Employment Land Appraisal Use Class B8 Study by etssetcf


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									Rugby Borough Council                         Employment Land Appraisal: Use Class B8 Study

 Employment Land Appraisal Supplementary Topic Paper: Use Class B8 Study
                         Storage and Distribution

The Employment Land Appraisal (September 2004) established that the majority of new employment
development in Rugby was in storage and distribution, also known as the logistics industry (Use Class
B8). This increase has been accompanied by a decrease in general industrial (Use Class B2)
development. The Appraisal also concluded that employment land densities, which is the number of
employees per hectare, needs to be maintained at around 48 jobs per hectare to make the most
efficient use of land.

Policy PA9 of the Regional Spatial Strategy considers Rugby to have the potential and infrastructure
to attract new investment and to act as a focus to support wider regeneration. Rugby is seen
regionally as an area where it could be desirable for further concentrating logistic developments.
Therefore, this study builds on the Appraisal and seeks to understand the storage and distribution
sector of Rugby and its importance to the local economy.

Rugby Borough Economy

Rugby ranks 6th out of 34 regionally in terms of the level of employment (WCC Census 2001). The
Borough has high employment and low levels of unemployment, permanently sick or disabled and
other inactive persons. Rugby’s economy is growing steadily with a 9.3 percent increase in the
number of VAT registered businesses during 2002. This is encouraging for Rugby, which is ideally
positioned in the regional economy to take advantage of an economic upsurge. Rugby, with Coventry
and Nuneaton, form part of the central belt of economic activity traditionally associated with
manufacturing and service provision allied to vehicles, engineering and component production. In
addition, new investment has diversified the economy with significant employment in office and
distribution firms locating in the area. However, the economy has slowed slightly in recent years,
small pockets of deprivation exist with economic needs, and there is continuing rationalisation within
dominant local employers with local economic impacts. Therefore, there is a need to raise
competitiveness and continue to diversify the economy, attracting investment with a suitable range of
sites and premises.

Geography and Access

Accessibility is extremely important to the storage and distribution sector. Located in the centre of
England Rugby benefits greatly from its position on the country’s strategic transport networks, such as
the M1, M6 M45, M69 Motorways and the West Coast Mainline. This has resulted in the Borough
being a popular location for distribution centres. Indeed, the Borough’s transport links are one of the
reasons why businesses locate in Rugby.

                           Reason                            Percent
                           Availability of premises          19
                           Cost of premises                  13
                           Personal reasons                  11
                           Quality of locality               12
                           Aesthetics                        10
                           Transport Links                   10
                           Location of Customers             7
                           Convenience                       4
                           Location of other businesses      9
                           Other                             5
                    Table 1: Reasons for Locating in Rugby (Source: C&W 2002)

Employment Floorspace

Table 2 reveals that employment floorspace in Rugby has increased by almost 30 percent since 1984
to 1,485,000 m2, the majority of which is warehousing. This equates to an average yearly increase of
3.75 percent and is reflected in the three year period prior to 2003, which shows an annual increase of
3.73 percent. The decreasing industrial floorspace is perhaps an indicator of the shift in employment
patterns in Rugby from manufacturing to storage and distribution.

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Rugby Borough Council                          Employment Land Appraisal: Use Class B8 Study

                                 1984       1994      2000      2002     2003
                Office           97         108       131       141      145
                Industrial       702        593       741       744      740
                Warehouse        336        454       456       582      600
                Total            1135       1155      1328      1467     1485
               Table 2: Gross Floorspace in Rugby (‘000s m2) (Source: ODPM, 2003)

Employment Land Development

There are 485 hectares of employment land in the Borough. Most of the prime employment sites
around Rugby were rapidly developed in the late 1980s and early 1990s. The Swift Valley and Swift
Park estates are fully developed, totalling nearly 50 hectares of office and warehousing. In addition,
the 20 hectare site at Valley Park is nearing completion and the 50 hectares at Central Park, which
began in 2000, are progressing steadily. All these sites were greenfield sites situated strategically
near to Junction 1 of the M6 motorway and are popular with storage and distribution companies.

The majority of new employment development has been in storage and distribution facilities. Table 3
reveals that since 1996 B8 development continually exceeds B1 and B2, and accounts for 85 percent
of all employment related development. Indeed, the peak years of economic growth are intrinsically
linked to the development of B8 uses, which suggests that this Use Class has dominated new
employment in Rugby.

                                         B1          B2       B8          ANSTY (B1)
                   1996 – 1997            0          0       0.2              0
                   1997 – 1998          1.7          0       1.8              0
                   1998 – 1999          2.43        0.46      13              0
                   1999 – 2000          0.4          0       2.6              0
                   2000 – 2001          0.6          0       2.4              0
                   2001 – 2002          0.8          0       2.1              0
                   2002 – 2003          0.7          0       15.3             0
                   2003 – 2004          2.69         0      17.81             0

                      Total          9.32        0.46      55.21                0
                         Table 3: Completions in Rugby from 1996 – 2004

Employment and Broad Business Sectors

Table 4 reveals that manufacturing is the predominant industry in Rugby Borough; closely followed by
wholesale and retail trade, which together account for over a third of employment. Transport, storage
and communication are the sixth largest employer accounting for only 8.29 percent of employment
and forms 5 percent of all businesses within Rugby Borough (Table 5). This information has been
taken from the 2002 Coventry and Warwickshire Employers Survey and shows the broad business
sectors of Rugby. These results indicate that the logistics’ sector currently forms a small part of
Rugby’s economy although at least 2 of the major manufacturing plants in Rugby Borough, Peugeot at
Ryton, and Rolls Royce at Ansty are located in close proximity to Coventry and will employ a large
number of people residing in Coventry rather than Rugby.

However, when compared with the surrounding areas the logistics sector in Rugby is one of the
largest. Table 6 reveals that this sector, as a percentage of total employment, is 2 percent larger then
the West Midlands Region and over 1 percent higher than England, it is also proportionally higher then
most of the surrounding districts and counties. Indeed, the only immediate area with a higher
proportion of employment in storage and distribution is Coventry. Therefore, although at first glance
logistics seems to form only a small part of Rugby’s economy, the available evidence suggests that
the size of the logistics industry in Rugby is above national and regional averages.

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Rugby Borough Council                       Employment Land Appraisal: Use Class B8 Study

  Industry                                                            Numbers       Percentage
  Agriculture; hunting and forestry                                     741            1.71
  Fishing                                                                 6            0.01
  Mining and quarrying                                                   55            0.13
  Manufacturing                                                        8,195           18.93
  Electricity; gas and water supply                                     376            0.87
  Construction                                                         2,582           5.97
  Wholesale and retail trade; repairs                                  7,942           18.35
  Hotels and restaurants                                               1,984           4.58
  Transport; storage and communications                                3,588           8.29
  Financial Intermediation                                             1,169           2.70
  Real estate; renting and business activities                         5,048           11.66
  Public administration and defence; social security                   2,166           5.00
  Education                                                            3,656           8.45
  Health and social work                                               4,076           9.42
  Other community; social and personal service activities              1,663           3.84
  Private households with employed persons                               27            0.06
  Extra-territorial organisations and bodies                             10            0.02
  Total                                                                43,284           100
                      Table 4: Industry of Employment (Source: ONS, 2001 Census)

             Business                                               Percentage
             Manufacturing / Construction                           19
             Wholesale / Retail                                     32
             Transport, Storage and Communication                   5
             Finance / Business Services                            27
             Public Admin / Government / Health / Education         8
             Other                                                  9
              Table 5: Broad Business Sector (Percentage of Number of Businesses)
                                     (Source: C&W 2002)

  Area                              Numbers Employed in Transport,             Percentage of
                                     Storage and Communications                Employment
  Rugby                                         3,588                              8.29
  England                                     1,590,031                            7.08

  West Midlands Region                           147,041                             6.29
  West Midlands Conurbation                      69,697                              6.69
  Coventry                                       10,857                              8.64
  Warwickshire                                   18,202                              7.29
  North Warwickshire                              2,318                              7.59
  Warwick District                                2,961                              4.73
  Stratford Upon Avon                             3,510                              6.21
  Nuneaton and Bedworth                           3,159                              5.58

  East Midlands Region                         119,927                             6.25
  Northamptonshire                             22,747                              7.23
  Leicestershire                               19,492                              6.41
  Daventry                                      2,724                              7.39
  Harborough                                    2,489                              6.25
    Table 6: Number of People Employed in Storage and Distribution in the Surrounding Region
                                (Source: ONS, 2001 Census)

Economic Development Survey

The Economic Development Database is based upon a survey of employers in Rugby conducted by
the Economic Development Team in Rugby Borough Council. The Survey is conducted every three to
four years and was last updated towards the end of 2004. However, the information is only as
accurate as that which is provided and the Survey is dependent upon employers responding to the
questionnaire. Nevertheless, the Survey produces the most comprehensive information on companies

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Rugby Borough Council                           Employment Land Appraisal: Use Class B8 Study

in the Borough. Table 7 shows information on respondents that are B Class Uses and located on an
industrial estate in Rugby.

                 Employees        Number of        Employees   Total Gross Employment Land
                                 Respondent       per company Plot Sizes (ha) Density (employees
                                 Companies                                          per ha)
B1(a)              752              28            26.86         6.64             113.25
B1(b)              80                3            26.67         0.36             222.22
B1(c)              59                7            8.43          0.52             113.46
B2                3974              76            52.29        94.17              42.20
B8                2518              50            50.36        45.20              55.71
Sui Generis        120              17            7.06          2.33              51.50
Total             7503             181            41.45        149.22             50.28
         Table 7: Use Class B information from Rugby Borough Council Employers Survey

Analysis of the database in Table 7 reveals that 42 percent of the respondents were B2 general
industrial use compared to 28 percent being B8 uses. Furthermore, B2 uses employ the most people
per company, closely followed by B8. These two uses employ nearly twice as many people per
company when compared to B1(a) office and B1(b) research and development companies.
Nevertheless, B1 facilities utilise very little land. For example, 28 B1(a) companies employing 752
people occupying just over 6.5 hectares. This creates an employment land density of 113.25
employees per hectare. In comparison, with their large plots of land B2 and B8 developments are
lower density. The Employment Land Appraisal revealed that the average employment land density
for Rugby was 48 jobs per hectare.

Logistics facilities are traditionally perceived to be low-density developments with large warehouses
employing few people. Therefore, the above average employment land density of 55 employees per
hectare for B8 uses could be due to the older and smaller storage and distribution facilities, such as
those on Somers Road Industrial Estate. Table 8 suggest that there is very little difference in terms of
employment land density between the old style smaller logistic facilities and the new style large
warehousing, which is typical of Swift Valley and Central Park. However, there is a significant
difference between the two in terms of number of employees per company with the newer facilities
employing six times as many people, although this comes at a cost with more land required to cater
for such uses.

                 Employees        Number of        Employees   Total Gross Employment Land
                                 Respondent       per company Plot Sizes (ha) Density (employees
                                 Companies                                          per ha)
Older B8 Uses         300            23            13.05          5.25                     57.14
Newer B8 Uses        2218            27            82.15         39.95                     55.52
                         Table 8: A Comparison of Old and New B8 Facilities

Pay and Skill Levels

Through the analysis of average gross annual pay the logistics industry compares favourably with
other sectors. Table 9 reveals that the average annual pay for all full-time employees in the UK in
2004 was £22,248 (ASHE, 2004). In comparison, the average pay for transport, storage and
communication was above average at £24,629. This is favourable, when compared to other large
employers in Rugby, such as manufacturing, and wholesale and retail.

Rugby compares favourably for average pay when compared with the surrounding area (Table 10). It
is above the UK average, the West Midlands Regional average and the Warwickshire average. In
comparison, the logistics industry’s average pay is above the average pay levels apparent in Rugby.
However, within logistics there are significant pay variations, particularly from the relatively unskilled
warehouse floor to the skilled management positions. Table 11 shows the variety of jobs available in
transport, storage and communications and their typical associated pay. This analysis reveals that
logistics can be highly paid in the skilled managerial and manual sectors. However, some jobs can be
poorly paid, particularly in the low skilled warehouse jobs, such as packing.

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Rugby Borough Council                       Employment Land Appraisal: Use Class B8 Study

 Industry                                                        Average Annual Gross Pay (£)
 All Employees                                                               22,248
 Agriculture; hunting and forestry                                           16,013
 Mining and quarrying                                                        32,456
 Manufacturing                                                               24,629
 Electricity; gas and water supply                                           30,991
 Construction                                                                25,682
 Wholesale and retail trade; repairs                                         17,921
 Hotels and restaurants                                                      11,555
 Transport; storage and communications                                       24,945
 Financial Intermediation                                                    39,488
 Real estate; renting and business activities                                26,396
 Public administration and defence; social security                          23,072
 Education                                                                   18,464
 Health and social work                                                      17,990
 Other community; social and personal service activities                     20,634
 Private households with employed persons                                    11,619
 Extra-territorial organisations and bodies                                  26,409
           Table 9: Average Annual Gross Pay (£) for UK industries (Source: ASHE, 2004)

 Area                                                            Average Annual Gross Pay (£)
 Rugby                                                                     24,063
 England                                                                   22,893

 West Midlands Region                                                         20,138
 West Midlands Conurbation                                                    19,329
 Coventry                                                                     20,440
 Warwickshire                                                                 23,352
 North Warwickshire                                                           20,731
 Warwick District                                                             25,981
 Stratford Upon Avon                                                          26,789
 Nuneaton and Bedworth                                                        18,597

 East Midlands Region                                                    20,187
 Northamptonshire                                                        22,276
 Leicestershire                                                          21,325
 Daventry                                                                26,117
 Harborough                                                              25,159
 Table 10: Average Annual Gross Pay (£) for Rugby and Surrounding Area (Source: ASHE, 2004)

 Typical Logistics Jobs                                          Typical Annual Gross Pay (£)
 Contract Manager                                                         £15 – 30,000
 Road Transport Manager                                                   £25 – 30,000
 Warehouse Manager                                                        £16 – 28,000
 Operations Manager                                                       £35 – 60,000
 Freight Forwarder                                                        £15 – 20,000
 Logistics Manager                                                        £30 – 60,000
 Inventory Specialist                                                     £25 – 30,000

 Driver                                                                     £14 – 35,000
 Technician                                                                 £15 – 20,000
 Warehouse Operative                                                        £11 – 22,000
 Fork Lift Truck Operator                                                   £10 – 16,000
 Courier                                                                    £18 – 23,000
 Transport Clerk                                                            £13 – 16,000
 Customer Service Assistant                                                 £8 – 13,000
 Removals Porter                                                            £9 – 16,000
 Packer                                                                     £7 – 14,000
                Table 11: Typical Jobs in the Logistics Industry and Pay (CIL, 2005)

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Rugby Borough Council                          Employment Land Appraisal: Use Class B8 Study

Balance of Economy and Conclusion

It is evident from analysis that the logistics industry is becoming increasingly dominant in Rugby’s
economy and has relatively good pay and skills levels. However, the available evidence suggests that
manufacturing is still the prime employer in the Borough, although storage and distribution is
increasingly having a significant contribution. Since 2000, floorspace in warehousing has increased
by almost a third, compared to an increase in office floorspace of just over a tenth and a marginal
decrease in the industrial sector. Primarily, this would appear to be due to Rugby’s central location in
England, its position on the strategic transport network and the availability of good quality developable
land over the past decade.

The national economy is growing steadily and the Employment Appraisal revealed that Rugby’s
economy is relatively self-sustainable; it imports only a fraction more commuters than it exports. The
Appraisal also highlighted that where new good quality developments occur they are generating
interest and are in high demand. In order to maintain this sustainable growth, the economy should be
allowed to develop organically. Furthermore, it is important that Rugby maintains a balanced
economy that supports a wide range of industries and sectors in order to maintain its competitiveness.
Therefore, B1 uses should be encouraged due to the demand existing for these types of businesses
and their current slow development rate. Similarly, there is no evidence to suggest that B8 uses
should be discouraged within the Borough on their own merits but it is important that the obvious
market benefits of location and ease of access which are apparent in Rugby should not be allowed to
unbalance the local economy.

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