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11 February, 2021updated 30 Oct 2021 05:08

How Stoke is quietly attracting investment through diversification

Stoke-on-Trent is hoping its diversified economy will help it bounce back from Covid-19 and raise its profile internationally to help attract greater levels of investment.

By Jon Whiteaker

Stoke-investment-potteries

The remaining kilns of Johnson Brothers Trent Pottery are a reminder of how Stoke was once the centre of the ceramics world. The city has now branched out to other manufacturing industries, although pottery forms a big part of the city’s present. (Photo by Gareth Copley/Getty Images)

Stoke-on-Trent may lack the loud identity of some other major UK cities, but its leaders think it is quietly building a diversified economy that will prepare it for post-Covid life.

The city is most famous for its pottery industry, which first emerged in the early 17th century thanks to local deposits of coal, clay, lead and salt. By the 19th century, Stoke was the centre of UK pottery production, with its goods being transported around the world.

Stoke potters on as automation grows

While ceramics remain an integral part of the local economy, manufacturing has declined as an employer in recent decades, as in the rest of the West Midlands, due to greater automation in production.

Health and social work is now the biggest employer in Stoke, followed by wholesale and retail trade, but manufacturing has remained economically vital. Between 2010 and 2015, rising manufacturing productivity drove growth in the city, with data from Oxford Economics showing Stoke was the second-fastest growing city in the country at the time. While wages for most areas outside London fell or stagnated, they grew by 4.8% in Stoke.

It is difficult to pull out one or two things from the hundreds of good things going on [in Stoke]. Alun Rogers, SSLEP

In 2014, the Stoke-on-Trent and Staffordshire Local Enterprise Partnership (SSLEP) set a target for the city to grow its economy by 50% and create 50,000 jobs in ten years. While the jobs target has already been met, the most recent report from SSLEP acknowledges that gross value added (GVA) growth for Stoke is now lagging behind other UK cities.

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A 2020 report from the University of Staffordshire also warned that the city’s inhabitants were particularly exposed to the negative impacts of the Covid-19 pandemic. Like other deindustrialised urban centres, Stoke has many low-skill, low-pay jobs, according to the report, and as many as 27,000 roles could be lost due to Covid-19.

Alun Rogers, chair of SSLEP and co-founder of local IT managed services and solutions company Risual, says that the city’s industrial strategy is focused on driving productivity and creating more high-value jobs. He argues that the building blocks of a more progressive economy are already in place, even if not everyone has noticed yet.

“We have world-leading industries here and have a very diverse economy,” says Rogers. “That is a real strength but can also be a challenge when promoting the region because it is difficult to pull out one or two things from the hundreds of good things going on.”

From pottery to advanced manufacturing

Stoke-on-Trent was formed when six bordering pottery towns – Stoke-upon-Trent, Hanley, Burslem, Tunstall, Longton and Fenton – joined in a federation to create a single county borough. City status followed in 1925.

Manufacturing continues to be at the heart of the local economy through both traditional ceramics and advanced materials companies that employ thousands in the region, while multinational engineering companies such as Jaguar Land Rover, JCB, Michelin and General Electric are also based in Staffordshire.

“Our largest employer is healthcare and our largest sector by GVA is advanced manufacturing, which combined account for just under 30% of our economy,” says Rogers.

While UK manufacturing has become less labour intensive and so supports fewer jobs, the types of roles at local companies such as materials development company Lucideon are now more highly skilled. Clusters of these advanced manufacturing businesses are now dotted around the region.

i54-South-Staffordshire

An aerial shot of the i54 business park in South Staffordshire. Developments in and around the city of Stoke are attracting a growing number of manufacturing and digital businesses. (Photo courtesy of i54 South Staffordshire Partnership)

Jaguar Land Rover and several other manufacturing businesses are located at the i54 South Staffordshire technology-based business park, which opened in 2012. Paul Forrest, head of research at West Midlands Economic Forum, says the success of i54 highlights the hidden strength of the regional economy.

“I54 has been the strongest-performing site in western Europe for greenfield foreign direct investment,” he says. “The GVA data doesn’t actually show the dynamism of Stoke and Staffordshire.”

The Ceramic Valley Enterprise Zone was launched in 2015 and has been attracting businesses to its six development sites spread across land near the A500 road. In planning is the Midlands Industrial Ceramics Group tech campus, a development in North Staffordshire supported by JCB, Rolls-Royce and Lucideon, which promises to create 4,000 jobs by 2030.

The region is also one of only two sites in the country to be manufacturing a vaccine for Covid-19, with Keele-based firm Cobra Biologics doing so in partnership with Oxford-based vaccine developer Scancell.

Raising the reputation of Stoke

Stoke’s profile was raised between 2008 and 2018 when its soccer team played in the Premier League for its first spell in top-flight football since the mid-1980s. This era saw many high-profile players such as Michael Owen turn out for the team.

Stoke City’s physical and uncompromising play led to its stadium gaining a reputation as the toughest away fixture in the league. A well-worn cliché still used to undercut the hype around any new flair player is to say, “Yeah, but could they do it on a cold rainy night in Stoke?”

The creation of such an unwelcoming reputation is not the greatest legacy in terms of investment promotion, but the team’s spell in the top flight did raise the city’s international profile and another connection to the football club does reflect well on the city’s business environment.

Bet365, an online gambling company based in Stoke, has been Stoke City’s main sponsor since 2012, when its chairman, Peter Coates, also became chairman of the football club. Bet365 founder Denise Coates (daughter of Peter) started the business in a portable building in 2000. The company now employs more than 4,000 local people and has grown to become a global business.

Abi Brown, leader of the Stoke City Council, says that she is trying to change the perception of the city from somewhere that used to be too inward-looking. “Stoke has got so many great things going for it and I think we have started to wake up to that and be more positive in recent years,” she says.

Stoke is unique in being polycentric, having been created through the amalgamation of six towns.

“We used to spend quite a lot of time arguing about which of those towns is more important,” says Brown. “People outside Stoke-on-Trent are not interested in that conversation. Those looking to invest just want to know why they should come here.”

Brown adds that the city council and Stoke’s three local MPs are working on a proposal called the Stoke-on-Trent Prospectus, which packages together transport, skills, health, productivity and general economic ambitions for the area. This will be used to lobby government for greater support for projects.

She says a previous “lack of ambition for large developments projects has left a legacy of an infrastructure unable to cope with the city’s success”.

Investing in transport and infrastructure

The most high-profile infrastructure project in the Stoke area is the UK government’s second high-speed rail route (HS2), intended to connect London to the Midlands, Manchester and Leeds.

The Staffordshire Chamber of Commerce campaigned for Stoke to be included on the HS2 route but was unsuccessful. Stafford will be one of the hub stations, however, and a £500m scheme has been proposed to build a hotel, office space and new homes on that site.

Rogers argues that HS2 will be a “significant benefit to our area” because of the capacity it will free up on the West Coast Mainline.

Situated right in the middle of the country, Stoke already benefits from good connectivity to all major cities in mainland UK through both rail and major road networks, and is also close to three major airports.

“Because Staffordshire is so well-connected, it is one of those places that you go through but not necessarily stop at,” says Sara Williams of the Staffordshire Chamber of Commerce. “We are a victim of our own success in that sense.”

We have a bit of the Peak District, Cannock Chase and some wild open spaces. One of the drivers of investment is quality of life and we have it by the bucketload here. Sara Williams, Staffordshire Chamber of Commerce

This makes the region ideal for logistics and in January 2021 online retailer ASOS announced that it was investing £90m to build a new fulfilment centre at Fradley Park near Lichfield. The centre will employ 2,000 people.

A strategic rail freight interchange is also being built at Four Ashes in South Staffordshire that will provide 743,000m² of new rail-served and rail-linked warehousing and create 8,550 direct jobs.

Stoke has been allocated £29.5m of initial funding under the government’s Transforming Cities Fund and Brown says she and the council will be pushing hard for more support, not least for local light-rail expansion, so it is as easy to travel around the area as it is to and from it.

Rogers says that the region’s skilled workforce is not necessarily represented in the productivity data, as many who live in the area commute to other places, with London just an hour away from some parts of Staffordshire.

“People already choose this as a lifestyle location while working in roles around the country,” says Rogers. “Staffordshire is a brilliant place to live and to work across multiple cities, and with people working from home more now it plays further to our strengths.”

Williams agrees that the region’s geography could help boost its economy. “Staffordshire is a beautiful county,” she says. “We have a bit of the Peak District, Cannock Chase and some wild open spaces. One of the drivers of investment is quality of life and we have it by the bucketload here.”

Supporting small business investment

Rogers says the overwhelming majority of local businesses in Stoke are small, with fewer than nine employees, so a priority for the post-Covid economy will be to attract investment to help those businesses grow fast.

Deborah Price was commuting between London and Stoke as a buyer for a clothing company when she decided to set up British Boxers. The nightwear and loungewear brand was set up with just £4,000 left in an ISA savings account but has since raised £180,000 through a fundraising campaign and sells through international online platforms such as Not On The High Street.

Price says being based in Leek, a town to the north-east of Stoke, has provided low commercial property rent and a higher quality of life than if she were in the south of the UK.

“We often have meetings in London with buyers but you can get there in less than two hours by train,” says Price. Now she is looking to move into new premises to expand her business.

Williams says the local chamber of commerce has had a lot of enquires about starting new businesses in the region during the pandemic. “I think there will be an explosion of small companies over the next year to 18 months,” she says.

Stoke’s environment for expansion

Developments such as the Ceramics Enterprise Valley and i54 are opening new commercial space for businesses to expand; meanwhile, Stoke should avoid some of the post-Covid challenges faced by other cities.

“When the big four consultancy firms decide that they are not going to have an office in every city in the UK anymore, that is not going to impact us,” says Rogers. “We are not going to end up with large amounts of office space and a city centre that has become unoccupied.”

Rogers points out that Stoke has never had skyscrapers filled with financial and professional services firms, nor the associated retail and leisure businesses that were supported by those workers.

“I think in some ways we were a little bit behind the times with some of those regeneration programmes of the past, but I think that has given us an opportunity, like jumping straight from no telephones to mobile phones, to take advantage of a whole new way of doing work,” says Williams.

Will Brexit work in Stoke’s favour?

Rogers anticipates that Stoke will be able to bounce back faster than many other cities, arguing that its “natural strength around logistics is good for us [post-Brexit] as we start to move to an export-led economy”. Stoke famously voted in large numbers to leave the EU in the 2016 referendum, with nearly 70% choosing to exit the bloc, the highest of any major city in the UK. According to the New Statesman‘s Brexit Vulnerability Index, Stoke looks well positioned to avoid the worst of the fallout of the UK leaving the EU, ranking as the 303rd most vulnerable local authority out of 379.

Following the signing of a new UK-Japan trade deal, Lucideon announced in September 2020 that it was opening an office in Japan and seeking to launch a joint venture with a Japanese company. CEO Tony Kinsella predicted an additional £1m in business in the first year following the trade deal and said new jobs would be created in Stoke as a consequence.

If that deal is a sign of things to come, Stoke might not be able to keep its successes so quiet for much longer.

For more of Investment Monitor’s coverage of the UK’s cities, read through our Future of British Cities series:

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