In the past six months or so we have been inundated with university surveys, partnership reports, Parliamentary Committee hearings, and Welsh Government debates: much navel-gazing, and all with an underlying theme of failure – both in economic performance and in the attraction of inward investment projects. My study of all this suggests some ill-considered and factually inaccurate statements about Wales’s economic performance in the past, all of which contribute to a sense of public unease which could well discourage potential investors. Where there are fault lines they should not be obscured, but vigorously addressed. What we must do as a country, however, is to renew and vociferously display the confidence of the last decade of the 20th Century.
To read that Welsh GVA per capita at 74 per cent is the lowest it has ever been, and that our rate of growth has been less than 1 per cent per annum in real terms for the last 20-plus years, is not comforting. If you were today’s Chairman of the Ford Motor Company considering, as Alex Trotman did in 1994, whether to make an investment of £329 million in a new engine line in either Bridgend or Brazil, why would you choose Bridgend, as he did? Simply, and I quote him: “The quality of the Welsh workforce, their attitude, and their productivity achievements.”
Note that he did not mention ‘low wages’, as some uninformed persons bandy about as a reason for Wales’s success in the 1980s and 1990s. I do not need to remind this audience that at that time Wales was transforming itself from an economy still heavily dependent on the traditional industries of coal and steel.
Today I suggest there is a great story for Wales to tell. For the process of transformation has continued apace, and the descriptions ‘High Value Added Manufacturing’, ‘High Value Added Services’, ‘The Creative Industries’ and ‘The IT Sector’ – used in hope 15 years ago – now exist and are continuing to be successfully developed. Support for domestic entrepreneurship must increase.
However, inward investment is a vital ingredient and a most significant impetus for Wales’s economic growth. In addition to employment created by the projects themselves, Welsh businesses can and do gain real benefits from the supply chain requirements.
In the past few years Welsh inward investment activity has been both confused in structure and in message, and therefore poor in performance. Latest figures indicate we are near to if not at the bottom of the countries and regions of the UK in terms of projects successfully realised. Some in this audience may remember when Wales was recording 15 per cent plus on an annual basis of all projects and jobs created by inward investment in the UK, punching thus some three times more than our weight in terms of population percentage of the UK as a whole.
The cost of attracting overseas business today has clearly increased considerably. I am pleased to note the beginnings of a closer cooperation between our activities and those of UK Trade & Investment. They have a proven worldwide network and they are there for us to leverage. We must put aside any prejudice and understand that an overseas business in all probability looks at the UK first, and it is only after that proposition has tickled their fancy that Wales’s message can be driven with all guns blazing.
We have some 18 staff based overseas. We could increase that representation at small additional cost by using the UK’s embassies and consulates in countries where we wish to focus, and placing a Welsh Government official in those offices that we identify as key target markets – co-location. I know this is a concept which is getting warmer on both sides of Offa’s Dyke. In this way a much bigger bang for a buck can be achieved.
What is Wales selling? Let’s start with Ford (but messages repeated by British Aerospace, General Electric, British Airways, and Toyota): the Welsh workforce – intelligent, hardworking, keen to learn new skills; high productivity; a wonderful environment in which to live and work; a unique culture. We need to focus on our education, and in particular development of skills in engineering and science, and give even more support to, for example, Swansea University in its efforts. I hope the creation by the Government of nine Sector Panels will succeed in their active identification of opportunities, but also we must ensure that activities outside these Sectors are equally supported.
We also need to focus and expand on clusters of activity. Alas, the Technium project failed because, as Simon Gibson said in his evidence to the Welsh Affairs Select Committee, “it ended up a very poor idea based on property,” but “started out as a very, very good idea based on the exploitation of intellectual property”.
In fact, the project was inspired by an idea created in Sydney between the Government and the University of New South Wales to stimulate the commercialisation of intellectual property from students and graduates. The organisation was of course linked to and supported greatly by the University, and professional, legal and financial services were provided at no, or modest, cost.
I was struck by a headline recently in the Western Mail on an article by Dylan Jones-Evans: ‘Leaders who really care’. As in everything else, inward investment is not something that you can pick up one day and put down and come back to a few days later – I think I am paraphrasing Voltaire’s comment on diplomacy! Inward investment is a continuous process of identifying, building and sustaining relationships. If it is not, the prospect will soon realise the lack of total commitment and enthusiasm.
As importantly, the relationship is continued closely once the investment has been made. When do you think that Wales knew that Bosch was moving out of Llantrisant? When the final decision was made, I venture, rather than when rationalisation was being considered by the company, which would have given time to influence.
We know we are a small country in both population and geography. In the competitive economic environment of today we cannot afford a fragmented approach if we are to make the most of the assets we possess. With great respect to my north Wales friends, I was horrified to read on 1 March a press release suggesting that “North Wales aims for inward investment agency”. I am sure such thinking is bred from frustration at the current national lacklustre performance. However, I strongly urge it be resisted. Again, I can understand and indeed support the objectives of Cardiff Business Partnership and Cardiff & Co. However, I urge that their overseas aspirations be coordinated and executed in collaboration with the Welsh Government, which hopefully will provide the leadership, and will strengthen a closer working relationship with UKTI. Unity is key; the alternative is confusion.
Some more obvious priority markets, as I see them, include: USA, China, India, Japan, Brazil, Russia. Japan still needs strong presence in the EU and we must never forget the successful relationship that Japanese companies have had with Wales. They will not, because their memories are cultivated to last much longer than ours! The same can be said of China, where length of relationships are vital in building trust to do business.
There has been much talk of somehow recreating the WDA. Its disbandment was a political decision taken some eight years ago. I strongly suggest that today this is not the way forward. We must not go backwards in our thinking. We are where we are, and should cast no further envious glances at the Scotland and Northern Ireland structures. We are a grown-up nation and must make our own.
But currently it is unclear where the actual responsibility for inward investment lies within Government. This lack of clarity was largely brought about by the demise of International Business Wales. It is essential that inward investment be unified, led by one Department which is clearly responsible, and by one Minister who is clearly accountable. In line with current Government thinking on Economic Renewal Panels and Sector Panels, there could perhaps be a role for an external body to advise the Minister and to provide, through the Minister, focused support to ensure that the agreed priorities are being effectively and professionally executed.
Also, the Welsh Government and its overseas representation must mirror UKTI and provide strong visible support to Welsh businesses in their efforts to gain access to overseas markets and overseas links.
In its inward investment activities Wales must become again fleet of foot, responsive to the over-arching national objectives, and the Department must be seen as a body that is effective and responsive – both by the investor and by the nation.
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