Key points
- Aston Martin committed to £200m manufacturing plant in South Wales
- Supply chain for Ford’s Bridgend plant amounts to 10% of local market
- Existing sites poised to benefit and deal breathes life into enterprise zone
The news that Jaguar Land Rover is to invest another £100m in its Castle Bromwich manufacturing plant has cheered the Midlands auto sector. It also came as a relief, because Aston Martin’s decision to move away from the Midlands to a 90-acre site in relatively cheap South Wales had given the sector a nasty shock.
“Land just isn’t coming through quickly enough in the West Midlands,” warns Simon Norton, Birmingham-based director at Colliers International. “That’s pushing prices up to a point where companies such as Aston Martin look elsewhere. The auto sector doesn’t all have to happen in the Midlands.”
Meanwhile, down at St Athan in the beautiful Vale of Glamorgan, excitement is rising as recruitment begins. Aston Martin says the Brexit vote will not derail the £200m project, which sees it occupy three so-called super-hangers previously owned by the Ministry of Defence. Construction is set to begin next year, with full vehicle production commencing in 2020.
Big spin-offs for the supply chain, and hence for industrial property? Definitely, says Robert Ladd, Cushman & Wakefield’s Welsh industrial and logistics director. The auto sector is one of five economic development priorities for the Welsh government and it will make sure there are spin-offs through its Source Wales initiative, says Ladd.
“The supply chain for the Bridgend Ford plant probably amounts to about 10% of the local industrial market – perhaps it’s similar around Toyota Deeside – because the supply chain usually accounts for as many jobs as the car plant itself,” says Ladd.
There are no known requirements yet – it’s early days – and for now the immediate neighbourhood is not well provided with space. However, that could begin to change soon, following local plan land allocations. The Vale of Glamorgan Local Development Plan allocates 1,152 acres for employment use until 2026, of which 730 acres are in the St Athan part of the Cardiff Airport & St Athan enterprise zone.
Aston Martin suppliers might look slightly further afield to Treforest or, more likely, Bridgend, where they will also find workers with the right skills.
Big winners could be Columbia Threadneedle’s 300-acre Bridgend estate (Threadneedle declined to comment), while Robert Hitchens’ Central Park site is also tipped with space for a 100,000 sq ft unit and two smaller units of 15,000 sq ft and 35,000 sq ft. The 1,200 acres of the Penllyn Estate might also benefit.
Gareth Hooper, Cardiff-based chief executive at DPP, sees other spin-offs. The St Athan plant will breathe life into the local enterprise zone, he says.
“The Cardiff Airport & St Athan enterprise zone has been in existence since 2012 and there’s still a degree of uncertainty – to be polite – about what it means and what it is delivering, and the Aston Martin deal helps answer that,” he says. “It seems to be about engineering – whether aerospace or auto sector.”
A strategic plan for the zone – focused mostly on the airport, which the Welsh government bought in 2013 for £52m – was published in July 2015. There are 493 developable acres at St Athan.
“This is basically in a rural area, and the closest settlement of any size is Barry, but if this area is to support more industry, more auto and aerospace development, and become a national hub, there may be a need to invest in infrastructure,” he says.
So far, it’s no more than chat. Nobody yet knows whether Aston Martin is a transformational move – or just another here-today-gone-tomorrow inward investment of the kind Wales has seen too often.
John Newton, partner at Tuffin Ferraby Taylor, which is advising Legal & General on the St Athan interests, says: “What is now important is that the Welsh government uses this as a catalyst to secure further inward investment.”
There’s not a soul in South Wales who wouldn’t agree with that.
No more St Athans?
Could Brexit mean the Welsh government isn’t able to offer the kind of (large but undisclosed) offers that tempted Aston Martin to St Athan?
Robb Ladd at Cushman & Wakefield fears that could be the case. “You have to ask yourself, if the Aston Martin deal had come a year later, would it have happened? The future of this kind of deal depends on whether the UK and Welsh governments want to directly support south Wales,” he says.
Yet even without direct grant support, south Wales has advantages. Average wages are about 5-6% lower in Wales than in the West Midlands – and lower still in some parts of West Glamorgan.
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