Jobs create jobs create jobs, proclaim the inward investment agencies. But do they? Charlie Jacoby investigates the real impact of relocations on local economies.
Anyone doubting the impact of the arrival of a major company on the employment figures of an area should consider the example of the Ministry of Defence’s move to 1.3m sq ft (120,770m2) at Abbey Wood, Filton, north Bristol.
The MOD is going to need everything from nannies to nightwatchmen. According to Symonds’ Chris Booy, project manager for the MOD, the move will create between 800 and 1,000 support positions, and another 200 in catering and security. The MOD also has 3,500 people relocating at a rate of about 200 per week. There will eventually be 6,500 people on the site, including 2,000 from London, 900 from Bath and 500 from Swindon.
This will mean an annual wage bill for the MOD of £100m. A preliminary environment and development audit estimates that 75% of this income will be spent within Avon. Gross spending will equal about £75m, with disposable income – some 75% of this figure – at £56.2m.
These are the consequences of just one organisation’s move. Places like Cardiff Bay, with a development corporation and an active strategy for attracting relocators, can boast yet more impressive job creation figures.
Some £340m has been invested in the Bay so far. This has resulted in the building of 2,000 houses, a 300,000 sq ft (27,870m2) retail and leisure park and a 65,000 sq ft (6,039m2) business park.
In April, the Cardiff Bay Development Corporation announced the arrival of a £200m manufacturing plant which will produce glass tubes for the television industry and should create 750 new jobs. The CBDC reports enormous interest from leisure operators keen to capitalise on this new market.
Relocations generate jobs, a fact that has kept the inward investment agencies in business for years. “On the assumption that staff will be shed, there will be the likely need to fill jobs,” says DTZ Debenham Thorpe’s Jonathan Turner. “It could be support staff, or it could be key personnel. Most companies want to retain the core of their key personnel. I am currently advising a central London-based US computer company on a move to the suburbs and it wants to keep all its staff.”
But companies are often thwarted in their attempts to get their staff to go with them. “In every relocation there is an attrition rate,” says Cluttons’ Ian Noble. “Whenever an organisation moves from A to B, even three stops down the tube, it is guaranteed to lose some people. Five years ago, Amoco went from Tottenham Court Road to Hangar Lane, six stops down the line. The attrition rate there was close to 50% because a lot of staff came from Essex.”
However, one of Cluttons’ clients is a trade union which is keen to retain its staff when it moves from central London to 18,000 sq ft (1,672m2) in Hertfordshire. The union has not said how many of its staff it expects to lose, but it is offering incentives to employees. “The attrition rate varies from company to company,” says Noble. “Companies with lots of lower grade staff lose more. Staff like this are less mobile.” This is good news for the areas where companies end up.
At Heathrow, BT is taking over BP’s 170,000 sq ft (15,793m2) building at Stockley Park as part of a colossal relocation programme, releasing BP to move staff to its existing building, Uxbridge One, to the north-west of London. BT plans to move its entire London workforce out of the city centre to these better quality buildings on the m25.
Last year, the programme put 1,500 people into Westside in Hemel Hempstead. The second phase will see the same number installed in Stockley Park. Although it is trying to keep its relocations in the north-west quadrant of the m25, because it has found that most of its existing staff live there, it will definitely need to employ more when it is in. To sweeten the pill for existing staff, BT is offering a graded incentives package to move.
The Welsh Development Agency’s Godfrey Jillings expects companies to be able to keep only one in six existing staff in any relocation to South Wales. But, in defence of the region, he points to the high quality of staff already available for employment in South Wales.
“You can actually recruit a higher calibre of staff and have a lower staff turnover on the south coast of Wales,” he enthuses. “With that combination, you get fewer errors, and it is errors that always cost you an arm and a leg.
“National Provident Institution has between 400 and 500 staff at the moment on Newport Road in Cardiff, and it is taking on 100 more next year. Admiral Insurance has taken on at least 400 people in the past two years and plans to take on another 100 this year.
“Unemployment stands at 106,800 in south-east Wales. We want to create 10,000 jobs. This won’t make much difference to the figure because – if there is the same female activity rate as there is in the South East of England – 6,000 of these people might be women who are not already part of the unemployment statistics. Yet there will be an enormous increase in each family’s disposable income. For every person directly employed, you will get 0.7 of someone employed within 12 months.” This means that within a year of 10,000 jobs being created they will give rise to up to another 7,000 ancillary positions.
An area’s unemployment rates can also rise in the wake of a relocation as employees’ partners register as unemployed while they look for work.
Hambro Countrywide Relocation has launched a job search guide for the partners of relocating workers, in association with Management Career Development. The Partner Relocation Guide is a response to requests for assistance made by employees’ partners. “This is the first stage of a new service which we believe will benefit the personnel departments of relocating companies,” says HCR’s Andrew Finney. “The guide is designed to provide help at a modest cost and can be enhanced to include higher level assistance and personnel counselling if required.”
