The Boeing Sheffield factory is the aerospace company’s first manufacturing facility in Europe. Its presence in the city is a testament to Sheffield’s excellence in advanced manufacturing. (Photo by Oli Scarff/AFP via Getty Images)

Sheffield’s mighty rise and fall is defined by an alloy of iron and carbon: steel. The city has long been synonymous with metallurgy, being noted for knife production in the 14th century by Geoffrey Chaucer’s The Canterbury Tales.

Fast-forward to the mid-19th century, and Sheffield was the undisputed capital of the world for steel, iron and cutlery, a bastion of the Industrial Revolution. At that time, it produced a whopping 90% of British steel and nearly half the European output – all thanks to local innovations.

However, like many hubs of industry across Europe and the US, Sheffield’s single-commodity economy came crashing down during the 1970s and 1980s, hit by the twin challenges of privatisation and cheaper foreign competition.

“We are still feeling the impact of that rapid, crippling deindustrialisation,” says Alexis Krachai, a founding director of the Sheffield Property Association, a private sector body that helps promote Sheffield internationally.

“But the city has evolved while continuing to do what it has always done very well: making world-class things. We are leading the charge on the future of advanced manufacturing, and today produce more steel than at the peak of our industrial heyday.”

How McLaren and Boeing found a home in Sheffield

While it is still known as ‘the City of Steel’, Sheffield has come very far from its original manufacturing base.

“The city is now at the very heart of the fourth industrial revolution,” says Martin McKervey, director of Aesseal, a Sheffield-based manufacturer of sealing solutions that has 230 locations worldwide.

“The ability to design, develop and distribute innovative products and solutions [stems] from a partnership between the University of Sheffield, Sheffield Hallam University and our businesses places,” he adds.

The two universities are home to 65,000 pupils, meaning that more than one in ten people in Sheffield are students. Out of England’s eight core cities – Sheffield, Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle and Nottingham – the City of Steel has the second-highest percentage of inhabitants educated to degree level and above, according to the latest Office for National Statistics data.

Numerous research hubs have come out of the aforementioned universities, both of which are highly ranked. One prominent example is the Advanced Manufacturing Research Centre (AMRC), into which McLaren Automotive invested £50m in 2018.

“There was no bidding war between UK cities for the McLaren investment,” says Edward Highfield, director of city growth at Sheffield City Council. “It was a no-brainer for McLaren because Sheffield has competencies in advanced manufacturing that are found nowhere else in the world.”

The AMRC is part of Sheffield Advanced Manufacturing Park and the region’s wider Global Innovation Corridor, a melting pot for academia, government and business to conduct research and development (R&D) across manufacturing, health and well-being, and tech – the city’s leading sectors. Subsequently, Boeing, Rolls-Royce, Hitachi and Toshiba, among others, have set up operations in Sheffield in recent years.

For this, some feel that Sheffield is not getting enough credit and support. “The UK does not spend enough on R&D to help boost and improve our productivity,” contends McKervey. “Sheffield is doing innovation and technology, and must be a core focus of the government’s industrial strategy.”

Sheffield’s serious tech specialisms

The past ten years have seen Sheffield’s tech scene grow rapidly, especially in education tech (edtech), industrial tech, creative tech and mobility tech.

“Sheffield, like much of England back in 2012, was not widely renowned for its tech industry,” says Sam Chapman, co-founder and director of the Floow, a mobility tech company that has been recognised as one of Tech Nation’s ‘Future Fifty’ UK firms (and one of the first outside of London).

“However, as operating costs for Golden Triangle [Oxford, Cambridge and London]-based firms skyrocketed [amid] reporting skills shortages, the time was ripe for the growth of ‘northern tech’,” he adds.

The Sheffield region now has an established digital cluster employing more than 20,000 people, shows a recent report by the University of Sheffield and Creative Sheffield. This section of the city’s economy is growing nearly six times faster than the national average. Although Sheffield’s overall employment has been fairly sluggish over the past five years, its ICT sector and creative sectors have shown strong growth, as shown in the above chart.

“Instead of Silicon Valley or Shoreditch, the Floow set up its headquarters in Sheffield to take advantage of two leading universities, each delivering state-of-the-art digital skills,” says Chapman.

Sheffield’s burgeoning digital community – stacked with small to medium-sized businesses, although mostly the former – boasts a world-class education technology cluster that is changing the course of online teaching.

“Sheffield has the largest and fastest-growing e-learning sector outside of London,” says Highfield. “We have got more e-learning businesses per population than anywhere else. There is a lot of collaboration between the companies and universities.”

One of the fastest-growing businesses among Sheffield’s 80 edtech companies is Twinkl. It provides schools across the world with innovative online teaching resources, something that has seen a large rise in demand since the Covid-19 outbreak. This year it won the Queen’s Award for Enterprise and Innovation, as well as a Global Digital Excellence Award.

Challenges for Sheffield to address

Sheffield’s economic resurgence has accelerated over the past ten years, as highlighted by the aforementioned achievements.

It is also exemplified by strong growth in real estate prices in the city (see chart below). It is worth mentioning, however, that from an investor’s perspective, real estate in Sheffield remains highly competitive, as do salaries.

“Sheffield wants to be heard, to grab the next decade by the scruff of the neck and make it ours,” says Highfield. “You would not have heard that level of optimism and ambition ten years ago.”

Nonetheless, the city still has challenges. “Sheffield is not where it needs to be economically; we have still got issues in terms of wages and gross value added,” says Highfield. Although wages have grown over the past ten years (see chart below), Sheffield has the second-lowest salary levels among the eight English core cities, and the second-lowest annual growth in 2020, according to HM Revenue and Customs.

In terms of the UK’s exit from the EU, it is unclear how disruptive a no-deal Brexit would be for Sheffield’s all-important manufacturing exports. “I don’t think we can predict the long-term consequences of Brexit – and Covid for that matter,” says Highfield.

Unlike in previous decades, much of Sheffield’s high-value manufacturing sector benefits from nimble supply chains that are not too reliant on one sector. Therefore, the city should be fairly resilient to potential Brexit trade disruption.

Like all parts of the UK, Sheffield’s economy has been hit hard by Covid-19, but not as badly as others, thanks to its tech sector.

“The pandemic highlighted certain inequalities in the city that need urgent addressing,” says Krachai. “However, I have been in Sheffield for 15 years and I have never seen such levels of collaboration between the public and private sector, the third sector and our universities.”

Although the pandemic has paused the city’s largest events, such as Sheffield Doc Fest (the world’s third-largest documentary festival), it has also made the city’s geography even more attractive.

“Covid-19 has raised the importance of being close to amenities and having access to outdoor space,” says McKervey. This is good news for Sheffield, which is also known as the Outdoor City, and a ’15-minute city’ in terms of its ease of transportation.

Sheffield Town Hall is currently putting more than £50m into improved walking and cycling provisions. Nestled in the middle of England, 60% of Sheffield is green space and one-third of the city is in the Peak District National Park, thereby giving it a claim to be England’s greenest city.

Once lockdown restrictions are lifted, Sheffield has many other attractions, such as a vibrant nightlife and music scene. “We have more independent brewing companies than any other city in the UK,” says Krachai. “It is a big part of our economic DNA. We like a pint. Unashamedly.”

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