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Inward Investment and Company Relocations in Birmingham

Published: November 2001

The 1998 Economic Review identified the need for Birmingham to diversify its industrial base through inward investment and strategic planning. This Topic Report looks in more detail at Birmingham's position and future prospects as an investment location at international, national and regional levels.

Data sources include the Coopers & Lybrand, Locate in Birmingham Market Research Study (May 1998) and PRISM Research's CREDO database.

Key Findings

• Regional and international comparisons show that Birmingham is not very competitive as a manufacturing location, but shows promise as a location for service activities – something that could be capitalised on more.
• Birmingham's main problem as a manufacturing location is its lack of good sites and property availability generally. A perception of poor education levels is also acting against the city as a location.
• The city's attractiveness as a service location may be damaged by its high office costs. A recent study showed Birmingham to have amongst the highest prime office costs in the World.
• In recent years the flow of foreign inward investment projects into Birmingham has stagnated, whereas in the rest of the Region their number has continued to rise. This must raise concerns about Birmingham's ability to compete as a business location.
• Birmingham has tended to lose more companies than it gains through company relocations. Overall, 37.5% of Birmingham businesses that changed location opted to move out of the city in the 1988 to 1998 period. When the effect of relocations into Birmingham are taken into account then the net loss of companies was equal to 7.3% of the city's relocating businesses, 6.2% of the relocating jobs, and  5.8% of the relocating turnover.
• During the 1988 to 1998 period Birmingham had the highest negative net outflow of relocating companies of any local authority area in the West Midlands Region. Analysis of year to year trends showed that this position is not improving.
• The trend of negative company relocation outflows for Birmingham is entirely consistent with the experience of most other competitor cities within the UK. However Birmingham's relative position is towards the bottom of the rankings.

Inward Investment 'Broker' Agencies Identification of Key Strengths & Weaknesses of Birmingham as a Business Location

Key Strenghts

• Scale of UK market access
• Good communications links
• Large local/regional market
• Large manufacturing base
• Good business support infrastructure
• Low cost base relative to South East
• Good higher education base
• Image as a pro-active, innovative city
• Strong 'business friendly' perception
• Strong fringe locations (e.g. Birmingham Business Park)

Key Weaknesses

• Growing congestion
• Too narrow an economic base
• Poor site/property range and office costs
• Skills base too focused on older manufacturing sectors
• Limited awareness of public policy target sectors
• Cost base competition with other manufacturing regions
• Uncertainty about selective investment grants compared to other assisted areas