East Midlands SPD 2000-2006 Chapter 7 SWOT
7 SWOT
7.1 INTRODUCTION
The East Midlands Objective 2 Programme contains a number of diverse areas. These
include almost all of Nottingham, parts of the major cities of Leicester and Derby, and large
former coalfield and rural areas including parts of Lincolnshire and the Peak District. The
diversity and geographical configuration of the eligible area presents a challenge in developing
a coherent SWOT.
Many of the key issues facing the sub-areas were summarised at the end of Chapter 2, and
these have influenced the development of the SWOT. Area based SWOTs have been used
to identify common concerns and issues such as the problems of disadvantaged groups in
urban areas, principally the three cities, and the vulnerability of mining and market towns and
isolated rural communities. The area based SWOTs have also been used to identify the
issues relevant to particular measures, and to help focus priorities and measures on key
constraints. These are highlighted in Chapter 9 of this document.
In order to identify key constraints and allow opportunities to be developed, the Programme
SWOT presented below has identified strengths, weaknesses, opportunities and threats
relevant to all or significant parts of the Programme Area. Particular attention has been paid
to identifying opportunities in order to direct resources to activities where there are significant
economic benefits to be realised.
The East Midlands Programme Area combines two former 5b Programme Areas with the
former (industrial) Objective 2 Programme Area. The eligible area for this Programme
combines distinct rural, coalfields (a combination of rural and industrial urban) and urban
elements. In assessing the Programme level SWOT, it is important to bear in mind that many
of the issues apply to parts but not all of the Programme Area. In addition, positive progress
with regard to one indicator often masks problems in other aspects, for example employment
growth in parts of the rural area masks the predominance of seasonal and part time
employment and low paid employment.
In relation to the urban areas, critical issues are the decline of key manufacturing sectors, the
presence of significant concentrations of disadvantaged groups, a blighted urban
environment, and long-term problems associated with economic re-structuring.
With regard to the coalfields, the collapse of traditional employment resulted in the loss of
significant numbers of highly paid jobs, leaving behind environmental damage, a poor base for
attracting new investment, a shortage of modern business facilities, and problems around
securing new employment for older workers.
The rural areas face problems associated with economies based around low paid sectors, the
sharp decline in the fortunes of the agricultural sector, the difficulties of smaller and remoter
communities, and many years of under–investment in local infrastructure.
While there have been some positive features as regards each of the sub–areas, including
employment growth, and notable successes in areas such as financial services, these have
not out-weighed the significant job losses of the early 1990s. While there are a number of
opportunities to help transform the region, it is clear that considerable public sector stimulus is
required to secure permanent change.
191
East Midlands SPD 2000-2006 Chapter 7 SWOT
STRENGTHS WEAKNESSES
Resilient business base Major employment sectors in decline or transition
Small groups of strong sectors/clusters Significant concentrations of economic and
socially excluded groups concentrated in the
An outstanding natural environment in parts of the urban centres
region
Rural areas dependent on low added value
Urban/rural quality of life sectors and an agriculture sector in transition
Strong public and private research base Under-representation of growth sectors in the
industrial structure
Central location with access to the South East
and European economies Low levels of further and higher education
participation rates by young people and low levels
of attainment.
Under-use of ICT by business
Skills shortages and recruitment difficulties in key
sectors
Fewer businesses per head, and a business
„deficit‟
Lack of an East Midlands „brand‟
OPPORTUNITIES THREATS
Use of emda ICT action plan to focus Increased global competitive pressures on the
developments in e-commerce manufacturing sector leads to further jobs losses.
Continued growth in finance and business CAP and trade reforms leading to a further
services in the UK deterioration in agricultural competitiveness
Increasing demand for sustainable/environmental Further decline in urban problem areas
tourism and cultural industries
Increased competition for tourism related
Development of environmentally sound brands expenditure
and products
A further deterioration in rural service provision
HE/research base and SME spin outs
Further rural depopulation of young people
Development of knowledge based industries
Failure to create jobs in the former coalfield areas
Development of Nottingham as a national centre
for financial and professional services
Upgrading skills levels in indigenous SMEs to
help raise productivity.
192
East Midlands SPD 2000-2006 Chapter 7 SWOT
7.2 STRENGTHS
The East Midlands has out-performed the national economy over the past decade in spite of
major sectors undergoing structural change. This performance has been the result of a
resilient business base even in those sectors facing the greatest difficulties. Companies of
all sizes in sectors such as engineering, clothing and textiles have improved their commercial
position to deal with intense competition from other countries and regions.
The solid engineering base, including motor vehicles and aero engines, remains particularly
strong in the south of the Objective 2 Programme area, notably Derby. For textiles,
employment remains three times more concentrated than nationally despite the increased
competition from outside the region. Overall manufacturing accounted for one in four of all
jobs in the Programme Area in 1997, and 28% of GDP. The region has sustained this
employment level, despite national employment decline in the sector of over 5% since 1991.
This strong manufacturing base remains a major asset, even though exporting sectors are
under considerable competitive pressure owing in part to the high level of the Pound.
The Programme Area is the base for a small number of key sectors including engineering,
food, pharmaceuticals, healthcare and bio-technology, finance and design and tourism,
cultural and creative industries. Although a number of these sectors/clusters have been under
considerable competitive pressure e.g. engineering, clothing and textiles, many companies
have successfully diversified and continue to employ significant numbers of people. Many of
these sectors are concentrated even within the Programme Area.
Parts of the Programme Area enjoy an outstanding natural environment, notably the Peak
District and parts of the coastline and rural Lincolnshire. The natural environment is an
important economic asset and underpins the tourism product in many parts of the rural area.
The designation of the Peak District as a National Park recognises its importance in a national
context. The outstanding natural environment plays an important part in increasing the quality
of life for residents, many of whom may commute to urban centres.
Unlike other regions, the East Midlands is characterised by a balance between medium sized
cities such as Derby, Leicester and Nottingham, major centres such as Lincoln, and a rural
settlement pattern based upon smaller settlements. This offers citizens the benefits of
urban and rural life, while avoiding the massive conurbations of, for example, the West
Midlands and the North West. As a result, the East Midlands is an attractive place to live and
work, although it has a low profile as an investment location. A number of the city centres in
the region are themselves attractive, Nottingham and Lincoln for example, which further adds
to the overall favourable impression.
The region has a strong public and private sector research base, and although some
capacity is located outside of the area, the facilities are available to support, for example, SME
development, in the Programme Area. The region has an outstanding research facilities/base
in relation to engineering, biotechnology and fashion and design. There is a strong Higher and
Further Education sector in the region, with one of these institutions, Nottingham University,
ranked sixth in the UK as a place for study and research, and the medical schools in
Nottingham and Leicester are important for healthcare research. There is however
considerable unrealised potential from these assets and the number of SME spin-outs from
the research base has been limited. Greater recognition of the benefits of commercialisation
from the region‟s universities, and greater awareness of the benefits of research within
companies, would help realise the potential.
The Programme area benefits from a central location with access to the South East and
European economies. This has enabled the region to benefit from close links to major
markets, particularly the South East of England which is both the largest and fastest growing
part of the UK economy. Improved access relates to excellent road and rail networks between
the region and the South East economy, but there are also good links to other UK markets,
such as the West Midlands. The continued expansion of East Midlands airport further
strengthens the advantages afforded by the region‟s centrality. The south eastern tip of the
193
East Midlands SPD 2000-2006 Chapter 7 SWOT
Programme Area contains the sea port of Boston with its easy access to northern European
markets.
7.3 WEAKNESSES
The Programme Area has significant employment in sectors in transition or decline.
These include mining in the coalfield areas, rural areas with regard to agriculture, and urban
areas with regard to manufacturing sectors such as clothing and textiles. In many of these
sectors significant steps have been taken by companies to improve competitiveness and
diversity. Nevertheless, the competitive pressures are increasing, and the continuing
dependence on what are vulnerable sectors leaves the Programme Area exposed to the
likelihood of further employment decline and there is a widespread need for net additional
jobs and re-skilling to redress this. A number of areas within the Programme Area are
particularly dependent on these vulnerable sectors.
The Programme Area has significant concentrations of economic and socially excluded
groups concentrated in the urban centres. These areas are characterised by high levels of
unemployment, economic inactivity and, consequently, dependence on income support; high
crime rates and poor physical environment. The severity of the problems are highlighted by
the difficulties in securing sustainable improvements in many of the communities involved, in
spite of targeted support being available for a number of years. These areas represent a
major challenge for the region. Concentrations of economic and socially excluded groups are
a feature of the three major urban centres in the region, but are also found in the city of
Lincoln and in other parts of the region. There are a number of urban areas within the
coalfields where there are concentrations of excluded groups characterised by low levels of
economic activity and high levels of social exclusion. For these areas, the (rapid) loss of
traditional employment has been a major factor, requiring significant efforts to prevent these
communities from becoming further detached economically and socially.
Rural areas dependent on low added value sectors and an agriculture sector in
transition. Although rural areas do not have the significant concentrations of unemployed or
economically inactive people as some of the urban areas, this reflects the different nature of
rural disadvantage, rather than the absence of problems. In particular, rural areas are
characterised by higher levels of seasonal and part time employment which disguise the
severity of problems. The low wages prevalent in rural areas is a more accurate indicator of
the difficulties facing residents in ensuring a reasonable standard of living. The difficulties are
most acute in areas such as the Peak District.
The overall education performance of young people within the region lags behind the UK,
and in the inner city areas is significantly lower than the East Midlands average. As is usual,
the performance in rural areas is better. On key indicators such as performance of school
students at GCSE and A-level, and in terms of proportions going on to further and higher
education, the Programme Area‟s performance is disappointing
The Programme Area has a low proportion of employment in many of the growth sectors
which have fuelled the employment growth in the national economy. These include electrical
engineering, communications, finance and business services. The Programme Area has a
poor profile with regard to knowledge-based industries, even though many of the key
components to support relevant sectors are present in the region. Only the City of Nottingham
has been partially successful in capitalising on the growth of the financial, business and other
services sectors, key growth sectors nationally, with employment in many areas, for example
the urban centres in the coalfields, significantly under-represented in these sectors. Overall,
this has contributed to a lower level of skills in the workforce than is needed to take full
advantage of the reorientation and continuing growth of the UK economy.
Conversely, there is growing evidence of increasing skills shortages and recruitment
difficulties in key sectors of the economy. There appears to be a skills shortage with regard
to certain engineering occupations, and food producers and clothing and textiles companies
have recruitment problems; although this is partly due to employment conditions and wages.
Nevertheless, these difficulties are affecting the competitiveness of a significant number of
194
East Midlands SPD 2000-2006 Chapter 7 SWOT
companies in the Programme Area. In addition, the region, in common with others,
recognises an impending skills gap in ICT as the workforce gets older and its professional
knowledge becomes outdated.
For Information and Communications Technology, low rates of connectivity show that
relatively lower proportions of businesses in the East Midlands currently use electronic
communications. In addition, the region has relatively low penetration of online purchasing,
advertising and marketing and sales and below-average employment in the IT sector.
Evidence emerging as part of emda’s consultation on the ICT Action Plan indicates that the
programme area under-performs against regional statistics.
In the urban areas in particular, the number of annual business registrations is falling, but
across the Programme Area a decline in the overall number of businesses is producing a
business deficit. The urban areas in particular have lower business densities per head of the
population than wider regional and national levels, although the more rural areas also have
lower than average business densities per head when agriculture is excluded. The
Programme area, therefore, needs to increase the number of business start-ups, boost their
survival rates and enhance the competitiveness of existing businesses.
There is an undeveloped ‘East Midlands ‘brand’ as a result of a lack of a distinct
regional identity which undermines the potential for greater economic growth. The East
Midlands does not have a regional image to rival London and the South East, the North East
or the West Midlands for example, and this, in part, reflects the mixed urban, industrial and
rural nature of the area. The lack of an „East Midlands‟ perception hinders the development of
tourism, as well as inward investment, in the region.
7.4 OPPORTUNITIES
The growth in e-commerce is an opportunity for the Programme Area. New opportunities
include the facility for existing companies to improve communications, to automate and
change processes, to increase productivity, to reach new markets more easily, to improve
service to existing customers, to change working practices and organisational structures and
to take advantage of new business opportunities. Regional aspects of these issues will be
investigated through the development of emda‟s ICT strategy. E-commerce and ICT related
developments offer opportunities to all parts of the Programme Area, including remoter and
smaller rural communities. This, together with the opportunity to ensure that the region is
attractive to new and existing “e-literate” firms, makes e-commerce a major theme, and is
already recognised as such in the Regional Economic Strategy.
There will be continued growth in finance and business services in the UK in the medium
term, and it is clear that the Programme Area has the capacity to secure an increased share
of this market, although competition from other countries and regions is increasing.
Nevertheless, the East Midlands is well located, has a fast growing international airport, has
speedy rail links to London, and offers a high quality of life. The provision of appropriate sites
and premises, along with business and skills development support, can secure new
investment for the region.
Increasing demand for tourism and cultural industries services presents a major
opportunity for the Programme Area. Forecasts for long term growth offer an opportunity for
both rural and urban areas to secure an increased share of the market. The emphasis is likely
to be on quality and higher value added tourism and export opportunities offered by creative
businesses. The Peak District already has a very high profile in the UK and abroad, although
the industry is characterised by low paid jobs. The urban areas have already made
considerable in-roads into building a significant tourism base over the last 10 years, and the
opportunity exists to build further through the continued growth of the cultural sector across
the region. Recent developments in linking the tourism and cultural industries has secured
greater co-ordination between the two, and there is increasing awareness of the mutual
benefits of closer links. As with rural tourism, a key issue will be securing higher paid jobs
within the sector.
195
East Midlands SPD 2000-2006 Chapter 7 SWOT
The rural districts have the opportunity to capitalise on the increasing interest in outdoor
and environmental or ‘green’ tourism. This sector is likely to continue to grow, and there
are real economic benefits which are sustainable in the long term to be gained in the rural
areas of the Peak District and Lincolnshire, especially the coastal strip.
There is a major opportunity to capitalise in HE/research base company spin-outs,
particularly to encourage new companies to locate in sites and premises supported by the
Programme. The region has the potential to build on its research base, and the support
available through the Programme, particularly with regard to tailored business support, should
contribute to realising the benefits that high quality spin-outs can bring to the Programme
Area. Commercialisation and company spin-outs from Higher and Further Education
establishments has brought significant benefits to other regions where a strong research base
exists, and the promotion of better links between companies and research will assist the East
Midlands in taking advantage of the opportunities.
The growth in knowledge-based industries in the UK is forecast to continue, and although
the Programme Area is currently under-represented in some sectors, the key ingredients to
increase business and employment activity are present in the region. These include a high
quality of life, a positive investment climate, access to the South East market, the presence of
major universities and a very supportive business development network.
The Pathfinders Group set up by emda identified the potential of Nottingham to develop into
a major, national financial and professional services centre, capable of competing with
Leeds, Manchester, Birmingham and the City of London. Given the potential scale of
employment involved and the higher skilled and higher paid jobs, this presents a major
opportunity with any new jobs likely to be taken up by residents throughout the region. With an
attractive quality of life, the presence of major universities, and a supportive business
environment, Nottingham should be able to compete with the other major English cities.
7.5 THREATS
Increased global competitive pressures on the manufacturing sector leads to further
job losses. The manufacturing sector in the UK has increased output significantly in the late
1990s and adjusted to the high level of the pound relative to other European currencies. It is
likely, however, that there will be an effect on competitiveness if the pound stays at its current
levels. Such pressures have undoubtedly already had a negative impact on the sector, and
the manufacturing sector in the region has held up despite these pressures. Further
increases in competitiveness are required to secure the longer term future of the sector.
CAP and trade reforms leading to a further deterioration in agricultural competitiveness
poses a major threat to the rural areas. The farming sector has gone through a period where
real incomes have collapsed, and many enterprises are only just surviving or going part time.
Any further major reforms, or changes to trade policies, are likely to have a significant effect
on business survival given the lack of profitability of many farm enterprises under current
conditions. The small number of businesses in the region dependent on the fisheries sector,
in coastal Boston district, are experiencing similar threats to their survival.
A further decline in the most deprived urban areas will undermine any employment and
income gains in the rest of the Programme Area. The concentration of problems in certain
areas and the multiple nature of problems all serve to reinforce exclusion, with many problems
becoming generational issues. Any significant growth in the numbers isolated from the
mainstream society, particularly young people, threatens the social cohesiveness of the major
cities in the region. Increasing polarisation of society within cities can create negative
perceptions for those outside the city and the region, including investors, as well as for those
within the deprived areas themselves, which can take years to correct. Further decline in the
urban areas will only increase the distance of economic and socially excluded groups from
mainstream society further polarising the community.
Increased competition for tourism related expenditure presents a major threat to the
region. The introduction of more low cost flight operators from regional airports, the strength of
196
East Midlands SPD 2000-2006 Chapter 7 SWOT
the pound, and increased consumer expectations make foreign holidays more attractive than
ever, including short break holidays which many people would traditionally have taken in the
UK. These changes require the tourism industry in the region to improve the quality of the
product, and to develop demand lead services, which cater for higher value-, added visitors.
A further deterioration in rural service provision presents a major threat to the smaller and
more remote rural communities. As increased commercial pressures lead to more
centralisation, and the reduction in key retail networks, such as banks and building societies,
there is danger that the viability of rural communities is called into question, or those in
employment choose to relocate to better serviced centres in the rural area, or to the urban
fringes.
Whilst a certain number of young people in rural areas will inevitably leave to go to universities
or other educational establishments, a significant number do so because of the lack of
appropriate employment opportunities. Further loss of young people from the rural areas
will undermine the economic and social viability of rural communities, as communities are
increasingly comprised of those commuting to urban centres, and of older persons no longer
economically active.
A failure to create new employment opportunities in the former coalfield area will
represent a severe setback for the region as a whole. A key facet of the East Midlands has
been the diversity within the region, with traditional communities as a feature. Coalfield
communities are in danger of permanently losing young people to other areas, and of dealing
with the prospect of significant numbers of older workers with limited prospects of securing
employment.
197