Economic attractions: Polish tin can manufacturer Canpack’s decision to start operating in Scunthorpe is a sign of the times
Could Yorkshire & the Humber become a low-cost manufacturing alternative to Eastern Europe? Many will howl with derision at the suggestion, but this has become a reality for one Polish firm, tin can specialist Canpack. In December, the firm swapped Kraków for Scunthorpe, signing up for 450,000 sq ft at Opus Maximus.
The reasons were purely economic. Although details of the deal remain confidential, the shed was initially marketed with a guide price of £2.50 per sq ft. Compare this with Polish industrial rents of around £4 per sq ft (albeit for prime stock), quoted in Invesco’s European market outlook report at the end of last year, and the attractions are clear.
When Canpack settled on the former MFI factory in Scunthorpe, Lincolnshire, it was attracted by the power supply – nearly four times the “average” amount for a shed of this size.
The company’s agent, Andrew Gent of Gent Visick, says: “The company’s main customer base is in the UK and, ultimately, it came down to the cost of transporting a tin can as the finished product all the way from Eastern Europe into the UK. The rising cost of diesel, increased land prices in Eastern Europe, and growing labour costs – all the associated costs were too great.”
This Polish incursion is not the only sign that manufacturing is beginning to stage a comeback.
Despite the Leeds Chamber of Commerce reporting a 19% fall in first-quarter sales in the manufacturing sector – the lowest level for nearly two years – forecasts for profits are up. By the end of Q1, manufacturers in Leeds, West Yorkshire, expected a 20% improvement in profits and a 3% increase in the size of their workforces.
And Gent can reel off a list of manufacturing companies that are looking for space in the region or have recently settled there. These range from hydraulic systems manufacturer Oilgear Towler to transformer producer Winderpower, which acquired 80,000 sq ft in Pudsey, West Yorkshire.
“With the strength of the pound against the dollar, we are turning from a net importer to a net exporter, and are starting to see one or two more enquiries creeping in,” says Gent.
At this stage, companies are looking for buildings between 100,000 sq ft to 200,000 sq ft.
Few would predict a manufacturing boom, especially as mega-shed occupiers continue to target the region (see below), but in hard times any fledgling recovery is being welcomed.
Controversy as monster shed gets go-ahead
The largest shed in the UK has landed in South Yorkshire. Marks & Spencer, in a joint venture with ProLogis, is to build a triple-decker, 69ft-high, 4m sq ft monster distribution centre in Bradford.
The application was cleared by Bradford council early last month, and has now been given the nod by the secretary of state.
But should it have been given planning permission? The debate is now largely academic, but the issue has rankled with some local agents. They claim that the land on the former West Bowling Golf Club on Rooley Lane, three miles south of the town centre, falls under local policy known as E7. This states that “large storage and distribution warehouse development (of use class B8) will not be permitted unless it is directly related and/or ancillary to local manufacturing and distribution processes”.
One agent says: “When the site was put to market, everyone went to see Bradford council and asked if there was any chance of getting the planning conditions changed, and were turned down. Suddenly, Marks & Spencer comes along and it is in.”
Yet most agree that Bradford council would have been mad to turn away the occupier and its 3,000 jobs.
Mohammed Yousuf, area planning manager at Bradford council, says: “ProLogis has clients lined up for the large warehouse and, because of its size, we are not going to find anyone else to take it.”
ProLogis will pay nearly £600,000 to the Highways Agency to improve signage and motorway connections, with nearly half ofthis going towards the council’s high-occupancy lane scheme.
