Derby must reach out beyond its borders to grow in the recovery

Date: 18/10/2010

Derby must reach out beyond its borders and its traditional industrial base to grow in the recovery, as some large local employers may be vulnerable in the public spending squeeze.  This is according to a new report on the city’s economy by the Centre for Cities – published on the eve of the Spending Review.

Derby has seen strong improvements to its economy over the past decade, which has been reflected in local rates of pay:

• At £644 per week, Derby has the highest workplace based earnings of all English local authorities outside London and the South East.  Workplace earnings are higher than Reading and Kingston-upon-Thames for example.

The city depends strongly on large employers:

• 41% of Derby’s employment is from firms of more than 200 people compared to 32%, nationally.
• The direct value of Rolls-Royce on Derby’s economy is £3.1bn.
• Rolls-Royce also indirectly generates a further £1.5bn and 5,200 jobs for the local economy.
• Advanced manufacturing is a key strength.  Derby’s rail engineering cluster is the largest in the UK

Major employers in Derby

But Derby’s reliance on large employers can present vulnerabilities as well as opportunities.  Like many cities with a tradition of large employers, Derby also has fewer business start ups.  The city places among the bottom 20 UK cities for firms with new VAT registrations between 1994 and 2007.

And while aerospace and rail engineering expertise are well established locally and aerospace is expected to continue to grow, the decline in public investment in infrastructure, combined with globalisation and technological change mean there are risks attached to Derby becoming too reliant on these industries.

To continue to grow in a fragile private-sector led recovery, the report recommends Derby pursues an economic strategy that capitalises on its strengths like advanced manufacturing, but is also outward looking and open to new opportunities.

The council should also “scenario plan” for the impact of public spending cuts on infrastructure and how this might impact on local employers like the rail industry.

And the new local enterprise partnership between Derby’s neighbouring councils and employers should look beyond its boundary to help local businesses to grow.  This means helping small and medium sized businesses develop closer relationships with universities and colleges in the East Midlands and beyond, for example.

Andrew Carter, Director of Policy & Research, at the Centre for Cities said:

“It is absolutely essential that Derby reaches out in the difficult years ahead – recognising that the government spending squeeze is likely to put pressure on public sector employers and private sector contractors.

“This means building on existing assets like advanced manufacturing, but also encouraging firms to diversify their products and markets and helping them connect with universities and other businesses beyond the city’s borders.”

The Leader of the Council, Cllr Harvey Jennings, commented that:

“Derby is proud of its long standing strengths in manufacturing and high-tech employment.  The recommendations of this report remind us that that the city must not rest on its laurels but continue to support economic success during challenging times”.  

NOTES TO EDITORS

A full copy of the report – Shifting Gears: Safeguarding Derby’s economic growth by Jonathan Seager and Andrew Carter, from the Centre for Cities is available at www.centreforcities.org/shiftinggears

The Centre for Cities is an independent, non-partisan research and policy institute. Committed to helping Britain's cities improve their economic performance, the Centre produces practical research and policy advice for city leaders, Whitehall and employers.

Derby is a Partner City in the Centre for Cities research programme.  The programme is working closely with a small group of urban areas, including Sheffield, Croydon and Preston.  The Centre for Cities works with these cities to inform their economic development strategies and improve economic performance.

For more information, please contact:

Rosamund Taylor
07876 175 426 / 020 7803 4316
r.taylor@centreforcities.org