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Call centres and cars replace old industries

Posted on Oct 18 2010
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For centuries, shipbuilding, coal mining and industrial glassmaking were the engines of its economy. But all three shuddered to a halt in less than 20 years from 1988.
Seeing in the early 1980s how this decline in traditional industries was accelerating, the city council strove to win inward investment and managed to create two new economic sectors – automotive manufacturing and call centres.
These activities are underpinned by big names and big money; Nissan’s high performing Sunderland plant, for example, is now a near-£3bn investment which has secured a post-combustion-engine future by winning manufacturing of the new Leaf electric car.
But old assumptions about jobs for life and the rootedness of big workplaces are as dead as the mines and shipyards.
Not even a consistent top performer such as Nissan’s Sunderland plant, the UK’s biggest car exporter and often cited as Europe’s most efficient car producer, can be taken for granted.
And, as Vince Taylor, Sunderland city council’s head of strategic economic development, observes: “Who knows whether, in 20 years’ time, there will be a call centre on the earth?”
Recent restructuring of Sunderland’s economy has been a significant achievement.
The city has more than replaced the 30,000 jobs, a quarter of its total, lost between 1975 and 1989.
Many new jobs, however, particularly in customer service centres, target a very different kind of employee to the old male-dominated heavy industry.
From 1997 to 2007 Sunderland’s gross value added increased by 70 per cent, slightly ahead of England and UK rises of 69 per cent and 68 per cent, and outstripping the north-east’s overall 55 per cent. For a decade to 2008, the city had the fastest-growing economy in north-east England.
Its GVA per head in 2007 was £17,411 ($27,802); the England average however, was by this time £20,458.
As economic change intensifies, Sunderland has to be fleet of foot, says Janet Snaith, head of business investment. “We recognise we’ve got to run to stand still.”
Sunderland has attracted 60 inward investors, including 14 automotive suppliers that, with Nissan, have created about 12,000 automotive sector jobs. The big-name customer service centres at its Doxford International business park include Lloyds TSB, Barclays, EDF Energy and T-Mobile, with RWE Npower at Rainton Bridge. Other companies in the city include Berghaus, Nike, Tanfield and home-grown, fast-expanding Hays Travel.
Inward investors from a dozen countries employ about 17,500 people, some 15 per cent of all the city’s jobs. But this injection of economic activity offers no guaranteed future; having been dependent on shipbuilding and coal mining, there is unease about being dependent on automotives and call centres.
“We might have to go through it all again, but in decades, not centuries,” observes Mr Taylor.
This is the context of Sunderland’s Economic Masterplan, launched on Tuesday. It is, says Dave Smith, the council’s chief executive, an analysis of “Sunderland plc”, assessing today’s reality and how to make the best of its assets.
“We need to be crystal-clear about what we have to offer in a detailed, business-friendly way,” he says.
It highlights assets and achievements but is candid about shortcomings, many of which are rooted in the industrial past. While many redundant workers from heavy industry are now of pension age, it appears, it says, that “a new generation of less healthy and often less qualified workers is becoming marginalised and dependent on benefits”.
More than one in five working-age people in Sunderland – 22.5 per cent, compared with 15.8 per cent for the UK as a whole – are claiming benefits, a situation the council links to deprivation, low educational achievement and low skills. The most recently available data for the International Labour Organisation-based unemployment rate puts Sunderland on 12 per cent, compared with a UK average of 8 per cent.
Sunderland, the report suggests, needs a wider variety of industries and career opportunities and better-paid jobs, to retain more of the young and ensure a resilient economy.
The university is an important potential driver in economic transformation, including aspirations in digital business and start-ups.
The council was jubilant when, this month, a Royal Mail business start-up barometer named the city as the fastest-growing in terms of businesses established in the past six months as a percentage of all local businesses.
At the big established end of the private sector, there are now no plcs with their HQs in Sunderland following the takeovers of SCS Upholstery by Sun European Partners, car dealer Vardy by Pendragon and transport operator Arriva, in August, by Deutsche Bahn.
“I’m not worried, because it’s the way of the world,” says Ms Snaith. “We’re in a global economy; you’ve got big companies making strategic acquisitions. You can’t stop change.”
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