How the North East hit back at Detroit slur

When The Guardian decided to take a detailed look at the North East economy, few would have predicted the outrage. Adrian Pearson looks at how the North East, faults and all, differs in the eyes of the region

Newcastle and Gateshead Quayside
Newcastle and Gateshead Quayside

Last month the North East did what it does best and united against an unfair attack on its image.

From combating the prejudices of southern think tanks wanting to close it down through to correcting the Chancellor’s father-in-law over “desolate” attacks, the North East is quite familiar with having to point out that it is far from grim up North.

The problem in the latest attack came two-fold. One, it was from the Guardian, normally a little friendlier to the region, and two, they had most of their facts right.

In their detailed look at the region, The Guardian said the North East is at risk of becoming like Detroit, the bankrupt US city abandoned by large parts of its population.

Clearly, this was rubbish, in a story which plucked the damaging facts and ignored the inconvenient positives.

The problem for the North East is not though that it has another London-based critic but in how the region sells itself despite the issues facing it.

After all, most of the region’s MPs and city leaders have complained to Government about disproportionate cuts. It is a mantra of Government failure for some councils.

Another frequent criticism of the North East economy, made most often by papers in the region, is that unemployment is too high. But while The Guardian piece looked at 10% unemployment and left it at that, others try to dig past the top line to show that overall the rise in employment shows the region is growing its economy.

That top line only approach ran through the piece. The quayside was criticised as being a shadow of its former pubs and club centrepiece, even though that trade has simply moved up hill as banks and accountants move in.

Newcastle United was criticised for having Wonga as a sponsor, the decision apparently reflecting child poverty in the region, but there was no mention for Sunderland and its Invest in Africa partnership and recent sponsorship.

Blyth’s Narec wind testing centre is criticised for only employing 69 people with little indiction that the centre is a means of bringing in expertise and jobs to the region.

The North East does face some difficult issues. It has suffered funding cuts, it has seen a fall in investment and its unemployment is too high. But for each of those challenges there is reason to hope.

The Guardian article says the region has not seen long-term growth from the cash put in the Blair era. The latest Foreign Direct Investment (FDI) figures show that while we might be down slightly this year, the region has actually had some of the highest investment rates outside of London in recent years.

According to financial services advisory group EY, in its annual UK Attractiveness Survey, the number of FDI projects secured by the North East declined by 12% to 23 in 2013 compared with 26% in 2012, but in line with other trends.

And last month, the North East saw the strongest expansion in the UK, according to the latest Lloyds Bank figures. The region had a PMI score of 63.5, the highest the survey has ever recorded and the first time it has been the fastest-growing part of the country since 2010.

Prime Minister David Cameron at the Port of Tyne in Tyne and Wear on a visit to the region
Prime Minister David Cameron at the Port of Tyne in Tyne and Wear on a visit to the region

Mark Hatton, senior partner at EY in Newcastle, said the region continues to be a centre for excellence in “key industries like manufacturing and energy – which deliver fewer but larger scale projects”.

While there has been a decline, he added, this had to be put into context.

“The North East has set high standards over the last 10 years for inward investment and isn’t alone in having endured a challenging 2013. While some areas grew FDI levels considerably, total projects in the English regions – excluding London and the South East – were 20% lower in 2013 than 2010, when the regional development agencies were abolished.

“The rest of the UK is at risk of being overshadowed by London, which accounted for nearly half of all investments in 2013. It’s critical that the regions leverage the strengths of the capital and build on their own unique strengths in order to drive wealth and job creation right across the UK, and bring balance to the economy.”

Manufacturing was the dominant sector in the North East in terms of volume of projects in 2013, adding 18. Nine of these were in either automotive assembly or components, including the largest project of 2013; the expansion of Nissan’s assembly operation in Sunderland, which created 400 jobs. Transport and communications secured three projects, while business and finance services attracted two.

Japan was the top source of FDI projects in the North East in 2013 with five, followed by France (4) Germany (3) and the US (2). The region also secured one investment from India, but has failed to attract a project from China since 2009.

Mr Hatton added: “The region must continue to promote its expertise in the offshore energy and automotive sectors, which have been the backbone of inward investment in the North East in the last 10 years. However, we must also look to promote the benefits of our key cities as destinations for business services investment, an area that is increasingly driving job and wealth creation in the UK.”

Oddly, what would have made the Detroit comparison a possible starting base, the region’s all powerful Nissan site, doesn’t feature once in the article.

Thanks to Sunderland’s Nissan plant the region has an enviable export record, based on a firm that is increasing its stake in the region.

Among the many spotting that omission was the Prime Minister, who, on a visit to the Port of Tyne after the article was published, said it was wrong of the Guardian to overlook the region’s many success stories.

Mick Thompson, office senior partner at KPMG in Newcastle, summed it up.

“Nissan’s Sunderland facility is at the forefront of the UK’s automotive industry and is a key driver behind tens of thousands of engineering and manufacturing jobs, not only in the North East, but throughout the country as a whole,” he said.

“Our research shows that the supply chain from this plant spans hundreds of separate companies in 24 different countries. Furthermore, 70% of all Nissan cars sold in Europe originate from Sunderland.

“This is something the region can quite rightly be proud of.

“The future of the UK automotive supply chain looks bright. We are seeing an upsurge in interest from potential investors, including private equity and overseas companies. Given the success of the Sunderland plant and the technical skills that exist locally, the North East is well positioned to benefit from this trend.

“The portrayal or the North East as a Detroit waiting to happen is unfair and inaccurate.

“The region has a host of positives that it can be proud of, ranging from the healthiest trade balance of any UK region, to a collection of world-class universities that foster positive thinking and help to shape tomorrow’s business ideas.

“The North East also has a buoyant professional services sector. The reason why the UK’s four biggest accountancy firms and a host of large law firms have offices in the region is to support a strong and vibrant business community which is characterised by its entrepreneurial spirit.”

Finally, The Guardian has an image problem. Its pictures of rundown shops could have been found in any urban area of the UK.

As former North East LEP chief Edward Twiddy put it to the paper, “your picture editor needs to get out more”.

Also read:

2020 Vision - June 2014: How the North East hit back at Detroit slur


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