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It is important not to get too gloomy about the UK’s north-south business divide. Companies may be thinner on the ground in some parts of the country, but those of any size tend to trade nationally or internationally, so their location does not hold them back.
Businesses that serve local markets are the most vulnerable, particularly in regions with a large public sector workforce, where redundancies may depress demand. But most companies around the country face similar issues of raising finance and deciding when and where to invest.
In 2002-08, high-growth companies – accounting for only 6 per cent of all UK companies employing 10 or more people – generated 54 per cent of jobs created by existing businesses, according to the National Endowment for Science, Technology and the Arts, and the good news for the regions is that these “gazelles” are quite well spread. Experian, the business information company, found that, up to the crash, Scotland, north-east England and Northern Ireland had higher concentrations of “growth champions” than the south.
During the recession, sales of services in London and Scotland were the hardest hit, according to the British Chambers of Commerce, and manufacturing suffered in north-east England, Yorkshire and the West Midlands.
But business confidence in all regions is now at different stages of recovery.
Take Holiday Extras, an airport hotel and parking provider based in Kent that operates across the UK and Germany, with a turnover of £170m ($276m). It was hit by the travel industry downturn, closed two of its nine carparks (in Manchester and Cardiff) and shrank its staff from 950 to 700. Now, however, a new management team has used the opportunity to rethink strategy.
“We are working hard to turn [round] a 28-year-old business and pretend we are a start-up,” says Matthew Pack, chief executive. It now sees itself as a customer technology business, using the latest techniques to offer add-ons over the internet.
From its past bookings, Holiday Extras concluded that 80 per cent of its profits came from 30-40 per cent of customers – notably families. So, the focus is now on offering child-friendly hotels with free cots and baby monitoring services, family insurance packages and the ability to book children into an adjoining room. The company aims to double its profits over the next five years.
Similar reappraisals have been going on across the UK. Lawrence Tomlinson, a champion race-car driver, runs LNT Group, one of Yorkshire’s fastest-growing enterprises – a mini-conglomerate that spans care homes, cars and chemicals.
Turnover, at £105m, has grown by 90 per cent a year for the past three years, helped by a return to running care homes, an industry Mr Tomlinson had left when he sold a previous company for £180m in 2007.
His biggest business is building homes, but potential clients could not get bank debt during the recession, so Mr Tomlinson started managing them too. His workforce has grown by 700 to 1,200 over the past 18 months, and he expects to add 800 jobs a year for at least the next five years.
Tangerine Confectionery, a Blackpool-based company launched in 2006, is now the UK’s biggest independent sweetmaker, having acquired businesses from Burton’s Foods and Cadbury. It makes historic brands such as Butterkist popcorn and Barratt’s Sherbet Fountains, and employs 1,300 – including 50 jobs created by moving production of Fruit Salad and Black Jack Chews sweets from Spain.
Steven Joseph, chairman, believes Tangerine can grow to between 1,500 and 1,600 staff and double its profits in five years if it finds a strategic investor. Those jobs would be created in northern England, where Tangerine has six of its seven factories and where confectionery manufacture is increasingly concentrated.
The recovery of manufacturing is boosting businesses in some of the regions that had been hard hit by the recession – such as Acme Whistles, a Birmingham company founded in the 1860s that employs 65 people (it made the whistles used by the crew of the Titanic). Acme, with a turnover of £9m, exports 80 per cent of its production, and export orders rose by 17 per cent last year, mainly to Brazil, South Korea, China and Vietnam.
Now it is increasing investment in plating and polishing equipment so it can sell new products such as children’s christening gifts. “Firms that have survived in the West Midlands must have something to offer,” says Simon Topman, chief executive. “We have a solid base to build what I believe should be good growth in the future.”
For the UK’s less buoyant regions, a huge amount now depends on the ability – and determination – of such companies to invest and grow.