…is of new importance to distribution companies who are attempting to overcome its menial and low-skilled image. By Noella Pio Kivlehan
Location used to be the first thing companies cared about when deciding where to base themselves. While this still remains important, other issues have now become equally significant.
In the logistics and distribution sector, staffing is a major factor. As Jones Lang LaSalle’s Sandra Martyn puts it: “Demographics and the employment pool are becoming greater indicators of a location’s quality.”
There are several points developers, operators and companies are having to deal with: lack of staff, image of the industry as one of menial work, high costs and a low skills base, coupled with transportation and staff loyalty problems. They are having to consider whether or not to locate near competitors for fear of staff being poached. Also, the whole issue is escalating into another north-south divide, with the higher skill levels and low unemployment in the south forcing companies to locate in the north.
One part of the UK that has seen its own share of troubles with staffing is the West Midlands – an area which Birmingham-based FPDSavills agent, Neil Starkie describes as a “hot spot for distribution”.
There are around 50 distribution schemes available with speculative developments covering 3m sq ft of land. These include DIRFT and Magna Park. Given the number of sites and the intensity with which they are occupied, it has made life difficult for some companies when they try to secure staff.
Starkie quotes the example of Argos having to choose Barton Call Centre 38 on the A38 over DIRFT because of a lack of available labour. Argos wouldn’t confirm the suggestion and stated it doesn’t give reasons why it decides on one site over another.
Whether or not difficulty in getting staff was the reason for Argos’ decision, it is one that many companies are experiencing and not just in the West Midlands. London-based developer Helios Properties has sites UK-wide, including the 450,000 sq ft Thame Park in East Manchester, and the 1m sq ft SIRFT in Sheffield. The company’s managing director Mike Hughes says that in some areas like Sheffield, the occupiers don’t have a problem with staffing. However, he does foresee difficulties at Helios Park’s distribution site depot in Watford.
The problem is caused by low unemployment in the area. This is why, says Starkie, companies are heading north. “If you go north, there tends to be a higher unemployment rate which is why we hear of companies looking up there,” says Starkie.
Drain on manpower
Without naming names, Chesterton’s Giles Scott says he has lost deals to the north from the south east because the company in question couldn’t get staff.
There is more to it, however, than just getting bodies. Skills levels, getting the staff to the location and wage cost are also factors. Nick Collins of GVA Grimley says that although people are a part of costs that have to be considered, “this is not the most pressing consideration when locating”.
“What is more important is the quality of staff. Schemes will try to be based where there is availability of skilled people,” he says. Collins points to the M25’s Golden Triangle, which he says has drifted northwards towards Nottingham and Derby where the right labour pool is plentiful.
“This is due to the fact that Derby and Nottingham were skilled manufacturing areas. Manufacturing has declined but the skills are still there,” he says.
Hughes believes: “Staffing is a growing problem for areas that have been developed with a limited pool of employees.” The location of developments in the UK plays a major factor in staff acquisition. While more than a pure location question, companies and developers have to look at how employees will get to the sites, he says.
In Starkie’s opinion: “Companies would pay more to be in a certain area. It then becomes an equation involving all the other component parts of having a warehouse. You have to ask if it’s cheaper to add a few more miles to get the cheaper labour, and then to make it up in fuel costs.”
As usual the problem boils down to money. Hughes says wages don’t come into the equation, but according to others it does. Geoff Revell, director of marketing at the 100-acre Express Park, Bridgwater, which houses the likes of Exel in a 150,000 sq ft site, says wages were definitely an issue for companies locating to the park.
“Staffing was a major priority for Exel. The natural place to develop logistically was Bristol, which is 30 miles away, but Exel decided to come away from the obvious centre because of available labour and its cost.”
Revell gives the regional wage comparisons. In Bridgewater, he says, the general warehouse/stock check/order packers earn an average of £6.80 per hour, while in Bristol it’s £9 per hour.
If the company does manage to find the right staff at the right price, life is still not easy. There is the growing culture of companies poaching other staff with the promise of higher wages.
“You hear stories of companies being reluctant to locate near other companies for fear they will take their staff,” says Starkie.
Giles agrees: “The logistics industry is fiercely competitive. If you are on a park where some are paying more around the corner, it could be a temptation for your staff to leave. Staff will shop around, so an operation might choose a site where they aren’t close to other users.”
Sidestepping human nature
One solution to staffing problems could be the continued development of automated warehouses which use fewer staff. Giles says one development he is involved in – the 140,000 sq ft ICL Distribution Centre in Stevenage – has a high level of automation.
“It’s a modern system. Before, I would have been thinking of how can I get rid of it, but because there’s good automation and the only people who are required to work in it are at the dispatch bays, I have no worries that it will attract clients.”
While staffing is something that needs to be considered, says Collins, it is not everything. “There is only so far a company will go to get the type of staff it requires. Successful distribution is fundamentally a question of proximity to good motorways and freight termini. Distribution sites will not be located in order to get good staff if it comprises the actual distribution process.”
While it seems that the old adage of location does still win the day, it remains to be seen how long it will last.
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UK’s major distribution companies |
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Some companies employ large numbers |
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Company |
Staff levels |
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Exel |
25,000 |
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Tibbett & Britten |
16,030 |
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Wincanton |
16,000 |
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Christian Salvensen |
10,687 |
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Hayes |
7,500 |
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TDG |
6,400 |
|
Taylor Barnard |
2,250 |
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Source: Distribution Journal |
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