Plymouth Devon County South West England VAT registered businesses per 10,000 adult population, January 2003 New VAT registrations per 10,000 adult population, 2002 Change in VAT registered -1.4% -1.1% +4.3% +9.2% business stock, % of employment in 15% 27% 23% 21% workplaces with 1-10 employees, 2001 % of employment in 43% 22% 27% 30% workplaces with 200+ employees, 2001 Source:VAT data/sbs,annual Business Inquiry/NOMIS Plymouth City Growth Strategy 15

18 INTRODUCTION TO PLYMOUTH low cost operations such as call centres and assembly plants; Build on local competitive advantages to maximise opportunity and develop a stock of businesses that benefit from being located in Plymouth and are embedded in the local economy. 16 Plymouth City Growth Strategy

19 SECTION 3 3 Competitive Advantages and Disadvantages 3.1 Introduction A key starting point for City Growth Strategies is the idea that all urban areas however deprived have certain facets that provide them with potential competitive advantages. City Growth Strategies aim to build on these competitive advantages to encourage the development of business clusters that benefit from being located in urban areas. At the same time it is helpful to identify a city s competitive disadvantages, to enable the strategy to focus on activities where its strengths outweigh its weaknesses. This approach seems particularly appropriate for Plymouth, a city that faces substantial competitive difficulties and challenges, and which must make more of its undoubted strengths and opportunities if it is to prosper in future. 3.2 Strengths and Competitive Advantages Plymouth s key competitive strengths include: Environment and Quality of Life Plymouth s waterfront location and proximity to Dartmoor and the coasts of Devon and Cornwall provide outstanding opportunities for recreation, offering potential to attract visitors and lifestyle oriented businesses and employees; Setting - The quality of Plymouth s natural harbour explains its rich maritime history, and provides a location for modern day marine industry and watersports; Heritage - Plymouth has an immense history as a city of discovery, for which it is known throughout the world, and which offers opportunities for tourism; Size and Sub-Regional Presence - As the second largest city in the South West region, Plymouth has a strong role as a service, retail and leisure centre for Cornwall and Devon, but one that has yet to develop to its full potential; Workforce - The city has a loyal and effective workforce, and, though overall skill levels are below regional and national averages, there is a substantial pool of skilled labour in key sectors of the economy, such as engineering; Higher and Further Education Plymouth has a large and diverse HE and FE sector, including a growing University, which offers potential both as a skills and knowledge base and a means of attracting talent to the city; Marine Science Base - Plymouth s marine research centred on the activities of the University, Plymouth Marine Laboratory, the Marine Biological Association and the Sir Alister Hardy Foundation for Ocean Science - is world renowned, but its Plymouth City Growth Strategy 17

20 SECTION 3 commercial potential is under-developed; Medical Science Base - There is strong and developing expertise in medical science, due to the presence of Derriford Hospital (one of the largest in the UK), the University and Peninsula Medical School, and a growing cluster of firms centred on Tamar Science Park; Sectoral Strengths - Plymouth has strengths in the defence, marine, medical and engineering sectors; Sites and Premises - Though there are shortages in some areas (e.g. waterfront sites for marine uses), in general companies do not report difficulties in finding sites and premises for development, and this includes some brownfield sites in potentially desirable locations. 3.3 Weaknesses and Competitive Disadvantages Key competitive weaknesses are: Peripherality - Plymouth is generally perceived to be remote from the UK s main economic centres, and difficult to get to; Poor Transport Links - Transport is an over-riding concern of local companies, particularly the slow rail links and the lack of an air link to Heathrow; Lack of an Entrepreneurial Culture - In general Plymothians have a poor track record in forming new businesses and exploiting wider development opportunities, reflecting an employee culture and relatively low levels of aspiration and confidence; Reliance on Low Value Operations Many of Plymouth s manufacturing operations have fairly limited knowledge and skills requirements, while recent years have seen a growth in call centres all of which are vulnerable to overseas competition; Dependence on Major Employers - A large proportion of the workforce is employed in large organisations, including the public sector, NHS, dockyard and major manufacturers, and the economy is sensitive to their fortunes. Most larger manufacturers are branch plants of global companies, making Plymouth sensitive to decisions made overseas; Image - Plymouth s image both internally and externally is seen by businesses as negative, and lacking in vibrancy, creativity and innovation; Urban Environmental Quality - The city s natural setting and heritage are let down by examples of poor architecture and urban design, unappealing gateways, litter and anti-social behaviour; Deprivation - Deprivation is substantial and widespread, reflecting the limited opportunities open to many people, and in turn providing a barrier to their ability to access new opportunities; Skills - Plymouth s skills levels including basic as well as more advanced skills are below regional and national averages; City Centre - For a city of its size, Plymouth is perceived to have poor retail and leisure facilities, while the city centre lacks appeal to evening visitors; Business Engagement - There is a poor track record of engaging business in economic development, and the business community generally has low expectations of the public sector; Sectoral Weaknesses - Plymouth has been slow to develop expertise in certain activities especially computer services and various business services many of which have to be bought from firms outside the city. 18 Plymouth City Growth Strategy

21 COMPETITIVE ADVANTAGES AND DISADVANTAGES 3.4 Opportunities A variety of opportunities for Plymouth s economy are apparent, if the city can: Capitalise on strengths in the Higher Education sector, to support knowledge transfer and skills development in the wider economy; Capitalise on its environmental and quality of life benefits, by overcoming weaknesses and marketing itself more effectively to visitors, firms and employees; Use ICT effectively to overcome locational disadvantages and attract lifestyle businesses; Make the most of available funding, including Objective 2, SWRDA and UK Government programmes; Create a new sense of optimism, creativity and entrepreneurship; Redevelop the built environment,to make the most of the city s natural setting; Engage business in shaping the city s economic future; Develop the city s role as a sub-regional centre for business services, leisure and entertainment; Gain a larger share of the regional tourism market; Benefit from increased leisure spending, especially in marine leisure and outdoor pursuits; Develop stronger and more focused local business networks and supply chains; Redevelop brownfield sites effectively and to their full potential; Attract a relocating government department or agency, following the Lyons review; Achieve Mackay's plans for urban renaissance; Capitalise on the opportunity to strengthen the city centre economy through the pilot Business Improvement District scheme. 3.5 Threats Plymouth s economy also faces a number of potential threats, including: Global economic conditions - since many employers are foreign owned, the city is sensitive to any threat of a further downturn in the global economy; Increased competition from low cost overseas competitors, particularly if Plymouth fails to strengthen competitive advantage through skills and knowledge development; Relocation of existing employers, particularly call centres and manufacturing operations that could locate to lower cost overseas locations; Increased peripherality, if a failure to Plymouth City Growth Strategy 19

22 COMPETITIVE ADVANTAGES AND DISADVANTAGES improve transport links is accompanied by improvements elsewhere; Declines in defence spending and employment, which continue to support a significant proportion of economic activity; Skills shortages especially in engineering related occupations where the workforce is ageing and there are difficulties in attracting young people; Fragmentation of initiatives and a failure to integrate strategies. 3.6 Implications for the Strategy Plymouth has substantial competitive advantages on which to base future business growth, and many of these have yet to be exploited to their full potential. There are, however, also significant disadvantages. Some of these (e.g. image, urban environment) can be addressed over time, while others (e.g. peripherality) need to be accepted, and ways found to mitigate their impacts. This suggests that there is a need to focus on the development of activities that benefit from Plymouth s competitive strengths and which are not substantially disadvantaged by the city s weaknesses. Thus, CGS can target activities that benefit from Plymouth s environment and quality of life, or in which there is a strong intellectual capital base, while avoiding those that require a central location or incur substantial travel and transport costs. Plymouth will also make itself less vulnerable to competitive threats if it is able to diversify its economy, and to develop local competitive advantages based on knowledge, skills and location rather than cost. 20 Plymouth City Growth Strategy

23 SECTION 4 4 Vision and Strategic Objectives 4.1 A Vision for Plymouth s Economy Our vision is for Plymouth to develop: A more prosperous, dynamic and competitive economy that provides opportunities for all of its people; A stronger, more diverse and growing business base that benefits from the city s natural assets and competitive advantages, and takes a central role in the development of the city; A new culture of entrepreneurship, innovation and aspiration. 4.2 Strategic Objectives To realise this vision, four main objectives have been identified for the City Growth Strategy: A. To achieve business growth through the development of clusters and target sectors. B. To increase the rate of business start-ups, by promoting a culture of entrepreneurship and supporting the formation of new businesses. C. To improve the delivery and co ordination of business support and economic development initiatives. D. To ensure that the right conditions are provided for business growth, by working with partners to enhance the city s infrastructure, image and environment. The Plymouth CGS Action Plan, due to be published at the end of June 2004, will list a series of actions designed to achieve each of these strategic objectives. 4.3 Cross-Cutting Principles There is also a series of cross cutting principles that run through the strategy, are central to its success, and underpin each of its objectives. Many of the proposed actions are based on these themes. They are: 1. Business Engagement involving businesses more closely in the economic development process, and ensuring that actions under the strategy take account of their needs and priorities, and harness their expertise and experience. 2. Changing the Culture a common theme is the need for Plymouth to change its culture to raise its aspirations, confidence and self esteem, and project a positive image to the outside world. 3. Partnership a recurrent theme is the need for organisations concerned with business support, economic development and regeneration, as well as the private and voluntary sectors, to work together to develop new programmes and enhance the co-ordination and effectiveness of existing ones. 4. Economic Inclusion it is important that actions under the strategy provide opportunities for all of Plymouth s citizens and employees, help to tackle deprivation, and benefit disadvantaged communities. The strategy recognises that these communities represent an untapped resource and that business formation in these areas can provide significant economic and social returns. 5. Sustainability the strategy needs to be economically, socially and environmentally sustainable, achieving continuing business growth that does not place excessive demands on the public sector, benefits all sections of society, and maintains and enhances the quality of Plymouth s environment. Plymouth City Growth Strategy 21

24 SECTION 5 5 Clusters and Priority Sectors for Development 5.1 Background and definitions "A business cluster is a geographic concentration of interconnected companies 11 and institutions in a particular field." Clusters can include: Suppliers of specialised inputs such as components, machinery and services; Providers of specialised infrastructure; Customers; Manufacturers of complementary products; Companies in industries related by skills, technologies or common inputs; Educational and research institutions. The cluster approach is central to CGS in that it seeks to identify and develop economic activities that derive a competitive advantage from an urban location. Porter s work has identified a variety of benefits from the development of successful clusters. By establishing a critical mass of activity in a particular field, an area develops local networks, pools of knowledge and skills, and local supply chains and support services, which can together enhance competitiveness and productivity, drive innovation and stimulate growth in employment and creation of wealth. While business clusters are clearly beneficial, the extent to which they currently exist at the local level is a matter of some debate. In Plymouth, for example, there are examples of strong concentrations of activity in particular industries (boat building and repair, a variety of manufacturing activities), but relatively few examples of firms collaborating with each other or with research organisations, or of well-developed supply chains. As a result, it might be regarded as misleading (or at best aspirational) to claim the existence of true business clusters in the city. However, this strategy identifies a series of priority sectors that gain competitive advantages from being located in Plymouth, and where future initiatives to strengthen collaborative links between firms, educational and research institutions and business support agencies could further strengthen these competitive advantages. 5.2 Identifying Priority Sectors A variety of criteria were used to identify priority sectors for the City Growth Strategy. These examined the existing strength of these sectors in Plymouth, their growth potential, and their fit with local strategic priorities. The criteria used were: Size and critical mass. Local concentrations - using location quotients 12 to identify industries that are concentrated in the Plymouth economy. High LQs imply local competitive advantage. Recent growth - to identify sectors that are performing well locally. Growth opportunities examining regional and national forecasts for future sectors. Supply chains identifying sectors with strong local supply chains or the potential to develop them. Markets identifying sectors that sell a high proportion of their output outside the region/uk demonstrating dynamism and competitiveness, and offering 22 Plymouth City Growth Strategy

25 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT opportunities to bring income into the local economy. Fit with regional priority sectors identifying Plymouth s scope to contribute to the development of regional clusters, and to benefit from regional sector development initiatives. Fit with local strategies and initiatives the scope to complement and add value to existing strategies. Local competitive advantage - identifying sectors that secure competitive advantages from being based in Plymouth, and are not adversely affected by local competitive disadvantages. Scope for entrepreneurship opportunities for sectors to enhance entrepreneurship by increasing firm formation and survival rates. Wages, skills and career opportunities the extent to which sectors can offer opportunities for secure employment, decent wages and skills development. The full analysis against these criteria, by GHK and the University of Plymouth, is presented in a separate report 13. The analysis identified a long list of potential priority sectors. An analysis scoring these sectors against the key criteria is presented in Table 6. Based on this analysis, six priority sectors were identified for development in the city: Advanced Engineering; Business Services; Creative Industries; Marine Industries; Medical and Healthcare; Tourism and Leisure. Some of these sectors such as marine and medical - are already prominent and well established, but offer new emerging opportunities in the exploitation of science and technology. Others such as creative industries and business services are more aspirational, and there is some evidence of existing strength, but significant scope for future development. Advanced engineering could also be placed in this category, since there is a substantial engineering and manufacturing sector in the city, but only a handful of operations that could truly be described as involving "advanced engineering". Tourism and leisure is also a large sector, but one that has underperformed and has significant unexploited potential. The following sections profile the six priority sectors. They are based on the findings of the cluster analysis, and the business survey and focus groups, which involved firms in each of the six sectors. 5.3 Advanced Engineering Overview The sector comprises a variety of high value-added enterprises involved in mechanical, precision, electrical, electronic and communications engineering, serving diverse markets. Key industries in the SW region include aerospace, automotive and manufacture of measuring instruments and medical devices. There are significant overlaps with the marine and medical sectors. Collectively, companies in sub-sectors that involve advanced engineering employ Plymouth City Growth Strategy 23

26 SECTION 5 Table 6: Matrix Scoring Sectors against Key Criteria Size/ Existing Recent Future Supply Export Fit with Fit with Unexploited Scope for entre- Wages & career Notes critical concentration growth growth chains revenues RES local local prneurship opportunities mass prospects strategy competitive advantage Marine ** ** ** * ** * ** ** ** * * Fits many criteria. Strength is in ship and boatbuilding, future depends on diversification and exploitation of marine science (Advanced) ** ** * * ** ** ** * ** Range of engineering/ Engineering manufacturing operations, a few of which could be described as advanced engineering, others lower tech assembly type operations Telecoms ** ** ** ** ** ** ** Score misleading - rapid recent employment growth dominated by low wage call centre operations with uncertain future Food and * * * * * ** * * Strength only in certain Drink products Transport * * *? * * Fits City Vision but difficult to know how CGS could develop sector Medical and ** ** ** ** ** * * ** ** * ** Scores well against most healthcare criteria Creative and * * * **? ** ** * ** * Varied sector, undeveloped, Media growth prospects and good strategic fit Business ** * * ** ** * ** * Growth prospects, opportunity Services to close supply gap Tourism and ** ** ** * ** ** ** ** Low wages but unexploited recreation potential, strategy fit and growth prospects Construction ** * * * * * Growth opportunities but weak fit with other criteria Environmental *? **? * ** ** * * Fits several criteria but very little technologies here at present. Link with marine Key: ** Significant Strength * Partial Strength 24 Plymouth City Growth Strategy

27 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT more than 5,000 people in the City of Plymouth, excluding the marine sector. Many of these are branch plants of multi-national manufacturing companies. Only a minor proportion of activity could truly be described as advanced engineering, with most jobs involving a variety of manufacturing operations. Advanced engineering operations include major companies such as BAe Systems Avionics (manufacturing electronic equipment for aircraft), as well as a range of smaller engineering and design firms. Plymouth has a concentration of activity in a range of engineering based manufacturing activities, including manufacture of TV and radio receivers, industrial process control equipment, instruments for measuring, tools, electronic valves, bearings and gears, and steel tubes Reasons for Prioritisation Plymouth has developed a concentration of engineering-based manufacturing operations that is of considerable economic importance to the city. Though evidence of collaboration is limited, companies receive joint benefits through the development of a skilled workforce. Employers in the sector offer relatively high wages and decent career opportunities, though there is scope to move operations further up the value chain. Given the vulnerability of mainstream manufacturing operations to international competition and potential relocation, development of a knowledge-based cluster holds the key to the future of the sector. Advanced engineering is a regional priority sector, so there is scope for Plymouth to contribute to and benefit from regional sector development initiatives and clustering opportunities Trends and Prospects Recent trends in employment have been mixed, with some sub-sectors (manufacture of bearings and gears,tv and radio receivers, parts for motor vehicles and electrical distribution apparatus) experiencing growth, and others (manufacture of steel tubes, ventilation equipment, machine tools, machinery for paper, electrical equipment, electronic valves, instruments for measuring) shedding labour. There have also been some recent high profile plant closures. Future prospects at the national and regional level are for increasing output but declining employment, as productivity continues to grow. The prospect is therefore for enhanced incomes and higher value employment opportunities, rather than net job creation. Locally, while some companies expect to grow, there is also a risk of further job losses as companies move operations to lower cost locations overseas. Plymouth City Growth Strategy 25

28 SECTION Competitive Advantages Key competitive advantages of Plymouth identified by local firms include: The scale of existing engineering and manufacturing activity, and the opportunity to strengthen collaborative linkages; Strong workforce loyalty and lack of militancy, and a developing skills base; Under-exploited potential of the University s academic excellence in engineering Key Issues and Challenges Key issues facing the sector include: Its sensitivity to variations in the global economy, which have a major impact on the decisions of multi-national companies; Low cost competition from Asia Pacific and Eastern Europe, causing some firms to consider relocating manufacturing operations; Transport links and the peripherality of Plymouth as a business location travel times by customers and parent company managers are a concern, as are the costs of transporting components and finished goods; Skills shortages especially in relation to electrical, mechanical, electronic and software engineers, skilled fitters and machinists and exacerbated by the difficulty of attracting young people into engineering. Adding value by developing skills is seen as an important means of competing against low cost overseas operations. A perceived lack of critical mass in the sector, with weak relationships between firms and under-developed supply chains Existing initiatives Plymouth Manufacturers Group (PMG) represents the interests of larger engineering and manufacturing companies, and provides opportunities for networking and knowledge sharing. The DTI s Manufacturing Advisory Service provides advice to manufacturing companies, and is currently running a Lean Manufacturing Programme for 10 PMG companies. The ten projects have benefited from topic workshops and on-site support provided by MAS, and have encouraged networking and idea sharing among participating companies. Further initiatives to support manufacturing companies in the region are planned. SWRDA is planning to set up a world class Microsystems manufacturing facility in Plymouth and is looking for an operator to run it. It would provide full Microsystems commercialisation and manufacturing services to companies of all sizes. A regional Advanced Engineering Skills Project "Journey Through Engineering" part SWRDA funded for 3 years includes work with schools, university liaison, Apprentice of the Year competition, specialist sector courses and sharing of best practice. A Supply Chain Purchasing Development Programme was launched in March Priorities for CGS The priorities with regard to advanced engineering would appear to be to: Enhance the competitiveness of major employers, to reduce the risk of plant closures and relocations; Encourage the development of higher value operations based on local skills and knowledge to enhance competitive advantage; Encourage the development of local supply chains, strengthening linkages between firms and providing 26 Plymouth City Growth Strategy

29 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT opportunities for the growth of smaller companies; Support the start-up of new indigenous firms to broaden the supply base and reduce reliance on overseas decisions; Strengthen links with the University and other HE/FE organisations in the region, to encourage knowledge transfer, skills development and commercialisation of research. Encourage the start-up of new knowledge-based businesses among skilled workers released by downsizing, closures and outsourcing. 5.4 Business Services Overview Includes a variety of services provided to businesses, including banking, insurance, accountancy, legal, consultancy, commercial property, recruitment, machinery rental, computing, security and cleaning services. There are some overlaps with the creative industries, which include advertising and architectural services. Published statistics make the sector difficult to quantify, because of the difficulty of distinguishing between business and domestic markets - collectively the above activities employ more than 13,000 people in Plymouth, though that is an overestimate of true business service activity as it includes some services (e.g. banking, insurance, real estate, legal services) that are offered to both business and domestic customers. Most business services are underrepresented in Plymouth, although there are local strengths in industrial cleaning and rental of construction equipment. sector of the economy, with output and employment both growing strongly in recent years and expected to continue to do so in future. In view of its size and location, Plymouth is well placed to act as a service centre for Devon and Cornwall. However, though significant, business service activities employ a lower proportion of the workforce than the national and regional averages. Analysis of the local economy by the University of Plymouth South West Economy Centre has revealed that, while there is strong local demand for business services, there is a significant supply shortfall which results in services such as computing, banking and finance, advertising, real estate, market research, management consultancy and accountancy being bought from firms outside Plymouth. Closing this supply gap could potentially create several thousand new local jobs Trends and Prospects Employment across the variety of activities listed above grew by 14% between 1998 and Particular growth areas included business and management consultancy, courier activities, renting of construction Reasons for Prioritisation Business services are a significant growth Plymouth City Growth Strategy 27

30 SECTION 5 equipment, other computer activities, and investigation and security activities. Some activities, however, declined in employment, including renting of other machinery and equipment, development, sale and management of real estate, some financial services, accounting and bookkeeping, software consultancy and supply, and secretarial and translation activities. There has also been net growth in the number of firms in the sector unlike most other sectors, the number of new VAT registrations in Plymouth has consistently exceeded de-registrations in recent years. Future prospects remain good, with further growth in both GDP and employment forecast both regionally and nationally over the next five years. Locally, most of the firms participating in the business survey and focus group expected continued moderate growth Competitive Advantages Plymouth s size and location mean that it is well placed to serve as a business service centre for Devon and Cornwall. The local economy creates demand for business services, and there are opportunities for companies to supply markets elsewhere in the sub-region that lack Plymouth s critical mass Key Issues and Challenges The fortunes of the sector depend to a large extent on the development of the economy as a whole, as revenues are gained from supplying services to other businesses. However, there is also a significant local supply gap, so developing Plymouth s role as a business centre, and meeting more local demand locally, are also priorities. Businesses stress the role of public procurement in this respect, given the scale of the public sector locally. The purchasing policies of manufacturing branch plants were also raised as an issue. Addressing transport issues is also seen as significant, both in developing Plymouth s role as a service centre, and in encouraging growth in the economy more generally. Though there is not a general skills shortage, firms have reported difficulties in finding staff with more specialist legal, secretarial, accountancy and financial consultancy skills. Business services comprise a variety of individual activities and local firms do not generally see themselves as belonging to the same sector. Scope for collaborative ventures may therefore be limited Existing Initiatives There are few relevant cross cutting local initiatives. Business service firms are served by individual professional organisations (e.g. representing accountants and lawyers). The main cross cutting organisation is Plymouth Chamber of Commerce, which organises a range of training, networking and business support activities Priorities for CGS The key priority is to develop the role of Plymouth as a service centre, identifying opportunities to increase the proportion of local demand met by local firms. This might be achieved by addressing supply chains/procurement policies and/or by aiming to enhance the skills and capabilities of local firms. 5.5 Creative Industries Overview The creative industries are defined by the Department of Culture, Media and Sport as: 28 Plymouth City Growth Strategy

31 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT "those industries that have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property, comprising the following sub-sectors: advertising, architecture, art and antiques market, crafts, design, designer fashion, film and video, interactive leisure software, music, performing arts, publishing, software and computer services, television and radio." Together these activities took place at 366 workplaces and supported 3184 jobs in Plymouth in Major activities include architecture, publishing of newspapers, radio and TV activities and artistic/literary creation. Most creative industries are underrepresented in Plymouth, with the exceptions of newspaper publishing, radio and TV activities, motion picture projection, reproduction of computer media and artistic and literary creation, all of which account for a greater proportion of employment locally than nationally. The creative industries sector is fragmented, with most activities dominated by small firms, including some of the larger sub-sectors such as architecture and software consultancy. However, some activities such as newspaper publishing,tv and radio and cinema are much more concentrated. Major employers in Plymouth include the Western Morning News, Carlton TV, the BBC and the Theatre Royal. the Regional Economic Strategy, while there is a strong emphasis on cultural development in the draft Plymouth City Strategy Trends and Prospects Across the creative industries, employment in the city increased by 25% between 1998 and Much of this growth was in TV and radio (up 110% to 512 jobs) and architectural/engineering services (up 43% to 854). In addition, there was rapid growth in a number of less prominent activities such as motion picture production and projection, market research and various printing and publishing activities. Employment declined in publishing of journals, software consultancy, museums and photographic activities. Some of the creative industries have experienced difficult market conditions recently, because of the economic downturn and its effects on advertising expenditure. The creative industries are expected to experience significant long-term growth, in line with increased expenditure on leisure and lifestyle goods and services Reasons for Prioritisation Creative industries are a growing sector of the economy. Although under-developed in Plymouth, there are significant local strengths to build on, especially in TV, radio and newspaper publishing. There is also a good strategic fit, with creative industries identified as an emerging priority sector in Plymouth City Growth Strategy 29

32 SECTION Competitive Advantages Plymouth is an established media centre, and has the potential to develop its role in provision of arts and leisure facilities for the wider sub-region. Plymouth s natural assets provide a backdrop for the creative industries, and have the potential to offer a high quality environment in which firms and individuals can locate. Environmental quality is important for many of the creative industries Devon and Cornwall provide important destinations for the film and TV industries. A number of HE and FE establishments contribute to Plymouth s cultural and creative knowledge base including Plymouth College of Art and Design (PCAD), the University, Plymouth College of Further Education (PCFE) and the College of St Mark and St John (Marjon) Key Issues and Challenges Plymouth s creative industries are fragmented, and firms identify a need to develop a critical mass of activity, and strengthen business networks and supply chains, operating at the regional level where appropriate. There is a perception that many creative and cultural initiatives are public sector led, and that there is a need to strengthen private sector engagement. Key challenges facing Plymouth as a location for creative industries are the need to: Improve its image as a "creative city"; Retain people with creative skills and talent, especially graduates, many of whom leave Plymouth; Make more of the city s natural assets, and develop a more stylish and vibrant feel to the city; Tackle skills shortages in specialist areas, e.g. graphic designers, camera and sound specialists, IT experts and theatre technicians Existing Initiatives Plymouth Media Partnership (PMP) was established in November 2003, covering the city s Travel to Work Area (TTWA).The Partnership has appointed a co-ordinator tasked with researching the media and digital content industries (especially TV and film), promoting collaboration, and developing a programme of customised business support. It is financially supported by SWRDA through SW Screen. As at February 2004, there were 140 people registered as members. Further funding has been made available (April to June 2004) which will be used to fund bursaries to enable local businesses to attend conferences and exhibitions in UK or abroad and disseminate knowledge gained on their return. Plymouth Arts Network is an umbrella body representing artists and arts organisations in the city. Last Friday continues to provide networking opportunities for individuals involved in creative businesses. A web site has recently been launched. The University has investigated the feasibility of developing a cultural quarter in the North Hill area, by expanding and relocating existing facilities (museum/art gallery, arts centre, cinema) and developing new ones, including a new library, Faculty of Art, Architecture and Humanities, extension of Plymouth College of Art and Design, incubation facilities, studios, workshops and a new students union and performance venue. This would be accompanied by a cultural industries development strategy and business support programme. A cultural strategy is being developed for 30 Plymouth City Growth Strategy

33 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT the City. The sector is also one of three targeted for skills development by the Plymouth Learning and Work Partnership. PCAD launched the "Creative Entrepreneurs" initiative in March The project aims to bring business training to creative companies across broadcast, new media arts. Plymouth City Council is working on a bid to support a new Arts and Maritime Festival to start in 2005, focusing on crafts and music. The Mackay plan for redevelopment of the city sets out a new vision for Plymouth s built environment, including enhanced architecture and urban design, and new cultural facilities, such as a new art gallery on the Hoe Priorities for CGS Key priorities would appear to be to: Strengthen networks and collaborative initiatives across the creative industries; Enhance private sector participation in cultural initiatives; Engage companies in projects and events designed to enhance the image of Plymouth as a centre of creativity; Develop specialist incubation, business support and skills development initiatives; Link with wider initiatives aiming to enhance Plymouth s image and profile, and the quality of its built environment. administration; fisheries and marine leisure. There are some overlaps with the advanced engineering and tourism sectors. Studies have estimated that there are 9500 jobs in the marine industries in Plymouth Travel to Work area, and a further 4,000 defence jobs. The majority of employment is in ship and boat building and repair, which provide 5,800 direct jobs in the City of Plymouth. There are also significant concentrations of activity in building and repair of pleasure boats, and in water transport activities. The sector is dominated by two major employers - DML and Princess Yachts, involved in ship repair and boat-building. Plymouth also has a substantial marine science sub-sector, dominated by the University, Plymouth Marine Laboratory and the Marine Biological Association, which employ 345 people. Other prominent employers include Brittanny Ferries, Associated British Ports, the National Marine Aquarium and the Mountbatten Centre. There is also a large number of smaller companies involved in a variety of activities, including ship and boat building, manufacture and supply of equipment, 5.6 Marine Industries Overview The marine industries comprise a variety of activities connected with the sea, including ship and boat building/repair; marine engineering; marine construction; environmental technologies; communications; ship management; agency and freight forwarding; port operations and Plymouth City Growth Strategy 31

34 SECTION 5 fishing, port activities, marine leisure and water transport Reasons for Prioritisation The marine industries are a priority sector because of their scale and economic importance to the city. Strong local concentrations of activity and recent growth performance also point to significant local competitive strengths, although some potential competitive advantages such as the strength of the marine science base have yet to be fully exploited and offer significant growth potential. Although large employers dominate the sector, there is evidence of local clusters developing to supply the boat-building industry. Marine industries are also a regional priority sector, and there is therefore scope for Plymouth to contribute to and benefit from regional sector development initiatives Trends and Prospects Between 1998 and 2001, employment growth occurred in building and repair of ships, building and repair of pleasure boats, sea and coastal water transport, and other supporting water transport activities. There was a fall in employment in fishing. Mainstream marine markets (ship and boat-building and repair, naval defence) are mature and offer limited growth opportunities. However, there are a number of growth markets including renewable energy, environmental goods and services, coastal defence, communications and IT, aquaculture, biotechnology, marine leisure and port activities Competitive Advantages Plymouth s strengths in marine industries are built on its situation in a natural harbour, the quality of its waterfront and marine 32 Plymouth City Growth Strategy

35 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT environment, and its rich maritime heritage. There is evidence of clustering in the boat-building sub-sector, with welldeveloped local supply chains, a pool of skilled labour, frequent collaboration between firms, and examples of contact between companies and the HE sector, especially the Advanced Composites Manufacturing Centre at the University. Thus there is evidence that firms gain competitive advantages from being located near to each other. A further potential source of competitive advantage is the city s internationally renowned marine science base. A cluster of research organisations - including Plymouth Marine Laboratory, the Marine Biological Association, the University of Plymouth and the Sir Alister Hardy Foundation for Ocean Science have strengths across a wide range of marine science applications. These organisations work together as the Plymouth Marine Sciences Partnership, but the commercial potential of their combined strength has yet to be developed Key Issues and Challenges The CGS research identified a number of key issues for the development of the sector: The need to improve the internal and external image of Plymouth as a centre of maritime excellence rather than a Naval base; There is a perception that the sector and its economic impact are under-valued in Plymouth, and that too little is done to provide targeted support or to encourage maritime events; Firms are concerned about the shortage of waterfront premises and conflict between residential and industrial uses, and this is constraining the development of some of them; Skills issues are a constraint to development, especially shortages of craft and engineering skills in the boat-building sector.the workforce is ageing, and young people are no longer attracted to the sector. Smaller firms in particular also find training apprentices very expensive Existing Initiatives A range of collaborative initiatives already exists. Marine South West has been established by the RDA to support the development of the marine sector regionally. Its initiatives include Schools Challenge, which aims to interest young people in marine engineering by providing schools with the materials and expertise to produce a prototype vessel. Maritime Plymouth provides a local forum for organisations active in the marine sector. Plymouth Marine Network was launched in March 2003 and is now part of Maritime Plymouth. It will be financially supported by SWRDA through Marine SW on completion of Business Plan and confirmation of RDA funding. PMN has launched a programme of training events relating to a variety of aspects of marine engineering. Plymouth is to host a Centre of Marine Engineering Excellence to be based at Princess Yachts and accessible to local marine SMEs. This is one of three being set up by Marine SW, the others will be in Falmouth and Poole. There are proposals for a marine science and technology park, and a steering group (comprising marine science and economic development interests) and project manager have been appointed to develop detailed proposals. The sector is one of three targeted for Plymouth City Growth Strategy 33

36 SECTION 5 skills development by the Plymouth Learning and Work Partnership Priorities for CGS Priorities for CGS would seem to be to identify ways of: Facilitating closer engagement between marine firms and the public sector, to ensure that provision of sites and premises, skills development and business support are tailored to the needs of marine companies; Capitalising on Plymouth s marine strengths especially its environment and maritime heritage and using these to promote a more positive image for the city; Strengthening links between marine and other sectors, including tourism and advanced engineering; Making the most of opportunities in marine leisure; Capitalising on growth opportunities in marine science and technology. 5.7 Medical and Healthcare Overview The sector supplies a variety of medical and healthcare goods and services. It includes the manufacture and distribution of goods such as pharmaceutical products, medical and surgical equipment and instruments. It also includes the provision of services by the public and private sectors, through hospitals, medical, dental and veterinary practices and nursing homes. There are some overlaps with the advanced engineering sector, e.g. in the manufacture of medical instruments. Together these activities employ some 13,500 people in the City of Plymouth nearly 13% of all employees. Most of these jobs are in public health activities, especially hospitals and nursing homes. A variety of medical and health related activities are relatively more important in Plymouth than in the national economy. These include the manufacture of medical and surgical equipment, retail sale of medical/orthopaedic goods, hospital activities and social work activities with accommodation. Others are underrepresented (wholesale of pharmaceutical goods, dental practices) or absent (manufacture of pharmaceutical products and preparations). Key employers are Derriford Hospital, the private Nuffield Hospital, the Peninsula Medical School, and manufacturers such as Becton Dickinson. Engineering companies such as Barden and Algram manufacture components for medical applications. There is a collection of small medical technology companies in and around Tamar Science Park and Langage Industrial Estate Reasons for Prioritisation The medical sector is growing and is of 34 Plymouth City Growth Strategy

37 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT considerable importance to Plymouth s economy. As well as public sector health services, Plymouth is developing a growing cluster of knowledge based manufacturing and service activities, many of which are linked to the work of the University, hospitals and/or the advanced engineering sector. Employment opportunities are many and varied, including highly skilled, high waged jobs for medical scientists, health professionals and manufacturing specialists Trends and Prospects Employment in the sector grew by 22% in Plymouth between 1998 and 2001, with particular growth areas being the retail sale of medical/orthopaedic goods, wholesale of pharmaceutical goods, hospital activities, and social work activities with accommodation. There was a slight decline in employment in the manufacture of medical and surgical equipment and dental practices. Further growth in the demand for medical and health products and services is expected nationally and regionally Competitive Advantages Plymouth is very much a health centre for the sub-region, and Derriford is one of the largest hospitals in the UK. A knowledgebased cluster is forming around the activities of the hospitals, the University and Peninsula Medical School, and Tamar Science Park.This cluster is concentrated in the Derriford area Key Issues and Challenges Key issues and challenges identified by local companies are: Networking no formal network or organisation exists to link private sector medical firms, or to facilitate contact with the NHS; Skills shortages there are difficulties in recruiting medical (e.g. junior doctors and nurses), scientific and research staff which could constrain development of the sector; Transport especially traffic congestion in the Derriford area, where the sector is centred, as well as poor links between Plymouth and other cities; Finance particularly for faster growing companies; Uncertainties resulting from changes in the regulatory environment; Challenges in doing business with the NHS - including the uncertainty of future demand, limited local procurement, and perceived difficulties in engaging with the NHS from outside Existing Initiatives A range of existing initiatives includes expansion of Tamar Science Park, the new Medi-park, new hospital buildings at Derriford and the Nuffield, and the development of the Peninsula Medical School. The medical sector is also one of three sectors targeted for skills development by the Plymouth Learning and Work Partnership. A 2-year post is being funded to broker needs/provision for training (and available funding) within the NHS. The Universities of Plymouth and Exeter have submitted a HEIF 2 consortium bid "Peninsula Health Science Enterprise (PHASE) Programme" to creative a single focal point for health expertise for business in the sub-region, provide professional development for health-related staff across the region, fuel the generation and exploitation of health related intellectual property and build capacity to transfer and apply knowledge to generate economic benefits. Plymouth City Growth Strategy 35

38 SECTION Priorities for CGS Priorities for the City Growth Strategy appear to be to: Strengthen networks between medical sector companies, and facilitate closer links between firms, the NHS and the University; Ensure that business support and skills development meets the specific needs of the sector; Encourage engagement of the NHS in the development of the sector, assessing opportunities to facilitate collaborative links and develop local supply chains; Encourage the spin-off of commercial opportunities created from R&D in the NHS. 5.8 Tourism and Leisure Overview The tourism and leisure sector comprises a variety of activities that provide services to visitors and locals, including hotels and other accommodation providers, restaurants, transport services, retailers, visitor attractions and entertainments. Some of these sub-sectors (e.g. hotels) are entirely tourism focused, while others (e.g. restaurants, shops and entertainment) cater for locals and visitors alike. An economic impact study undertaken by South West Tourism estimated that tourism expenditure in Plymouth totalled 308 million in 1999, supporting 7,806 full time equivalent (FTE) jobs, of which 5,226 FTE are direct jobs. Total employment was estimated at 10,669 jobs, 9% of Plymouth s total 14. Plymouth is less of a tourism centre than many other parts of Devon and Cornwall. As a result, a range of tourism-related activities are under-represented in the city, including restaurants, hotels and motels, travel agencies, and scheduled air transport. There are local strengths in sea and coastal water transport and car rental. The sector supports a large number of businesses of varying sizes, including hotels, 36 Plymouth City Growth Strategy

39 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT guesthouses, restaurants, shops, visitor attractions, marine leisure services and transport operators. Key tourist attractions in the city are the National Marine Aquarium, Plymouth Dome and Saltram House Reasons for Prioritisation Tourism and leisure is an economically important sector in Plymouth, although there is significant under-exploited potential. The city has not made the most of its environmental assets, maritime heritage, or role as a transport hub and sub-regional shopping and service centre. The tourism market in Devon and Cornwall continues to grow, and Plymouth has the potential to benefit from this growth and to gain a larger share of the market. Since the tourism and leisure sector supports large numbers of relatively small firms, it offers opportunities to promote entrepreneurship and to reduce the economy s reliance on large employers. Tourism is identified as a priority sector in the Regional Economic Strategy Trends and Prospects Tourism and leisure is growing in economic importance in Devon and Cornwall, though recent performance of the sector in Plymouth is mixed. There was a 4% reduction in employment in hotels and motels in Plymouth between 1998 and 2001, but a 3% increase in jobs in restaurants, 29% in travel agencies, 50% in car rental and 6% in sea and coastal water transport. Further growth is forecast in the regional tourism and leisure market, with employment in hotels and restaurants expected to increase by 5% between 2003 and Competitive Advantages Plymouth has a number of competitive advantages as a centre for tourism and leisure, including its: High quality environment and natural setting; Outstanding maritime heritage; Potential as a major centre for marine leisure yachting, diving and other watersports; Role as a transport hub many visitors pass through the city to use the cross channel ferry, intercity rail and coach services, or to reach Cornwall by road; Large population - offering potential to develop leisure and entertainment services that serve both the local population and the sub-regional tourism market Key Issues and Challenges There is a strong feeling among local tourism and leisure firms that Plymouth is failing to make the most of its potential as a tourism destination. Key issues are: The image of the city and a failure to promote a distinctive and positive image to potential visitors; Transport issues especially poor rail and air links but also some concerns regarding car parking and transport services within the city; Environmental issues such as the quality of the built environment in general, and the gateways into the city (e.g. train and bus stations) in particular; The need to make more of the Barbican and Coxside area, and resolve local environmental problems (such as litter, anti-social drinking, transport and parking issues, under-developed retail potential); Attractions and events a perception that the city lacks things to do; Plymouth City Growth Strategy 37

40 CLUSTERS AND PRIORITY SECTORS FOR DEVELOPMENT Challenges in marketing the city and its for CGS should be to engage the private attractions, especially given the limited sector in tourism development efforts. budgets available. Particular priorities for business engagement might be in: Existing Initiatives Developing a strategic vision for tourism A number of associations and collaborative in Plymouth (linked to the emerging ventures are in place already, including regional tourism strategy 15 ), and Plymouth Attractions Group, Premier implementing actions to achieve this, Hotels Group, Plymouth Hotels & Guest through a strategic tourism forum; Houses Association (for smaller hotels), Involving the creative industries in public Plymouth Personal Services (for owner- art and environmental improvements, occupied guest houses), and Plymouth focusing on the gateways to the city; Hotels & Caterers Association. Plymouth Encouraging firms to take a leading role in Marketing Bureau, funded by the Council the development of festivals and events. and business partners, is the city s official tourism agency, responsible for marketing and visitor information. Plymouth does not have an up to date tourism strategy. The last tourism marketing and development strategy was developed for the 1990s, and is in great need of revision. Plymouth City Council s recent Best Value review highlighted the need for a strategic forum to develop a coherent vision for tourism in the city and develop a policy to achieve this. Companies involved in the CGS business survey and workshops supported this view Priorities for CGS Many of the priorities for tourism development in Plymouth cannot be addressed by the City Growth Strategy alone they require wider initiatives relating to infrastructure, environmental enhancement, image and marketing, and the development of events and attractions. They will have to be addressed by the City Strategy, and in future by a dedicated tourism strategy. At this stage the priority 38 Plymouth City Growth Strategy

41 SECTION 6 6 Business Environment Issues 6.1 Key Issues An indication of Plymouth s performance against key criteria affecting businesses is available from the CGS business survey 16. Figure 1 examines the importance to firms in Plymouth of a range of business environment issues, while Figure 2 rates Plymouth s strengths and weaknesses against the same criteria. Figure 1 demonstrates that the skills of the local labour force are a leading issue for companies in the priority sectors. Transport links also rank highly on the list of factors important to firms in the area. Interestingly, networks of similar companies and access to local suppliers were seen as the least important issues to firms surveyed, further evidence that clusters have yet to develop in most of the priority sectors. Figure 2 shows that while transport links Figure 1: Importance of Different Issues to Firms in Plymouth Mean score out of 5 given by 53 firms in CGS Business Survey (1 = very unimportant, 5 = very important) Plymouth City Growth Strategy 39

42 SECTION 6 are ranked as one of the most important issues to firms, Plymouth is perceived to perform worse in relation to transport than to any of the other criteria. Access to markets and the entrepreneurial culture also scored poorly. Clearly, firms perceive that a major strength of the city is its quality of life, which was the highest scoring factor. Major issues affecting the business environment in Plymouth are as follows: Transport. Poor transport links and services between Plymouth and other cities is one of the key concerns of business. Air, rail and road links are held to be poor, and there is a perception that this restricts trade and inward investment. Though enhancing strategic transport links is beyond the scope of this strategy, there is also demand for local improvements (e.g. improvement of the railway and bus stations and of car parking facilities). While transport issues are a concern for all sectors, they also suggest that there is merit in concentrating on less transport intensive activities, such as knowledge-based activities, local services, and low volume high value manufacturing. Plymouth s Image. There is a widespread perception that, as a city, Plymouth has an "image problem". While the quality of life is high, external and internal perceptions of the city are often negative. Reasons for this are complicated, but reflect not just the physical environment but also the "atmosphere" of the city and a perceived Figure 2: Strength of Plymouth Against Key Criteria Mean score out of 5 given by 53 firms in CGS Business Survey (1 = very poor, 5 = very good) 40 Plymouth City Growth Strategy

43 BUSINESS ENVIRONMENT ISSUES lack of vibrancy and energy.there is also a common perception that the city does not capitalise on the assets that it does have. If perceptions are low, this is partly because the best aspects of the city are not well promoted. This has an impact on business in different ways, making it harder to attract or hold tourists, investors, entrepreneurs and employees. Sites and Premises. In general firms in Plymouth do not see a shortage of sites and premises as a major constraint to business growth, although this is a problem in some areas. For example, the limited supply of waterfront sites creates conflicts between housing and industrial uses, with concern expressed by some marine companies that this restricts their ability to grow. Some companies are also dissatisfied with the planning system, and especially the amount of time taken to consider applications. Entrepreneurship. The problem of low rates of entrepreneurship discussed in Section 2.7 of this strategy is widely recognised by businesses. This is seen as reducing the vibrancy of the local economy and the business opportunities it offers, although it can also benefit existing firms by reducing local competition. Business Engagement. There is a general feeling amongst the business community that Plymouth has a poor track record in engaging them in the economic development process. While there is some appetite and enthusiasm for engagement, Plymouth City Growth Strategy 41