Research highlights sectors most likely to grow in Devon
Business services, distribution and logistics, construction and property, and creative media are the sectors that have growth potential in Devon, according to the latest research.
These sectors are not seen as those that will be the sole drivers of employment growth in Devon, but they do exhibit a range of factors which are correlated with high levels of growth, and have the potential to create significant numbers of new jobs in the future.
Plymouth University's research department SERIO with the Red Group, Ecorys and Plymouth Business School undertook the research for Devon County Council.
The shortlisted sectors show some synergy with priorities outlined in the UK's industrial strategy which identifies those sectors which could make the greater contribution to future economic growth at a national level, in particular reflecting the focus in the strategy on knowledge intensive traded services, including professional and business services; and enabling sectors, including energy and construction.
Researchers modelled the economic impact (in terms of overall employment) of intervening to support the sectors shortlisted in the study, Sectors Research, Final Report to Devon County Council.
This is based on a scenario where a 1.0% increase (over base) in employment growth per annum is realised in each sector, taking into account both the direct jobs that would be created in the industry, but also the indirect jobs that would be created in the wider economy.
In the construction sector an increase in employment by 1% over base projections would have a significant impact on employment growth in Devon. By 2020 it would mean an additional 2,800 jobs while by 2035, if this growth was maintained over that period, it would mean over 8,500 additional jobs, both direct and indirect.
This would have a significant impact on overall employment growth in Devon. It would have the effect of reversing projected decreases in employment and lead to employment growth, in particular post 2020.
Of particular note in relation to construction (and the reason it is seen as an economic driver or enabler) is the extent of indirect job creation (ten jobs created in the sector results in a further 7.5 jobs in the wider economy). The potential for construction to be a key part of a strategy to kick start growth is clear.
An increase in business services employment by 1% over base projections would have a very marked impact on employment growth in Devon. By 2020 it would mean an additional 2,200 jobs while by 2035, if this growth was maintained over that period, it would mean nearly 9,000 additional jobs, both direct and indirect.
This would mean significantly increased overall employment growth rates overall in Devon, with annual growth well above zero. This, aligned with the fact that many of these jobs will be high value, shows its potential as a central part of Devon's sectoral focus, and the value of intervening to support the sector
Of the original shortlisted sectors, the distribution sector is the one where intervening with the result of increasing its employment growth by 1% above forecast would have the least impact. The direct impact of intervening to an extent that an additional 1% employment (over base) was created per year would lead to an additional 980 direct jobs by 2020, with a further 400 created indirectly in the supply chain.
However, the creative media sector, which was also included in the secondary analysis, because of its limited scale would have even less impact on levels of employment growth overall. While the sector is forecast to grow anyway, the impact of an increased 1% growth rate per year would only lead to an additional 100 direct jobs by 2020, with a further 40 or so created indirectly, although admittedly these would be high value.
A universal issue raised by all those consulted, as part of the development of the sector outlooks was the importance of skills to future growth.
The architecture of skills funding and provision is in the midst of dramatic change with significant implications for businesses, but which will also present opportunities for local partners to shape skills provision to meet local needs.
In particular, the following were identified as key potential roles and issues for local partners:
* Mapping potential demand shifts and providing targeted resources to ensure the skills system remains capable of providing a full range of training and learning;
* With minimum contract values here to stay, dissemination amongst provider networks of best innovative practice in relation to partnering and collaboration would help maintain the necessary competition to make the market function effectively for employers and individuals;
* Supporting the take up of higher-level apprenticeships in particular through targeted resourcing;
* Providers will need to actively seek understanding of the market place, but employers must also be proactive in communicating their needs to the providers. Communication channels such as the Employment & Skills Boards or sector / location specific groups are not always effective.
* Being alert to major programmes and projects, which will have an inherent skills demand and, as they are often long in development, can provide sufficient lead-time to enable resources, facilities and curricula to be put in place.
As part of the desk research that underpins the sector outlooks, examples of successful sectoral interventions were sought from both the UK and overseas.
Some general principles and lessons learnt from sectoral interventions across a range of industries include:
* Most significant sector interventions tend to have been undertaken at a national or regional level as opposed to a local one. While Creative Sheffield is a local example of an intervention this involved injections of funding from the regional development agency, Yorkshire Forward, as well as EU funding.
* Interventions often require measures to stimulate demand as well as supply (this is particularly the case with renewables). This will often involve setting mandatory requirements on the private sector, something that will again be easier to do at a national level;
* Sector interventions tend to build on existing strengths. While the Welsh Development Agency's work on promoting the automotive and electronic sectors, for example, has been cited as a significant achievement it built on initial injections of foreign direct investment achieved through the private sector; and
* Sector interventions may take some time to pay off. The development of Denmark's renewable energy sector began in the 1970s, while Gussing's renewable energy project has lasted over 15 years. Similarly, moves to re-model Sheffield's economy on the creative industries go back to the 1980s.
The research says that while it should be noted that although the short list of target sectors represents a coherent and evidence-based rationale for economic development intervention, this does not tell the whole story. The research has sought to identify growth potential. Clearly, however, there are other factors that will have a bearing on where the focus of economic development resources might be directed, including:
* Anchors in the economy: those sectors dominated by one or a small number of large employers such as the pharmaceuticals sector in North Devon. The success or failure of these sectors can have profound implications for the economic resilience of each sub-region and so, whether identified as having growth potential or not, there remains a policy and strategy imperative for economic development stakeholders to maintain close and positive relationships; and
* Sectors whose presence and development is aligned with strategic policy objectives such as the land-based sector in Dartmoor as well as possibly ill-defined and "cross cutting" sectors, such as the low carbon and environmental goods & services sector.
In addition, the public sector will continue to be very important to all of the sub-regional economies as the single largest aggregate employer and, through procurement and enacted policy and strategy as a driver of economic growth in its own right.
Regardless of the current narrative around 'cuts on top of cuts', there is no prospect that the public sector will re-trench to the extent that it no longer plays a hugely influential role - indeed in some regards a dominant one.
Where local knowledge and intelligence will be vital in shaping sophisticated sectoral policy and strategy, an understanding of the sectoral strengths, intentions, opportunities of neighbouring economies will be important. The functional economic geographies of sectors, supply chains, clusters and populations cut across administrative boundaries and, as the spatial level decreases, so the self-containment of an economy diminishes.
