Business Agenda: How London and the regions can work in harmony

Robert Forrester, chief executive of Vertu Motors plc, says that North East firms can succeed by harnessing the power of the capital

Robert Forrester, Chief Executive of Vertu Motors
Robert Forrester, Chief Executive of Vertu Motors

How often I tire of politicians and commentators – from the regions of England – bemoaning the dominance of London.

Like Monty Python’s ‘four Yorkshiremen’ the sense of misplaced grievance is often stated to the point of self-parody.

The North-South divide is now a feature of every TV or radio report that considers the economy. There are real differences, but the trick is to use them for the greater good of all.

Every person in the regions of England who complains about London needs to remember the principle of the martial art of jiu jitsu – the concept that a smaller person can successfully defend against a bigger, stronger person by using leverage and proper technique, taking the fight to the ground.

London is bigger and stronger in financial terms than any region of the country, but it has its weaknesses – principally its high cost base – and these can be used to the benefit of the rest of us, leading to growth and opportunity.

Most of the team at Vertu Motors Plc come from the North of England and we were proud to establish our business in the North East – which is sometimes portrayed, by those who want to divide our country, as a malnourished backwater starved of resources. The truth is far more complex and the opportunities here are far more wide-ranging.

The North East, like other English regions, needs more enterprise and more business ownership to grow and succeed. This requires more financial investment.

It is true that some of the investment needed is public investment of the type London is attracting by the billions; completing the motorway network to connect us up would be a good start.

But private investment is far more important and our business story shows that it can be achieved.

Vertu Motors was established in 2006, just before the economy was about to tip into recession. As interest rates tumbled and money was tight, the City of London was ready to invest in credible businesses which looked forward and could see opportunity, rather than those which were paralysed with fear.

Our plan was simple: we would take the best operating procedures of the best performing motor dealerships and create a new dealership chain by purchasing underperforming businesses and applying new techniques to their operations.

One of the great advantages of the North East is that it is less than three hours from the world’s financial centre. It is an awesome advantage that needs to be used to maximise development.

It didn’t matter to London-based investors where we were located, in fact it was a positive attribute that we could keep our operating costs low by locating in a region with far cheaper accommodation and staff costs.

The City invested with enthusiasm, it wanted new business models to support and understood that recessions also breed entrepreneurial businesses ready to sow the seeds for later successes.

Fortunately for us, too few businesses in the regions of England were coming forward for investment and we had an even better hearing as a result. Too many plans to launch IPOs were delayed and the City was ready to look favourably on management teams that were not timid about sharing equity.

The unwillingness to share equity is one of the big ‘mental blocks’ that holds back too many great British firms. Holding out for a big trade sale, a one-off big payday, can often result in entrepreneurs with great businesses failing to generate the resources they need to grow and prosper.

Once we were up and running, we brought the best of the City and the best of the North East to bear on our operation.

The best of the City comprises its ready supply of finance and its willingness to back those entrepreneurs who have a buccaneering spirit and a credible plan to create value.

The markets seek out firms willing to trade their shares in exchange for investment; they do so regardless of UK location, they care only about performance and potential for returns in the future. We gave investors something to get excited about.

The best of the North East region is its hunger for success and its willingness to work hard.

Its supply chain businesses charge realistic prices; we have struck deals with dozens of North East-based businesses, including legal firms, marketing & PR firms, building and maintenance firms and many others essential to a national business that operates as a network.

Each of these North East-based businesses is good at what they do, grateful for our business and highly competitive when it comes to price and performance.

Vertu Motors has over 106 outlets at locations from Scotland to the south west of England. Taking a satellite view of the UK, it makes no sense to locate in the South East and, as a truly national firm, it makes sense to locate further North.

If business were a martial art, combining the strength of the City and the agility of the regions would be a winning formula for any enterprise.

Commentators should stop bemoaning the strength of London and start encouraging others to use the opportunity it presents to finance the growth of our entire nation.

Robert Forrester is chief executive of Vertu Motors plc.

 
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