The real green shoots of recovery
Jul 23 2009 Agenda
Angela Maxwell says a new wave of enterprise is needed to breathe life back into the midlands.
Talk of green shoots of recovery in the economy are commonplace at the moment with a number of headline grabbing surveys and reports suggesting that the worst of the recession may be over.
Only time will have to tell whether these green shoots actually have roots and whether we might, finally, be able to put the doom and gloom behind us.
But those who have defied the negativity and pressed ahead with their business plans during the storm will already be considering what things are going to be like when, be it sooner or be it later, the recession ends.
When the economy does begin to pick up, it is certain that the business base of the West Midlands will look markedly different from how it looked just two years ago.
The manufacturing sector – already rocked by decades of economic restructuring – has suffered even further, while the construction industry will need longer to rebuild itself after it crashed so dramatically.
We have lost some household names and major employers, while the financial services sector everywhere will need to take on a markedly different identity now the state holds such a significant stake.
Other industries, susceptible to the ebbs and flows of global recession will also have suffered from the downturn although there is no doubt that the West Midlands business base will regroup and, in many ways, be stronger and more robust as a result of the recession.
The West Midlands economy has traditionally been over-dependent on a small number of large employers, a time which now has passed and which, it is safe to say in the global economy will never return.
What is required now is a new wave of enterprise to fill the gaps in a range of industries but with a focus on high-growth businesses and high-value sectors.
The West Midlands Enterprise Board, which was set up in 2005 in order to provide strategic leadership for Advantage West Midlands, includes amongst its aims the creation of an infrastructure and culture which enables enterprise to grow.
Other key objectives include identifying and supporting new businesses, ideally those with high-growth potential and in particular those from traditionally excluded and under-represented areas such as women, ethnic minorities, social, rural and young people largely achieved through four centres of expertise which works with organisations such as Business Link to ensure proper levels and types of support.
The Enterprise Board is also focused on improving the support for existing businesses, particularly SMEs, in improving competitiveness.
Latest research suggests the West Midlands is continuing to perform well in this area with levels of entrepreneurial activity holding up reasonably well.
For the last seven years, Advantage West Midlands has worked alongside Aston University in compiling the regional contribution to the Global Entrepreneurship Monitor (GEM).
This international project involves 43 counties and aims to provide a snapshot of entrepreneurial activity in regions and countries around the world.
While statistics must always be treated with a degree of caution – if we are to treat reports that the recession is over, for example, we need to exercise vigilance elsewhere – GEM is the most credible and recognised guide to how the West Midlands economy is performing.
Additionally, it helps the West Midlands Enterprise Board, Advantage West Midlands and other bodies see how enterprise policies and various schemes and initiatives help the shape the entrepreneurial landscape.
The figures for 2008, accumulated just as the effects of the recession were beginning to bite, show that early-stage entrepreneurial activity is higher in the West Midlands, particularly among women and young people. Early-stage entrepreneurial activity is, in essence the total nascent entrepreneurs – those who have done something in the last 12 months to start a new business – and new firm entrepreneurs – those who at least part own and manage a business which is between four and 42 months old.
This shows that even last summer, there were people who were actively engaged in the process of setting up a new business, with figures of 6.35 per cent meaning that one in 16 adults involved in this area of activity.
Importantly, the West Midlands ranks in the top three of the 12 UK regions, a position it has occupied for the last two years after a number of years performing below the national average.
In terms of who is driving this activity, the GEM research shows that female entrepreneurship is slightly above the UK average, having traditionally been an area the West Midlands has struggled with.
Young people – those aged 18 to 34 – in the West Midlands are also performing above the national average while there are more graduates in the region involved in early-stage entrepreneurial activity.
The news is not all encouraging, of course, and there are a number of worrying trends that require attention from those driving enterprise.
Confidence in the conditions for starting up a business has been falling since 2005 and this needs to be addressed while entrepreneurs who have made the step to start up in business are currently showing little confidence in their ability to grow.
This may be expected given some of the gloomy proclamations about the recession this time last year and, we would hope, should improve as the outlook itself improves.
There is nothing the public sector can do to ‘make’ enterprise. However, there are ways that it can help to create some of the conditions to enable it to develop. For a number of years, for example, investment has been made in the West Midlands in improving opportunities for female entrepreneurs which has resulted in the region being one of the worst performing regions to one of the best.
And we hope to further build on the success of graduate activity in the region with the continuation of the Graduate Advantage and First Move West Midlands programmes.
Whether the optimistic proclamations of economic recovery are premature or not, we need to be preparing for the best now.
While manufacturing still has a vital role to play in the future economy of the West Midlands, a diverse and strong business base is a must and, if we are to achieve that, we need an enterprise culture which is optimistic and confident about the opportunities and support available.
* Angela Maxwell is a member of the West Midlands Enterprise Board and the Board of Advantage West Midlands.