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Solihull motors ahead as productivity in automotive and aerospace sectors soars

Greater Birmingham and Solihull Local Enterprise Partnership

This blog post has been produced for the Greater Birmingham Chambers of Commerce to provide insight on the findings of our new publication Doing Business in Solihull: An Economic Snapshot.

Doing Business in Solihull: An Economic Snapshot is produced by the Greater Birmingham Chambers of Commerce policy team. It offers an introduction to the local economy and business community within Solihull. The report is sponsored by Prime Accountants Group, one of the West Midland’s leading independent firms of chartered accountants, forensic accountants, business and financial advisors.

This post is featured in the full report here.

Solihull’s labour productivity is now the highest in England outside of London and the South East.

The town has seen the largest growth in productivity of all areas in Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP) since 2010, with workers increasing their output from £30.1 per hour worked, to £41.7 per hour worked – an improvement of 38.5%. This compares very strongly to the national average of 17.2% growth. While the UK has struggled to regain productivity growth following the recession, leaving economists to ponder the UK’s ‘productivity puzzle’, the case of Solihull clearly defies the trend. Two questions emerge: why has productivity grown so much in Solihull recently; and what opportunities are there to build on this success?

Our analysis suggests that growth has been driven by momentum in automotive and aerospace manufacturing. In particular, the expansion of the Jaguar Landrover site – that now produces Range Rover, Land Rover and Jaguar models – has contributed a significant boost in output. Likewise, there has been a growing momentum behind the aerospace cluster in Solihull with the relocation of GKN Aerospace to compliment the £75million Rolls Royce Aerospace manufacturing facility and UTC Aerospace Systems.

Figures from the Office for National Statistics (ONS) support this explanation for Solihull’s soaring productivity. The ‘Manufacture of metals, electrical products and machinery’, which is the manufacturing sub sector that includes automotive and aerospace manufacturing, has increased its Gross Value Added (GVA) from £742 million to 1.7 billion between 2010 and 2017 – a growth of 130%. This sector, which accounts for 22% of Solihull’s GVA, is over 3 times as big as the next largest sector in Solihull – accommodation and food service activities, which accounts for £553 million GVA.      

Employment figures from the Business Register and Employment Survey suggest that employment in the ‘manufacture of metals, electrical products and machinery’ sub sector has increased during the period from 2010 to 2017 in Solihull, from 6,000 to 10,000. However, since employment has increased by a lower percentage than GVA, this would go a long way towards explaining the strong labour productivity growth in Solihull since labour productivity is the ratio of GVA to labour hours. It suggests that local automotive and aerospace firms have been able to innovate, exploiting technologies and new markets to boost output by a greater proportion than employment and therefore create improvements to labour productivity.

The opportunity that this rapid productivity growth presents for Solihull and the wider region is huge. Developing specialisms in these high-tech engineering sectors will enable the region to take advantage of the next wave of advances that comprise the 4th Industrial Revolution. Indeed, transferring knowledge, systems and processes more widely between sectors will enable other industries to also benefit from innovations being developed within the advanced manufacturing and engineering sector.  

Of course there are challenges ahead. The skills base in the West Midlands is not as strong as it might be, with the percentage of the working age population with NVQ3+ qualifications still below the national average. GBSLEP has supported the pool of skilled talent for the automotive and aerospace industries in Solihull by contributing £278k from its local Growth Fund (LGF) to the Hybrid Vehicle Training Centre and just over £1 million LGF to the Centre for Advanced Aeronautical Provision, both at Solihull College. These facilities will help to sustain the progress of the automotive and aerospace sectors in Solihull and will help prepare young people to take advantage of emerging technology advances in low carbon and autonomous vehicles.

There is also Brexit to consider, and its implications for sectors that rely on import and export. The GBSLEP Growth Hub, along with the Greater Birmingham Chamber of Commerce (GBCC), is helping signpost businesses to the support information most relevant to them. The GBSLEP is also working with partners, including the West Midlands Combined Authority (WMCA), to identify measures to support businesses to weather the economic headwinds of Brexit.

Opportunities will be seized by working in effective partnership. For instance the Urban Growth Company, a special-purpose delivery vehicle created to realise the full economic potential of The Hub (an area of land in Solihull, comprised of Birmingham Airport, the National Exhibition Centre, Jaguar Land Rover, Birmingham Business Park and Arden Cross, which will be home to the HS2 Interchange Station from 2026), is preparing the infrastructure and employment sites necessary to sustain growth in the area and better connect Solihull with the wider region, to maximise the benefits of HS2. Together with GBSLEP’s investments in the skills pipeline, the work of WMCA and collaboration with industry, Solihull is well placed to build on its record of success as one of the most productive places in the country.

Katie Trout
Director
Greater Birmingham and Solihull Local Enterprise Partnership