The Brian and Linda Eaton Economic Assessment Papers: Review Winter/Spring 2017


Linda Eaton

The regular readers of this on-going economic review will remember that, in addition to providing assessments of the current situation, I am also involved in the Linda Eaton Crafts and Arts (LECA) Awards which is in memory of my dear wife. Linda, as well as being a noted practitioner in the field of Arts & Crafts, was always a great supporter of British craftsmanship and innovative skill. In addition to her own high creative skills she was a great encourager of others. Five successful competitions have already been undertaken between 2012 and 2016 inclusive. There has been an increase in entries year by year. Most notably in 2016 the number of entries totalled a record 180, an increase of 76 or 73.1% on the previous year. The theme was “This is My World” with the grand Presentation evening held on 15th October at Blackpool Football Club. The overall winner was Susan Frye with her wonderful winning Art entry entitled “A True Friend”. Her picture of a gentle dog looking straight out of the picture was iconic and also won the best technical merit accolade. Individual categories comprise Art, Painting & Drawing; Textiles & Fabrics; Card-craft; 3D Arts & Crafts; and Photography. For the main competition the minimum age of entry is 16 but there is now a further one for younger people. The Linda Eaton Awards are designed to stimulate the interest of arts and crafters ranging from those new to the activity right through to the seasoned performer. 15th October 2016 saw a very successful Presentation evening at Blackpool Football Club with guests entertained by highly talented local singer Sara Cheston. The Linda Eaton Awards, with the exceptional support of SELECT ENERGY, and other local businesses including BLACK TAX and CAFE FRESCH, goes from strength to strength. It is, however, not solely about competing but importantly to develop a camaraderie and friendship amongst Arts and Crafters generally. The theme for 2017 is “What is Life?”

The Brian and Linda Eaton Economic Assessment Papers. Winter/Spring 2017
This Economic Assessment Review is presented in a different format from previous papers. The latter tended to major on the Manufacturing Sector of North West England in some detail. This still features prominently in the analysis and the key approach of highlighting individual businesses is firmly retained. However, the approach differs this time in that firms are not “assembled” into sectors. The focus this time is on how individual enterprises have responded to challenges and opportunities. Previous reports have emphasised that any “local economy” is strongly influenced by happenings elsewhere on the globe. This scenario has been explained and analysed in more detail. Just two recent happenings make this essential, with the results of the UK EU Referendum and the USA Presidential Election surprising many pundits!
The current Review has been built-upon in between more active field-work; hence the time taken to produce it! In the circumstances this has not had an adverse effect. Indeed, with circumstances changing in so many areas of activity, it has enabled a, hopefully, more considered view being taken. A particular difficulty has been keeping-up with statistical updates especially post-Brexit. If the reader identifies examples of slightly out-of-date, largely global figures or assessments then this is generally the explanation. However, even then the orders of magnitude indicated in the review will still provide a useful indication of the situation.

 The Brian and Linda Eaton Economic Assessment Papers. Winter/Spring 2017.
A.”The best approach to any scenario is to be diagnostic rather than predictive. The former method will identify the current strengths and weaknesses that need to be acted upon. Detailed predictions are built upon the shifting, whispering sands and provide little better guidance than drawing-up astrological charts!”
Source: Anonymous and timeless.
B. “We are not moored but are ever gliding, though we notice not our motion, down the streams of time which we can neither create nor direct.” “Man cannot control the current of events. He can only float with them and steer.”
Quotes from Otto Von Bismarck (1815-98), the celebrated “Iron Chancellor” of Germany.
C.”There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. These are things we don’t know we don’t know.”
This is a 2002 quotation by Donald Rumsfeld(born 9th July 1932).This famous politician and businessman had been the USA’s 13th Secretary of Defense between 1975-7 when Gerald Ford was President. When he made the statement above he had become the 21st Secretary of Defense between 2001-6 under the Presidency of George W Bush.
D.“No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friends or of thine own were; any man’s death diminishes me, because I am involved in mankind, and therefore never send to know for who the bells toll; it tolls for thee.”
Taken from Meditation XVII by John Doone (1572-1631) the famous Metaphysical Poet.
E. “Before the discovery of Australia, people in the Old World were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence.”
Prologue to “The Black Swan: The impact of the Highly Improbable” by Nassim Nicholas Taleb, Dean’s Professor in the Sciences of Uncertainty at the University of Massachusetts at Amherst in the USA.
1. The above five quotations all have distinct relevance to the local regional, national and wider global economy. The first has no fixed author or time-period; the second combined related quotes originate from the 19th Century; the third statement was made in the early 21st Century; the fourth one derives from about four centuries ago; whilst the fifth, and indeed most recent, originally published in 2007, appears at the beginning of a ground-breaking volume. The author’s CV ranges from empiricist to “no=nonsense mathematical trader.”

2. It is a pity that more notice is not given to the first (anonymous) quotation. Never before in our history have we been in possession of so much information. This enables the keen observer to diagnose the position as a medical expert does in identifying a patient’s illness or disease. A course of clinical action is then decided upon. There are, however, significant differences when seeking to tackle global economic, and pseudo-economic, challenges. Despite the seeming plethora of information, not all of it, by far, is exact and some of it can be decidedly “flaky”. Even the more precisely calculated data is of limited value in predicting the future situation. There are so many possibilities that can arise, some totally “out of the blue”, that cynically one feels that the recruitment of an astrologer might be of more value!

3. The second combined quotations come from that most astute and pragmatic of politicians the great Otto Von Bismarck, the man who played the lead role in wielding together the German state in the 19th Century. The “Iron Chancellor” recognised that, for all his supposed ingenuity, man was limited in how he could dictate events. The best that could be achieved would be to navigate as best he could by steering the ship through choppy waters. The impression is given by some latter day politicians that they feel that they are capable of influencing events on quite a grand scale. The emergence of subsequent unforeseen developments somewhat refute this belief! As one realises, especially from the very recent past, factors that were not precisely predictable have played a central role in scuppering some of the best-laid plans.

4. The comments made above suggest that despite the vast array of knowledge at the analyst’s disposal there are also, crucially, significant gaps. As well as those limitations that we are aware of, there are also, to move onto the third quotation, whole battalions of “unknown unknowns”. Production of a key material can be affected by a new innovation, or else the site of a strategic activity can be affected by natural or even man-made turmoil including terrorism. Climate change is a central issue on the world’s agenda but, in addition, local changes within a short period can wreck harvests either by rain or drought. Despite increased medical knowledge we do not live in a disease-free world and pandemics can occur from almost anywhere.

5. Changes of government, even peaceful events without blood-shed, can alter the focus of economic policies. Other situations such as the result of referendums can obviously make a significant difference. The largely unexpected results of the USA Presidential Election and the UK decision to leave the EU, popularly referred to as BREXIT, are particularly noteworthy. One can become rather sceptical of the subsequent growing army of media and other experts who claim predictive abilities. Some may indeed have displayed some intuition but, on the other hand, hindsight is a marvellous thing!

6. John Donne’s deeply reflective comments sum-up the human inter-action in the world. This feature is as relevant today as it has ever been. The larger enterprises have a global presence and, in addition, they invariably have a lengthy supplier network. Even such significant monoliths are dependent on key features such as availability of skilled employees. Business does not stand still as competition springs from both likely and unlikely sources. It is not only the larger operations that feature in the world economy. The famous Mittelstand companies, largely in Germany and also, for instance, in Austria and Switzerland, play an important part. Although generally no larger than medium-sized enterprises they pride themselves in exploiting niche-markets and are notable performers on the global stage.

7. Producers, whether of goods or services, are dependent on their markets. Hence such features as a growing middle-class in developing countries are significant. On the debit side high levels of poverty are still prevalent in many parts of the world. The chief concern here must be from the humanitarian viewpoint. Just one example, for instance, is the reality in some locations of people of all ages having seemingly little alternative but to drink contaminated water. However, this devastating scenario of poverty impacts on market demand. It is in the world’s best interests that all nations are prosperous and growing.

8. One of the most absorbing pieces of work in recent times has been “The Black Swan” by Nassim Nicholas Taleb. His book, first published in 2007 and subsequently re-issued, was stated in the “Sunday Times” as being among the dozen most influential books since World War Two. Professor Taleb as well as being a noted scholar and statistician is a risk analyst who has experience in the field of hedge fund management and trading in derivatives. His work focuses on problems of randomness, probability, and uncertainty. Indeed in an earlier 2001 volume, entitled “Fooled by Randomness” he stressed the significance of the latter in events. These features need to be written into assessments through a robust “Black Swan” approach which can withstand difficult-to-predict events. Nasim Nicholas Taleb proposes antifragility as a system, an ability to benefit and grow from a certain class of random events, errors, and volatility. This is in addition to what he refers to as “convex tinkering” as a method of scientific discovery. He, therefore, suggests that decentralised experimentation will outperform “direct research”.

9. Professor Taleb illustrates his analysis by reference to a range of events where low predictability was associated with large impact. These cover widely diverse happenings such as the rise of Adolf Hitler in the 1930’s and the outbreak of World War Two and, in much more recent times, the spread of the Internet. Other difficult to predict occurrences include specific epidemics, fads, fashions, and ideas. As Taleb states the typical portfolio manager, when being asked about risk, will invariably supply a measure that excludes the possibility of the “Black Swan” effect. The ground-breaking work undertaken by the Professor helps to highlight the intricate nature of the economy, whether local, regional, national, or global. It further reinforces the work of notable earlier economists, who stressed the significance of uncertainty. This distinguished group included the late GLS (George) Shackle, Brunner Professor of Economics at the University of Liverpool.

10. Uncertainty comes in many forms and, significantly, different gradations. There are what appears to be “firm facts” which are not really that at all. When the latter are investigated further it is recognised that they need to be handled with caution. How many well-presented tables of data contain caveats indicating the need for careful interpretation? An important step forward, over the years, has been the increasing globalisation of information. This has seen a steady rise in performance indicators covering most of the countries in the world. It should be remembered, however, that despite resolute attempts by statisticians in standardisation, even basic data is not completely uniform for every nation or state.

11. Lack of standardisation might be easier to live with if it related mainly to the smaller nations. However, there have been challenges relating to China and Japan two of the mega economies in the world. Even Chinese officials have, in recent years, acknowledged an element of over-estimation in the calculation of GDP. For instance one factor mentioned has been a deliberate over-estimation in parts of NW China. This was to provide performance figures that would be acceptable to the centre. Ironically in Japan the reverse has been the case. The methodology used has now been corrected but it under-emphasised Japan’s actual GDP growth. As far as China is concerned, whilst the impressive two-digit GDP growth figures quoted in recent years seem exaggerated, nevertheless that Nation has expanded rapidly. More recently though the increase has slowed-down.

12. The views of Ruchir Sharma are worth noting. He is the author of “The Rise and Fall of Nations” and in 2015 made the Bloomberg Markets 50 Most Influential List. He is the head of emerging markets equity and global macro at Morgan Stanley Investment Management. In summer 2016 he suggested that China’s GDP was more likely expanding between 4% and 5% than the then official rate of more than 6.5%. He also suggested that India’s figures were an over-estimate. The official Indian Q2 2016 GDP growth figure was 7.3%. According to Sharma the reality was more likely between 5% and 6%. It is especially important to obtain a better “handle” on these figures with China and India’s positions as respectively the 1st and 2nd most populous nations on the globe. With estimated populations of 1.4 billion and 1.3 billion in 2016, combined they account for around 36% of the world total of over 7.4 billion people.

13. There are even different definitions as to what actually constitutes a country. The United Nations in 2016 provided data for 233 countries worldwide. There are 193 member states of the United Nations plus two non-member observer states, the Holy See and the State of Palestine. Amongst a number of other territories is Taiwan which is recognised by the United Nations as being part of the People’s Republic of China. Given the sheer, and growing, size of the world economy it becomes evident that it is not possible to measure and evaluate every single feature. Sample surveys are, therefore, very much the “order of the day”. In addition there are other challenges to be faced. This even applies to our own highly professional ONS when attempts are made to provide a regional analysis of national statistics. For instance, in some statistical series it is not possible to attribute all the data to specific regions and hence an unallocated heading appears!

14. As just indicated the UK possesses the highly professional and proficient Office for National Statistics (ONS). However, even the most dedicated service is dependent on its data sources. For instance there are distinct challenges in the Annual Business Inquiries in analysing net capital expenditure between regions. The situation is clear when an enterprise is concentrated solely in one region. However, difficulties arise when operating units are spread across more than one region. It is often not possible to break-down the firm’s UK expenditure into this detail. ONS, therefore, assumes a pro rata breakdown of net capital expenditure on the basis of employment per region. Hence if, say, 60% of a firm’s employees are in North West England it is assumed that 60% of net capital expenditure will be there also. This is too simplistic an assumption but, in the absence of detailed data for all surveyed firms, this approach is adopted.

15. Many observers of the “economic scene” demand far too much from the statisticians. Indeed there is a tendency to read into the data more than is actually presented. A great deal of thought is put into describing the strengths and limitations of data series. This should help the user to make a sensible assessment of their overall validity. A key problem arises when data is used in too “cavalier” a fashion. Here in the UK and the rest of Europe there has become what is referred to as “the standard benchmark for recession.” This is supposed to occur when there is a contraction in output for two consecutive quarterly figures. Why two? In addition the “decline” may be from a particularly high level. Private business, for instance, secures orders at different rates due to circumstances and invariably evaluates a linger-time period than a couple of quarters. The USA adopts a different approach with its National Bureau of Economic Research looking at a wider range of data including retail sales and unemployment. This attempts to date the start of a recession to a particular month. All this so-called sophistication can, however, only partially help. The data collected for whatever series is less than fulsome. Certainly a clearer “economic picture” emerges when “on the ground” even anecdotal experience is used to supplement data survey sources.

16. There is much media attention drawn to the latest Gross Domestic Product (GDP) data in most nation states. This is certainly true here in the UK where the figures are derived from a sample survey. The initial totals are stated as provisional with, invariably, an adjustment afterwards. It is noteworthy that sometimes a period of sluggish performance or worse when re-assessed can be judged as being slightly better than originally stated. The reverse situation can also occur. However, the changes are generally only small. There are, nevertheless, exceptions including in 2008 when the revisions were larger than normal. This was when the economy was moving into recession and reporting and analysing relevant statistics was particularly challenging.

17. In order to assess what are likely future rates of growth, or the reverse, a government needs an awareness of developing trends. However, even over a comparatively short time the unexpected can happen. As indicated earlier the UK justly prides itself on the professionalism and dedication of its ONS statisticians. However, there are problems in making comparisons with various other nation states where the data is not similarly assembled and analysed. Not all activities can be measured with equal facility despite their likely impact on the economy. This was noted in a detailed article in May 2014 by the ONS which was entitled “Changes to National Accounts: Inclusion of Illegal Drugs and Prostitution in the UK National Accounts.”

18. Gross National Income (GNI) is a key statistic used to calculate a Member State’s contribution to the EU Budget. Because of this obvious operational importance the EU statistical office, Eurostat, undertakes regular audits of the methods and data used to estimate the GNI. In 2014 it was announced that a number of changes were identified including attempts to guesstimate key areas of the illegal economy such as drugs and prostitution. At that time Eurostat suggested that these new inclusions would add around 2.4% to the EU Budget, chief contributors were identified as Finland and Sweden in the 4-5% range whilst Austria, UK, and Austria were around 3-4%. This approach ran into a particular challenge when France refused to provide data. The French national data agency, INSEE, stated that because drug-users and certain types of prostitutes were not operating of their own consent then France had no obligation to collect this information. Eric Dubois, INSEE’s Director of Economic Statistics, indicated that consensual prostitution tended to operate through “front businesses” and were, therefore, already included in France’s GDP.

19. The UK was particularly affected by this more rigorous approach. Figures for 2009 suggested that some £9.7 billion had been contributed by prostitution (£5.3 billion), and illegal drugs (£4.4 billion). The total accounted for 0.7% of the UK GDP. Estimates suggested that by 2013 the figure had risen to £11.77 billion, including £5.65 billion for prostitution and £6.12 billion for illegal drugs. Given the guesstimated approach calculating these figures there has, not unexpectedly, been critical comments from various sectors. On prostitution the ONS had suggested there were around 61,000 prostitutes in the UK. Further guesstimates involved average prices charged, clients per woman, and weeks worked annually. There was some disputation with these figures including from respected scientist Dr Brooke Magnanti. The latter worked for around 14 months in the sexual services sector to help pay for her studies and, under the pseudonym of “Belle de Jour”, published “The Diary of a Call-Girl”. Dr Magnanti suggested that the financial assessment could be ten times too high. Some other commentators suggested that the figures may be an under-statement because they do not include everyone in the sex industry including male prostitutes. One figure suggested was £9 billion. Stephen Pudney, Professor of Economics at the University of Essex, was especially critical of the figures on illegal drugs. He suggested that the approach rested on “some heroically large assumptions which would be difficult to test”. It was indicated that this measure was likely to under-state the true level of illegal drug use.

20. The UK is very much dependent not only on local situations but what is happening in the global economy. Paradoxically the global or any other economy is not solely influenced by economics. Severe changes in the weather can affect the expected yield from major crops. Tsunamis, or seismic sea-waves, have devastating effects. For example the 2004 version in the Indian Ocean was believed to be one of the deadliest in history. In excess of 230,000 people were killed or went missing in the fourteen countries bordering the Ocean. Natural disasters are far from being the only challenges. Man-made disasters in recent years have included the largest marine oil-spill in history. This involved Deepwater Horizon off the Gulf of Mexico in April 2010 with devastating effects on the economy, environment, and welfare of the Gulf States.

21. Pandemics present yet another example of the unpredictable. They can occur sometimes in not the most likely of locations involving outbreaks of disease that would have been difficult to forecast. For instance in 2014 the Ebola Virus, which is a viral haemorrhagic fever affecting humans and primates, struck in Guinea, Liberia, and Sierra Leone. A carrier of this disease is the fruit-bat which is contained in African bush meat consumed in these countries. There have been impressive improvements in the diagnosis and treatment of potentially fatal diseases ranging from Tuberculosis to Malaria. However, even here the situation can sometimes take the observer by surprise. For instance a London Assembly Report recently indicated that five of their boroughs had higher rates of TB than parts of Rwanda, Iraq, or Eritrea. World-wide the rates for Malaria disease decreased by 37% between 2000 and 2015. However, there was an increase between 2014 and 2015 from 198 million cases globally to 214 million. In Africa it has been estimated that the impact of Malaria results in a loss of around $12 billion per annum. This includes increasing health-costs, inability to work, and the negative effects on Tourism.

22. There is serious discussion about Antimicrobial Resistance (AMR).This represents a major public health crisis which reduces the chances of successfully treating people with infectious diseases. The latter, according to latest figures from the World Health Organisation (WHO), is a major cause of death in both the developed and developing world. In 2015 a report was commissioned by the UK Government. This suggested that without new treatments there would be a dramatic rise in deaths caused globally by drug-resistant pathogens. It was estimated that the current 700,000 fatalities would increase to in excess of 10 million by 2050. Put into its context only two new classes of antimicrobials have been developed over the past three decades. This contrasts with the large number introduced in clinical practice between the 1940’s and 1970’s.

23. There are always hostilities going-on in the world including terrorism, the results of which are difficult to predict. One particular terrorist group that has sprung up “almost from nowhere” is the Islamic State of Iraq and Syria (ISIS). They have been particularly active and successful in parts of Iraq and Syria as well as North Africa. Fortunately more recent information suggests that they have subsequently lost ground in their reign of terror. However, reports suggest that the Egyptian Tourist Industry has suffered due to potential visitors being concerned about terrorist situations in the area. Ironically this has, for instance, made Spain’s Holiday sector more attractive to tourists with resulting improvement in visitor numbers.

24. Regime or government change, whether they take place peacefully or otherwise, have repercussions affecting many aspects of life. Politics play their part directly in trade relations when embargoes and other initiatives are imposed on specific countries. Disruption is also caused when disputes take place between trades unions and employers or even with governments. The UK has not been immune: for example the” winter of discontent” in 1979 and the miners’ strike in the early 1980’s.

25. Much more recently in April 2017 “the biggest strike in the history of Brazil” was forecast by Paula Pereira da Silva, the president of Brazilian trade union group Forca Sindical. There have been violent protests in the last four years amid political turmoil, a lengthy recession, and corruption investigations relating to politicians. The government has claimed that it is seeking to carry out reforms “to create jobs and economic growth”. This is strongly rejected by the unions including Vagner Freitas, the national President of Brazil’s biggest Labour Confederation the Central Workers Union (CUT). The Brazilian Government is seeking to push through measures, according to Freitas, which would “end social security and legalise the exploitation of workers.”

26. Businesses, enterprises and economies could not exist and flourish without effective entrepreneurship and dedicated workforces embracing a range of skills. The world population is ever growing currently and currently stands at around seven billion. China, in an effort to curtail population levels, adopted a “one child” policy. However, this has now been relaxed in the wake of an ageing society which impinges on the availability of future personnel for Industry and Commerce. There has also been concern over declining population levels in Japan. The National Institute of Population and Social Security suggests that numbers in Japan could decline from 127 million to 88 million by 2065. By the latter year this will mean that people aged 65 or over will account for 38% of the population. However, due to an increasing number of women having children in their thirties and forties suggests that there is “a moderately slower population decline than was expected.” The Japanese government is determined to stop numbers falling below 100 million by 2060.

27. Only someone living on another planet would be unaware of the global financial crisis of 2007-8 leading to the great recession of 2008-12. The replications are still very much with us! This is considered by many experts to be the worst, in financial terms, since the Great Depression of the 1930’s.The US Financial Crisis Inquiry Commission considered that the situation was avoidable and was caused by widespread failures in financial regulation and supervision, and a combination of such features as excessive borrowing, risky investments, and a lack of transparency by financial institutions. The crisis threatened the collapse of large financial institutions but this calamity was prevented by the bailout of banks by national governments. The bursting of the US housing bubble, which had peaked in 2004, caused the values of securities tied to US real estate pricing to plummet, damaging financial institutions globally.

28. The financial crisis was triggered by a complex interplay of situations. Ironically these included the encouragement of home ownership through providing easy access to loans for subprime borrowers. There was an overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate. There were decidedly questionable trading practices on behalf of both buyers and sellers. Disaster became imminent in the face of a lack of adequate capital holdings from banks and insurance companies. These were essential components if there was to be backing of the financial commitments being made.

29. The impact of this global crisis is still apparent. The UK is affected because of its important role in financial markets. Political electioneering in 2010 focused on alleged over-spending by the Labour Government suggesting that this had exacerbated the financial crisis. However the Independent Office for Budget Responsibility, reporting in September 2014, suggested that over-spending did not cause either the Budget deficit or the banking crisis. In the opinion of the IOBR the UK Government was not sufficiently prepared due to a consistently over-optimistic view of the revenues HM Treasury was likely to receive from 2003 onwards. Sir Nicholas McPherson, Permanent Secretary to HM Treasury, commented in 2015 that the 2008 crisis was “a banking crisis pure and simple. Excessive risk had built-up in the system; the regulators failed to appreciate the scale of that risk and address it.”

30. Much focus is now on reducing the Budget deficit and, hence, tighter budgetary control on the agenda. It has, however, created almost a Pavlov’s Dog mentality among some politicians and policy-makers. This has resulted in a more cautious attitude towards Government expenditure. In such circumstances cost-saving becomes a virtue with spending in worthwhile sectors at times adversely affected. This is despite assurances that strategic and essential activities will virtually be “ring-fenced” from severe cuts. At the end of the day these decisions are value judgements with even key sectors such as Health, Social Services, Defence, Police and other emergency services not exempt from cost-cutting.

31. On a more optimistic note Philip Aldrick, economics editor at “The Times”, reported on 26th April 2017 that, according to official figures, government borrowing had dropped to its lowest level since the eve of the 2008 financial crisis. The annual shortfall in the public finances stands at £52 billion down by £20 billion on the last year, according to the ONS. At 2.6% the deficit is at its smallest share of GDP for nine years. Nevertheless caution is urged in various quarters. The Office for Budget Responsibility has forecast that borrowing will rise again to £58 billion in 2017-18. Some sources suggest that “on the present timetable the books may not balance until 2025”. A further complication is the advent of a General Election scheduled for 8th June 2017.

32. There are also detailed individual spending practicalities to be assessed. For instance, it was recently reported in “The Times” that Lancashire Constabulary was spending more than £100,000 a week on a 24-hour operation policing Cuadrlla’s Fracking site at Preston New Road near Blackpool. Clive Grunshaw, the Lancashire Crime Commissioner, claimed that the government had a duty to cover policing costs as they had over-ruled the anti-Fracking decision by the County Council. He added that front-line policing was being affected. The Force had already lost 800 officers since 2010 with more cuts needed by 2020.Policing Minister Brandon Lewis rejected the approach indicating that there was no central government funding stream available to deal with the current situation.

33. Further global financial crises are also the subject of debate. There has been a particularly worrying annual report publicised in September 2016 by the United Nations Conference on Trade and Development (UNCTAD). It suggested that “alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion.” UNCTAD estimates that there has been a rise in these areas from 57% to 104% of GDP since the end of 2008. If the global economy were to slow down more sharply a significant part of this debt could become unpayable. In turn this would exert considerable pressure on the financial system.

34. China, with the world’s second-largest economy, plays a significant role globally. As indicated earlier in this review it has been a challenge to accurately assess its GDP and recently Chinese officials have suggested that earlier figures were likely to have been an over-estimate. Growth has been slowing, undoubtedly, over recent times. It is, therefore, of international concern that billionaire investor George Soros has suggested that China could be near a financial crisis similar to the USA in 2008. Data from the “Wall Street Journal” suggests that China’s total social financing (a measure of credit in the economy) grew 15.8% in March 2016 to the equivalent of $22 trillion. This was over twice as high as its estimated GDP of $10.4 trillion.

35. A vital commodity in the world is oil the importance of which is paramount. Prices can fluctuate dramatically at times due, not surprisingly, to the supply situation. 2016 was particularly challenging especially with terrorism and related devastation adversely affecting production levels. Publicity was given in summer 2016 to a report by Rystad Energy, a Norwegian consultancy firm, which suggested that the USA had surpassed Saudi Arabia and Russia as the global leader in oil reserves. Rystad estimated that the USA had 264 barrels of oil in reserve ahead of Russia at 256 barrels and Saudi Arabia with 212. The report suggested that a number of locations, including members of the Organisation of Petroleum Exporting Countries (OPEC) exaggerated the size of their reserves in self-reported surveys. Rystad Energy carried-out its own calculations by only recording each country’s viable reserves. This indicates how problematical it is for the economist to obtain a confident feel on the situation when basic data comes under challenge.

36. Most observers of the oil market, however, would point to the continued importance of Saudi Arabia. Amin Nasser is the Chief Executive of Saudi-Arabia’s state-controlled company Saudi Aramco, the world’s biggest oil producer. Speaking at the beginning of the meeting of the 14 OPEC states in Algiers in September 2016, he suggested that the oil market was recovering slowly but remained weak. He predicted a gradual rise in prices from the then level of about $47.50 per barrel. In New York on 26th September Brent crude was $46.97 a barrel. A number of pundits have pointed to a glut of crude oil caused by excess production from nations such as Saudi Arabia, Russia, Iran, and Iraq. This had prompted a halving of oil prices in the last two years. However, after hitting a 13 year low in January 2016 of $27 a barrel prices had risen to a concentrated range just below $50 where they had stuck by autumn 2016.

37. In the later part of 2016 Helima Croft, global head of commodity strategy at RBC Capital Markets in New York, pointed out the significant role of Iran in the then current position. The Iranians had been increasing output since February 2016. This followed the lifting of international sanctions which had been imposed due to its nuclear programme. Iran was producing about 3.6 million barrels per day in September 2016 with a desire to reach approximately pre-sanction levels of 4 million. This increasing output had contributed to the global glut, thereby persuading Saudi Arabia to state that it would co-operate on any collaborative moves provided that Iran took action first! The estimated rising position of the USA was assisted by the rapid increase in discoveries in the Permian Basin of Texas. However, despite large reserves the USA oil market was affected by the recent drop in prices due to over-supply in the global market. Nevertheless a spokesman for Rystad forecasted that the barrel price would bottom-out soon as supply begins to rebalance.

38. In December 2015 the USA lifted its forty year ban on oil exporting and has benefitted considerably from the International situation. For instance February 2017 experienced a 35% increase on the previous month with a record high figure of 31.2 barrels. The OPEC production cuts have assisted the US making it more competitive in Asia. Significantly, China has turned to the US as supplies from OPEC have reduced. In February 2017 China bought more than 8 million barrels from the States. This represented almost four times the volume that it had purchased in January. The OPEC cuts came at a time when China was importing more oil than ever before and this has certainly benefitted USA producers.

39. Following the announcement in late September 2016, that OPEC had agreed in outline to cutting oil production for the first time in eight years, oil prices actually increased by more than 5% in New York. This was after OPEC agreed to limit production to a range of 32.5 to 33 million barrels per day. The agreement had been possible because Iran was to be exempt from capping production. This, hopefully, represented a new phase in relations between major producer Saudi Arabia and Iran. Previously since 2014 the two nations had clashed on oil policy and, at a political level, supported opposing sides in the civil wars in Syria and Yemen. This situation was expected to improve the prospects for the Energy Industry, ranging from giant businesses such as Exxon Mobil to small USA shale firms. It would also boost the economies of oil-rich countries such as Russia and Saudi Arabia although it would mean higher prices for consumers at the pump.

40. Russian President Vladimir Putin had indicated in October 2016 that he would support OPEC’s proposal to freeze oil production in order to reverse the slump in global prices. Speaking at the World Energy Congress in Istanbul the President stated that oil prices had more than halved in two years due to surplus production provoking a cycle of decreasing investment. Since then oil prices have been steady within the $50=$55 per barrel. However, there was a fall on 6th February 2017 as a stronger $ and ample US supplies outweighed OPEC output curbs and rising political tensions between the USA and Iran. US Crude fell by 1.5% to $53.01 per barrel, whilst Brent Crude fell by 1.84% to $55.81 a barrel.

41. The impact of wider issues on prices has been demonstrated with some force on 7th April 2017.Oil traded near a one-month high after the USA fired missiles at a Syrian Government air-base. Concerns were raised that the conflict could spread to the oil-rich region. Brent crude futures rose by 29 cents to $55.17 a barrel after reaching an intraday peak of $56.08 following the US military action. This was the highest since 7th March. US West Texas Intermediate (WTI) crude futures rose by 40 cents to $52.10 per barrel, having reached an intraday high of $52.94.

42. OPEC’s decision to deliberately cut supply is currently benefiting this Cartel’s chief competitor namely US Shale. Commenting on OPEC’s influence on the oil markets analysts Wood Mackenzie made a number of forecasts (forecasts again!) in January 2017. They suggested that OPEC “may still be able to control oil prices to a limited degree”. However, the analysts suggested that the benefits would accrue to parties outside the Cartel itself. They then added that “if OPEC remains a functional entity by the end of 2017, its greatest hits will surely be in the past.” The Oil sector has had such a turbulent and varied history that such predictions need to be treated with caution and care! Indeed on 14th April 2017 a rather different view was expressed by Amir Nasser Chief Executive of Saudi Aramco, the State Energy Group and the world’s largest oil producing company. He dismissed suggestions that demand for oil could peak in the foreseeable future. His view was that it would play a central role in world energy supplies for decades to come. Amir Nasser added that his company were investing heavily in future crude production with the aim of increasing global refining and marketing capacity by almost half.

43. One situation inevitably influences another. This applies in the context of concerns over dwindling oil revenues in the Middle East. For example in Oman monies from Energy account for 83% of its Budget. The State is revamping its ports infrastructure from Muscat to Duqm, Sohar, and Salalah. This is partly to adapt them for Tourism but, also, more importantly to increase industrial production and exports. It is also to exploit Oman’s strategic location and create a hub for international shipping. There was good news in August 2016 when an agreement was announced between Oman and Chinese investors. This was to develop a new US$10.7 billion industrial city near the port of Duqm. The latter’s capacity is being expanded from 250,000 containers per annum to 3.5 million. China features prominently amongst investors and the Chinese State-run company Oman Wanfang has already promised $370 billion for roads, utilities, and other infrastructure.

44. Saudi Arabia is especially concerned with the need to diversify its economy away from oil. King Salman visited Japan in March 2017 to discuss economic ties and related issues. The Saudis are one of Japan’s biggest suppliers of crude oil accounting for a third of oil from the Middle East. However, trade between the two countries fell during 2016 as oil prices fell. As a result Japan’s 2.1 trillion Yen ($18.6 billion) of imports, mostly oil and gas, from Saudi Arabia were dwarfed by its exports which totalled 546.3 billion Yen ($ 4.8 billion).King Salman had earlier visited Indonesia and Malaysia and was further traveling to Brunei, China and the Maldives. Saudi Arabia subsequently hosted a visit by UK Prime Minister Teresa May in April to discuss diversification and other issues.

45. The USA oil position has been influenced in the past couple of years by productivity and improvements in technology. The latter includes the extraction of shale, known also as hydraulic fracturing or fracking, which increased in the early years of the Century. The surge in oil prices at that period made the process economically feasible. Fracking has, however, drawn sharp criticisms from various sources including environmentalists. It has been castigated for a range of alleged side-effects including, for instance, excessive use of water, contamination of wells with possible cancer effects, creation of earth tremors, and desecration of the local area.

46. In the UK there has been a heated debate about fracking. The Government has adopted a supportive stance on the grounds that, in their opinion, these are valuable energy assets to be exploited. In May 2016 the then Government Energy Minister Andrea Leadsom stated that “fracking is a fantastic opportunity. It’s good for jobs, the economy, and strengthens our energy security.” However, survey results announced earlier in 2016 indicated that opposition to the process outstripped support. The chief reason given was the loss or destruction of the natural environment. Crucially there has also been much concern expressed about the fear of possibly contaminated water as a result of the process. At least as dramatic is concern over sub-ground explosions. The weak public support for shale gas was in contrast to the support for renewables such as wind power, solar, and biomass.

47. Hydraulic fracturing (fracking) was suspended in the UK in 2011 following earth tremors in the Blackpool area where Cuadrilla was drilling. In June 2015 Lancashire County Council rejected an application by the company involving Roseacre Wood situated between Preston and Blackpool. This was followed by a rejection at Preston New Road, near Little Plumpton on the Fylde where Cuadrilla had hoped to drill four wells and undertake exploratory fracking for shale gas. Both applications were rejected on the grounds of noise and traffic impact. However, both decisions were subject to appeal and in October 2016 the Government Communities Secretary Sajid Javid accepted the company’s appeal relating to Preston New Road. This gave the “green light” for the sinking of four wells. Although the Communities Secretary deferred a decision on the Roseacre Wood site he indicated that he “was minded” to also grant planning permission there. He proposed, however, to give Cuadrilla more time to provide evidence on road traffic issues and to allow other parties to make further representations. If this scheme was accepted then yet a further four wells could be drilled.

48. The above decisions were subject to appeal. As a result an enquiry lasting several weeks was undertaken at Bloomfield Road in Blackpool followed by a shorter few day’s judicial hearing at the Manchester Court of Civil Justice. The results were announced on 12th April 2017 in which the High Court ruled in favour of the Government pro-fracking (hydraulic fracturing) position. Francis Eagan, Cuadrilla’s Chief Executive, commented that work was continuing on the exploration site and it was hoped to progress to the drilling stages within the next couple of months. Latest opinions suggest that planning consent for fracking at Roseacre Wood is likely to receive Government approval provided traffic concerns are addressed. Cuadrilla is 45% owned by private equity firm Riverstone, another 455 by Australian engineering firm AJ Lucas, and 10% by Cuadrilla’s management and staff. The initial work is largely funded by a 2013 deal with Centrica which bought a 25% stake in Cuadrilla’s Lancashire licence area.

49. The debate and associated action continues with anti-fracking demonstrators featuring prominently. Amongst the cautionary observations is one appearing in a report produced by Department of Earth Sciences at Durham University on behalf of the Consortium Research Fracking in Europe (ReFINE). Sarah Clancey, the Study’s lead author indicated that the number of wells capable of being sunk would be limited by ”existing and immovable infrastructure.” Supporters of fracking have suggested that these assumptions are premature. Test drilling was needed to see how much gas was likely to be recoverable.

50. Reporting earlier in the year in January 2017the energy firm Cuadrilla indicated that contracts worth up to £3 million were on offer to potential supplier firms. It was indicated that since the setting-up of a supplier chain portal some two years earlier more than 700 businesses were “interested” registers. Francis Egan, Cuadrilla Chief Executive spoke positively of the opportunities for local firms to benefit and “ensure that millions of pounds of spend remains in the County (Lancashire) supporting local jobs.” It had been announced in December 2016 that Cuadrilla had awarded an exploration site build contract to AE Yates Ltd, a Bolton-based civil engineering firm. Exploration work is now progressing at Little Plumpton.

51. In May 2016 South Yorkshire County Council approved Third Energy’s plans to frack at a site near Kirby Misperton in Ryedale. Rasik Valand, Chief Executive of Third Energy, promised to deliver their commitment to undertake the operation safely and without impacting on the local environment. There were, as in North West England, determined anti-frackers who made their views felt including through demonstrations. However, despite objections from Friends of the Earth and Frack Free Rydale on 20th December 2016 the High Court supported the original ruling. The environmentalists had argued that the local authority had not, in their opinion, properly considered the impact of burning gas and climate change implications.

52. The impact of Fracking can, according to its critics, extend even into other industries. For instance, further afield, the Scottish Government is considering the situation. In this context the Scottish central belt has been earmarked by Industry as a target for development. However, according to anti-Fracking campaigners Fracking activity could damage the Whisky sector which supports more than 10,500 Scottish jobs.

53. In September 2016 came the announcement that the first-ever shipment of shale gas was set to arrive in Britain. This was to involve Petrochemical company Ineos taking delivery of a tanker-full of ethane at its Grangemouth plant in Scotland. In contrast to the UK Conservative Government, the Labour Party has indicated its opposition to fracking whilst the devolved Scottish Government has imposed a moratorium. However, the Grangemouth plant will receive 27,500 cubic metres which had been extracted from beneath Western Pennsylvania where shale gas production has boomed.

54. These imports are to replace dwindling supplies from the UK’s North Sea reserves. Gas has travelled more than 3,500 miles via a “virtual pipeline” of eight tankers to reach Grangemouth where Ineos has built an import terminal as part of an overhaul costing £450 million. The gas will be converted into ethylene that can be used in the production of a range of plastic products. Supporters of fracking claim that it could help rein-in rising energy prices and offer greater energy security in case supplies from abroad are disrupted. Communities Secretary Sajid Javid has commented that shale gas has “the potential to power economic growth, support 64,000 jobs and provide a new domestic energy source” thereby making the UK less reliant on imports.

55. Energy sources, their accessibility and acceptability, are central to what happens now and in the future. Globally and here in the UK discussions continue over which fuels to promote and focus upon. There is a whole spectrum of approaches from environmental bodies such as Greenpeace and Friends of the Earth to long-established industrial bodies including those in the Nuclear Fuel Industry. Amongst the array of energy possibilities globally is Concentrated Solar Power (CSP). Situated in the Nevada desert in the USA is the Crescent Dunes mile and a half wide solar power plant. Kevin Smith, one of the project’s founders, is CEO of Crescent Dunes’ parent company Solar Reserve. He believes that CSP is a potential competitor to conventional fuels including fossil and nuclear. Solar Energy is already developing cheaper, higher capacity installations and planning to build similar solar plants in South Africa, Chile, and China.

56. In the UK and with implications for West Cumbria in North West England is the long-running debate on a possible power plant to be built at Moorside near Sellafield. However, the situation has become more and more worrying and complex. The company behind the plans has been NuGen which is 60% owned by the troubled Toshiba company. As long ago as 24th June 2011 the then UK Coalition Government announced that NuGen’s site in Cumbria was suitable for a new nuclear power station. It was on 1st December 2011 that the name now associated with this project, Moorside, was announced. The share-holders in NuGen were Toshiba (69%) and ENGIE (40%). The latter had formerly been known as GDF SUEZ. Westinghouse Electric Company, a Group company of Toshiba, would be able to provide world-leading AP 1000 nuclear reactor technology.

57. The Moorside project aimed to develop a new generation nuclear power station of up to 3.8 GW gross capacity. NuGen contended that nuclear energy had a role to play in providing future UK supplies and in delivering clean, affordable, low-carbon electricity. There was positive news in March 2017 when it was announced that the Office for Nuclear Regulation (ONR); the Environment Agency; and the Natural Resources Wales had provided their official backing. They were satisfied that the AP 1000 nuclear reactor met expectations on safety, security, and environmental protection at that stage of the regulatory process. This approval, satisfying though it was, paled into lesser significance beside the financial problems of Westinghouse which had filed for Chapter 11 bankruptcy in the USA where it was based. This lead to an admission by its Parent Toshiba that the Moorside scheme was “uncertain”. Toshiba has forecast a 713 billion Yen (£5 billion) loss in its nuclear business largely through Westinghouse.

58. On 4th April ENGIE signalled their intention to withdraw from the NuGen joint-venture. This meant selling its 40% interest so that Toshiba becomes the sole owner. One company believed to be interested in buying into NuGen was the South Korea-based Korea Electric Power Corporation (Kepco). As this economic assessment is being written further developments are awaited. The Moorside project had been said to be providing around 21,000 skilled jobs during its construction and when it was up and running. It had been estimated that the £10 billion Moorside facility would eventually supply around 7% of the UK’s energy needs. Unite, the trade union, expressed further concern about the Impact on Springfields nuclear fuel manufacturing facility near Preston in Lancashire. The plant, which contains around 1,000 Unite members, was in line to supply the fuel to Moorside.

59. A Report has recently been produced by the cross-party group of MPs involved in the Business, Energy, and Industrial Strategy Committee. Chairman of the latter is Labour MP Iain Wright who suggests that “the government has failed to consider the potentially severe ramifications of its BREXIT objectives for the Nuclear Industry.” It was suggested that plans to leave the Nuclear Research Agency Euratom had not been properly thought-out. The likely delays in finding an alternative body could threaten power supplies and could inhibit Nuclear trade and research. The Committee urged the government to keep the UK in Euratom until a new plan could be hammered-out.

60. Sellafield in West Cumbria is far from being a “stand-alone” operation. Countless jobs are provided for key supplier firms. For instance in April 2017 engineering company Amec Foster-Wheeler announced an impressive milestone. Amec has 150 staff on the Sellafield site that carry-out civil, mechanical and electrical engineering work plus sub-contractors and supply—chain businesses. The company were justly celebrating the completion of one million man-hours of work without an injury causing period of work to be missed. A spokesman for Amec commented that maintaining this safety record is extremely challenging undertaken in a high-hazard area performing heavy construction work.

61. There has been recent publicity given to Energy company Centrica’s plans to boost gas production in Morecambe Bay. Centrica owns British Gas and is the UK’s largest gas supplier. It announced in early May 2017 that it would invest some £60 million thereby securing 350 jobs. Significantly it would unlock up to three billion cubic feet of gas under the East Irish Sea. This would be achieved by simplifying the process required to get it ashore. The refurbishment of two 5,000 tonne platforms is expected to commence later in the month. This will increase output from the fields which already produce enough gas to heat 1.5 million UK homes. Tamsin Lishman, Morecambe Bay Director for Centrica’s exploration and production business, indicated that these fields had been a cornerstone of their business for more than thirty years.

62. Coal-mining was formerly a major Industry in the UK including in North West England. This particularly applied to Whitehaven in West Cumbria where, for instance, some 48 million tonnes of coal was extracted from the famous Haig colliery during its life-time between 1914 and 1986. However, in recent years the West Cumbria Mining Company (WCM) has forwarded proposals to mine the high quality coking coal resources in the area and supply it to the UK and other European steel markets. The aim is to create around 510 skilled job (including 50 apprentices) of which at least 80% would be recruited from local people. This is part of a £185 million proposal to develop a new underground mine extracting coal offshore. Saleable annual coal output has been forecast to reach over two million tonnes per annum.

63. The West Cumbria Mining Company (WCM) has recruited a number of key personnel including on the technical side. Most publicity, however, has gone to Chief Executive Officer Mark Kirkbride and Communications Manager Helen Davies. The former is a considerably experienced chartered mining engineer whilst Ms Davies has been a pro-active communicator working 50 hour weeks in winning over the local population to WCM’’s ambitious plans. Mark Kirkbride has suggested that in addition to the 510 direct jobs he anticipates that indirect jobs will total around 1,000-2,000 in the area. The money for the mine is coming from EMR Capital, an Australian private equity firm. It made an initial investment of £14.7 million in 2014 and it will take about £165 million to get it into full operation. The high-grade coking coal produced by WCM will be shipped to Europe which currently imports around 45 million tonnes a year from North America, Russia, and Australia. The coal which will be despatched from Redcar on Teesside will be cheaper and quicker to arrive. The first coal from WCM’s mine is expected by the end of 2019.

64. The world is continually changing and this applies especially to the business landscape. The creation of new businesses takes place at a tremendous pace. The closure rate of business units is also high. This renders it difficult to estimate the total number in existence at any one time especially micro-businesses. As indicated earlier there are over 200 countries on our planet. It would, therefore, be surprising if each one was identical in calculating its business coverage. Even here in the UK, with its long-established history and professionalism in such matters, the task is decidedly challenging! If one narrows the definition then, according to ONS in 2015 there were almost 2.5 million VAT and/or PAYE-based enterprises in the UK. In terms of actual numbers by far the most abundant are Small and Medium-sized (SME) businesses with just one unit. However, an important contributor to investment, turnover, and employment are the multi-plant enterprises. These include companies with operations abroad. Hence wider global considerations relating to strategy, outside the control of the local units, will often come into play.

65. There is a further complication, however, in that in the realm of surprises some events are much more challenging to predict than others. The spin-off from such incidents is similarly difficult to forecast. In September 2016 India’s Supreme Court directed Karnataka state to share water resources with neighbouring Tamil Nadu. This led to clashes with cars and buses being set alight. Prime Minister Modi urged calm in India’s Tech Hub after a water dispute caused violence. A strike over water severely impacted on IT business. The general disruption through the water war compelled doctors to smuggle patients across state borders. Although less traumatic the UK had its own water-related crisis. This took place earlier in the year and was the product of heavy rain. This caused various rivers to overflow creating flooding with the ensuing disruption on commerce, industry, and daily life and travel. Some observers have suggested, however, that the situation could have been ameliorated by increased anticipatory infrastructure spending.

66. Even without these surprise effects there are limits to the knowledge-base. There are practical difficulties of collecting and analysing vast swathes of relevant information. Hence when, for instance, the UK Chancellor of the Exchequer seeks to predict performance even in the year ahead, he is undertaking this key exercise with limited resources. Is it any wonder that detailed percentage performance figures are impossible to predict with any degree of accuracy? Measures announced by the Chancellor may seek to attain a particular objective but even there guesswork plays a considerable role. Philip Hammond’s Spring Budget of March 2017 was no exception. The Government’s guestimate on the effects of a particular measure will not necessarily equate to the views of other, including business organisations. Ironically the less controversial parts are sometimes rebuked for being too bland with little substance. These vary from pledging to make “Britain the best place in the world to do business” to laying the groundwork for a “brighter future” for Britain as it looked to leave the EU.

67. Another issue relates to the time needed to collect data. This can vary from series to series. Harold MacMillan (Prime Minister 1957-63) commented that in some instances economic predictions depended on the transport equivalent of using an out dated Bradshaw’s as a guide to train timetables. The position has improved since then, especially under the impressive professionalism of UK statisticians, but there is a limit to what can be achieved. The unexpected, difficult to predict, situations can undermine the most rigorously thought-out plans and policies. Harold MacMillan was responsible for at least one other shrewd assessment in this sphere. When questioned about the biggest influence on politics he is alleged to have replied “events, dear boy, events!”

68. The third quotation at the beginning of this Review although around four-hundred years before the second one is equally valid. The John Donne quote is, however, closely related to that of Donald Rumsfeld. “No man is an island entire to itself” emphasises the significance of inter-dependency ranging from people to organisations. The development of an enterprise, for instance, relies on a vast number of different features. No matter how innovative is the founder he or she needs highly skilled personnel to progress the business along effectively. These range, for example, from research staff to human resources managers, from skilled machine operatives to a focused marketing section. In a wider sense companies would find it difficult to operate except for key suppliers. As an example a major enterprise such as BAE Systems relies on an enormous network of component and other suppliers to ensure that it achieves its targets.

69. A company may have its overall efficiency reduced if it has to contend with a poor transport and communications systems. This not only applies to transportation of goods and services but also to ensuring that personnel can travel quickly and in reasonable comfort from home to work and vice versa. Another important consideration is the existence of a business-friendly government administration. What is the extent of government support systems, help and advice on skill training, level of business rates and is there an over-abundance of inhibiting “Red Tape” legislation? The latter can emanate not only from the national government but through wider multi-national scenarios such as the European Union (EU). The continually changing global economy stimulates competition and in order to be successful firms need to be “light on their feet”. This necessitates assessing product-lines on a regular basis, looking at cost-structures, considering new or re-investment.

70. Government strategy can only operate in the actual scenario in existence. However, financial and other support can play an important part. For instance, regional development has benefited from both UK and EU aid via Assisted Area (AA) and European Regional Development Fund (ERDF) aid. Prior to EU membership AA evaluation was based on the situation within the UK. In the context of European membership, however, areas were compared with the overall EU situation. The latter grew larger and provided more competition for scheduling areas as the number of EU members increased. This form of assistance was invaluable to a number of firms and in the main financial assistance came in the form of grant-aid. There were also other forms of regional aid such as advance factories built by the UK Government. In the more recent period, Government policy has been more constrained affected by the need to reduce the Budget Deficit.

71. The role of UK Government Assisted Area/Regional Development Policy warrants (and has received!) lengthy volumes of analysis. This has been from the early stages such as the 1928 Industrial Transference scheme and the 1934 Special Areas Act to the present day. Quite obviously the scale and focus detail of such assistance has varied even within the same Government Administration. There was also a period in Regional Policy when the “stick and carrot” approach was adopted. This sought to” encourage” Industry from the then “economically over-heated” London/SE Conurbation and also the West Midlands to locate projects in those areas where unemployment was high and jobs were scarce. The “stick” was in the form of refusing industrial development certificates in the “over-heated” areas but associating this with the “carrot” effect of financial and associated inducements in the more depressed locations in the UK. This approach, regarded by many pundits as appropriate for its time, has long-since gone into abeyance.

72. An influential political figure in the field of regional development has been the former Deputy Prime Minister Michael Heseltine. In October 2012 he had published “No Stone Unturned: in pursuit of growth”. In this paper Lord Heseltine made the case for a major rebalancing of responsibilities between central and local government and between government and the private sector. Under David Cameron’s Coalition Government in June 2010 businesses and councils in England were invited to come together to form Local Enterprise Partnerships (LEPs). The boundaries of the latter reflected the Country’s “natural economic areas.” These were to replace the Regional Development Agencies. This approach superseded the concept of the wider statistical regions as engines of economic growth. Indeed data is still meaningfully produced for these wider areas. Ironically Lord Heseltine had been a proponent of the Government Offices similarly now consigned to history. These had brought together, largely under one roof, all the key economic Government departments plus other key activators such as crime services in each region.

73. The effectiveness of the Local Enterprise Partnerships (LEPs) is determined by a number of factors including their constituent components. For instance, in North West England the Greater Manchester and Liverpool City Region LEPs benefitted from a fairly well-established connectivity which enabled them to organise themselves fairly quickly. Within the LEPs are Enterprise Zones where there is a range of incentives for businesses to start-up or expand. Amongst these are, for instance, enhanced capital allowances in some zones, Given concerns over “stifling red tape” a particular advantage in the EZs is simplified local authority planning. In 2010 the Government’s Regional Growth Fund (RGF) was launched. Its purpose was to support local businesses to grow and take-on more staff across England. Since its 2010 launch, by late 2015 it had invested some £2.6 billion. The LEPs make bids to secure funding from this pot of money and a range of businesses and enterprises have benefitted.

74. Much has been written over the so-called North/South Divide in terms of economic success. This is too simplistic a view and, in any case as indicated elsewhere, if there is an approximate “cut-off point” it is between the London/South East conurbation and the remainder of the UK or the so-called Peripheral regions. Be that as it may the concept of the Northern Powerhouse surfaced during the time of David Cameron’s Coalition Government (2010-15). The proposal was based on urban agglomeration and sought “the repositioning of the English economy away from London and the South –East”. Behind this were proposals to improve transport links, invest in science and innovation, together with the devolution of powers in City Deals. Under the current Prime Minister Teresa May, who assumed power in July 2016, it was alleged in some quarters that the focus on the North was to be down-graded. This was subsequently refuted by the PM who pledged to “help the great cities and towns of the North pool their strengths and take on the world.”

75. In recent times publicity has been given to the Northern Powerhouse Partnership. This is an independent body established by the former Chancellor of the Exchequer George Osborne to represent the voice of major business and civic leaders across the North. Amongst the participants is Lord Jim O’Neill former Commercial Secretary to the Treasury. He is also famous for having coined the phrase BRICs to refer to the growing economies of Brazil, Russia, India, and China. In October 2016 the NPP began a series of round-table “evidence gathering” events with a meeting in Manchester. It is invariably something of a challenge to assess how organisations such as these will ultimately influence policy. As will have been noted much Government legislation focuses on England with the Celtic nations (Scotland, Wales, Northern Ireland) having their own initiatives.

76. In February 2017 Government Minister Andrew Percy officially launched the new £400 million Northern Powerhouse Investment Fund (NPIF). The latter has been set-up by the British Business Bank in conjunction with LEPs across the Northern Powerhouse area. It is financed by the European Regional Development Fund (ERDF); the European Investment Bank (EIB); and the UK Government. NBIF aims to provide SMEs with increased flexibility in types of funding available. It will work alongside the LEPs and Growth Hubs. Local accountants, fund managers and banks will also be involved to work with SMEs at all stages in their development. It was indicated in early April that more than 530 businesses across the North had enquired about NBIF Funding. This was only four weeks after it opened to the market. Keith Morgan, CEO at British Business Bank, commented favourably. He indicated that not only was the level of enquires impressive but they covered a range of different sectors.

77. It was reported in April 2017 that two businesses in the North West were amongst the first four to secure cash from the NPIF. Business Finance Solutions has invested £100,000 in Greater Manchester-based mobile CCTV provider Red Security Solutions. This will allow the business to invest in a range of new hybrid and solar-powered technology. FW Capital Debt Finance has provided an undisclosed amount to support the continuing growth of AEV of Birkenhead. The latter manufacture varnishes, resins, compounds and insulating products designed for the electrical and electronic sectors. The funding is to support AEV’s continuing growth strategy especially in emerging markets outside the EU.

78. A UK Northern Powerhouse International Conference &Exhibition was held in Manchester in February 2017. It was indicated that UK manufacturers needed to be on a “level playing field” to compete globally. That included addressing such challenges as energy costs. For instance British Steel Commercial Director Peter Hogg found it disturbing that his business paid “twice as much for its electricity as overseas competitors.” Amongst other concerns the Government was also urged to support a long-term R&D investment strategy for the biotechnology sector. It was also vital that the Government created an environment that made it easier for sectors such as car manufacturing to keep their operations in the UK.

79. A successful Northern Powerhouse would embrace all the aspects of potential growth and development ranging from infrastructure to R&D, from skill-training to education, from a business-friendly approach to environmental improvements. A concern that has been voiced in the past is that not enough attention and support has been put into locations outside the main centres. Hence it is important that no area is considered to be “off the beaten track”. Examples of business success stories given later in this review bear out this statement forcibly!

80. It is important that the cities and towns in the Northern Powerhouse are seen to be, and actually working together in a common forward-looking advance. One of the first impacts in January 2017 was decidedly positive. It was then that the Prime Minister announced a £556 million boost for the Northern Powerhouse. This amount was to be spread over eleven LEPs with the largest recipients Greater Manchester with £130.1 million; Liverpool City Region with £72.0 million; Lancashire £69.8 million; Leeds City Region £67.5 million. North Eastern £49.7 million. Amongst other parts of the North West Cheshire and Warrington were to receive £43.3 million and Cumbria £12.7 million. North West England based projects included £10 million for the Greater Manchester and Cheshire Life Sciences Fund. There was also funding for a conference centre and hotel at Blackpool’s Winter Gardens.

81. On the negative side following the announcement was the concern expressed by, for instance, Tom Bridges Leeds City Council’s Chief Officer for Economy and Regeneration. He expressed the view that Greater Manchester seemed to be benefitting disproportionately He commented that “we talk about a North-South divide in public investment in transport, science and culture. Increasingly there is an East-West divide across the North.” Jonathan Walker, Head of Policy at the North East England Chamber of Commerce, suggested that the funding announcement represented a lost opportunity. In his view more could have been done for transport infrastructure or giving a greater boost to skills investment. Steve Rotheram who was campaigning to become Mayor of Liverpool claimed that the funding announcement was a step in the right direction. However, much more work was needed to rebalance the UK economy and demonstrate a full-blooded commitment to devolution.

82. There are, without doubt, however a number of positives in terms of business linkages and co=operation in the North. For instance in April 2017 it was announced that two businesses had signed a five-year deal. Cumbria’s Lakes Distillery, located at Setmurthy near Bassenthwaite, took the strategic step of engaging as a new corporate partner Newcastle International Airport. This new partnership will enable the distillery to showcase its Best of British range of spirits, as well as its site, across the Airport and its social media platforms. The partnership will see Newcastle International Airport make The Lakes Gin available for purchase in its World Duty Free Store. It also further strengthens the Airport’s policy of growing its catchment area across Cumbria including with businesses.

83. North West England has undergone considerable changes especially in the composition of its industrial and commercial base. In the 20th Century there were concerns about the shrinkage in various major sectors. Part of this was the result of overseas, including low-cost competition. However, on a more positive side part of the employment loss was also due to increased productivity. Those firms that have survived are invariably those businesses that have organised themselves well, sought quality and focused into profitable niche markets. At the same time whole new sectors have developed ranging from digital to advanced flexible materials. This has moved well along the road to so-called “balancing the economy” and should not be under-estimated. It is essential that this type of change and progress is assimilated into any economic forward-assessment and analysis.

84. The North’s world-class universities and business schools are focused on high quality practical research. Higher Education is indeed a key sector in itself as witnessed by a report produced in 2016 entitled “The Power of 8: Knowledge and Growth for the North.” This was the result of research by a not for profit organisation entitled N 8: Research Partnership in the North. The latter, set-up in 2007 and funded by the member universities promotes efficiency, collaboration and innovation. The study highlights the combined performance of eight universities namely Manchester, Liverpool and Lancaster in the North West; Leeds, Sheffield and York in Yorkshire and Humber; and Newcastle-upon-Tyne and Durham in the North East. The data indicates that these 8 higher education facilities contribute more to the UK economy than all the Premiership football clubs combined!

85. N 8 have estimated that for the year 2014-15 the eight universities achieved a direct Gross Value Added (GVA) of £2.7 billion per annum. However, the “knock-on” effect was a further £2.4 billion whilst the Student GVA was about £1.5 billion. This suggests an overall impact of £6.6 billion per annum. It was estimated that the N8 Universities delivered into the North a collective income of £4.1 billion per annum which compares with the Premiership Football Clubs figure of £3.2 billion. In addition to the N8 collective output of £4.1 billion their economic activities generate a further £5.2 billion in other industries annually. Most of this, namely£4.8 billion, is spent in the North. If one adds in the N8 Students impact of about £3.3 billion then the combined figure or North impact is £12.2 billion per year. The N8 universities have a combined research income of £1.26 billion per annum and the earlier collective income figure quoted of £4.1 billion accounts for 12% of the entire UK Higher Education (HE) sector. There are 100,000 students in the N8 universities and some 118,000 Full time Equivalent (FTE) jobs result from these 8 enterprises. Professor Koen Roberts, Chair of N8 and Vice-Chancellor of University of York commented thatN8 universities, as well as being world-class research institutions are also major economic enterprises generating significant revenue and economic activity as well as driving inward investment.

86. An interesting example of what dynamic higher education establishments can achieve is illustrated in an April 2017 announcement. It relates to the launching of a new “Low Carbon Lancashire Innovation Hub” being offered to small and medium-sized enterprises (SMEs) in Lancashire. The SMEs will be able to benefit through access to research and development projects three research institutions. Lancaster University through its Centre for Global Eco-Innovation and the Lancaster University Management School is collaborating with the Natural Environment Research Council’s Centre for Ecology and Hydrology and Liverpool John Moores University to create the Hub. Lancaster University Management School is launching a new 6-month management programme entitled “the Low Carbon Innovation Forum”. The latter will help directors and managers of sixty Lancashire-based SMEs improve competitiveness and climate impacts by developing new products, services or through improving the energy efficiency of day-to-day business operations.

87. The above example provides indisputable evidence that the significant contributors to economic growth do not necessarily come from the standard definitions of industrial/commercial sectors. For instance a leading voice, Claire Braithwaite, Head of Tech North, referred passionately to the increasing role of the Digital sector which she considered would be “the beating heart of the Northern Powerhouse”. She went on to say that “it will be our businesses and start-ups at the centre of the North’s growth; our technology and networks enabling critical connectivity and our founders, entrepreneurs and innovators leading the charge.” This is a view shared by Lord Jim O’Neil who insists that the Northern Powerhouse is about “much more than devolution.” He has further commented that it is also about “nurturing the creativity and talent in our Northern Cities.” In this way, for instance, our leading digital entrepreneurs can reach their full potential.

88. It was reported in February 2017 that Engineering multi-national Siemens had entered a strategic digitalisation partnership with Encirc. The latter is a container glass manufacturer and contract bottler, part of the Spanish Vidrala Group since 2015. Encirc occupies two sites one in Fermanagh in Northern Ireland and another in Chester serving the Food and Drinks sector with its products and claiming over 33% of market share. The company plans to invest significantly in furnace rebuilds at both its sites over the next five years. Adrian Curry, Managing Director of Encirc, believes that the strategic partnership with Siemens will enhance his company’s impressive reputation in technology, innovation and sustainable manufacturing. It represents Enric entering a new phase in terms of digitalisation and future technologies. Further reducing the company’s energy use and emissions will also build on their commitment to provide customers with the most environmentally-friendly route to market that is possible.

89. Juergen Maier, Siemens UK Chief Executive Officer, proclaimed the agreement a landmark technology partnership. He emphasised that it is set to focus on two central challenges, namely industrial digitalisation in the UK Glass sector and red reducing carbon emissions. Siemens UK is an appropriate company for Encirc to be working with. Its involvement in the Engineering Industry is immense. The wider Group, with its HQs in Berlin and Munich, is a European giant prominent in a number of Engineering fields ranging, for example, from medical technology to power generation, from water treatment systems to fire alarms, from industrial and buildings automation to railway vehicles. Indeed Siemens has been active for approaching 170 years in the UK where it employs around 14,000 people including 5,000 in Manufacturing. It has a presence in Greater Manchester and in Congleton in Cheshire is the famous Standard Drives facility. There is also the Siemens Subsea Excellence Centre in Ulverston in Cumbria.

90. Siemens has a long-standing connection with the UK. The original company was founded in Germany in 1847 by Werner von Siemens and Johann Georg Haske. However, the founder’s younger brother Carl Wilhelm Siemens (later Sir William Siemens) began to represent the company in London in 1850 with the London Agency becoming a branch office in 1858. This UK linkage continues not least through the passionate and highly professional involvement of Juergen Maier. He was appointed CEO of Siemens UK on 1st July 2014 and amongst recent positions that he has held has been MD of Industrial activities for the UK and Manufacturing Director of the award-winning Drives factory in Congleton. Juergen joined Siemens in 1985 with a BSc in Production Engineering from Nottingham Trent University. Born in Germany in 1964 he came to the UK in 1974.

91. The current CEO of Siemens UK is a firm advocate of the UK rebalancing its economy and has supported many UK-wide initiatives championing Manufacturing, improved infrastructure and engineering skills. This included, for instance, board membership of the EEF, the UK’s Manufacturers’ organisation. He was also asked by the UK Government to lead a new review on Industrial Digitalisation for UK Manufacturing. Juergen is part of the Northern Powerhouse Partnership, is Chairman of the North West Business Leadership team and a board member of Greater Manchester LEP. He was made honorary Professor of Engineering at the University of Manchester in March 2014.

92. Transport has featured prominently in discussions on the Northern Powerhouse including the necessity of strategic development in the road and rail network. Air transport is also a key feature and was focused upon at a two-day event in Manchester in March 2017. Tim Hawkins, Corporate Affairs Director at the Manchester Airports Group, stressed that better East-West connectivity was essential in driving the North’s economy forward. Within North West England the value of the Manchester (MIA) and Liverpool (John Lennon) International airports is immense on a number of fronts not least the positive impacts on business development.

93. Manchester International Airport is now among Europe’s twenty busiest with 26 million passengers in a 12 month period. There has been three years of constant growth with 1.7 million passengers using the Northern Gateway in February 2017 alone. This was an 11% increase on the same month in 2016. Ken O’Toole, CEO at Manchester Airport, has commented that growth has been delivered across the board. This reflects the fact that Manchester is now one of the world’s top fifteen airports in terms of the number of different destinations flown to. Liverpool’s John Lennon Airport has performed impressively especially between 1997 and 2007 when it was one of Europe’s fastest growing. Annual numbers in 1997 was nearly 690,000. However, by 2007 the figure had risen to 5.47 million. The situation has subsequently slowed. Nevertheless the 2016 figure of just over 4.8 million in 2016 represented an increase of over 11% on 2015. Making it the 12th busiest airport in the UK.

94. The John Donne quotation, beginning with the statement that “no man is an island”, has as much relevance now, if not more so, as when penned by the famous metaphysical poet. However, at least part of the theme running through these early paragraphs of the Economic Review, warns of the dangers of uncertainty. This is, fortunately, only one aspect of the situation. Mankind has made amazing progress through the achievement of notable advances in many varied disciplines. Every era has contributed in terms of new discoveries, developments in application and techniques, new approaches, and methods affecting increased productivity. These have been crucial and without them the world would be a different and less efficient place. They range from medicine to engineering, from bio chemistry to genetics, from Rocket science to transportation, from physics to construction. It is also important to identify some of the subtle changes in the way production is undertaken. This can often result in considerable cost-saving. It does not always have to be a headline-catching “remarkable product”. In its own way an efficiently constructed tea-bag says as much about innovation as a new jet-engine!

95. Both the high profile technological advances and the shrewd but less dramatic structural and reorganizational improvements play their part. Without such interventions solid, consistent progress could not have taken place. This Review homes into an eclectic mix of situations, demonstrating how business has responded to its challenges. In the modern world improvements are taking place rapidly. For instance within the space of a few decades a firm can have changed significantly. An industrial plant with, say, formerly 200 employees may now only provide jobs for around 50. The change is not always due to fierce competition from elsewhere. A look at the composition of the factory floor often provides the answer. Increases in productivity due to features such as micro-processors are not uncommon. One aspect, however, that the successful entrepreneurs have in common is resilience and refusal to be beaten. They obviously respond positively to that famous, although anonymous, quotation “life is not about waiting for the storms to pass it is about learning to dance in the rain!”

96. Events are obviously very important but equally significant is the reaction to them. Much has been written and spoken about the environment and the impact that it has on 21st Century life. Climate change is an intensely debated subject with a multiplicity of suggestions as to how man can help combat the adverse effects. It is especially confusing when even technical experts differ, however, on the extent of and crucially the significance of individual causes. Most observers would concede that changes have taken place and that man’s global activities including on the industrial front have, through their impact on the environment, caused severe problems. It was, therefore, with a measure of satisfaction at the time, that the latest Climate Change Summit at Paris in late November/early December 2015 achieved notable progress. However, signing a document and undertaking radical action are two separate actions.

97. Nonetheless Friday 22nd April 2016 was a significant day on addressing the environmental aspects of Climate Change. It was then that around 175 governments symbolically “put pen to paper” at the United Nations. By 12th January 2017 some 194 had signed the document of which 123 had both signed and ratified. At that stage only three countries had not signed namely Uzbekistan; Syrian Arab Republic; and Nicaragua who, nevertheless, combined only accounted for 0.78% of Global Emissions. The Paris agreement sought to avoid the more catastrophic effects of Climate Change by limiting warming to 1.5C-2C with governments committed to replacing fossil fuels almost entirely by “clean energy” in the second half of this century. The world’s two largest emitters, namely China (20.09%) and USA (17.89%) were amongst those that had both signed and ratified. The UK, represented by Foreign Secretary Boris Johnson, officially ratified the Paris Climate agreement on Thursday 17th November 2016. This Country accounts for 1.55% of the World’s emissions.

98. What happened next confirms the difficulty of making predictions of almost any kind?! Later on in this Review discussion is undertaken on political change. One of these features was the (Media) surprise at the election of Donald Trump to the Presidency of the USA. The new President has demonstrated his climate change scepticism and campaigned on a pledge to boost the US oil and gas drilling and coal-mining industries by reducing regulation. Technically a Government wishing to pull-out of the Paris Agreement after ratification has to wait four years. However, a speedier method could be through withdrawing from the 1992 International Framework Accord on Climate Change.

99. Events in mid-April 2017 demonstrated the difficulty of prediction. Some of President Trump’s policy advisors were reported to be urging him to keep the USA in the landmark Paris Climate Accord of 2015. Earlier on the Election Campaign trail Donald Trump had vowed to “cancel” the Climate deal. This view has been firmly supported by the President’s senior strategist Stephen K Bannon. However, Trump’s daughter Ivanka and her husband Jared Kushner have advocated remaining in the Accord Secretary of State Rex W Tillerson, former Chief Executive of Exxon Mobil has also spoken in favour of “keeping a seat at the table”. The President does not, in any case, have the authority to cancel a multilateral UN agreement such as this. It would also affect the USA diplomatically if the world’s largest economy was seen to back-tracking. Indeed a number of pundits suggest that it would weaken American leadership overall. According to Sean Spicer, the White House Press Secretary, the President plans to make a decision before the get-together of the world’s seven leading economies at the end of May.

100. Despite given commitments many scientists and economists are sceptical about how effective governments will be in pushing ahead with these policies. For instance, Ottmar Edenhoffer, Chief Economist at the Potsdam Institute for Climate Change Research, complains that over the last decade energy systems have actually been carbonised and not decarbonised! It has also been claimed that, despite a “flurry of climate initiatives” since 2013, the USA, even before the change in Administration, had yet to produce a coherent, long-term plan for a 21st century post-carbon economy.

101. The World Bank Group plays a significant role as the largest provider of public finance to developing countries. Their President Jim Yong Kim, speaking in April 2016, stated that his organisation was taking urgent action on the Climate front. This involved assisting nations to make major transitions to increase sources of renewable energy, decrease high carbon energy sources, develop green transport systems and build sustainable cities for growing urban populations. Indications were given that at least $16 billion from across the World Bank Group would be directed to Climate Change projects. It was also hoped to mobilise $13 billion in extra funding from the private sector within four years. By 2020 these efforts should amount to about $29 billion per annum. This compares with the figure of $100 billion a year promised by the richer countries to the poorer as part of global Climate Change agreements. Amongst other features the World Bank will be targeting “smart” agriculture systems which utilise less water and energy and retain soil fertility. The Group will also help countries to develop their transport and urban infrastructure in order to produce much less carbon.

102. Recent events have emphasised how significant is unpredictability in human affairs. As part of their electioneering in the 2015 General Election the Conservative Party had promised, if they won power, to hold a Referendum on continued European Union (EU) membership. Having won the Election Prime Minister David Cameron announced that this national plebiscite would take place on the 23rd June 2016. The Prime Minister set-out to secure improvements in the EU which would benefit the UK. When he felt that he had achieved this aim he indicated his decision to support a vote to remain in the Community.

103. Amongst organisations supporting this stance was the NW Business Leadership Team who stressed the importance of access to EU Structural funds. The latter, on the basis of the current programme covering the period 2014-20, was estimated to be worth around £800 million to North West England alone. The OECD published a policy paper on 27th April 2016 in which the case was made for the UK remaining in the EU. The report suggested that uncertainty about the outcome of the Referendum had already started to weaken growth here. If BREXIT took place the UK would be adversely affected by tighter financial conditions and weaker confidence. After formal exit from the EU there would be the difficult challenge of higher trade barriers as well as a restriction on labour mobility. The situation would also produce economic fall-out in the rest of the OECD especially holding back economic progress in Europe. Amongst a number of other concerns it was suggested that labour productivity would be held back by a fall in direct overseas investment and a smaller pool of skills. Quite obviously the OECD supported the proposition that the UK should retain its EU membership!

104. There was a fierce Media debate with both the “Remain” and “Depart” camps suggesting dire results if the opposing view were to prevail. In any event the Referendum was not one being decided by professional economists or even the business sector but the public at large. Even amongst the aficionado differing views were represented and the issue of stay or leave did not particularly lend itself to strict “scientific” analysis. It must also be acknowledged that other wider issues were also on the “debating table”. These ranged from “is there too much immigration for the UK to sustain?” to “is this country in danger of losing its Sovereignty?” A frequently argued case was the distance from “unelected” Brussels.

105. With the date of the Referendum rapidly approaching the pollsters suggested that the “Remains” would win the vote. The reality was quite different with the actual result showing a victory by 51% to 49% for those wishing to leave the EU. Amongst those voting in the 18-24 age group 75% wished to remain in the EU; amongst those between 25 and 49 those wishing to remain was 56%. As the age coverage grew older the proportion opting to remain in the EU declined; it was 44% for the 50-64 group and only 39% for those who were aged 65 years and over. Most UK regions opted to leave the EU with only three indicating the wish to remain, namely Scotland with 62%; London 59.9%; and Northern Ireland 55.8%. Interestingly in the UK dependency of Gibraltar the proportion wishing to remain was as high as 95.9%. In North West England those wishing to remain accounted for 46.3% of voters. The smallest UK regional proportions indicating the desire to remain in the EU was West Midlands on 40.1% and East Midlands on 41.2%.

106. David Cameron, who had put the case for remaining in the EU, announced that after seeking to “steady the ship” he would resign. In the event the transition to a new Prime Minister took place fairly swiftly with former Home Secretary Theresa May securing the post on the 13th July. Interestingly an event of this nature with a “surprise result” was more than likely to produce a “predictable” response! On the result being announced the £ fell dramatically. The immediate fallout from the Referendum was a drop in the value of Sterling. This included more than £100 billion wiped from the FTSE 100 on the morning of 24th June as stock markets reacted to the result. Subsequently the situation calmed down as the result of the Referendum “sunk in”. However the future, not least in terms of the logistics of disengagement from the EU, could be tortuous and difficult to forecast.

107. UK membership of the EU, until the Referendum results were known, was a given situation with trade and other situations established. The so-called and unknown BREXIT renders an assessment of future UK performance even more difficult than normal. On the positive side, as the more detailed part of this review will demonstrate, this country including North West England has a number of upbeat commercial and industrial enterprises. However, a company is only as successful as its markets.

108. The immediate impact of BREXIT was to cause “jitters and tremors” in key parts of the global economy. Reports, surveys, and opinions abound in such circumstances. There was, for example, headline coverage in the press in late September 2016 quoting Mathias Dopfner Chief Executive of the German publishing house Axel Springer. He suggested that the EU would suffer disproportionally from losing the UK’s “healthy influence.” The Chief Executive believed that this country would emerge from Brexit with a stronger economy and be better off than other EU states within five years. He added that he counted on “the pragmatism and free market orientation of the British people” who will find means “to attract foreign investment and be an important business hub.” Ironically the fall in the value of the pound following the BREXIT announcement not surprisingly benefitted UK exporters.

109. The UK possesses a very sophisticated and diverse economy. The latter part of this review demonstrates this substantially and that is focused largely on North West England. We would not be so arrogant and unrealistic to suggest that this Region has most of the UK’s Industrial and Commercial “virtues”; indeed there are also distinct challenges here as well as the positives! However, the UK and its regions cover a multitude of activities. Mention has already been made of the Financial sector which we ignore at our peril. According to Lobby group TheCityUK the UK’s Financial and Professional Services Industries contribute £176 billion to the economy annually. The sector is also the UK’s biggest exporter. A number of articles have appeared in the press suggesting that there will be challenges to some of those enterprises under foreign ownership. Invariably at times like these conjecture of this kind is not uncommon.

110. According to the latest 2016 KPMG survey, publicised in April 2017, the UK remains an attractive place to undertake business but has “lost ground” following BREXIT. As in 2015 the UK was in second place behind Ireland amongst UK companies. However, amongst non-UK enterprises the UK fell from first to fifth place in the rankings. Robin Walduck, tax partner at KPMG in the UK, commented that “the material change this year is that finance executive are now grappling with the question of how BREXIT might impact present and future investment in the UK. It’s in this area that we see a striking divergence between the views of UK companies and their G7 peers, providing some insight as to why the UK has started to fall out of favour.”

111. An especially challenging part of the UK BREXIT process is the time involved. There has been much discussion over activating Article 50 which Prime Minister Theresa May triggered in late March 2017.Technically the UK remains part of the EU until the process of separation is complete. Companies, therefore, need to be thinking about their trade situations in the context of future barriers. Also modern-day production is not free from complexities. As an example Bentley Motors at Crewe sends its car bumpers to Germany to have them professionally painted. They are then returned to the UK. In such circumstances the level of tariff is especially relevant. The 21st Century is one strongly influenced by global considerations and this applies to the significance of multi-national enterprises. A number of considerations help to decide where they chose to locate and invest including the value of EU membership. An ever-present concern at the moment is the uncertainty. This applies in many areas. As an example Dr Muhammad Amjad, lecturer in Strategy at Salford Business School, commented about research funding. He suggested that the latter would “have to go through more hoops” for cross EU collaborations in areas such as medicine, business and technology research.

112. Many large businesses have plants and other facilities in more than one country. This certainly applies in the UK. The BREXIT situation is particularly relevant here in the influence it may have on the investment decisions of multi-nationals. A number of companies have been fairly non-committal in their views. However, amongst larger Groups Pirelli is already expanding its tyre-producing facility at Carlisle. The expansion is to “cure” tyres, a process which gives the product its final shape. The firm, in February 2017, suggested that this would secure the 850 jobs at their Dalston Road factory as well as around 3,000 further supplier jobs. The company was until recently head-quartered in Milan in Italy. However, they are now under the control of China National Chemical Corporation (Chem China).

113. In October 2016 a firm commitment to Britain was made by the Chief Executive of the Boston, Massachusetts-based sportswear firm New Balance. This well-known business has a high reputation in the manufacture of athletic footwear. They have a manufacturing plant at Flimby in West Cumbria that employs 240 whilst their European HQ is at Warrington employing more than 160 staff. CEO Rob DeMartini commented that his firm had “big business here, we have a long-standing commitment to manufacturing in the UK” and “that will continue.” He also indicated that “we have faced plenty of political and economic challenges before and we are committed to the UK.” He added that BREXIT would bring the USA and the UK closer together. “We have been friends a long, long time.”

114. Within both the Aerospace and Automotive sectors there has been some caution expressed about the impact of BREXIT. Both sectors are especially significant within both the North West England and wider UK economy. The Society of Motor Manufacturers and Traders (SMMT) announced that in March 2017 British car-makers produced some 170,691 vehicles a 17 year record for March. It was indicated that one car was exported every 20 seconds in March with export demand increased by 10.6% compared with 12 months ago. The new car market hit record heights in March 2017 with 562,337 registered whilst for Q1 2017 the figure (another record) was 820,016. UNITE General Secretary Len McCluskey believes that these outstanding figures indicate the sector’s “jewel in the crown” status. Hence it is important for the PM to fight vigorously for British Manufacturing in the BREXIT negotiations.

115. The Region’s Automotive sector has performed impressively in recent years with major plants at Halewood, Ellesmere Port and Crewe. All three operations have benefitted from overseas investment. Stuart Lord became Operations Director at Jaguar Land Rover (JLR) at Halewood on Merseyside in October 2016. The company is part of the Indian Tata Motors Group. Speaking this January Stuart Lord commented that production volumes at Halewood were almost four times higher than they were a decade ago. Success has been driven by the Range Rover Evoque with more than 5,000 of the brand built here since the launch in 2011. In addition the Discovery Sport was launched in 2014. These two cars received around £600 million investment between 2010 and 2015. The Halewood plant employs 4,200 staff and in early 2017 came the announcement that more than £130 million was being invested in the plant to further increase productivity. Incredibly already it is claimed that a vehicle leaves the production line every 82 seconds.

116. The Vauxhall Astra plant at Ellesmere Port has similarly been a success story. However, there was some apprehension when it was announced that USA-owned General Motors, their Parent, was in discussion with France’s PSA (Peugeot Societe Anonyme) Group to sell their European operations. PSA are famously the owners of Citroen and Peugeot. In March 2017 a £1.9 billion take-over deal was agreed with PSA subsequently giving a commitment about the over 1,600 jobs at Ellesmere Port until 2021. That is when the latest production run of the Astra finishes. Vauxhall currently produces some 140,000 of the brand there each year. Following an earlier meeting between Carlos Tavares, CEO at PSA, and Len McCluskey, General Secretary of the trades union Unite, reported “a relatively positive first meeting.”

117. The result of the USA Presidential Election provided a distinct surprise in a number of circles. Successful businessman Donald Trump, with no conventional previous political background, defeated the Media favourite Hilary Clinton, who had been USA Secretary of State in the out-going administration. Almost right until the last moment Clinton was expected to win. It was believed by much of the Media that the “safe” political candidate would secure the overall victory. Instead the Presidency went to the outsider. Amongst a variety of forthright policies espoused was a more determined attitude towards trade relations with China. The new President also emphasised that he was the leader of the USA and not the World, and policies would seek primarily to benefit the States.

118. Much of the Media do not help in their own appraisal process. Their “bottom line” is to sell newspapers and, hence, a more bland, albeit realistic analysis of the situation does not particularly help circulation. In the post-Presidential Election period Donald Trump has had a better opportunity to spell out at least some of his policies. They reveal, in various instances, the ability to provide a fresh, clear-sighted view of the world from a successful businessman’s perspective. An additional feature to consider is that a candidate’s professed policies are not always followed exactly when actual office is attained. This can just as easily be due to challenges in making complex plans work “on the ground”.

119. It was not only the UK that held a Referendum in 2016. Italy held a constitutional Referendum on 4th December. Voters were asked whether or not they approved a law that amended the Italian Constitution to reform the composition and powers of Parliament as well as the division of powers between the State, the Regions, and administrative entities. The Bill was put forward by Prime Minister Matteo Renzi. And his centre-left Democratic Party on 8th April 2014. In accordance with Article 138 of the Constitution a Referendum was called because the constitutional law had not been approved by a qualified majority of two-thirds in each house of parliament in the second vote. This was the 3rd constitutional referendum in the history of the Italian Republic. The previous ones had been in 2001, in which the amending law was approved, and in 2006, in which there was a rejection.

120. The December 2016 Italian Referendum proved disastrous for Matteo Renzi. The vote went 59.11% against the proposals compelling the Prime Minister to resign. There was deep concern in other parts of Europe. For instance quotes from the Federation of German Industries suggested that “the risks of a new political instability for economic development, the financial markets, and the currency union are increasing further.” German Foreign Minister Frank Walter Steinmeier indicated that whilst the result of the Referendum did not represent “the end of the world” it was also “not a positive development in the case of the general crisis in Europe.”

121. There was a more welcoming response to the results of the Austrian Presidential elections on 5th December 2016. Prior to the vote it was anticipated that the contest was “too close to call” between Alexander Van der Bellen, former head of the Green Party, and Norbert Hofer, from the far-right Freedom Party. In the event Van Bellen secured victory with about 53% of the votes. In the previous run in May he also won but the result was over-turned by Austria’s highest court because of postal vote irregularities in the count. The now confirmed winner indicated that he would seek to be “an open-minded, liberal-minded, and first of all a pro-European Federal President of the Republic of Austria.”

122. The French Presidential Election took place on Sunday 23rd April 2017. Some months ago few commentators would have given much chance to the politically far-right candidate Marine Le Pen, leader of the National Front. Much of the Media felt that the winner would be the Independent Moderate/ Centrist candidate Emmanuel Macron. Le Pen had indicated that if she won she would hold a Referendum on EU membership within six months of coming into power. If Brussels agreed to transfer sovereignty to France (including a return to the Franc in place of the Euro) she would back the Remain campaign. However, if not she would propose leaving.

123. The two Presidential candidates were certainly not the “traditional” contenders. Emmanuel Macron is a former banker who has never been elected to political office. He served the government of the “deeply unpopular” outgoing Socialist President Francois Hollande as an unelected Economy Minister. However, he resigned in August 2016 to build-up his En Marche (Forward) movement. Following the first round of voting Macron led the polls ahead of Le Pen. This meant that the two of them would be contesting the decisive second round on 7th May.

124. A General Election was scheduled for 15TH March 2017 in the Netherlands. There were a total of 31 parties competing for votes with expectations before-hand that of those around 14 would probably secure at least one seat. In mid-February Geert Wilders far-right Freedom Party had a narrow lead over the centre-right People’s Party for Freedom and Democracy. The latter was led then by the current Prime Minister Mark Rutte. As it was the PM and his Party saw off the challenge and occupied first place albeit as a minority. It was expected that some time would elapse whilst Mr Rutte seeks to form a collation with the exception of Geert Wilders. All the major parties were unwilling to work alongside the latter and his Populist, anti-Islam Freedom Party.

125. The German elections are scheduled for autumn 2017. In February it was suggested in the polls that current incumbent as Chancellor, the long-serving Angela Merkel, was seeing her support eroded by Martin Schulz. The latter is leader of the Social Democratic Party (SDP) which is in coalition with Mrs Merkel’s Christian Democratic Union (CDU). The backgrounds of the two opponents are dissimilar. Whilst the Chancellor is a former research scientist with a doctorate in Physical Chemistry, Martin Schulz dropped-out of secondary education but subsequently advanced his career by dint of determination and combativeness. He has only recently vacated his post of EU Parliament President. If he secures victory over Angela Merkel he is likely to drive a hard bargain with the UK. He has been a vocal critic of the BREXIT decision.

126. Amongst other parties and personalities featuring in the German Election run-up is the right-wing Alternative fur Deutschland (AfD) which is led by Frauke Petry and Jorg Meuthen. The former gained her first degree, in Chemistry, in the UK at Reading University, and her doctorate at the German University of Gottingen. Jorg Meuthen, Professor for Political Economy and Finance at Academy of Kehl, is the co-leader and represents the more moderate section of the Party. Ironically this relatively new political party was initially associated with Bernd Lucke, a mild-mannered free-market economist. The agenda was based on the conviction that the Euro was unsustainable as a currency. Within the Party, however, the emphasis switched towards an anti-refugee stance focusing on the need for stronger restrictions on immigration.

127. The UK Media, probably not unexpectedly, tends to home in on the European Union (EU) almost as if it was the only such organisation on the globe. Yet at September 2016 Brazil was urging India to broaden its presence in MERCOSUR (in Spanish Mercado Comun del Sur, in English the Southern Common Market). Brazil’s Agriculture Minister felt that BRICs nations should be increasing trade with each other. MERCOSUR has as its full members Argentina; Brazil; Paraguay; Uruguay; and Venezuela. Associate countries are Bolivia; Chile; Peru; Columbia; Ecuador; and Suriname. Observer countries are New Zealand and Mexico. MERCOSUR originated in 1988, was established in 1991 by the Treaty of Asuncion, later amended and updated by the 1994 Treaty of Ouro Preto. Its purpose is to promote free trade and the fluid movement of goods, people, and currency. It is now a full customs union and a trading bloc. MERCOSUR and the Andean Community of Nations are customs units that are components of a continuing process of South American integration connected to the Union of South American Nations.

128. The Eurasian Economic Union (EEU) is of more recent origin but worth close study. The project was first mooted in 1994 by the President of Kazakhstan but it was not until May 2014 that an actual treaty was signed aimed at its establishment. The countries involved were Belarus; Kazakhstan; and Russia. Armenia and Kyrgyzstan’s were officially added in 2015. The EEU has an integrated single market of 183 million people and a GDP equivalent of over 4 trillion US Dollars (purchasing power parity). There is free movement of goods, capital, services and people and there is provision for common transport, agriculture and energy policies. There are provisions for a single currency and greater integration in the future. The Supreme Eurasian Economic Council is the Supreme body of the Union consisting of the Heads of the Member States.

129. This Review has focused on a number of separate issues that militate against predicting future developments. Policies of individual nation states are variable. In addition some are even more predictable than others. The policy of Syria has been held up as an example. As the reader will, hopefully, have gathered, the above examples only “scratch the surface” in listing the myriad unpredictable factors that contribute to economic reality. Economics is certainly not just about economics. In fact it includes the whole “melting pot” of activities and occurrences within the planet. Even this approach does not cover absolutely everything. Think about the possible impact of a stray meteorite striking the earth!

Some Facts and Figures: How the UK stands on the basis of global comparisons.

130. There is a certain irony in the title of this section in that the Introduction to the Review has cast some doubts on the validity of various data series! Indeed I hope that the reader is not overwhelmed by what might seem a plethora of statistics! Despite that, provided used prudently, statistical analysis is still a useful tool in evaluation. If nothing more it at least allows the investigator to identify orders of magnitude as well as think more cogently about the local/regional/national/and international situations. It is important to recognise, however, that the world is a very inexact place. There is even some debate about the actual number of countries contained within our Planet. As mentioned earlier the United Nations listed 233 countries in 2016 although actual membership of the UN amounts to 193 nation states plus two observers.

131. The UK, together with individual regions including our own North West England, is often done a disservice by the reporting media. It would be equally facile to assume that all is bright and cheerful and there is no room for improvement. Hopefully this Review does not evade the problem situations where they have arisen. At the same time attention is justly given to the positive growth stories. The Report does not claim to provide a detailed assessment, sector by sector, but rather seek to identify individual company traits that have helped to drive business.

132. One of the parameters most used to assess an economy’s progress is unemployment particularly the actual percentage rate. Unfortunately methods of calculation vary from nation to nation. One well-established approach is the International Labour Organisation (ILO) harmonised unemployment rates. The latter cover those of working age who are currently not working but are willing and able to work for pay, importantly available and actively seeking employment. The latest Eurostats data provides estimated rates of unemployment for the current EU28 on a seasonally-adjusted basis at February 2017. The EU28 average was 8%. Individual states ranged from the highest rates of 21.1% and 18% for respectively Greece and Spain to the lowest which was 3.4% recorded by the Czech Republic and 3.9% by Germany. GB recorded the 5th lowest rate with 4.6% whilst our French neighbours had an unemployment rate of 10%. ONS data indicated that the UK had an average unemployment rate of 4.7% whilst CIA statistics suggested that in February 2017 the USA figure was also 4.7%. The Japanese unemployment rate compared very favourably at 2.8%.

133. In order to assess the state of an economy in sufficient depth a number of indicators need to be used. Even then they may well confuse the situation as much as they provide focus. For instance a low level of unemployment might camouflage the type of employment being achieved. There may well be a growing number in part-time jobs or in low-paid activities. Wikipedia valiantly seeks to bring together ILO/OECD source data and in their latest table they have both the USA and UK in late 2016 with an unemployment rate of 4.8%. The BRIC Nations record rates of Brazil 10.9% (March 2016); Russia 6.0% (March 2016); India 3.4% (January 2017); China 4.1% (2015). South Africa 26.5% (Q42016) is now also considered to be one of the BRICs.

134. Despite “gloom and doom” comments from various quarters the UK enjoys advantages that many other nations would be more than enthusiastic to share. A number of august bodies such as the International Monetary Fund (IMF); the World Bank; and the United Nations provide estimates of Gross Domestic Product (GDP). The slightly later figures (2016 estimates) are provided by IMF. On that basis in terms of nominal GDP, out of 191 nations analysed the UK was in 5th place with a figure of $2,649,893 million, representing some 3.5% of total world GDP of $ 75,212,696 million. Dominating the situation was the USA with a figure of $ 18,561,934 million or 24.7% and China with $11,391,619 million or 15.1%. Japan, on $ 4,730, 300 million or 6.3% was in 3rd place ahead of Germany with $3,494, 900 million or 4.6%. Just below 5th placed UK was France on $2,488,280 million or3.3% followed by India on $2,250,990 million or 3.0 %.

135. Even when a purchasing power parity approach is adopted to GDP estimates the UK is still within the world’s top ten. The modern version of PPP was developed approximately one-hundred years ago by Gustav Cassel. The concept is based on the law of one price, where in the absence of transaction costs and official trade barriers, identical goods will have the same price in different markets when the prices are expressed in the same currency. Under this method the UK lies in 9th position with an estimated GDP of $2,905,392 million or 2.3% of the world total of $126,687,917 million. Compared with the GDP nominal rankings China leap-frogs over the USA into 1st place with an estimated GDP of $ 23,194,411 million or18.3%. The USA PPP figure is $19,417,144 million or 15.3%. The 3rd to 8th positions are occupied by India; Japan; Germany ($4,134,668 million); Russia; Indonesia: and Brazil. Just below the UK in 10th place is France with a GDP of $2,833,064 million.

136. A country’s population size obviously plays an important part in the level of GDP. For that reason GDP per capita is a more meaningful performance indicator although direct comparisons also need to be treated with caution. For instance IMF data, estimated for 2016, places Luxembourg ahead of the field on the basis of nominal GDP per capita, and Qatar in first position on the PPP GDP per capita calculations. The respective figures of $103,199 and $ 132,870 are impressive but these two countries both have small populations and not particularly large total GDPs. Recent data, for instance, suggests a population of 500,000 in Luxembourg, and 2.2 million in Qatar. As a comparison the populations of USA; Germany; and the UK are respectively 320.1 million; 82.7 million; and 63.1 million. Equally significant is the fact that the USA has a GDP of over £18,500 billion in both nominal and PPP calculations.

137. On the basis of nominal GDP per capita IMF-produced estimates for 2016 indicated that the UK was placed in 19th position globally with a figure of $40,096. Using the PPP approach the UK was 25th with an estimated $ 41,499. However, if one only analyses those countries with a GDP of $2,000,000 million and over then the UK is in 3nd position (behind USA and Germany) in terms of nominal per capita GDP and also in 3rd position (again behind USA and Germany) using the PPP approach. The UK also has a considerably higher nominal GDP per capita than any of the BRICs. The UK’s $40,096 contrasts with Russia’s $8,929; Brazil’s $8,727; China’s $8,113; and India’s $1,723. Using the PPP approach the UK’s $41,499 is higher than Russia’s $25,965; Brazil’s $15,646; China’s $14,340; and India’s $ 6,616.

138. Gross National Income (GNI) is a key measure of a country’s economic health. This is the sum of the value added by all the goods and services within a country. This includes foreign investment to which are added any product taxes (excluding subsidies) and the value earned by the nation through overseas ventures. GNI contrasts with GDP in that the latter is the measure of a country’s overall economic output. In essence it is the market value of all services and goods within the borders of a nation. GNI, therefore, comprises GDP along with the income obtained from other countries such as dividends and interests.

139. The World Bank GNI per capita estimates for 2015 appeared on the World Development Indicators database in April 2017. The more comprehensive detail was obtained using the Purchasing Power Parity (PPP) method. Whatever approach, PPP or the so-called Atlas method, the leaders are small economies. Under PPP Qatar is in 1st place with a GVI per capita of $138,480. The first “sizeable” country to appear is Norway in 13th position and a GVI per capita of $65,210. Qatar has a population of 2.2 million whilst Norway is not large by international standards with some 5 million inhabitants.

140. Despite the above reservations Norway deserves a high ranking being rich in natural resources with important government involvement including in Petroleum. Some 9% of GDP is spent on Health which is given an important priority. Although not a member of the EU Norway has good trade relations with the latter and is a member of the European Economic Area (EEA).Qatar has one of the world’s lowest unemployment rates and possesses a nationwide system of Health coverage. There is a strong Petroleum and Natural Gas sector and government policy is focused on ensuring that Natural Gas resources are as sustainable as possible. The manufacturing and financial services sectors are becoming increasingly more significant.

141. In larger economies it requires significant developments to increase per capita average figures. For instance the USA on the basis of GNI per capita (PPP) recorded a figure of $57,540; Germany was $ 49,090; Japan $42,310; France $41,680; and the UK $41,230. The “scores” for the four original BRICs were Russia $23,770; Brazil $15,140; China $14,320; and India $ 6,030.

142. The United Nations released its “World Happiness “Report in March 2017. The first review of this type began in 2012 and is produced by the Sustainable Development Solutions Network (SDSN) and edited by Professor John F Helliwell of the University of British Columbia and the Canadian Institute for Advanced Research; Professor Richard Leyard, Director of the Well Programme at LSE’s Centre for Economic Performance; and Professor Jeffrey Sachs, Director of the Earth Institute and SDSN. The Report analyses trends in data in 155 countries for the period 2014-16. Average scores are calculated based on six topics, namely income, life expectancy, social support, generosity, freedom and trust. Such an approach cannot contain a high degree of exactitude. However, it is useful and most of the high-placed and low-placed countries are ones that the intelligent observer would expect to be in those positions given the criteria. Scandinavian countries, as in previous years, performed well with Norway occupying 1st position ahead of Denmark in 2nd place, whilst Finland was placed 5th and Sweden 10th. Other top ten performers were Iceland 3rd,’ Switzerland 4th, Netherlands 6th, Canada 7th, New Zealand 8th, and Australia 9th.

143. Interestingly the Top Ten “Happiest” countries are the same as identified in the previous year’s report which covered 2013-15. However, the order was different. Denmark had been in leading position in the 2013, 2014, and 2016 reports before falling to 3rd place this time round. The Top four are, however, clustered so tightly together that the “differences among them are not statistically significant”. Norway moved up the charts despite experiencing weaker oil prices. The Report indicated that due to Norway’s decision to produce oil slowly and invest in the future it had insulated itself from the “boom and bust” cycle experienced by many other resource-rich economies. The UK rose 23rd to 19th position whilst the USA fell from 13th to 14th place. The latter held the 3rd “Happiest” position in 2007. China for this Report (2014-16) was in 79th position. The five unhappiest countries were 151st Rwanda; 152nd Syria; 153rd Tanzania; 154th Burundi; and 155th Central African Republic.

144. International trade, in many respects, is the life-blood of the global economy. Without it little progress would be made. The UK, despite some jaundiced comments by the media, is a strong performer here. In addition to being the 10th ranked in the world for the export of merchandise, the UK is second only to the USA in terms of export of commercial services. The UK has the second largest stock of inward foreign direct investment as well as the second largest stock of outward foreign direct investment.

145. According to The World Factbook and the USA Central Intelligence Agency (CIA) the global export figure for goods or merchandise, on a free on board (FOB) basis was the equivalent of $15.64 trillion ($15,640,000,000,000) in 2016. This was calculated with cognisance to exchange rates. The leading performer was China estimated at $2,011,000,000,000 followed by the USA, on $1,471,000,000,000 and then Germany with $1,283,000,000,000. The UK is in 10th position with merchandise exports of $ 412,100,000,000. In positions 4th to 9th are Japan, South Korea, France, Hong Kong, Netherlands and Italy. An interesting, possibly slightly unexpected “runner2 is Netherlands in 8th position with a merchandise export figure of $460,100, 000,000. This latter country at least partly benefits from the so-called Rotterdam effect, which is the EU’s leading sea-port. In addition to goods re-export, and international capital flows of multi-nationals, the Netherlands is also an important energy exporter. Apart from China, in its ascendant position, the other BRIC nations are behind the UK. This is India on $271,600,000,000; Russia on $259,300,000,000; and Brazil with $189,700,000,000.

146. The World Factbook estimates that in 2016 the USA was the world’s leading importer of merchandise/goods with the equivalent of $2,205.000, 000,000. This was some way ahead of China on $1,437,000,000,000 ahead of Germany in 3rd place with $987,600,000,000. Below these “front-runners” was 4th placed Japan on $629,800,000,000 followed by 5th placed UK with the equivalent of $581,600,000,000. Fellow European nation France was just below in 6th position on $525, 400,000,000. Reference has already been made to China, in 2nd world place, amongst the BRIC nations. In addition amongst this “club” India is in 10th global position of goods importers on $402,400, 000,000; Russia is 24th on $165,100,000,000, and Brazil 27th with $143,900,000,000.

147. A crude comparison of the above export and imports of merchandise indicates that of the top ten exporters, six had a positive balance of exports over imports, two were slightly below parity, whilst the remaining two imported considerably more than they exported. China led the field amongst the “positives” with an exports/imports ratio of 143.7/100. Behind them was Germany on 129.9; South Korea on 125.6; Netherlands with 122.3; Italy 117.2; and Japan 101.8. France and Hong Kong with respectively scores of 96.2 and 95.7 fell just below parity. Occupying the bottom two places was the UK on 70.9 and the USA with 66.7.

148. There tends to be something of an over-focus on the part of the media in highlighting international trade in merchandise/goods. This is not surprising because it is very definitely a significant part of the global trading economy. However, this often means that not sufficient attention is given to trade in services. The UK is particularly strong in this activity; indeed second only to the USA in terms of both export and import of services. In June 2014 there was a very informative special report produced by Ernst & Young (EY) ITEM Club on services exports. The review indicated that the UK’s main export partners abroad were severely affected by the global financial crisis. However the report suggested that UK performance was “on the mend”. The estimate in 2014 was that this country’s service exports would grow annually by 7.2% over the following five years. Amongst other nations only Japan at 7.6% per annum was expected to achieve a greater rate of increase. According to the EY review business services accounted for 30% and financial services 25% of overall UK service exports. The financial sector was coming out of the doldrums with London’s reputation largely intact. The UK’s business sector was considered dynamic. It had demonstrated this by being a global leader in areas such as legal and accountancy services. There had also latterly been a growing reputation in the creative industries.

149. As this review “goes to press” it has been a challenge to obtain up-to-date global statistics on trade in services. However, broad orders of magnitude have not changed too dramatically in recent years. World Bank data suggested that in 2014 the USA accounted for $690,127,000,000 in the export of services with the UK in 2nd place on $357,626,370,078. France occupied 3rd place on $274,887,150,584 just ahead of Germany with $272,317,237,807 of service exports. China is in 5th position on $230,955,780,305. The only other nations with service exports of the equivalent of $150,000,000,000 and over were Japan with $158,623,761,648; India on $155,670,575,021; and the Netherlands on $154,098,840,242. Further down the table Russia eventually appears with $64,817,970,000 whilst that other BRIC nation Brazil had a figure of $39,046,072,339.

150. As with export of services the USA is similarly the lead nation in terms of the import of services. The figure involved is $453,269,000,000. The World Bank data only has 2013 information for China as opposed to 2014 data for most other leading nations. Nevertheless the $330, 305, 219, 424 estimated 2013 total suggests that China is second only to the States. This rapidly advancing economy is both a high exporter and importer. Germany occupies 3rd position with $328,175,163,807 service imports followed by neighbouring France with $246,336,680,864. The UK then occupies 5th position with $205,683,703,355. Japan, on $190,335,165,711 is in 6th position globally. In earlier paragraphs comparison has been made with the thrusting BRICs nations. The Chinese performance has already been noted. However, service import figures for the other BRICs were $146,930, 354, 411 for India; $118, 908, 920,000 for Russia; and $86, 304,711,493 for Brazil.

151. The various figures quoted above indicate the complexity of overseas trade. Balance of Payments is an oft-discussed topic. Unlike Balance of Trade which focuses on transactions purely involving goods/merchandise, Balance of Payments indicates the overall situation covering all goods and services. It can be seen that the leading exporters are also significant importers. A well-balanced growing economy needs to attract imports from abroad in order to advance and meet its internal demands. The more prosperous a nation becomes the wider range of products required. Not all of the latter can be manufactured in the home country or if they can the cost involved may be higher than abroad. The intricacy of production processes often requires a multiplicity of components and raw materials. It would be unrealistic to expect all of these, of the appropriate quality/specification to be available in the local economy.

152. The statistics provided by World Factbook/CIA/WTO/World Bank et al between them cover information about global trade. As a crude measure it is interesting to compare the export/import ratios derived from these estimates. For instance, on the basis of Imports=100 the export ratios in merchandise/goods exports is 64.4 for the UK. This is not far behind the USA which as an export/import ratio of 67.1. Amongst other notably-sized economies China has an impressive positive ratio of 115.8; Germany 98.0; France 80.3; and Japan 76.9. In addition to China’s ration of 115.8 the other BRIC nations include Russia on 194.3; Brazil on 78.2; and India on 55.4.

153. The situation, however, is somewhat different when trade in services is analysed albeit for a slightly earlier period than merchandise. In this category on the basis of services imports =100 the UK exports/imports ratio was an impressive 173.9. The USA ratio was 152.3; France was 111.6; and India 105.9.Among other larger nations Japan was 83.3; Germany 83.0; and China 70.0. The two BRIC nations not so far covered are Russia with a ratio of 54.5; and Brazil with 45.3.

154. The UK Office for National Statistics (ONS) provides regular trade figures for the UK. The overall Balance of Payments current account deficit was £12.1 billion at Q4 2016, a narrowing of £13.6 billion from the revised deficit of £25.7 billion in Q3 2016. The deficit in Q4 equated to 2.4% of GDP at current market prices, down from 5.3% in Q3. The total trade deficit narrowed to £4.8 billion in Q4 2016 following a sharp widening in the deficit in Q3 when the figure was £14.8 billion. The narrowing between Q3 and Q4 was predominantly due to an increase in the export of goods of £7.6 billion. A current account deficit of £19.5 billion was recorded with other members of the EU in Q4 whilst a surplus of £7.4 billion was recorded with non-EU countries.

155. The Balance of Payments summarises the economic transactions of the UK with the rest of the world. These transactions can be broken-down into three main accounts, the current account, the capital account, and financial account. The current account comprises the trade in goods and services account, the primary income, and secondary income accounts. Mention has been made earlier about UK strengths in the export of services. This is demonstrated in the official ONS figures. For instance in Q4 2016 the trade in services surplus widened by £2.4 billion to £26.8 billion. The total financial account showed a net inflow (that is more money flowing into the UK) of £53.0 billion in Q4 2016 compared to a net inflow of £27.3 billion in Q3 2016.

156. International trade raises as much controversy as any aspect of economic development. There is much media attention paid to the level of imports in comparison with exports. This is of considerable importance but it needs to be tempered by analysing both sets of data in more detail. For instance, as an economy continues to advance market demand within becomes more diverse. Not all those goods and services demanded can realistically be produced within the home country especially a number of food and drink products. Even where it is possible the overseas version may be produced more cost-effectively. It is also a fact of life that certain countries have a comparative advantage over others in various product or service lines. Top quality fashion in Italy is one such example. An ability to focus on profitable niche markets is another key attribute. Here Germany, Austria, and Switzerland with their impressive Mittelstand businesses are prime examples. This definition is not a direct take of Small and medium-sized enterprises (SME). Rather it relates to generally, but not exclusively, to medium-sized companies that have family-ownership. The emphasis, however, is more on style of management, level of investment, emotional attachment, regional=orientation, to name some of the key approaches.

157. It should also be remembered that quality components and raw materials are essential to production. In that context it may sometimes be necessary to import some of these from abroad to ensure the highest standard of production. The contribution of individual companies to export trade can easily be under-estimated. For instance, here both regionally and nationally there are significant numbers of firms that do not export directly but contribute key components to other UK businesses who are important exporters.

158. In January 1999 Her Majesty’s Revenue &Customs (HMRC) initiated the Regional Trade Statistics (RTS) in order to provide support in the economic decision-making of the devolved Scottish Government, the Assemblies, and other regional bodies in the UK. These statistics cover the UK’s international trade in goods. Some of the latter, however, does not lend itself to being allocated on a regional basis. This was, therefore, the case in this latest period in which we are analysing data, namely the combined four calendar years 2013, 2014, 2015, and 2016. In this period, 2013-2016 included, unallocated trade accounted for £224,327 million or 8.1% of the total UK trade in goods figure (exports and imports combined) of £2,774,258 million. If, however, both regionally-allocated and unallocated data is included the UK figure for exported goods becomes £1,143,692 million compared with an imported goods total of £1,630,566 million, a ratio of exports to imports of 70.1/100. If only data that can be regionally-allocated is included this makes no actual difference to the ratio. In fact, £1,050,920 million of exports compares with £1,499,011 million of imports again producing a figure of 70.1/100.

159. As might be expected the arithmetic mean UK average figure camouflages significant differences within. The, prima facie, more positive export/import figures are concentrated in the smaller regions. These are led by Scotland (124.1); North East England (95.0); followed by Wales (90.1). South West England occupies 4th position with an export/import ratio of 86.9 ahead of the rather larger North West on 85.9. West Midlands follows on 83.3. At the bottom-end of the scale are the mega regions of London in 11th position on 52.7 and below in 12th position the South East on 52.0. It is through these two conurbations, however, that a massive amount of trade flows responding to the varied demands of the hinterland. As well as accounting for significant levels of exported goods London and the South East also receives a large amount of imports satisfying a range of demands within the economy.

160. North West England features prominently in trade with current EU partners. The Region secured 4rd position in terms of exports of goods to the EU in the combined four year period 2013-2016 inclusive. The South East led with £78,488 million or 15.0 % of the UK’s EU exports excluding regionally-unallocated data. London was in 2nd place with £66,575million or 12.7 %. Scotland occupied 3rd position with £57,443 million or 11.0% of exported goods to the EU. North West England, in 4th place, exported £53,518 million or 10.2% just ahead of the 5th placed East region with £53,148 million or 10.1%.

161. Imports of goods into the UK from the EU, in the period under review, totalled £888,705 million. If one excludes regionally-unallocated data the figure was £819,625 million. The leading importing regions are contained in the wider London and South Eastern conurbation. This comprises a mega £193,034 million through the South East accounting for 23.6 % of UK regionally-allocated imports to the EU. London accounts for £123,723 million or 15.1 %, with East region 3rd on £101,500 million or 12.4%. The North West is in 4th position with £78,283 million or 9.6%. Following behind the North West is West Midlands with £70,675 million EU imports or8.6% and then Yorkshire & Humber with £51,279 million or 6.0%.

162. The UK has been a member of the EU, and previously named EEC et al, for some 43 years. This has helped to cement contacts. At the beginning of 2015 the current EU 28 (including the UK) had a population of 509 million which was 6.9% of the world total. However, in the four year period 2013-2016 inclusive the EU proportion was 52.7%. The actual figures involved some £1,461,596 million (exports and imports combined) involving the EU out of a total figure of £2,774,259 million. EU trade consisted of £572,891 The UK figures consisted of £ 572, 891 million exports and £888,705 million imports providing exports to imports ratio of 64.5/100. Excluding the regionally-unallocated data the UK exports to imports ratio was 63.9/100. North West England exported some £53,518 million goods to the EU compared with an import figure of £78,283 million, a ratio of 68.4/100. The “most positive” performance by the UK regions was Scotland with £57, 443 million EU exports compared with £34,354 million imports providing a ratio of 167.2/100. Using this measure the “most negative” performance was South East England with some £78,488 million EU exports and £193,034 million imports producing a ratio of 40.7/100.

163. The figures covering trade in goods with non-EU countries displays a number of differences with the EU trade data. Firstly there is less dominance of imports over exports. The UK exports of goods to non-EU Nations totalled £570,802 million. This compared with an import figure of £741,859 million representing an export/import ratio of 76.9/100. If regionally-unallocated data is excluded then the exports over import figures of, respectively, £526,930 million and £679,381million provides a ratio of 77.6/100. The North West ratio was positive with £64,063 million exports comparing with £58,524 million imports representing a ratio of 109.5/100. West Midlands “topped the table” in terms of a positive ratio with £50,881 million non-EU exports comparing with £45,755 imports or a ratio of 111.2/100. The Region securing the lowest Export/ import ratio was London with respectively figures of £77,992 million and £ 150,390 million thereby providing a non-EU export to import ratio of 51.9/100.

164. The London/South East conurbation, serving a major hinterland, features prominently in both export and import of goods involving non-EU countries. The South East is marginally in the lead with exports achieving a figure of £78,768 million or 14.9% of the regionally-allocated UK figure. Very closely behind is London on £77,992 million, or 14.8%. North West fills an impressive 3rd slot with £64,063 million or 12.2%. South West is 4th with £53,375 million or 10.1% followed by Scotland with £51,249 million or 9.7% and then West Midlands with £50,881 million also 9.7%. In terms of imported goods from the non-EU the two dominant regions are London with £150,390 million or 22.1% of the regionally-allocated UK figure, and the South East with £109,359 million or 16.1%. East of England occupies 3rd position with £59,406 million or 8.7%.The North West fills the 4th place with £58,524 million or 8.6%.

165. It is more feasible to examine data covering a time period of at least a few years rather than the most recent twelve months. The longer period might well indicate distinct trends whilst it would be much more difficult to disentangle the significance of events influencing, say, just one year. However, for interest it might be useful to look at most recent performance. In 2016 the UK exported £290,768 million goods. This was an increase of £15,354 million or 5.6% on 2015. If one considers only regionally-allocated exports then the UK figure in 2016 was £266,700 million which represented an increase of £14,148 million or 5.6% on the previous year. The North West in 2016 achieved some £28,909 million exports an increase of £1,760 million or 6.5% on the previous year.

166. In 2016 the UK imported some £424,470 million goods, representing an increase of £29,953 million or 7.6% on the previous year. If one excludes regionally-unallocated data then the UK figure for 2016 was £386,717million representing a rise of £24,460 million or 6.8%. The North West figure was £33,922 million which represented an increase of £1,152 million or 3.5%. As with many statistical series the above figures camouflage as much as they enlighten! What they do indicate, however, is that the UK continues to be involved in a significant amount of world trade. It would be misleading to suggest that this Nation still retains the dominant role of yesteryear. However, in many respects the overall situation is more dynamic, and certainly challenging, with the global economy expanding and diversifying at a tremendous pace. Data published in September 2015 from the World Trade Organisation (WTO) indicates that the in 2014 the UK was 10th in terms of exports of merchandise, and 2nd in terms of commercial services.

UK and the Regions with emphasis on North West England.

167. The Office for National Statistics (ONS) provides annual data on UK and regional Gross Value Added (GVA) estimates. The most recent detailed figures were provided in December 2016 and relate to 2015. Provisionally the UK GVA was estimated at £1,666,342 million suggesting a growth of 2.6% on 2014 figures. GVA per head was £25,351 representing a growth of 2.1% on the previous year. Some £16,242 million of the UK GVA total was termed Extra-Regio. The latter relates to off-shore contribution to GVA that cannot be assigned to any particular region. Hence for regional shares it is more sensible to calculate calculated as a percentage of UK GVA minus the Extra-Regio which provides a figure of £1,650,100 million. In any case the UK Extra-Regio only accounts for 0.97 % of the total UK figure.

168. North West England plays a considerable part in the UK economy and this is supported by statistical analyses. The Region lies 3rd behind London and the South East in terms of GVA. London, with some £378,424 million GVA accounts for 22.9% of the UK minus Extra-Regio. South East England accounts for £249,174 million or 15.1%. In next position is the North West with £156,872 million or 9.5% of UK. Impressively the North West is ahead of the East of England; the latter had an estimated GVA of £145,651 million or 8.8% of UK. In 5th position is Scotland on £127,260 million or 7.7% just ahead of South West England on £126,007 million or 7.6%. The West Midlands was estimated to have a GVA figure of £119,769 million whilst the remaining £100 million plus Region was Yorkshire and The Humber with £109,704 million. There follows Wales on £55,788 million; North East England on £49,677 million; and Northern Ireland on £34,410 million.

169. Between 2014 and 2015 the UK and all regions experienced at least some positive growth in terms of GVA per head. The average UK figure (this time including Extra-Regio) was 2.1%. Amongst the individual regions North West England was in the lead with a 3.0% increase. Wales and the North East occupied joint second position each growing by 2.8%. Yorkshire and The Humber occupied 4th place with an increase of 2.4% closely followed by the South East with 2.3%. The South West also had steady growth increasing by 2.0%. In 7th position was Scotland on 1.8% leading a cluster of regions with East of England on 1.7%; London and West Midlands each on 1.6 %. In 11th and 12th positions was Northern Ireland on 1.4% and East Midlands on 1.0%. It should be emphasised that these are annual change figures and performance does, and has, fluctuated on a yearly basis.

170. Although they are useful indicators, the weakness of percentage change data is that each Region is coming from a different starting point with, for instance, each one being dissimilar in key areas such as population and GVA. The London/South East mega conurbation has virtually a self-generating momentum given its strategic and administrative position. This was recognised even in the time of the Roman occupation when the capital of Britannia was changed from Eboracium (York) to Londinium (London). The achievements of North West England can sometimes be under-played. It is the largest of the so-called “Peripheral “regions, albeit in size nowhere near as comparable with the Capital and its hinterland. It does not have the advantage of the same level of “self-sustaining growth” as the latter and this renders it difficult, statistically, to keep step in growth terms.

171. As with other Regions outside the London/SE Conurbation it is unrealistic to make direct GVA per head comparisons between North West England and the UK average. The UK average, (this time excluding Extra-Regio) incorporates the highly significant London and South East conurbation. As a result, on the basis of UK=100, every Region outside of London and the South East is below average! The dominating London Region scores 172.1, and the South East 109.8. East of England scores 94.6 followed by Scotland with a creditable 93.4. The South West is not too far behind on 90.8. Next in 6th position is the North West on 86.3. There is then virtually a cluster of regions namely East Midlands on 82.6; West Midlands 82.1; and Yorkshire and The Humber on 80.3. Scotland performs creditably with 93.4 whilst East of England is narrowly behind on 93.7. The South West then follows on 90.7. Finally there is another relative cluster consisting of the North East with a ratio to UK of 74.7; Northern Ireland with 73.3; and Wales with 71.0.

172. Statistics, if not analysed in depth, can camouflage a number of key features. For instance the standard definitions of UK regions have altered over time. Regardless of how a Region is defined it contains its own sub-regions which often comprise differing characteristics incorporating both positive features as well as challenges. Even regions do not represent “closed economies bulwarked against opposing adjacent territories”! As an example the noted Airbus factory located at Broughton in North Wales also provides valuable employment opportunities for a number of North West England residents. Also in North East England Berwick-upon-Tweed has strong links with Scotland. Despite falling to the military power of the then Richard Duke of Gloucester in 1482 amongst other features its local football team plays in the Scottish League!

173. The various UK sub-regions represent administrative areas rather than being based on “pure economic criteria.” Even when travel-to-work areas are used as a form of delineation they are far from satisfactory. In fact they are an average of work-travelling patterns incorporating some of the more distance involving, say, professional personnel as well as very short-distance unskilled employees. In the main centres of population, the UK Capital London, and the main regional centres elsewhere neighbourhoods and locations of great affluence can run cheek by jowl alongside some extremely deprived areas.

174. The UK ONS uses the approved EU definitions for areas. These are classified as Nomenclature of Territorial Units for Statistics (NUTS) and are approved by Eurostats. The latter operates from Luxembourg and is involved in providing key statistical information for the EU as well as seeking to harmonise provision of data. NUTS 1 are the Regions such as North West England. NUTS 2 are the sub-regions involving either county-type areas or groups of counties, for instance, in the North West there are five divisions namely Greater Manchester; Merseyside, Lancashire; Cheshire; and Cumbria. NUTS 3 are sub-areas within NUTS 2 such as West and East Cumbria in Cumbria.

175. These NUTS 1 figures only tell part of the story. Within each Region, at both NUTS 2 and NUTS 3 levels, there is a considerable diversity. This applies just as much to the London/SE Conurbation as elsewhere. For instance the highest GVA per head in the UK in 2015 was Inner London-West with the incredible figure of £137,513. The second place went to Inner London-East with the much smaller average of £41,518. Third place went, far outside London, to North Eastern Scotland on £36,726; fourth was Berkshire, Buckinghamshire and Oxfordshire on £35,550 and then the top North West England representative Cheshire in fifth position with an average of £30,099.

176. If one analyses the five bottom positions in the UK then London features here also. Fifth from bottom is Outer London-East and North East with an average of £18,487. Just below and we move to the South West with Cornwall and the Isles of Scilly on £17,964. Then geographically cross country we head in a Northern direction to Yorkshire & the Humber to focus on South Yorkshire with an average of £17,688. Further North still in North East England is Tees Valley and Durham on £17,419. The lowest NUTS2 figure, however, is recorded by West Wales and the Valleys with an average of £16,059.

177. A study of the smaller NUTS 3 areas is worthwhile in order to substantiate the statement that the UK including North West England is very diverse. If we solely concentrate on the North West then at the “top end” is Trafford with a GVA per head of £32,638 which is marginally ahead of Cheshire East on £32,314 and Manchester with £32,114. Fourth is the Ribble Valley on £31,494 followed by Warrington on £31,318.

178. An investigation of the lowest NUTS3 GVA per head figures does, however, reveal more of a pattern. There are four areas with averages below £15,000, and seven with averages between £15,000 and £16,000. The four lowest figures were attained by Wirral on £14,523; Wyre on £14,524; Sefton with £14,769; and Wigan on £14,917. The next seven range from Blackpool on £15,372 to Hyndburn on £15,995. “Sandwiched” in between are Oldham and Rochdale in Greater Manchester; St Helens in Merseyside; and Chorley and Pendle who, as with Hyndburn, are in Lancashire.
A broader look at individual business performance in North West England.
179. A feature of industrial/commercial growth in the UK including NW England is the strong inter-relationship of the sectors. There is a tendency in the Media to focus on broad headlines bemoaning that “Manufacturing is down” or that there has been a “sluggish performance in services”. These evaluations are invariably based on sample surveys and the broad definitions of Industry and Commerce cover a multiplicity and diversity of activities. This can be misleading as sectors are decidedly complex and certainly over-lap. The term “Service Industries”, for instance, is often deemed to indicate high growth sophisticated activities. The reality is that Services includes a vast range from hi-tech to the more prosaic.

180. An intriguing category of development, as an example, is recycling. For instance estimates suggest that 167,000 tonnes of mattresses are sent to landfill each year. This highlights the need for sectors including Manufacturing and Retail to make changes in the way that end-user waste is dealt with. Mattresses form an important part of the home products of Retail giant John Lewis. Hence it has been decidedly good news to learn about the partnership between the latter and The Furniture Recycling Group (TFRG), a Blackburn-based mattress recycling firm. As a direct result of the partnership John Lewis was able to collect and recycle about 58,000 mattresses in 2016, diverting around 1,500 tonnes of waste from landfill.

181. With the added support of TFRG, John Lewis is continuing to offer its customers the option to include a mattress disposal and recycling service whenever they order a new product for delivery. John Lewis then ensures that the old mattresses are sent to TRFG to be broken down into their components using that company’s innovative mattress recycling machine. The components are then repurposed and reused by TFRG to manufacture new, superior quality mattresses, thereby creating a circular economy.

182. Unlike previous economic reviews that we have produced the intention this time is to focus less directly on specific sub-sectors. The latter approach has a number of virtues and, in the course of the narrative, specific industries and activities will indeed be brought together to highlight how they are currently developing. However, the emphasis in this current economic assessment will be on the various facets of individual businesses; in essence what appears to make them “tick”.

183. We would also wish to commence by addressing a key issue namely “what is Industry and Commerce for? What is its central role in the scheme of things?” This may appear somewhat over-philosophical but is bottom-line profit the “be all and end all” of the matter? As the economics discipline acknowledges short-term profitability does not necessarily produce longer-term high performance. It is essential in some activities, for instance, to increase expenditure on research in order to improve the quality of the product or service. In some highly competitive markets the clientele may not be aware of the “unique quality” being offered and, therefore, a loss-leader approach, selling at a low, under cost, price might be ultimately more rewarding.

184. On the subject of overall welfare it is acknowledged that the operation of market forces does not always meet society’s wider demands. A useful example to take, or instance, is in the Pharmaceutical Industry. There is an important stimulus to conduct research in those product areas where high profit levels are more likely. Yet a society’s prosperity and healthcare may well require more concentration on less financially rewarding drugs and medication. As an example Psychiatric medicine has been considered by some as the “Cinderella” sub-sector of the field. For instance there are a number of conditions such as schizophrenia, bi and multi-polar including formerly described manic-depressive psychosis, in which the sufferer’s intellectual capacity remains sound. However, the mind may be clouded to a greater or lesser extent, by delusions of various sorts. An important source of treatment is through drugs which can stabilise the condition. Although useful progress has been made, these illnesses are so complex that a case could be made for still further study with practical results for the patient.

185. Some of the most amazing and heartening of innovations do not necessarily emanate from big company profit-orientated developments. It was over three years ago when Emma Lawton, a 29 year old graphic designer, was diagnosed with Parkinson’s disease. This severely affected the core part of her work and as her tremors became more pronounced this prevented her from not only writing but drawing straight lines. This is where the versatile Haiyan Zhang entered the situation. She was the Innovation Director at Microsoft Research Cambridge, exploring new “connected play” experiences enabled by cutting-edge technology. Haiyan’s work benefitted from her previous profession as a software engineer. As part of a development team she had helped to create an EEG visualisation tool for infra-operative monitoring used in hospitals across North America.

186. Zhang gained inspiration from a previous invention involving a spoon that counteracts tremors associated with Parkinson’s. The scientist decided to experiment with tiny vibrating motors. As a result she created a prototype connecting wires to tiny coin cell motors that would in turn vibrate. In a BBC video Zhang indicated that what the innovation was doing was short circuiting whatever feedback loop there was (between the brain and the hand) that’s causing the tremors. As a result graphic designer Emma Lawton, wearing one of the constructed wrist-bands, was able to draw a straight line and write her own name clearly. After trying it out Emma, in joyful tears, commented that “it makes me forget that I have a tremor.” Speaking in December 2016 Haiyan Zhang commented that she hoped to expand further with the wrist-band, which is called “Emma”, so that it can help other sufferers from Parkinson’s disease. Now that is the type on innovation that should be “shouted about from the housetops”!

187. Much nearer to home, here in North West England, it was reported in the local press that a Blackpool woman had had her life transformed for the better. The person in question was 48 year old Karen Montanaro. Until she had a Vibrant Southbridge (VSB) device fitted into her middle ear she could not hold a proper conversation. Now she is able to pursue her work teaching Spanish and French and can also play the piano. Amazingly the inner ear implant picks up external sounds and transfers the vibrations directly to the middle ear. Many credit the evolution of middle ear transplants with an earlier experiment in 1934 with iron particles placed on the tympanic membrane. Technology has greatly evolved over the years notably the VSB device developed by Symponix Devices, Inc (San Jose, CA). This type of innovation and subsequent key modifications has been a Godsend to Blackpool’s Karen Montanano. She is a sufferer from a genetic condition known as Turner’s syndrome. The impact of the device to her is virtually miraculous and indicates that when she awakes in the morning and turns it on she can hear such sounds as the “tick-tock of the clock”!

188. North West England is far from merely being a recipient of developments elsewhere. Indeed the Region can justly pride itself on its contribution to innovation and new business formation. The links between activities are also particularly noteworthy. Amongst a number of dynamic enterprises is the Herdy co in the Lake District. This amazing business only came into being on 13th September 2007 but how it has grown since specialising in promoting the famous Herdwick sheep wool. Within a short period of its existence Herdy secured the title of BITC Small company of the year. It now has around 250 national retailers and is continually looking for new markets. It was announced in February 2017 that it had teamed up with West Yorkshire manufacturer Harrison Spinks to create “herdysleep”.

189. The Herdwick sheep wool is to be used in high-end mattresses. The latter is to contain at least one Herdwick fleece and will be hand-finished with 6,000 pocket springs. Herdwick wool has unique qualities relating to durability and has previously been used to craft robust clothing and homewares including carpets and rugs. The decision to go-ahead emanated from an encounter with Herdy co-founder Spencer Hannah and the owner of Harrison Spinks. Herdy has announced its intentions to pay twice the market rate per kilo of Herdwick wool. This should ensure that each mattress produced keeps the local heritage trade alive. The mattress market is one to be fostered and developed further. This is far from being a once in a lifetime purchase. Every -one needs this important product and certainly needs to re-new it.

190. Herdwick sheep have been in the Lake District for over a thousand years and have adapted to the harsh environment of the high fells. It was, therefore, good to learn this year of a three-way collaboration between the Herdy Company; the Herdwick Sheep Breeders’ Association(HSBA); and Newton Rigg College. This has resulted in nineteen embryos being harvested from three new Herdwick flocks. Herdy co-founder Stephen Hannah expressed great satisfaction that this forward-looking initiative has successfully taken place. This will effectively boost the Herdwick gene bank and, in the words of Amanda Carson from HSBA, “is fantastic for the Herdwick breed now and in the future.”

191. The forward momentum of the Herdwick wool story continues further. A visit to Sedbergh is a rare treat offering much to the tourist, sited as it is in a marvellous tourist and countryside setting. It is indeed difficult to the uninitiated to ascertain where the Cumbria/ Lancashire/ West Yorkshire boundaries are actually located! Be that as it may this wonderful location is the home of another amazing Herdwick-based enterprise. John Barraclough has had a long and distinguished career in the British wool sector having worked as a carpet yarn spinner for nearly thirty years. His company is Wools of Cumbria Carpets, a business that has specialised in creating bespoke carpets and floor coverings using Cumbrian wool, particularly Herdwick, since 2008.

192. A chance meeting with hotelier Andrew Wildsmith in October 2014 proved an amazing Godsend for John Barraclough. Andrew was clear from the outset that for his latest hotel, the Forest Side, Grasmere, he intended to use local trades, local suppliers and manufacturers. This related especially to the new hotel’s exterior and interior design schemes. He had been toying with the idea of using Herdwick wool for his other two hotels but the recent Grasmere development provided an excellent opportunity. They subsequently met-up again and John Barraclough was rewarded with what might well be the largest single order ever placed for Herdwick wool carpet.

193. John Barraclough used his contacts to buy in the equivalent of over 2,100 light grey Herdwick fleeces from Cumbrian farmers. The fleeces were then scoured, spun into yarn and dyed in Yorkshire and then tufted into carpet in Blackburn in Lancashire. The entire process produced enough yarn to create 825 square metres of bespoke Herdwick carpet. Tim Booth from the British Wool Marketing Board (BWMB) commented on the very positive results stating that “The naturally robust qualities of Herdwick wool make it perfect for hotel carpet.” In addition he focused on the inherent attributes of the wool which help in retaining its appearance over a long time.

194. It is difficult to keep Wools for Cumbria Carpets out of the news. The Sedbergh company’s Silverware carpet won the British Wool Award at the March 2017 Campaign for Wool International Carpet and Rug Awards. Silverstripe is a modern crème and grey carpet created entirely from un-dyed British wool. The latter, in this instance, derives from a number of sheep breeds namely Rough Fell, Herdwick and Swaledale. The manufacturing is carried-out entirely in Northern England. Bridgette Kelly, Interior Textiles Designer for the Campaign for British Wool, commented favourable. She stated that the Silverstripe range demonstrated the immense capacity of British sheep breeds to produce a stylish quality carpet. Importantly this was without the addition of any other fibres or dye.

195. North West England is a very diverse Region and this is reflected in the variety of businesses operating here. A company that has been in the news recently is E A Foulds Limited of Colne in East Lancashire. The founder, in 1907, was Ernest Albert Foulds who had previously worked as an engineer at the De Beers diamond mine in Kimberley in South Africa. Returning to Colne to get married he decided to stay here because of the Boer War. The original business that he set-up was a general engineering and millwright concern servicing the local Textile Industry. Even in these early years the company displayed its versatility. In fact during WW1 it switched to manufacturing shell casings before, when hostilities ceased, reverting back to general engineering.

196. The history of EA Foulds has been one of continual diversification. During the 1920’s Ernest was approached to produce a hoist for a local business. He saw the strong market opportunities and decided to introduce this specialism. In addition orders for supplying goods lifts to the Textile Industry continued to prosper. EA Foulds then further diversified into building passenger lifts for hotels in Blackpool. The third generation of the Foulds family had, by the early 1960’s, joined the company after university graduation. Now further diversification took place this time into the manufacture of electrical control panels. A separate division, Pendec, was established in the 1970’s and as an independent electrical distributor supplies an extensive range of factory control, automation and safety control products. The usages are immense including applications in sectors such as automotive, food and beverage, water treatment and processing, rail and transportation. Now the fourth generation of the Foulds family have positions in this innovative company.

197. One of the most unusual of its orders came from the producers of the James Bond films. EA Faulds lifts featured in “Goldfinger” moving gold bullion in Fort Knox, and a company-produced hoist was featured in “You Only Live Twice.” Much more recently, however, deserved publicity was given to work undertaken on the Falklands Islands on a lift that they had installed some thirty years ago. This involved high quality, major repairs to a lift at King Edward VII Memorial Hospital in the Capital Stanley. The work was carried-out by Foulds engineers Jonathan Moore and Jack Davies who flew over 8,000 miles. This valuable contract was for new ram seals and valve block seals and included an LG10 test to the lift. This Colne-based business certainly goes from strength to strength.

198. ICI until quite recently dominated the UK’s industrial landscape. Although no longer in business as such a number of its former constituent parts have flourished. Amongst the latter is Fleetwood-based Victrex plc which was spun=off from ICI in 1993. The company manufactures high performance polyaryletherketones including the internationally famous PEEK polymer, VICTRX pipes, and PEEK-OPTIMA. There are two broad facets of the company’s business. Victrex Polymer Solutions (VPS) focuses on transport (including automotive and aerospace), industrial, oil and gas, and the electronics industry. The other division is Invibio Biomaterial Solutions concentrating on implantable PEEK bio-material solutions. The impressive HQ and manufacturing facilities are located at Hillhouse in Thornton-Cleveleys on the Fylde coast. However, the company operates on a global basis and has numerous technical and customer support facilities serving more than forty countries.

199. Victrex was first listed on the stock exchange in 1995. Its top-rank reputation centres around the high grade thermoplastics, principally PEEK, which it manufactures. This incredible product is renowned for its strength, lightness, and durability. It is also easy to shape and relatively cheap to manufacture into products. As a composite, strengthened by carbon fibre, Victrex and the manufacturers that it supplies are finding increasing uses for PEEK and similar polymers. It has a strong reputation wherever performance is critical such as components for aeroplanes, cars, smartphones, and medical implants.

200. Victrex produces around 4,000 tonnes of PEEK annually but has the capacity to produce 7,000. Total Industry capacity will reach around 11,000 tonnes when the rival Solvay company adds a further 1,000. Victrex, however, is moving further up the value chain producing PEEK in more shapes and grades. The Fleetwood business has six mega programmes under way. The first to prove themselves commercially have been Juvora and Magma m-pipes. The former is a dental disc that can be fashioned into dentures and implants whilst the latter is a new brand of subsea=oil pipeline. The company is set upon ramping up these six megas from £1 million annual revenue each to eventually a yearly figure of £50 million each. Success is often associated with flexibility and keen market awareness. This is a notable feature of Victrex with seemingly little time passing without the enterprise being involved in key initiatives For instance as recently as February 2017 it was announced that Victrex and Tri-Mack Plastics Manufacturing Corporation had established a joint venture to accelerate the commercial adoption of polyketone (PAEK) composite applications within the Aerospace Industry.

201. Victrex has performed vigorously with current turnover around £250 million annually. Within this total one should not under-estimate the Invibio/medical division which contributes around £50 million securing 70% from PEEK-OPTIMA HA spinal implants. The latter has already benefitted some 1,000 patients. The company is noted for continually searching for new, profitable markets. Most recently has been an investment of £90 million in order to increase capacity by 70%. Despite this high expenditure level Victrex has an impressive return on capital. Albeit, given this go-ahead approach the figure has halved in the last six years from around the 40% mark to 22%; an impressive performance nonetheless.

202. This determined enterprise has had an enthusiastic, long-standing CEO in David Hummel who has led since the company was spun-out in 1993. A clear advantage of the company is the wide variety of markets that it serves. For instance there has, in recent times, been a reduction in demand from consumer electronics customers whilst another market, oil and gas, has been effected by recessionary conditions. Despite this Victrex, with its forward-thinking CEO and a highly qualified staff, has continued on its positive and exciting path. The total number of employees in the enterprise is in the 700-750 range.

203. Another company with ICI connections, albeit more involved, is Innovia Films at Wigton in West Cumbria. The company has an international reputation as a manufacturer and supplier of biaxially-orientated polypropylene (BOPP) and cellulose films for speciality packaging, labelling, graphic arts and industrial products. A previous title was UCB Films. BOPP has received considerable publicity recently for its involvement in the production of the new £5 banknote.

204. In 1926 SIDAC was established with a factory in Ghent in Belgium before six years later setting-up a company in the UK to distribute its film. This latter operation became British Sidac Ltd which opened its first production plant at St Helens in 1934 which subsequently closed in 1987. Also in 1934 British New Wrap Co Ltd was formed in Wigton. It was then that production of cellulose film began at the West Cumbria site which had previously been set-up to produce Rayon. It was in 1963 that a merger took place with British Rayophane under the British Sidac name. Some four years later the latter entered into a joint venture with ICI to manufacture BOPP on the Wigton site. In 1987 the BOPP production partnership with ICI came to an end and UCB Films assumed full ownership of what was now known as Sidex Ltd. UCB commenced rapidly on an investment policy at one stage raising capacity from 10,000 to 35,000 tonnes per annum.

205. The company displayed combative qualities in the competitive global market. Further ownership change was, however, on the horizon. In October 2004 a UK consortium, led by Dennis Matthewman and financed by private equity company Candover Investments, purchased UCB’s polypropylene and cellophane films business. The new parent, Innovia Films Ltd, realised that the market for cellulose films was contracting due to substitution by oil-based polymers. Hence as part of cost-reduction and efficiency improvement it was decided to close its Bridgewater, Somerset factory.

206. The Wigton factory achieved national press coverage in 2014 when it was announced that the site had been selected to produce the new banknotes commencing with the £5 version but then extending to the £10. Innovia was reported to be investing £20 million on factory investment to cater for this demand. At this time the company employed about 1,600 personnel (800 at Wigton) across its Innovia Films and Security divisions. Besides West Cumbria there were manufacturing sites in Australia, Belgium, Mexico, and the USA together with a global network of offices, agents and distributors. The £5 polymer banknotes entered circulation, and together with the £10 variety, are expected to last for two and a half times longer than paper banknotes.

207. It was announced in April 2016 that the Japanese Futamura Chemical company were to acquire Innovia’s cellophane films business. The deal was scheduled to be completed by June 2016 and Futamura were to pay Innovia’s private equity owners, Arle Capital Partners, around 75 million Euros (£60 million). The cellophane business being acquired employed 470 persons worldwide of which 270 were at Wigton. The move would enable Innovia to concentrate on polypropylene films including banknotes where it is the world leader. It was stressed that the 270 local jobs transferred to Futamura would not be at risk. The Japanese company was keen to obtain a foothold on the European and USA markets and a high proportion of sales from the Wigton site go into Europe.

208. The present day story of Innovia Films is far from complete. As befits a dynamic, leading company something always seems to be happening. In December 2016 the Smithfield Group, Innovia’s managing shareholder, announced that they had agreed an offer from a Canadian firm CCL Industries Inc to acquire Innovia Group for Canadian$1.14 billion. The deal was finalised in late February/early March 2017. The transaction followed a highly successful period for Innovia during which it substantially enhanced the capabilities and performance of both its film and banknote businesses. There has been an increased focus on high value added and differentiated films with world leading technology. CCL is the world’s largest speciality label business and is quoted on the Toronto Stock Exchange with a market value in excess of Canadian $8 billion.

209. CCL stressed the high degree of complementary with their own capabilities and markets enabling the establishment of new growth opportunities for the business. Innovia’s R & D and significant technology was also regarded as key features. Any major successful firm could not operate effectively without key staff and leadership. The take-over also coincided with the appointment of Chemistry graduate Wayne Middleton as the new UK Managing Director. He has been an employee of the Wigton company for 26 years and attended Queen Elizabeth Grammar School in Penrith. Innovia now employs 1,200 people worldwide including over 600 at Wigton.

210. Female entrepreneurs contributed some £3.15 billion to the UK economy in 2015. Of this total, according to a study by NatWest, the North West figure was £325 million including £124 million in Manchester. One of these go-ahead female business women is Amy Wordsworth who established Good Bubble in 2014 after working in marketing mainly bath and beauty brands for a number of years. Her company manufactures and distributes natural bath products for children and has benefitted from focused R&D. Amy identified a gap in this specialist market and for the first year and a half concentrated on developing a product that was natural and free from chemicals. It also had to create bubbles that did not sting the eyes. These “fun at bath-time” products are currently available in Sainsbury’s and Holland and Barret stores as well as online supermarket Ocado.

211. The UK’s largest shoemaker is based in North West England. The company is Hotter Shoes located in the west Lancashire part of Skelmersdale where, in its 64,580 sq ft factory, the business produces annually more than 1.8 million pairs. This represents about one-third of the British output of shoes. Chief Executive Sara Prowse was appointed in the earlier part of 2016 with a remit to “fix, stabilise and turn the business around.” Under her tutelage there has already been large-scale investment in warehousing and the company’s contact centre. Together with the manufacturing everything is concentrated on one site at West Pimbo. The CEO, whilst not expressing a cash figure, has indicated that the expenditure planned during 2017 is “significant” and will include a major IT transformation programme.

212. The Hotter business was established in 1959 as a family-owned slipper manufacturer. Today the workforce comprises 1,310 personnel. The introduction of a night shift has helped to increase manufacturing capacity which has risen by about 30%. This will increase output to 2.2 million pairs of shoes each year. This is equivalent to one pair every twenty seconds. Sara Prowse has also indicated that if all the shoes they made in a year were placed end to end “they would stretch from West Lancashire to Frankfurt.” The company operates 76 stores across the UK. Online retailing currently accounts for 20% of total business but the aim in the three year plan is to increase this proportion to 40%.

213. Sara Prowse stresses the importance of Hotter’s as a UK manufacturer and this is a feature that will be of significance as the business moves forward. The lead time is six weeks which the CEO claims is “phenomenal for a footwear brand.” Growing export markets is another key aspect of company strategy. There has already been investment in the USA which accounts for around 12% of Hotter’s sales mix and has experienced an increase of 45% year on year. The Middle East, China and Europe are other export markets that the company is eager to exploit further. There is also a determination to quadruple the company’s wholesale division. This currently accounts for just 5% of the company’s total mix. Like any successful enterprise Hotter Shoes are firmly committed to pushing forward.

214. Wray Brothers of Liverpool are believed to be the longest established trading company to have been started with The Prince’s Trust support. This involves some thirty years for this combative printed workwear and janitorial supplies enterprise. Shortly after the Toxteth riots in the early 1980’s the brotherhood of Graham and Mark Wray were struggling to find work. It was then that they decided to set-up their own business. They contacted The Prince’s Trust and received a £3,000 loan together with the provision of a business mentor to kick-start their plans. Initially they started-out under the name Willy Wiper buying clothes from charity shops and then selling them on as rags. The name was changed in 1992 to Wray Brothers as the range of products and services expanded. What had started as a small business is now a multi-million pound enterprise based on Pleasant Hill Street in Liverpool employing twenty-two personnel. The business was honoured to receive a visit from HRH The Prince of Wales shortly after setting-up. Now they are an impressive operation with 4,500 products on a 138-page catalogue.

215. Meadow Foods is the UK’s largest independently-owned dairy group and leading supplier of milk-based dairy ingredients to the Food Industry. Founded in 1992 the company operates from factories in Chester; Peterborough; and Holme-on-Spalding Moor. Employing more than 275 personnel recent estimates indicate that Meadow Foods handles 500 million litres of milk annually. This is direct from over 550 farmer suppliers from across the North of England, Midlands and North and West Wales. The company manufactures a wide range of dairy ingredients including creams, milks, cultured products, butter, sweetened condensed milk, chocolate crumb and soft cheese. It was recently indicated that Meadow Foods, in a year, supplied over 100,000 tonnes of dairy ingredients to manufacturers operating in sectors such as prepared foods, bakeries, confectionary and ice cream. Through organic growth and strategic acquisitions it was indicated that a recent yearly turnover was in excess of £340 million.

216. Through their dedicated and secure supply base Meadow Foods are able to ensure that their clients receive an excellent service all the year round. The company zealously promotes its deserved reputation as a fervent supporter of both farmer supplier and customer alike. In this respect at end 2016 Meadow Foods announced that it would be raising its offered price to suppliers for the seventh time in succession. From 1st January 2017 the milk price was to rise by 2.15p/litre. This meant that prices had risen by 9.55p/litre since the height of the dairy crisis of July2016. The 500 farmer/suppliers were to receive an A price of 26.55p/litre. The company’s Executive Chairman Simon Chantler promised to continue to move the price forward when feasible.

217. Despite challenges on a number of fronts a key attribute of many North West businesses has been resilience. A number of “prophets of doom” have had to “eat their words” when local enterprises have fought back with determination and strength to confound the critics. It was in April 2001 that the famous Birkenhead-based Cammell Laird company, confronted with £125 million debts, collapsed with the loss of thousands of jobs. The crushing blow was the decision by Italian cruise-liner Costa Crociere to pull out of a contract which would have involved the insertion of a 28,000 tonne mid-section into its ship; the debt impact on Cammell Laird was £40 million.

218. John Syvret, who had been Cammell Laird’s Managing Director, tried unsuccessfully to secure the business from the receiver. However, in 2007 this energetic and dedicated shipyard entrepreneur at last won the right to restore the iconic name. This followed further negotiations with the receiver. He was then heading-up his own business Northwestern Shiprepairers and Shipbuilders. Mr Syvret then commented that he was very proud that they had the shipyard “and now we have the name (Cammell Laird) back” as well. Under the Northwestern title and with backing from Mersey Docks and Harbour Company, John Syvret had rapidly expanded his business. It was employing 500 directly with then recently had 1,000 staff working in the shipyard.

219. Since the restoration of the famous Cammell Laird name in 2007 the company has advanced still further diversifying into key strategic markets. Now Chief Executive and with a CBE, John Syvret commented in January 2017 that a company aim was to become one of Britain’s prime contractors serving the Energy Industry. It was considered an excellent fit for the workforce with its transferable skills as well as the availability of extensive engineering facilities. Publicity was also given this January to the appointment of Jonathan Brown as Cammell Laird’s new Energy Division Managing Director. He is to play a key role in helping the company to diversify further and grow across nuclear, renewables and the oil and gas markets.

220. The Energy Division Managing Director is excited by his new responsibilities. He emphasises that the company has demonstrated in the Maritime Industry that it can be “that anchor of system engineering, managing quality and providing schedule certainty.” It has, for instance, taken responsibility for complex build projects such as the £150 million Sir David Attenborough polar ship. Jonathan Brown revealed that he is keenly involved in a project examining small modular reactors. In this latter activity he will be working in partnership with the American nuclear power plant manufacturer Westinghouse and the UK’s Nuclear Advanced Manufacturing Research Centre (NAMRC). The company is also keen to promote its logistical advantages. Frequently major construction programmes do not have sufficient on-site storage capacity. However, by locating equipment at Cammell Laird it reduces cost with the location ideal for just in time multi-modal delivery across sea, road, rail and air.

221. The North West contains such an incredible range of expertise both in production and services that it would be difficult to provide a satisfactorily adequate list. Invariably a number of high achievers would be mistakenly omitted. High standards are indeed regarded as the norm in any truly customer-orientated enterprise. This thought was firmly implanted in the mind through reading an enthralling article in the “Manchester Evening News” of 21st January 2017 by journalist Lucy Roue. It was intriguingly titled “the unassuming Newton Heath business that’s enabling the world’s biggest airliners to crash-land safely.” The company in question was EDM, a twice M.E.N Business of the Year winner. Now possessing a global reputation especially in air-flight simulation, amazingly the company was only established in 1971 and that in a fairly modest way as an engineering business in Hollinwood in Oldham.

222. The company’s beginnings were in plant-modelling utilised by the construction sector. Here they provided designs for interactive exhibitions for children in science or aviation-based museums. However EDM needed a rethink as museums began to reduce spending. In the words of current Managing Director Tony Bermingham “it was time to look at our products and developing the market as well. The amount of business in the UK was not sufficient to sustain the growth of EDM.” The response to this was to focus upon and benefit from their engineering and modelling skills. Starting with the military aviation sector they created low level simulators for UK National forces. The company up-scaled to develop full life-sized models of aircraft.

223. Once in the world of simulation EDM realised what were the wider possibilities. This was not just military aviation but its civil equivalent as well as for trains, land vehicles and submarines. After increasing the complexity of the product the company then sold into the USA and also globally to NATO forces. One market stimulates another. Hence when the airlines purchase such as the Boeing 787 Dreamliner or the A350 Airbus, as examples, they are immediately looking for training facilities to the benefit of EDM. Tony Bermingham emphasises that his company has got sufficient visibility to underpin even further growth. Recent figures support this with a turnover of just over£14 million in 2015 increasing to £23.5 million in 2016. The aim is to expand further to £26.5 million in 2017 and reach £35 million by 2019.

224. Companies are more than just materials encased within bricks and mortar. They rely on the ingenuity, skills, dedication and sheer drive and enthusiasm of its personnel. Tony Birmingham meets all these qualifications and more .Amongst a number of previous positions that he occupied was working for Mirrlees Blackstone in Stockport as a project engineer followed by manager on medium-powered diesel engines for power plants and marine uses. Eventually when he joined EDM it was as Commercial Director before becoming Managing Director in 2012.

225. EDM has made considerable progress since breaking into the civil aviation market around 2000. Since then they have grown organically and are in number one position as supplier of evacuation trainers and door trainers to the airline industry worldwide. This includes being number one in China where they supply into thirteen airlines. The Chinese airlines are growing and want to fly internationally into Europe and, because of the need to meet European regulations, are tending to purchase western equipment. The company is proud of the fact that globally they are sole suppliers for ground training aids. The company provide ejection seat maintenance trainers and weapon loading trainers for aircraft, with devices going to all partner nations that are purchasing the jet plane. Currently the split of civil to military aviation work is 60/40 but has recently been in favour of the military. The latter includes Lockhead Martin in the USA for the joint strike fighter programme.

226. EDM has increased the number of its personnel from around 100 about three years ago to the present figure of 200. Indications are that this figure should reach 250 during 2017. The workforce comprises skilled engineers, tool makers and fitters on the shop-floor. In addition the offices are staffed by professional mechanical and electrical engineers and software systems experts. Training-up apprentices is considered highly important. In addition to people investment EDM has spent £2 million building a new on-site factory and increasing machining capability. There is also a further £1 million to invest in order to support this growth. On the civil aviation front the company is looking to tap into emerging markets including South America and India. This buoyant Manchester-based enterprise continues to “punch above its weight” and, therefore, has among its customer-base such major groups as BAE Systems, Lockhead Martin, and CAE.

227. This year as always there was considerable publicity given to the Red Rose Awards which was held on 9th March 2017 at the Winter Gardens in Blackpool. Accolades were given to some 26 businesses across Lancashire representing a range of key sectors. The finalists in this year’s awards generated more than £1.35 billion in revenue and made over £1 billion in profits. The Lancashire Business View Award went to Bispham/ Blackpool-based Lalla’s Fine Foods. This is an impressive family firm established in 1986 and has gained a high reputation as a specialist in chilled and frozen ready meals. Founded by the dynamic Lalla Remtulla it produces over 100,000 ready meals daily ranging over Indian, Italian and Oriental cuisine. Employment has increased notably in recent years now totalling over 400. It is very much a family enterprise with Lalla’s husband joint managing director whilst their three daughters Natasha, Rishma and Zera are also directors. Recent annual turnover has been estimated at over £37 million.

228. The company came into existence in Lalla Remtulla’s kitchen. Now it occupies a 43,000sq ft purpose-built factory in the Bispham part of Blackpool. High quality ready-meals are supplied to some of the UK’s most high profile supermarkets including ASDA, Lidl, Spar, Morrisons, and, in a blaze of publicity, an approximate £3 million a year contract with Iceland announced in 2015. This is in addition to food service and wholesaler clients in UK and worldwide. It was announced in November 2016 that Laila’s Fine Foods had again made it into “The Grocer’s Fast 50”list of the fastest growing UK food and drink companies. Lalla’s had actually climbed six places from 14th to 8th. Always strong on staff quality it had been announced in September that James Francis had been appointed Senior Technical Manager. James had previously worked with Lalla’s on a consultancy basis from 2007 to 2014 and has already demonstrated a great support to the business.

229. The company’s team of culinary experts have developed a mouth-watering range of products from the best of Eastern and Western culture ranging from Indian, Italian, and Far Eastern to English and South American. The products are hand-prepared and cooked using Lalla’s own closely guarded traditional family recipes. This amazing entrepreneur and her husband moved from Tanzania to the UK in 1976. After buying some “disappointing” bhajis and samosas from a nearby delicatessen Mrs Lalla Remtulla took her own recipes and persuaded the owner to stock those instead! It was, therefore, well deserved that she was awarded an MBE for in the 2015 New Year’s Honours for her services to the Food and Drink Industry.

230. In this current economic review an attempt has been made to provide an almost eclectic mix of businesses for the reader’s attention. This is to demonstrate the various types of enterprises in the Region and impacts they make on both the local and wider, including global economy. It also, through providing in-depth assessments, illustrates the different features enhancing performance. In order to highlight the North West’s various and varying industrial and commercial attributes there has been a deliberate attempt to move from one part of the Region and from one different sector to another. This time, however, no apology is made for remaining both on the Fylde coast of Lancashire within the Food Industry. The contrasts, although involving the same sector, are well-worth highlighting because they involve two companies both successes but with a decidedly different history.

231. A company very much deserving favourable mention is Lofthouse of Fleetwood, the manufacturer of the famous “Fisherman’s Friend” cough lozenge. Its origins effectively go back to 1865 when Fleetwood pharmacist James Lofthouse developed a menthol and eucalyptus liquid to act as a cough cure for deep sea fishermen on the trawlers. The fishermen found these potions invaluable for combating the effects of prolonged exposure to the hostile and stormy conditions that they had to encounter. However, with the trawlers moving about in these tempestuous conditions it was difficult to drink liquids in glass bottles! James Lofthouse, appreciating this challenge, produced a lozenge instead.

232. The Lofthouse family have a deserved reputation for both their business and charitable activities. However, it was Mrs Doreen Lofthouse who married into the family who has become virtually a local icon. She has played an invaluable role in marketing the product to many parts of the globe. It was realised that different parts of the world appreciate different flavours in their lozenges. Amongst different varieties the aniseed flavour was launched in1977 and the sugar-free mints in 1979. There was one of the first of many accolades when the company received the Queen’s Awards for Exports. The Fleetwood premises had been 34,700 sq ft in 1980 but by 2000 they had reached 600,000 sq ft which is their current area. Not surprisingly Doreen Lofthouse received the freedom of the Borough in 2003. This high reputation and performance has continued up to the present moment.

233. The five billion lozenges that Lofthouse produce annually find markets worldwide. Intriguingly sales were originally confined to the local area. However, demand from holiday-makers in the 1960’s led to the company selling further afield. Exports of Fisherman’s Friend lozenges began in 1974 with the first international sales going to Belgium and Norway. The business has extended its market coverage considerably since then including to South East Asia, a distinctly growing market. During 2016 the family-owned enterprise spent £3.9 million on additions to its assets. This investment mainly consisted of further developments to its Pharma suite and blending facility. The company continues its recent progress and in 2016 posted revenues of £51.2 million an improvement of around 11% on the previous calendar year. Fluctuations in exchange rates proved beneficial and operating profits rose by 220% to £5.5 million; pre-tax profits increased by 190% to £5.8 million.

234. The media talks-up the theme that whole sectors have disappeared including jobs going abroad. In fact companies should be judged on their own record. Industrial/sector definitions are virtually meaningless when you have an individual business that meets the criteria of securing a niche market position through its quality production/service and providing that special something extra to meet and even create market demand. It was particularly fitting that in the 5th March 2016 edition of the “Draper’s” magazine there was an article by Tara Hounslea entitled “Heroic Effort”. The latter featured an interview with James Eden the owner of Salford-based Private White VC, a long-established clothing business re-named after his own hero great-grandfather.

235. The background to the business is worth relating. Jack White was awarded the Victoria Cross for outstanding bravery in WW1 and then, returning to civilian life, took an apprenticeship in a local Salford raincoat manufacturing factory. Through skill and dedication Jack worked his way up from pattern cutter to general manager and then eventually owner of the business. After his demise in 1949 ownership went through several hands including the recent well-known name of Cooper & Stollbrand. When Mike Stoll took-over the business as Managing Director in 1983 it had a flourishing CMT (Cut, Make and Trim) operation serving third-party customers including Burberry, Aquascutum, Paul Smith and Saville Row tailors. Disaster struck in 2008 when the main customer, Burberry stopped its orders, thereby persuading Mike Stoll to close the factory. Fortunately his godson James Eden bought the facilities in 2009 and re-named the company Private White VC in honour of his distinguished ancestor.

236. The background of James Eden is worth noting. He is a Cambridge Economics graduate who has worked in investment banking in London. That activity did not inspire him, however, and he feels much more fulfilled working in the quality craft clothing sector. He had an emotional attachment to the firm, on a number of levels, and had worked there as a teenager. Therefore when the challenge presented itself he seized it with both hands. In James Eden’s own words the company had been “producing private label goods for brands such as Burberry, Stella McCartney and Holland and Holland but the orders were on the decline and people just wanted cheap. It was a period of cheap clothing, cheap credit and cheap mortgages, cheap everything. And that caught the business out.”

237. James Eden decided to launch his own label in 2011, inspired by a devotion to British Manufacturing. The collection is designed by the company’s Creative Director Nick Astley, the son of the late Sir Bernard and Laura Ashley, an icon of the clothes designing world. Since joining Nick, formerly head of Dunshill Menswear, has had a huge positive influence on the brand. There have been many plaudits given to the reinvigorated business. For instance, Ian MacLean, Chief Executive of Derbyshire Knitwear firm John Smedley, comments that a significant appeal comes from Private White’s use of technical fabrics. This includes Ventile, which is a locally sourced cotton used in many of the jackets. A feature of the business is that all the patterns are cut by hand, stitched together by machinists and finished by the most expert of craftsmen. Where possible all the materials are sourced locally with the majority of cloth coming from the surrounding areas.

238. Turnover is split 50/50 between wholesale and retail-stores and online. The business is well-positioned because of a diversified client base with 70% of sales coming from overseas. In 2015, for instance Private White VC exported online to more than 45 countries. Opportunities for further expansion are never ignored and it was announced in August 2016 that the company had taken on half the workforce of fellow Salford manufacturer Sweeney Outerwear after it went out of business. The acquisition of 14 skilled machinists out of Sweeney’s 25 strong complement took Private White VC’s own employment to almost 100. Before the business was transformed employment stood at 30 in 2008. In the “Draper’s” article last year turnover was thought likely to reach £5.5 million with a profit for the year to October 2016. This compared with the previous 12 month period of a turnover of£3 million and a small operating loss. The company was also intending to expand its small selection of womenswear.

239. James Eden commenting in August 2016 indicated that the then fall in the pound had made their clothes significantly cheaper. In the then previous month they had seen a significant uplift in traffic, enquiries and revenue from overseas. Key markets included the USA, Germany, Japan and Scandinavia. The company believes that it is the only British luxury fashion brand that is 100% manufactured in this country. This is being achieved from the same city centre factory on the River Irwell where it has been making clothes for over one-hundred years.

240. An effective way of enraging most people actively involved with the Textile Industry in North West England is to suggest that it is in decline. It is an accepted fact that considerably fewer people are actually employed in this famous sector compared with its heyday. It is similarly true that over the years a number of factories have either closed or down-sized in the face of low-cost competition from abroad. However, an examination of the thriving survivors of this combative Industry indicates that there are some incredible achievements to relate. Textiles were very much at the forefront of the first great Industrial Revolution and now, albeit in a different way, the sector is playing its part in the 21st Century.

241. Two names that have featured prominently in the determined attempts to drive the Textile sector forward are Lord David Alliance, former head of the now defunct but once mega £1 billion plus enterprise Coats-Viyella, and the former Rochdale MP Lorna Fitzsimmons. The latter has the role of Director of the Alliance Project which is based at the Manchester economic think tank New Economy. Since September 2012 the Alliance Project has been working with Industry and Government, both locally and nationally, to grow UK Fashion and Textile Manufacturing. The N Brown Textile Growth Programme was then established in November 2013.

242. In a preview to the Textile Growth Programme Conference at Trafford Wharf Road in April 2017 some amazing figures were quoted. It was reported that it had supported over £150 million of investment and helped 330 companies create over 4,000 jobs in the sector .Much work had also been undertaken in co-ordinating work on innovation, R&D, skills, and the strengthening of relationships between supply and demand in the UK. The focus is on Greater Manchester, Lancashire, West Yorkshire, Leicestershire, Nottingham and Derbyshire. However, the Programme is able to provide support to companies outside these areas if exceptional opportunities warrant it.

243. Within Greater Manchester, over a four year period, some 77 Textile manufacturing businesses invested £32 million in the Textile Growth Programme. This unlocked more than £6.4 million in grants and has helped to create nearly 1,000 new jobs. It has also safe-guarded more than 150 jobs and created 79 apprenticeships. Amongst an impressive range of companies benefitting is R Gledhill Ltd, an Oldham-based family business established in 1936. They produce made-to-order woollen yarns that are recognised across the world. End-users vary from luxury Scottish knitwear to the yarn used in the green baize of the World Snooker Championship tables. The RGF grant has helped them address a growing order book including in the Far East and Asia, increase plant capacity by 20%, and relocate manufacturing facilities back into the UK.

244. Other Greater Manchester beneficiaries range from Sigmatex, the world’s largest independent carbon fibre weaver, to the luxury leather manufacturer Grafea in Central Manchester, and to Rochdale’s TBA Textiles, a leading producer of high performance Technical Textiles. Amongst the clientele of Sigmatex is Boeing with its 787 Dreamliner and Bentley motors. The RGF has enabled it to dramatically increase production of “spread tow” fabrics. This is a lightweight carbon fibre material currently in huge demand from both overseas markets and the UK. Grafea produce handbags, briefcases, satchels, holdalls and rucksacks for luxury markets worldwide. They have utilised the RGF by purchasing additional machinery/equipment. This has helped them to increase output four-fold and promote the “Made in Britain” brand globally.

245. High quality yarn manufacturer TBA Textiles of Rochdale, also mentioned in the previous paragraph, has been in the Industry for over 140 years. This impressive company supplies over 100 countries across sectors including construction, marine and transportation. It was announced in September 2016 that TBA had committed to invest a further £700,000 in new technology and equipment. This was with the support of a £150,000 grant, its second from the N Brown Textiles Growth Programme. Mark Lineker, General Manager of TBA Textiles, confirmed that this significant investment would confirm his company’s position at the forefront of high performance Technical Textiles.

246. Lancashire has also benefitted from RGF monies. Some 39 Textile Manufacturing businesses in the County invested £8 million over the four years in the Textile Growth Programme. This unlocked more than£2 million in grants through the Government’s Regional Growth Fund. This helped to create nearly 380 new jobs, safeguard nearly 150 more and create 24 apprenticeships. David Hardman is chairman of Accrington-based Textiles firm Lantex. This is a small but vigorous business employing 30 personnel and has invested £100,000 in modernising their factory. However, one-third of the money was derived from the Fund. David also commented that his company had recently helped to set-up a Textile Academy in Burnley. This was to teach sewing and fill a skills gap with £45,000 from RGF.

247. Early 2015 saw the House of Commons launch of “The Alliance Report: Repatriation of UK Textiles Manufacture”. The Report, published by The Alliance Project, was the biggest study in twenty years on supply and demand in UK Textile Manufacturing. The potential for repatriating the latter back to this country. It was stated that the Textile production in the UK was just under £9 billion. It was indicated that significant capabilities still exist in traditional sub-sectors such as yarn-spinning, knitting, and weaving alongside growth in technical textiles, materials and composites. It was felt that a total of 15,000 jobs in Textile Manufacturing could be created by 2020, making a total of 20,000 since 2013. In a recent edition of “Lancashire Business Review” in April 2017 it was stated that UK Textile production had risen to £9.1 billion representing a £200,000 increase between 2014 and 2016. Exports of UK Fashion and Textiles had increased by 28% since 2012 and 26% is exported outside the EU.

248. Lorna Fitzsimmons, Director of the Textiles Growth Programme, commented enthusiastically about these most positive developments. “Five years ago Lord Alliance challenged Sir Vince Cable, the then Secretary of State for Business, Innovation, and Skills, to recognise the opportunity for increasing UK Fashion and Textile Manufacturing.” This led to a most extensive and detailed study. “There is still much to do but this is a success story that no-one saw coming.”

249. John Spencer Textiles in Burnley is a prime example of the resilience of the Industry. The current Managing Director of this family business is David Collinge. Today’s firm is especially modern with its computer-controlled looms. This flourishing enterprise became the first approved UK weaver of organic cotton yarns. The accreditation was certified by the Soil Association and under the Global Organic Textile Standard. Theirs is the last traditional weaving mill in Burnley. However, “traditional” should not be associated with staid and unadventurous. In the case of John Spencer Textiles anything but! Specialising in the weaving of spun yarns the range of end uses include home furnishings, ladies and menswear, protective clothing, and industrial fabrics.

250. John Spencer Textiles have achieved vibrant results due to their ability to respond to market demand. They certainly possess a very wide range of customers. Some specific examples include, for instance, fabrics for high-class frocks, rubberised material for Mackintoshes, composites for ship rudder bearings, cotton coated with cellulose used to repair the bodywork of vintage Bentley cars, and fabrics for the wings of old Tiger Moth biplanes. This represents only part of the impressive output. Indeed John Spencer Textiles manufactures the parachutes for ejector seats. Almost every fighter jet uses Burnley-produced parachute material because it does not melt at supersonic speeds. The internet is also proving very useful providing them with a growing market. David Collinge has commented that recent profit levels compare very favourably with “any time in the last thirty years.”

251. The resurgence of the Textile Industry should not be underestimated. The product range alone is impressive from fibres to finished products and from luxury clothing to cutting edge technical textiles. The latter, for example, includes such manufactures as airbags for the Automotive sector, anti-counterfeiting products, woven coffins and body armour. Lorna Fitzsimmons, Director of the Alliance Project, added that, amongst a number of amazing developments was the fact that “our companies are developing clothes that can tell if a child with diabetes needs an insulin injection.” The vibrancy of the Textile sector is a view also shared by Steve Kay, the dedicated and enthusiastic Managing Director of Northwest Textile Network (NWTexNet). He has emphasised that the Textiles of the future will be stronger and lighter including functions such as electricity generation. Steve has also pointed out the increasingly capital-intensive nature of the Industry with productivity and cost-effectiveness derived from possessing the best kit and equipment.

252. One particularly exciting aspect of Industry is its ability to either innovate itself or else adapt innovation. There are many absorbing lectures and talks given by North West England’s own Dr Richard Horrocks who is now Chairman of NWTexNet. Amongst these was a fascinating insight into the abilities of the spider and what we can learn from it in terms of Textile technology. It was, therefore, with some interest to read about the progress made at a new 2009 start-up in the USA named Bolt Threads. The company manufactures synthetic spider products and unveiled its first apparel item, a necktie, in March 2017. It will retail at $314 and is the culmination of seven years of research.

253. For around thirty years scientists have attempted to recreate spider silk in a laboratory. The fibres that spiders produce have the elasticity of a rubber band and a level of tensile strength comparable to steel. These characteristics make spider silk two to three times tougher than Kevlar which is the material used to make bulletproof vests. Unfortunately spiders are notoriously difficult to control in the lab as in captivity they are cannibals and eat each other! The founders of Bolt Threads, however, saw a path to spider silk that did not involve actual spiders. The company combines genetically modified yeast, water, and sugar and turns it to raw silk through fermentation. In August 2016 one of the founders Dan Widmair announced that Bolt Threads could also form new varieties of silk by tweaking the DNA of the genetically modified yeast. He was keen to emphasise this completely new method of manufacturing Textiles which has a very high degree of potential for innovation and sustainability.

254. Innovation has played an important part in the development of the UK Textile Industry including here in the North West. For instance the Manchester-based Smartlife team has developed a novel Textile-based sensor platform with Intellectual Property purchased from the University of Manchester in 2004. These form a wide variety of on-body, dry sensor wearables and traditional garments for the real time monitoring of vital health signs. The technology can be integrated into garments such as underwear to read biometric signals so that the users can monitor their performance. These health indicators include, for instance, an Electrocardiogram which is a simple test that can be used to check the heart’s rhythm and electrical activity. Another indicator is Electromyography which is a diagnostic procedure to assess the health of muscles and the nerve cells that control them (motor neurons). In addition it is also possible to analyse heart-rate, respiration, and a variety of sensory inputs and compare it with clinical quality standards.

255. Smartlife originally specialised in R&D in various sectors before focusing on the sports sector in 2012. The company’s team of scientists and engineers have developed the technology and it currently leads in garment wearables which has become a global marketplace. It was announced in November 2016 that Smartlife had benefitted by an undisclosed sum from Australian investors. This was deemed to be ideal in taking the company to the next level of commercialisation. The leadership team are enthusiastic about this move and include Founder director Mark Pedley, Chief Executive Martin Ashby, and Communications manager Claire Simpson. Mark Pedley indicated that the company would be following-up meetings held recently in the USA with a view to signing globally -recognised sporting brands. There were also believed to be good opportunities in Canada, the EU, Australia and China.

256. It was announced in early 2016 that the St Helens firm Leanvation had successfully entered the multi-million pound NHS market for surgical gloves. They had been supported by the North West Coast Academic Health Science Network (AHSN). Incredibly the Merseyside company was established as recently as 2013 by former healthcare executives Dr Jonathan Day, Tony Downs and Steve King. Financial backing has been received from Finance Wales and The North West Fund for Venture Capital, managed by Enterprise Ventures. Leanvation has pioneered a range of gloves suitable for uses across most surgical procedures. In 2015 it had shipped its gloves to West Africa for health staff treating Ebola sufferers. Building on this it subsequently won framework award contracts with NHS Supply Chain. This strengthened the company’s market position as it meant that their surgical gloves would now be available to NHS Trusts throughout the country. Dr Day emphasised that the company’s gloves deliver comfort strength and protection, with a diminished risk of allergy to those wearing them.

257. The North West is a focus for new ideas and practical innovation. A name that crops-up regularly in this context is the 21st Century wonder material Graphene. The latter was first isolated in 2004 by two researchers at the University of Manchester Professors Andre Geim and Kostya Novoselov. Deservedly they received Nobel Peace prizes in Physics in 2010 for this singular achievement. This made them the 24th and 25th Nobel Laureates in Manchester University’s history. They also subsequently were awarded knighthoods. Graphene is the world’s first 2D material and although ultra-light is immensely tough. Although 200 times stronger than steel it is incredibly flexible. It is the thinnest material possible as well as being transparent. It is a superb conductor and can act as a perfect barrier. Indeed not even helium can pass through it.

258. At the University of Manchester Graphene research has focused on a number of applications ranging from membranes to composites and coatings, biomedical, sensors and electronics. It has been said that future possibilities are endless “limited only by imagination.” Graphene could have uses including creating electric sports cars and lightweight planes. The material may dramatically increase the lifespan of batteries. Indeed the latter could become so flexible and light that they may be stitched into clothing or into the body. A few months ago Graphene researchers had teamed up with a wearable technology company to create the world’s first dress from this amazing material. The University has investigated Graphene’s potential for storing wind and solar power. Sensors made from the material could also be used by farmers to monitor crops.

259. Clean drinking water for more of the world’s population is a highly desirable humanitarian requirement. This is also where Graphene can play its part. For instance Graphene-oxide membranes could ensure significant progress in water purification technology and provide more efficient desalination plants. This is crucial in developing countries where it is estimated by WaterAid that around 663million people live without safe water. This is around one in ten of the world population. Professor Rahul Nair of Manchester University has commented that, although in the early stages, progress is being made. Researchers at the National Graphene Institute have already demonstrated the potential of the membranes for filtering small nanoparticles, organic molecules and large salt crystals.

260. The University of Manchester is committed to continuing its strong commitment to Graphene and its exciting future in the City where it was first isolated. There has already been significant investment in Graphene in Manchester with the £61 million National Graphene Institute (NGI) supplementing existing facilities. This has enabled it to become the home of Graphene research and the £60 million Graphene Engineering and Innovation Centre (GEIC). Graphene is a relatively young material yet the University is currently working with various high profile companies undertaking world-class collaborative research.

261. One name which regularly appears in the press in the most positive of ways is Accrol Papers. This buoyant enterprise has its HQ, a 350,000sq ft manufacturing, storage, and distribution facility on the Roman Road Industrial Estate in Blackburn. For such an achieving firm it is a surprise to realise that it has not yet reached a Quarter of a Century in existence. It was originally founded by Jawid Hussain in 1993 and has become a leading supplier of tissue products covering both the premier retail and UK discount markets. Figures quoted in summer 2016 indicated that Accrol Papers had a 35% share of the discount market and 7% of the overall UK tissue market. By 2015 turnover exceeded £100 million with a headcount of more than 450. An indication of recent progress is that turnover was £18 million a year in 2008 but had increased to £63 million by 2012. Between the same two years profits had risen from £500,000 to £7.5 million. The company imports industrial-sized paper reels from around the world and converts them into toilet, kitchen, and facial and other tissue products. Accrol currently manufactures around 16 million units weekly, supplying some of the UK’s largest retailers such as Tesco, Aldi, Morrisons, Bookers and Wilkinsons.

262. The founder of this fast-growing enterprise Jawid Hussain was born in Pakistan and came to Britain in 1967. He worked for a time as a machine operator in a dairy business before being made redundant. However, he then decided to invest his savings in buying second-hand machinery to set-up in tissue products initially in a small factory in Accrington with his wife Mahroof as Company secretary. The business quickly became family-orientated with the children of the couple becoming actively involved in Accrol Papers. Jawid and Mahroof decided to sell the business to their three sons around 2009 with Majid becoming Managing Director.

263. Majid Hussain discussed the philosophy of the company a few years ago. Prima facie the biggest rivals were the multi-nationals but Accrol moved ahead through developing processes to make high quality paper more cheaply. Investment in new machines using the latest technology enabled the business to be more flexible than the bigger competitors. Accrol also targeted the lower-end of the market acquiring notable customers such as Home Bargains and Poundstretcher. This was achieved through investing in the best machinery. The company prides itself on its forward-looking approach. For instance Majid claims that Accrol can sell its products cheaper when the company was founded. He added that they took a bold step in “an Industry that was not doing well and invested a lot of money. (In 2013) the oldest piece of equipment we have is three years old”.

264. A dynamic company, by definition, never stands still. This certainly applies to Accrol Papers. It was in 2014 that it received backing from North West-based private equity firm North Edge in a £66 million deal. This investment provided the business with the funding to expand its operations further. There was a follow-up in June 2016 when Accrol decided to float on the London Stock Exchange. This was organised through an Initial Public Offering (IPO) whereby a company offers its shares to the public for the first time, thereby seeking to raise money to assist further growth. The company joined the stock market with a market capitalisation of £93million. This was considered an opportune time with the business having achieved seven years of continuous financial growth and posted revenues of £101 million in 2015.

265. It was announced that the founding Hussein family would be stepping back from their day-to-day involvement but remaining with the company to facilitate a managed transition. They were also to retain a 15% stake in the company. The new management team was to include Steve Crossley as Chief Executive Officer. He had worked in Food manufacturing and distribution in the UK for over thirty years at senior management or board level. The new CEO reported further developments in September 2016 when the company announced their intention to lease a new 168,000 sq ft building in Leyland. This was to be used to house two new high-speed tissue-converting production lines, using huge roll paper to make kitchen rolls, tissues and facial tissues. Some 80 additional jobs were to be created.

266. It is a sign of the quality and importance of North West companies that overseas-based groups have been willing to inject further capital. It was announced in March 2017, for instance, that the Swedish-based global hygiene company Svenska Cellulose Aktiebolaget (SCA) had started work on a £12million investment programme at its Tawd paper mill in Paddock Street in Skelmersdale. Some forty jobs are expected to be created and the facility should be operational by the end of the year. This will make SCA the largest manufacturer in the UK of air-dried (TAD) tissue paper. This plant was acquired by SCA in 1999 as a converting mill.

267. The Tawd mill had been “mothballed” in 2008 but kept in perfect working condition until additional manufacturing capacity was required. This recent investment decision follows increased customer demand for soft, high quality TAD tissue. Following this each year will see thousands of tons of paper on giant “mother reels” leaving the mill for other SCA sites in the UK. Thence tissue will be converted into some of the UK’s best-known household brands such as Velvet, Plenty and Cushelle. SCA site manager Barry Clarkson commented that there is a national shortage of high quality through-air-dried tissue and much of the raw material used in the UK is imported. Tawd Mill is central to the company’s plans to increase market share.

268. SCA has undertaken a review of all its UK sites. The emphasis has been to increase quality to meet changing market conditions. This has tied-in with the reopening a state-of-the-art paper-making machine at Skelmersdale. Unfortunately the necessary implementation of this rigorous approach has led to the decision to close the Paper Machine 2 section at Stubbins Mill in Ramsbottom. Jim Lang SCA’s Operations Director stated that due to its age PM2 was unable to produce the high quality of paper required. Jobs were, however, offered in Skelmersdale where SCA had a presence.

269. SCA has a significant interest in North West England with a commercial office at Chicago Avenue, Manchester Airport and also in Manchester a mill in Trafford Park which produces much of the UK’s market for Plenty kitchen towels as well as Cushelle tissue products. The Stubbins Mill site was only acquired in 2012 and its paper, made from 100% recycled material, sent to Skelmersdale to be converted into the finished product. Skelmersdale is, however, the location where SCA’s most recent strategic investment has taken place. In addition to Tawd Mill SCA has at nearby Pimbo Road, with 334 employees, one of the largest sites for the production of the company’s “Away-from-Home” range. This includes Tork folding hand towels used in hospitals, hotels, and motorway service areas.

270. In July 2015 local MP Rosie Cooper officially opened the new Tork SmartOne line at SCA’s large Pimbo Road site. This was a state-of-the art single sheet dispensing system that reduces toilet tissue consumption and costs for professional customers by up to40%. Other new lines at the Mill included Europe’s first single dispenser for paper napkins. This was an innovative system designed to save consumption and costs for clientele such as fast food restaurants.

271. Mention was made earlier of the former significance of the then giant multi-national ICI in the Region’s economy. The name no longer exists but a variety of spin-off activities have developed substantially. One of these has been the Zeneca part of ICI. After leaving ICI in the 1990’s a few years later in 1999 it merged with the Swiss enterprise Astra to form the Pharmaceutical giant Astra Zeneca (AZ). The latter has been well-represented in Cheshire with major sites at Macclesfield and Alderley Park. It was stated in 2007 that with around 7,000 jobs in the North West AZ was one of the Region’s largest private employers. Manufacturing and R&D were both key features of the Group’s activities with, for instance, the company accounting for £1 in every £4 spent on R&D in the North West.

272. AstraZeneca has performed combatively in a challenging sector. However, despite the company’s ingenuity in developing new drugs and forms of medication there is invariably the potential and actual threat of copycat competition. Patent protection can only achieve so much and rival firms can often make-out a case that their product is subtly different from the original. Pharmaceutical enterprises also have to meet rigorous requirements from national/international bodies regarding the efficacy of their developed products. Despite high skills and perseverance on the part of the company the end-result is not always positive.

273. In such a challenging scenario businesses in the Pharmaceutical sector need to be especially cost-effective. AZ both globally and within the UK has been compelled, certainly in recent years, to re-align its cost structures. This has involved elements of re-location and job savings. There were shock-waves in Cheshire when it was announced in March 2013 that all R&D at Alderley Park would cease by 2016. This would affect some 1,600 scientists and technicians who would be offered the chance to transfer to a £330 million strategic global R&D centre in Cambridge in Eastern England. AstraZeneca was compelled to refocus its strategy in the context of having no new blockbuster drugs in the pipeline. At the same time two key money-earners Nexium stomach acid pills and the Crestor treatment for cholesterol would face the expiration of their USA patents in 2014 and 2016. Profits had also fallen by 34% to around £5.3 billion. AZ announced, however, in late 2015 that it was to invest £75 million in Cheshire. This was to create new state-of-the-art facilities in Macclesfield featuring packing lines for tablets and capsules as well as an automated warehouse. The investment would help secure the 3,500 jobs at the site.

274. AZ sold its Alderley Park site in March 2014 when it was acquired by Manchester Science Parks (MSP) majority owned by Manchester property developers Bruntwood. The local press suggested that the deal was around £30 million. Very quickly the new owners shared their vision for the site with MSP indicating that they wished to create a vibrant community of businesses specialising in different stages of the drug recovery process. George Osborne, MP for Tatton and then Chancellor of the Exchequer, was present at the handing-over ceremony by AZ. The latter confirmed its intention of keeping 700 non-research staff at Alderley Park. AZ also announced that it was pledging £5 million to the newly-created Alderley Park Springboard Fund. This was to support new business start-ups there. MSP also announced their intention to contribute £5 million but were confident of boosting the Fund further.

275. Announcing progress in March 2015 MSP indicated that around £30 million had been committed to Alderley Park over the next three years. This was to deliver 1.5 million sq ft of laboratory and office space. The intention was also to start the first major phase of development. This involved a 300,000 sq ft former toxicology unit which was to be transformed into a centre for new businesses. By end 2015 the situation had moved on apace. In November the Chancellor had announced that the Government would provide £4 million to provide a centre of excellence at Alderley Park to spearhead research into anti-microbial resistance (AMR). He also revealed that Alderley Park would form part of a new hi-tech science Enterprise Zone spanning Cheshire and Warrington. Even earlier in September 2015 there was the launch of a £30 million Greater Manchester and Cheshire Life Sciences Fund. July 2015 saw excellent publicity to the extent that some 450 jobs had been created by 28 companies at Alderley Park since AZ had announced its intention to relocate its own R&D.

276. Amongst a number of enterprises and projects displaying interest in Alderley Park was Redx Pharma the drug discovery and development firm based in Liverpool. It was announced in April 2016 that the company had reached an agreement with MSP which would see Alderley Park become the new location for Redx Oncology which develops anti-cancer drugs and was based in a building due to be demolished in 2017. The Redx Group already had two other subsidiaries Redx Anti-Infectives and Redx Immunology based at Alderley Park. This move by Redx Pharma would see the whole of the Group with its 193 staff operating on the same site for the first time. Some 88 Liverpool personnel would be re-locating.

277. Research is a vital and also enthralling activity. However, by its very nature involving testing and experimenting does not always, certainly immediately, achieve hard-headed profit-orientated “bottom line” results. For instance for the 12 month period to end September 2016 Redx Pharma announced a pre-tax loss of £15.4 million. This followed a pre-tax loss of £8.8 million in the year to end September 2015, and a smaller loss of £4.3 million in the year to end September 2014. Although revenue figures were not quoted the company experienced an increase in operating expenses between end September 2015 and 2016 from £11.5 million to £16.5 million. Costs have been high for the company as it has invested heavily in a pipeline of new products. These have included the development of its treatment for pancreatic, biliary and gastric cancer. There is expected to be a clinical trial application (CTA) submission in the 2nd Quarter. Redx is also developing leukaemia treatment and plans to make an investigational new drug application and CTA towards the end of the year.

278. On 21st March 2017 Redx Pharma announced that it would be refocusing its business to concentrate on its key assets in oncology and immunology. This meant that the company would be switching from being a purely research-based group to an R&D operation. As a result there would be a loss of 86 jobs mainly in research roles. On the basis of current employment this represents a reduction of around 60% of staff. The company, nonetheless, remained committed to discovery research but at a reduced investment level. Redx Pharma was further in the news again in March 2017. On this occasion it was to announce that the company had been awarded a £180,000 grant from CARB-X. The latter are one of the world’s largest public-private partnerships and were launched in July2016 to accelerate global antibacterial innovation and research. Eleven projects were selected through a competitive process from 168 worldwide. Redx will receive the funding over 18 months. There will be an option for future tiered milestone payments. This will be to drive scientific progress against globally-challenging drug-resistant Gram-negative bacteria.

279. Justifiably there is a buzz of optimism about the future of innovative science within the North West. This has been embodied in recent comments by John Alden the Growth Director of Cheshire Science Corridor. He firmly believes that his area can come together with Manchester and Liverpool to create a new “Golden Triangle”. He cited in particular the Knowledge Quarter in Liverpool and Manchester’s Oxford Road Corridor. Alden insists that this compliments what is going on around Oxford and Cambridge. Tom Renn from the Manchester Science Partnership (MSP) wants to make its Alderley Park development the UK’s leading open innovation Bioscience campus.

280. A key topic for discussion amongst economists and others is what is the likely number and type of jobs required in the relatively near future. One remembers listening to an eminent and respected economic analyst some forty plus years ago. He suggested that in the face of new innovative labour-saving devices fewer jobs for people would be required and many people might ultimately go through their adult lives without a paid job. The use of robotics, for instance in the car manufacturing industry, is already an example of this type of situation. More recently Price Waterhouse Coopers (PwC) in 2017 have produced a report suggesting that robots will take a third of UK jobs by 2030. Accepts that some activities do not lend themselves to automation; also innovation continually developing; also the way we organise our work. The advance of the business world has come about through the skills, enterprise and drive of individuals.

281. In recent times one of the UK’s inspiring and driven entrepreneurs has been John Edward Halewood who sadly died at the age of 64 in October 2011. In 1978 he founded Halewood Vintners in West Yorkshire but in 1993 moved the company HQ to Huyton on Merseyside. Now known as Halewood International/Halewood Wines and Spirits the still family-owned enterprise is the UK’s largest independent drinks manufacturer and distributor. It has an annual turnover of £230 million and employs more than 300 staff in the UK. The company exports to around ninety countries worldwide and manufactures and distributes directly in five markets, the UK, Eire, Romania, China and South Africa. Halewood embraces a comprehensive Drinks range such as wines, spirits, beers, ciders, ready-to-drink, soft drinks and spring water. The latter is the famous Willow Water from the Lake District with origins going back to the 12th Century when water was extracted by Augustan monks. Halewood’s biggest International seller is Red Square vodka. Amongst a number of other famous Drinks names are the award-winning Whitley Neill, JJ Whitely, Lambrini and Crabbies.

282. Even the most successful of businesses has to face challenges. This has applied to even such a combative company as Halewood International. In 2015 the company sustained a loss of £9.5 million but this was transformed into a pre-tax profit of £1.7 million in 2016. The enterprise with its track-record of entrepreneurship, appreciate the value of dynamic and focused leadership. To that end Stewart Hainsworth was brought-in as Chief Executive. Amongst his impressive previous experience was three years as Chairman of Russia’s principal vodka producer. The new Chief Executive set about focusing on a longevity strategy in terms of spirits which would also generate higher margins and better cash-flow in the future. Amongst various astute moves was one relating to Red Square vodka. Halewood declined a profit-reducing listing with a major grocer and instead opted for investment through the on-trade. Regular quarterly growth was secured with the product outperforming the overall vodka category by more than 14%. The new Chief Executive also brought in a team of managers who could execute a spirits strategy. Recent performance has supported the new approach with staff morale also positively affected.

283. Halewood has also benefitted from a shrewd acquisition policy. This has included the purchase in May 2016 of the Liverpool Gin business which had been established as recently as four years previously. The two owners, who were bought out, had been operating from small premises with no expansion capabilities. Halewood has subsequently invested heavily in equipment including a new copper still which allows the quality of the product to be controlled with greater precision. Stewart Hainsworth indicated that this key acquisition had contributed notably to Halewood’s much improved financial results. Liverpool Gin has expanded to include Liverpool Vodka and Liverpool Rum. These are at the forefront of the company’s new focus on drinks with a bigger margin. Although sales for Liverpool Gin come primarily from the North West it is now available in all the big retail travel hubs in the UK.

284. Halewood International has been especially active recently in the merger and acquisition trail. In March 2016 a 50% share was secured in The Rogue’s Irish Whiskey. This was followed-up later by acquiring a “significant stake” in the latter’s producer West Cork Distillers. A North Wales whiskey distillery Aber Falls is scheduled to open later this year. Stewart Hainsworth also announced in March 2017 that Royal Bank of Scotland (RBS) would support his company by helping it to develop a balanced portfolio of spirits brands. This was to be through an assets-based lending facility.

285. Halewood secured a particularly inviting link-up in February/March 2017 obtaining a majority holding in the Lake District-based Hawkshead Brewery. This represented Halewood’s first foray into the beer market. Hawkshead are a thrusting new company only set-up in 2002 by MD Alex Brodie. The latter sees the link-up with the Liverpool enterprise as ideal. It will allow his company to secure “significant investment” without being absorbed into a “big beer” operation. As part of the partnership Hawkeshead will build a new brewery thereby gaining new routes to market for its craft beers. The Lake District firm will have Halewood as its main distributor and investor.

286. Success is not necessarily aligned to the sector that a firm operates in. More relevant is the ability to make the product or service something different or special that appeals to the market. This is undoubtedly the case with Dukinfield-based Tibard the uniform and workwear manufacturer. This family-owned business was established in 1979 by Chairman John Shonfeld and wife Sue in the back-room of their Mottram home and currently produces 10,000 items of clothing weekly catering for chefs, front-of-house and kitchen staff. Current expectations are that annual turnover will reach around £17 million this year compared with £15 million in 2016. Growth is coming from not only significant contract wins but also with increased repeat business from existing clients as the hospitality sector continues to expand. Tibard now operates from Dukinfield and employs 110 staff with a further 40 at Ashton-under –Lyne laundry where it cleans chefs’ wear, table linen, napkins and other items for hotels and restaurants.

287. Amongst Tibard’s client-base are 1,500 restaurants. These include major chains such as Pizza Express, Wagamama and Yoi Sushi. Demand is also catered for in such enterprises as hotels, nightclubs, cafes and delicatessens. Rick Shonfield Tibard’s Commercial Director, has indicated that the company requires more space for new staff as the business expands and reduction of order lead times becomes crucial. Rick has also commented that an important company focus is to push ahead with online and overseas sales. Internet ordering currently accounts for 6% of overall sales and aims to increase this proportion to 25% by the end of 2018. An online portal called Cloud Stores was launched in 2016 to make ordering simpler and more efficient. Tibard impressively has won overseas contracts in the Middle East and Scandinavia for bespoke hospitality uniforms and the Commercial Director sees considerable potential to further increase exports.

288. Tibard has certainly come a long way since the Shonfields commenced their business in the backroom of their home. John identified a gap in the market and felt that the clientele would be better served by integrating the production and laundering of chefs’ wear into a single managed service. The company moved to Denton in 1982 and then its current location Duckinfield in 1989. In 1987, after nine years in operation, turnover reached the £1 million mark. Now, as indicated earlier, current expectations are around £17 million. This company’s highly creditable performance indicates what can be achieved from small beginnings if there is a focused and determined approach to market demand.

289. There is often too much emphasis in labelling an Industry or Sector as “declining”. In actuality there are sub-sectors within sub-sectors with differing rates of growth. There are also individual businesses that have focused on bringing in new innovation as well as successfully breaking into new markets. A key strategy must be to maintain the highest quality standards by investment in both equipment and staff. Carrington, based at Adlington in Lancashire, is one of Europe’s largest workwear fabric manufacturers and recently announced an impressive expansion. It is increasing its production capacity to more than 50 million metres annually as well as investing £10 million. It will also be developing a state-of-the-art R&D facility and seeking to increase jobs at the plant. The company already exports to over 70 countries worldwide. Carrington’s reputation as an innovator is well-deserved specialising in the development of fabrics and finishes with exceptional performance levels in the most demanding workplace environments.

290. There was particularly exciting news this April relating not only to Carrington but also the Belgium head-quartered Alsico Group which has a major facility in Preston in Lancashire. Alsico has a history of working with Carrington purchasing technical products for the flame retardant workwear sector as well as lightweight fabrics for the Healthcare Industry. However, this arrangement has now extended to Carrington being given a contract to supply polyester cotton products; a staple Textile of the Workwear Industry. The order will involve Carrington supplying 2 million metres of fabric in 2017 with scope to rise to 4 million metres during 2018. This contract is potentially worth £12 million over the first two years.

291. Alsico had been buying fabric from a company in Italy for around 50 years. However, the fall in the value of the pound post-Brexit Referendum drove up the costs and the decision was made to transfer the work to Carrington in Adlington. Alsico were aware of the high quality work of Carrington whose customers range from McDonalds to the British Army. Neil Davey, Carrington’s Sales Director, stated that the deal represented their single biggest contract. He also commented on the speed with Alsico agreeing in December and Carrington starting on the work almost straight away in February. Carrington already supplies 2.5 million metres of personal protective equipment (PPE) to the Preston company. The new contract will provide polyester cotton fabrics. These will meet the requirements for regular high temperatures and drying suitable for industrial laundries.

292. Much has been written about the Automotive Industry. There are, however, many fascinating and different facets of this vital sector. In particular the achievements of luxury car manufacturer Bentley at Crewe are worth a closer look. This is a craft activity par excellence. As a result at 400 hours per car it takes 17 times longer to build a Bentley than a Volkswagen Golf. Bentley has responded well to market challenges and goes positively forward. The original company was founded in Cricklewood, North London in 1919 but is now firmly based in Crewe in Cheshire where there are about 4,000 employees. Bentley Motors Ltd has been a subsidiary of the German-based Volkswagen (VW) AG since 1998.

293. Bentley has proved more than equal to the demands of a highly competitive sector. In 2011 some 7,593 vehicles were delivered a total which rose to 9,107 in the following year. Each of the four succeeding years saw the 10,000 barrier breached. The 2016 performance was a record 11,023 vehicles delivered which represented a 9% improvement on the 2015 figure of 10,100. Ironically earlier in the year sales had fallen by 23% in the 1st Quarter 2016 compared with the same period in 2015. This, however, proved to be only a temporary halt to progress as sales raced along for the rest of the year. Of the 11,023 cars some 9,331 or 84.7% were for the overseas market.

294. The Crewe-based company indicated that during 2016 an important contributor to their success was strong customer demand for the new Bentley Bentayga Sports Utility Vehicle (SUV). The number one customer sales region in 2016 was the Americas delivering some 2,792 cars although this was actually a slight decline of 72 or 2.5% on 2015. However, the introduction of Bentayga to the Americas in the 2nd Half of 2016 a record high performance for a six monthly period. The Americas overall accounted for 25.3% of Bentley’s global market.

295. In Europe sales for 2016 increased by an astonishing 981 vehicles or 57.9% to a total of 2,676 cars. This was only marginally behind the Americas and accounted for 24.3% of Bentleys delivered. The UK itself proved a profitable source of demand in 2016 recording some 1,692 deliveries an increase of 235 or 16.1% on the previous year. The total represented 15.3% of Bentley’s overall sales.

296. All of the other world regions experienced slight declines on the 2015 sales but, nevertheless, were not too far behind. China has become a very useful market for Bentley luxury cars and it was reassuring to note that performance in 2016 was little changed from the previous year. The number of deliveries to this rapidly expanding economy was 1,595 representing a marginal fall of 20 or 1.2%. The total represented 14.5% of Bentley’s world-wide sales. The Middle East received 1,239 cars a marginal decline of 35 or 2.7%. This was 11.2% of Bentley’s global figure. Japan and South Korea received 606 cars which showed a decline of 134 or18.1% on the previous year. This part of the world accounted for 5.5% of the 2016 Bentley market. The Asia Pacific region accounted for 423 cars in 2016 a decline of 32 or 7.0%. The market coverage was 3.8%.

297. Impressive though these recent demand statistics undoubtedly are this cold data only tells a portion of the story. Bentley Motors insist that their luxury car brand is the most sought after worldwide. The company HQ at Crewe is a cornucopia of craftsmanship and achievement. There can be found Design, R&D, Engineering and Production of mouth-watering world-famous model lines Bentayga, Continental, Flying Spur, Mulsanne. This is surely an example of high-class UK Manufacturing at its very best. Earlier this year Bentley Chairman and Chief Executive Officer Wolfgang Durheimer addressed the Automotive News World Conference in Detroit in the USA. He highlighted Bentley’s focus on anticipating new types of demand. He emphasised that customer dynamics will broaden and change dramatically. The rising affluent in developing economies was just one key consideration. Authenticity is central to the approach and is described by the CEO as the Da Vinci touch that separates Bentley from the rest of the competition.

298. Developments at Bentley have already come “thick and fast”. For instance in September 2016 the company unveiled a flagship addition to its Flying Spur range. The W12 S featured a 6.9-litre twin-turbo W12 engine capable of a speed of 202 mph. In November the Bentley Mulsanne Extended Wheelbase was selected as “the best car for being driven in” by Top Gear magazine. Amongst plaudits was recognition of the luxury features that “create 1st-class air travel experience for the road. Also in November the Bentayga received global accolades only one year on from the first production model leaving the assembly line. The model was designed to be the world’s fastest and most luxurious Sports Utility Vehicle (SUV). CEO Wolfgang Durheimer indicated that production had increased and more than 5,500 luxury SUVs had already been produced during the year. Deliveries had commenced in all 56 markets in which Bentley were active. In March 2017 the company unveiled a new all-electric luxury concept vehicle. This was the Bentley EXP 12 Speed 6e concept which was showcased at the Geneva Motor Show. Traditional brand characteristics were being combined with new high-performance technology. This included rapid inductive charging and on-board concierge-style services.

299. In October 2016 HRH Princess Anne, the Princess Royal, officially opened Bentley’s new R&D Centre at 25 Pyms Lane, Crewe covering some 77,500 sq ft. Wolfgang Durheimer commented that this was where a new generation of Bentley’s would be developed committed to excellence and quality. After unveiling a plaque HRH visited the flagship showroom and then toured the main production facility. The latter is where the company’s four model lines are hand-crafted. Princess Anne also met enthusiastic apprentices. This was of particular interest to HRH as Bentley’s Manufacturing Apprenticeship Programme had recently received recognition in the inaugural Princess Royal Training Awards. This was a fitting tribute to Bentley’s innovative approach which seeks to continuously improve skills in all areas of the business.

300. It was particularly apt that in February 2017 twenty-one year old Bentley apprentice Matthew Thorpe won the Outstanding Final Year Business Apprentice Award sponsored by Siemens. This was at this year’s EEF Future Manufacturing Awards and recognises the contribution being made by apprentices across the country. Winners were selected by a panel of judges drawn from business leaders, industry experts and academics. Matthew himself commented that “through a variety of placements and involvement in a wide range of placements” he had gained invaluable cross-functional experience. This underpinned his continuous development and facilitated “the transition into my permanent role in Mulliner, Bentley’s personal commissioning division.”

301. Bentley certainly never stands still. As recently as February 2017 it was reported that the company had been granted planning permission to create a new logistics building spanning some 92,570 sq ft at its Crewe HQ. Bentley’s full planning application to regenerate an area of 3.1 acres owned by the company was approved by Cheshire East’s Southern Planning Committee. The logistics building will be used for the storage and handling of parts prior to being used on the assembly line.

302. There are many companies with a presence in North West England that continue to make outstanding contributions to added value. A key business here is the Mega Group of BAE Systems. Not only does the latter provide valuable employment in the Region but it is also responsible for providing valuable work for an army of supplier firms. BAE has major plants at Warton and Samlesbury in its Aerospace division as well as a weapons facility at Barrow-in-Furness where its famous nuclear submarine manufacturing plant is also located. BAE Systems is the successor to various aircraft, shipbuilding, armoured vehicles and defence electronics companies. In its present form it was founded in November 1999 by the £7.7 billion merger between British Aerospace (Bae) and Marconi Electronic Systems (MES). Its largest operations are in the UK and USA. Worldwide employment is around 82,500. In 2016 sales were around £19 billion compared with £17.9 billion in the previous year. Operating profits rose from £1.5 billion in 2015 to £1.7 billion in 2016.

303. Highlights during 2016 included the announcement by the UK and French governments of a £1.7 billion programme. This was to build operationally representative unmanned combat air system demonstrators following a successful joint-feasibility study. In July a ten-year partnership agreement was signed with the UK Ministry of Defence (MOD) to support the UK Typhoon fleet. This was expected to be worth at least £2.1 billion. The Eurofighter Typhoon capabilities continued to be enhanced. This was through the ongoing integration of the Captor E-Scan and the Storm Shadow, Meteor and Brimstone 2 missiles as part of European capability delivery programmes.

304. There had been concerns in November 2015 when it was announced that BAE Systems was to reduce by up to 371 jobs as production of the Typhoon fighter jets was slowed down. The combined employment at the Samlesbury and Warton sites was then around 13,000 with some 343 expected to be cut at the former and the remaining 28 some 23 miles away at Warton. Chief Executive Ian King indicated that this was a short-term measure to extend the production life of the Typhoon. He suggested then that future outlook was good with the company “operating in an improving business environment.” Ian King’s working career has taken in more than forty years in the Defence sector including serving as BAE Systems Chief Executive since September 2008. He will, however, be retiring later this year when his position will be taken on 1st July by current Chief Operating Officer Charles Woodburn. The latter has considerable experience working in big industry including fifteen years at Schlumberger, the world’s largest oilfield services company.

305. A Mega multi-national enterprise such as BAE Systems needs to win sizeable contracts at a steady rate to maintain levels of profitability. It is also beneficial if the orders include high status projects. For instance in spring 2017 it was announced the Fast Lightening 11 new hi-tech warplane, part-built by BAE, had moved a step nearer to coming into service by the RAF in the UK. This involves an £80 million deal between the USA and UK governments. The main contractor is USA’s Lockhead Martin involved in carrying out initial training, engineering, maintenance and logistics support for the UK’s F-35 fleet over a three year period. However, the latter has sub-contracted work worth £40 million to BAE Systems. The two companies will form teams of more than 100 skilled technicians at RAF Markham. BAE personnel at Samlesbury build the tail and rear fuselage sections of the aircraft and the plant is expanding ready for full production. UK Secretary of Defence, Sir Michael Fallon, commented on the prestige involved in joint-working on the world’s most advanced combat aircraft.

306. The versatility of BAE Systems is immense. This extends to working with UK Olympic hopefuls. In fact recently the company’s engineers have been teaming-up with British Cycling to design a device for measuring cyclists’ power output on the velodrome. This state-of-the-art system measures the work-rate and energy expended by cyclists. More than that it has the capability of replicating the centrifugal forces of an indoor race-track more accurately than any other form of test. Data collected includes gas and blood analysis and enables testing at high speeds. This advanced cycling ergometer was developed as part of the technology partnership between BAE Systems and UK Sport. This easily portable device can be customised for individual cyclists. BAE Systems states that it applies the same problem-solving principles and ingenuity to challenges in sport as it does to tackling complex defence and security programmes.

307. Within the North West Region BAE Systems further displays its ingenuity and diversity. Adjacent to the company’s famous shipyard at Barrow-in-Furness is BAE’s Weapons Systems business. It was announced in January 2017 that a $542 million contract had been received from the US Department of Defense to provide 145 M777 ultra-lightweight howitzers to the Indian Army. This was through a Foreign Military Sale between the USA and Indian governments. The M777 provides superior artillery capability and is uniquely battle-proven. Speaking in December 2016 BAE Systems also indicated that it had won a seven-year contract from the US Army worth up to $384 million to provide specialised weapon sights.

308. BAE Systems facility at Hattiesburg in Mississippi is responsible for the final integration and testing of the M777. However, prime contract management of the programme, manufacture and assembly of the titanium structures and associated recoil components are undertaken at Barrow. The first batch of twenty guns is expected to be delivered by BAE Systems in a couple of years. The remaining 125 will be assembled in 48-54 months by BAE partner Mahindra Defence at Faridabad, Haryana.

309. BAE Systems has demonstrated its flexibility and wide range of top skills during the build-up to the Indian contract. After the Indian government failed to submit an official contract production on the howitzer was suspended from 2013 for three years. However, the company maintained the key skills and equipment ready for a re-start. At the earlier peak production some 400 personnel were employed although prior to the recent contract announcement this figure had been reduced to 240.

310. BAE Systems Maritime Marine owns the Barrow-in-Furness shipyard (formerly Vickers). Its core business is nuclear submarines and it is North West England’s largest operational shipyard covering around 169 acres. Over 5,000 employees work here. As with the whole of the company, however, the number of supplier jobs especially from the hi-tech SME sector is immense. The company spends more than £300 million annually with over 300 suppliers.

311. Audacious, the 4th nuclear submarine in the Astute class, was officially named at a ceremony in December 2016. The official launching took place in April 2017 at BAE Systems’ site in Barrow-in-Furness. This 97 metre-long attack submarine weighed some 7,400 tonnes. Featuring the latest nuclear-powered technology, the Astute class can circumnavigate the globe submerged; manufacturing the crew’s oxygen from seawater as they go! They can also operate covertly and remain undetected in almost all circumstances. This is despite being 50% larger than the Royal Navy’s current Trafalgar Class which are being replaced by the Astute. Will Blamey, BAE Systems Submarines MD, commented on this latest achievement. “Today’s launch marks an important milestone in the Astute programme”. “Audacious enters the water in a more advanced state than any previous Astute-class submarine.” “Designing and building a nuclear-powered submarine is extremely challenging and today’s launch is yet another reminder of the unique skills required to deliver such complex programmes.”

312. Successful businesses are those that never take a step back; indeed they are forever considering future challenges and opportunities. Skill training to the very highest standards is one area that is invariably paramount. This is certainly the case with BAE Systems. In late 2016 the company opened its brand new £15.6 million Academy for Skills and Knowledge (ASK) at the Samlesbury Aerospace Enterprise Zone. It is sited alongside BAE Systems military aircraft Advanced Manufacturing Centre. As well as training apprentices and graduates it will provide life-long learning skills. ASK will also act as a collaborative skills-hub for the North West’s Engineering and Manufacturing sector. It offers, in addition, an exciting learning education centre for school-children from five to fourteen years of age.

313. It was announced in December 2016 that BAE Systems was training an unprecedented 2,036 apprentices across its UK-based defence and security businesses. This amounts to some 6% of its 34,000 total UK employees. This is the largest number in the company’s history surpassing an original target to train 2,000 apprentices in 2018. In addition BAE had plans to recruit an additional 574 apprentices in September 2017. The company prides itself on its investment in education and skills. The amount spent is more than £90 million annually in the UK. Examples range from nationwide engineering roadshows for schools to life-long learning programmes for employees.

314. It is apparent in noting a number of businesses mentioned in this review the sophistication and high quality involved. However, even companies falling into this latter category are not immune from challenges. As an example in Ulverston is located the German-owned Siemens Subsea which manufactures subsea connector and measurement technology indicated in April 2017 that job losses could take place. Some 277 work at Ulverston but demand in 2018 is expected to remain flat. In that context further efficiencies would be needed to achieve an “appropriately sized” organisation to meet the circumstances. It was suggested that 36 posts could go including senior personnel. Poor market conditions driven by the low price of oil are to blame. Mike Henry, General Manager, indicated that the losses are part of a global scenario also affecting businesses in Norway, USA, and Brazil. Nonetheless Mike Henry stressed the importance of the Ulverston site in the company’s future deliberations.

315. A feature of any organisation is that it will over an extended existence face both challenges and opportunities. It is the go-ahead operation that will, indeed, rapidly transform the challenges into opportunities for growth and further development. If this review had been composed just a relatively few years ago a popular choice for a steady, thriving enterprise would have been the Manchester-based Co-operative Group. The latter’s roots date back to 1844 when it was originally established by the Rochdale Pioneers. It grew to become the largest consumer co-operative in the UK, owned by some 4,350, 000 active members in 2016. The diverse range of activities incorporated in the business cover retail including food, electrical, financial and insurance services, legal, and funeral care. Manufacturing also used to feature and at one stage could claim to be the UK’s biggest farmer. Fairly recent estimates indicate that the Group was operative in more than 4,200 locations and accounted for over 60,000 employees. The Co-op has prided itself as an ethical retailer and was, for instance, the first major UK retailer to champion Fairtrade.

316. All businesses, whatever size, cannot guarantee that their business will run smoothly whatever the circumstances. Therefore there was little surprise when it was announced that the Co-operative Group was in a loss-making situation. The pre-tax profit of £23 million in 2016 had become a pre-tax loss of £132 million in 2016. There has been much adverse publicity about the disastrous scenario relating to the Co-op Bank. That eminent journalist Paul Gosling recently summarised the position with considerable shrewdness. He suggested that the problems arose before the unfortunate Rev Paul Flowers took-over as Chairman. Problems began earlier when both the Group and Bank decided to take-over the Britannia Building Society. There was a disturbing lack of awareness of the extent of poor lending decisions by Britannia and the due diligence carried-out before the take-over was stated by pundits to be “very inadequate. ”The Bank’s then Finance Director, later Chief Executive, has accepted responsibility for that. The Group lost control of the Bank to US hedge funds under a bailout deal. This was after a £1.5 billion hole was found in its finances relating to the ill-fated 2013 Britannia merger.

317. The Co-operative Bank reported statutory pre-tax losses of £477.1 million for the 2016 calendar year compared to losses of £610.6 million in the previous 12 month period. During 2016 the Bank completed 59 branch closures which reduced the overall size of its network to 105. It also reduced its full-time equivalent workforce, including contractors, from 4,704 to 3,895. On 13th February 2017 the Co-operative Bank was put-up for sale. This sales process invited offers for all its shares. However, the Bank indicated that it was also considering other options to build capital and meet its long-term requirements. The Group conceded that there had been considerable volatility caused by the on-going sales process at the Bank Therefore it had realistically put its Bank share-holding at £NIL compared with £185 million in 2015.

318. The Co-op Group now owns just 20% of the Bank. Commenting in March 2017 it was reported that the ability to meet longer-term UK regulatory capital requirements had been challenging. This was because of low interest rates and higher than anticipated transformation and “conduct remediation” costs. It was announced on 7th April 2017 that the Bank had received a number of “non-binding proposals” from strategic and financial parties. It was indicated that several of these had been selected to enter the next stage of the sale process.

319. The important role that the Co-op had played in the Farming Industry has been briefly alluded to earlier. It was, therefore, sad to relate that the Group decided to shed its Farms business, as well as Pharmacy, before embarking on a three-year turnaround plan, namely Rescue, Rebuild, and Renewal. On the positive side the Co-operative Group announced that Group revenues had increased in 2016 by 3% from £9.2 billion to £9.5 billion. Food like-for-like sales rose by 3.5%. Performance here was driven by core convenience business as Food continued to outperform the market. Funeral-care revenues grew by 3% driven by a move to make funerals more affordable. Insurance saw sales increase by 28%. This was based on motor premium inflation, improved pricing and distribution capabilities.

320. Amongst a number of measures during 2016 was the sale of 298 stores to McColl’s. The money raised was to be re-invested into the Co-op Group strategy of focusing on convenience retailing and strengthening its membership offer. It was announced that all the 3,808 now former Co-op employees would be absorbed into the new arrangement. The challenges facing the Co-operative Group have been enormous but they have displayed considerable fortitude in battling on. The future is an unvisited land but opportunities abound for not only the Co-op but for all the array of striving businesses here in North West England and the rest of the UK.

321. In June 2015 the Mint Bridge, Kendal factory of HJ Heinz was under considerable stress. It had indeed experienced five recent years of redundancies. It was then that the factory was taken-over by Kendal Nutricare: the latter not only saving 88 jobs but also implementing a programme of innovation. This involved “Kendamil” which is the only infant formula to be produced in the UK. In addition it is the only one that uses a full cream recipe rather than a skimmed milk formula. Now it is already sold in over 18,000 mother and baby stores in China. Kendal’s sales success in China has been greatly assisted by the Orient International Shanghai Foreign Trade Co Ltd.

322. Nutricare is also breaking into markets in the Middle East, South East Asia, America and North Africa. In addition a super-kosher formula “Kendamil Mehadrin” is proving a huge success in North America whilst a “Kendamil Halai” product is being manufactured for customers across the Middle East. Other export contracts will be announced shortly as the Kendamil brand really takes-off globally. This is truly delivering the benefits of milk supplied by 220 farms across Cumbria and Lancashire to children world-wide. This success achieved by Nutricare has laid the foundations for the launch of another specialist product. This, however, is an adult nutrition drink “Kendalife” which is coming along in spring 2017. The success of the company has resulting in employment rising to 118 with more jobs expected as factory capacity increases.

323. It is only fitting that Kendal Nutricare has been named the North West Regional winner of the Federation of Small Businesses (FSB) &Worldpay UK Exports Awards. It is not only the company that has secured a well-deserved accolade. In addition the Chief Executive Officer Ross McMahon has been named the Institute of Directors (IOD) Start-Up Director of the Year. The CEO has commented that these awards help to bring the excellent achievements of the company before the wider business world. It also raises morale and keeps Kendal Nutricare focussed on innovation, excellence and export. Ross McMahon also indicated that the company is ambitious in extending its reach in the UK “where we shall have some significant news to break soon.” The company’s record of success is outstanding especially considering that they have been established for less than two years.

324. The final item in this economic assessment relates to an actual sector. No excuses are made here because the activity involved is a vital part of both the North West and UK economies. It is the very important Tourism Industry and it is well worth the reading to closely examine UK Tourism Statistics published in 2016 by Tourism Alliance. The latter is the Voice of the sector comprising 55 Tourism Industry organisations that together represent some 200,000 businesses of all sizes throughout the UK. Their Chairman is Bernard Donoghue who makes a number of telling points. One in particular is disturbing namely that in the 2010 General Election not a single political party mentioned Tourism in its manifesto! Fortunately this regrettable over-sight was remedied five years later when the next Election occurred. The Chairman acknowledges that “this new-found understanding of Tourism” has resulted in the Government announcing a range of initiatives that will benefit the sector. The strategic ”Five Point Plan for Tourism” was very helpful and supportive. What was probably even more vital was the setting-up of a new Inter-Ministerial Group to oversee its implementation. This is an excellent way of removing some of the “roadblocks” that are the responsibility of other Government departments. However, there is still much to be done and it is essential that the momentum continues and Tourism is given its rightful place as a major income-earning Industry.

325. According to “UNWTO Tourism Highlights” the UK was the 6th largest International Tourism destination ranked by visitor expenditure. Ahead of it was the USA; China; Spain; France; and Italy. The UK was in 8th place in terms of visitor numbers. Ahead of it were France; USA; Spain; China; Italy; Turkey; and Germany. It was estimated that the UK accounted for 3.6% of global International Tourism receipts. According to the official Blue Book, ONS 2015 the UK’s total revenue from Tourists was £121.1 billion some 7.1% of UK GDP.

326. On the basis of UK Tourism by Region North West England in 2014 was in 5th place in terms of value with a figure of £9,188 million or 9.5%. Not surprisingly London occupied 1st position with £25,484 million or 26.3% ahead of South East England with £12,204 or 12.6%. The 3rd and 4th placed regions were only slightly ahead of the North West. 3rd was South West with £9,690 million or 10.0% with Scotland 4th placed with £9,303 million or 9.6% of the UK total. Total UK value in 2014 was £96,724 million. This figure comprised £52,848 million for day visits; £22,549 million for domestic visits; and £21,027 million for inbound visits from abroad. The proportions were, therefore, rounded 55:23:22 The North West’s position amongst UK regions was 3rd in terms of day visits; 4th for domestic visits; and 4th in terms of value of inbound visits from abroad. The North West’s actual figures were £5,370 million; £2,465 million; and £1,330 million. The North West’s ratios between types of visitors were 58:27:15.

327. The 2014 data also indicated that the North West was in 5th position in terms of employment provided by Tourism. The Region accounted for some 170, 113 persons in direct employment which represented 9.5% of the UK total of 1,789,333. This was behind London with 471,928 or 26.45; South East on 226,003 or 12.6%; South West with 179, 450 or10.0%; and Scotland on 172,282 or 9.6%.

328. More up-to-date figures for Tourism were publicised in February 2017 by “Visit Britain”. In 2016 there were a record 37.3 million inbound visits to the UK, a rise of 3% on the previous year. Amongst these overseas visitors there was a strong growth from North America. The North West is performing well and in Q3 2016 (July-September) received 81,000 inbound visits. This represented a 6% increase on the same period in 2015 and was the highest since records began in 1961. Overseas visitors spent £383 million in the North West during Q3 2016, representing a 1% increase on Q3 2015.

329. The North West Tourist Industry is considered by a number of pundits to be in a healthy economic position. According to information publicised in April 2017 the Insolvency trade body R3 indicated that the Region’s hotels and tourism businesses had the lowest risk of failure of any of the major sectors that it monitors. Just 19% of hotels are considered to be above normal risk of failure in the next 12 months. This is similar to holiday accommodation businesses, stately homes, and historical buildings. As a comparison the proportion of businesses at risk in transport and haulage is 34%.

330. Tourism comes in many forms and there is a danger that its scope and immense coverage can be under-estimated. The North West has much to offer as indicated by website It suggests some 195 places to visit; what ONLY 195?! These range from Bramhall Hall in Bramhall, Stockport to Chester Cathedral; from Carlisle and Muncaster Castles in Cumbria to Stockley Farm Patk in Arley, Northwich and the Dewa Roman Experience at Chester; from Lakeland Motor Museum in Backbarrow, Ulverston to Brockholes Nature Reserve in Preston; from the Museum of Science and Industry in Manchester to Knowsley Safari Park in Prescot ; from the World of Glass in St Helens to People’s History Museum, in Manchester; from the Sandcastle Waterpark in Blackpool to Lytham Windmill Museum; from Bowland Wild Boar Park in Chipping, Preston to Madame Tussard’s Waxworks in Blackpool; from the National Football Museum in Manchester to Chester Zoo. And so it goes on, where does one stop?

331. Culture comes in many forms and there are few areas that can compare with the North West’s sheer variety. Take, for instance, the world-famous Lake District with its incredible scenery and its famous historical associations from Beatrix Potter to the great national poet William Wordsworth. The Region has three impressive but different types of sea-side resorts in Morecambe, Blackpool and Fylde coast, and Southport. The Blackpool Tower and Pleasure Beach continue to receive numerous visits as does Blackpool’s famous Illuminations display in the autumn. Work is currently under way on the Pleasure Beach’s new £16.25 million Icon rollercoaster. This is the first double-launch variety in the UK.

332. In early April 2017 Sajid Javid, the Government’s Communities Secretary, announced cash amounting to £40 million for 30 coastal regeneration projects. Coastal tourism is now worth £8 billion annually to the UK economy. Despite this there has been surprise and concern following a study last year by the British Hospitality Association. The report indicated that nearly a third of adults had not visited the British seaside since they were children. The Government has indicated that it has invested £120 million in 200 schemes since 2012 as part of the Coastal Communities Project. The latter, nationally, has supported 18,000 jobs and attracted £200 million in additional investment. North West projects that will benefit include a new conference centre to be built at Blackpool’s Winter Gardens. In addition Southport’s Grade 11 Pier will be turned into a vantage point for bird-watching.

333. Bearing in mind all of the above is but a “snap-shot” of what is happening in the local and wider economies. Hopefully, together with some statistical feel, the focus on the actual achievements of individual businesses, as well as their challenges, will have helped in obtaining a clearer view of “what makes Industry tick”. If you have any comments to make they will be gratefully received and much appreciated.

Brian Eaton,
May 2017.
Contact mobile 07850 216451.