Thanet and East kent Insider 9th January 2012Your Business Bulletin from Thanet & East Kent Chamber
Thanet & East Kent Insider
9th January 2012 Issue No.: 177
This edition of the Thanet & East Insider, see also pdf version attached, consists of a Thanet Business Report which looks back in detail at the past trading year and reflects on the opportunities for 2012. Chamber members will share our delight at the announcement in the New Year’s Honours List of the award of a knighthood to Roger Gale MP, who among his many distinctions is Co-President of this Chamber. Roger has provided invaluable support to local businesses which has been much appreciated by Chamber members, regardless of their political affiliations. Our next Business Networking Breakfast will be on Friday 27 th January at 0730 hrs when the main speaker will be the Managing Director of Manston Airport. Details to follow. I would like to thank our Chamber Chairman, Dr Bill Moses MBE, our Co-Presidents Laura Sandys MP and Sir Roger Gale MP, our board of directors and of course our Chamber members for keeping us informed and fully involved in East Kent business throughout the year.
Thanet Business Report
1. Employment Indicators
The employment indicators relating to Thanet continue to give rise to concern. The latest figures show Thanet as registering the highest unemployment rate in Kent with 5.8% of the workforce claiming Jobseekers Allowance and National Insurance Credit. This equates to 4,614 unemployed, an increase of 14.7% since the same time last year. Most worrying of all is that unemployment among 18 to 24 year olds is listed at 13.7%, the highest in the South East. There are large differences across East Kent, for instance youth unemployment in the Canterbury District is just 3.2%.
[NOMIS December 2011].
2. Other Economic Indicators
The median gross weekly pay for full-time workers resident in Thanet in December 2011 is £412.50. The median gross weekly pay calculated on the basis of those who work in the district is £392.10. These figures compare with Dover £510.40/£495.80, Canterbury £560.20/£512.40, Shepway £490.90/£461.90 Kent £546.20/£489.20 and the South East £554.40/£528.20. Thanet has the lowest weekly wage costs in Kent and the second lowest in the South East. [ ASHE/ONS Dec 2011]. Of the 4,090 registered companies in Thanet [UKBS Feb 2011], 90.6% have fewer than 20 workers. Companies with 20-49 workers constitute exactly 6% of the workforce. Those with 50-249 workers account for 3.2% of employees. Just 0.2% of companies have between 250 and 499 workers and there are no companies employing more than 500 people. [UKBS PAYE / VAT Feb 2011]. The Chamber is concerned that figures relating to the period to 2009 show that just 39% of new companies survived five years in contrast to 53% in Ashford. [ONS 2004-2009, KCC Feb 2011] Of course, companies may close or cease operations for manifestly benign reasons, but astute investors take into account the publicly available data when deciding where to spend their money and a favourable business environment is clearly a factor. The Chamber is addressing directly the challenges faced by start-up companies and established firms looking to expand with a range of measures including the free Business Advice Clinics launched last April, which have already welcomed over 70 current and potential business owners; see “15. Some Solutions” below.
3. Pfizer & Business Rates
The phased closure of Pfizer with the loss of at least 1,500 jobs has impacted severely on the East Kent coastal business community as executives and researchers with considerable spending power disappear from our shops, restaurants and estate agencies. The continuing malignant effects of the Rating (Empty Properties) Act 2007 have discouraged investment in commercial property as some owners have preferred to demolish buildings rather than pay full business rates when there is no rental income to sustain their investment.
4. Pubs
Pubs and breweries have traditionally been a significant element in our tourism economy but are increasingly under threat from cheap off-sales in supermarkets. The net rate of UK pub closures in the first six months of this year is 14 per week. [BBPA Summary of CGA Data including CGA Spreadsheets 2009 – H1 2011] Nationally, the Pubs and Breweries sector still accounts for 983,000 employees and £13 billion in wages. Despite the influence of the big chains, pubs tend to support a wide variety of local suppliers and provide important focal points in our community. [ Submission to National Policy Framework, BBPA, Oct 2011]. It is not surprising that much of the action in the television soap opera Coronation Street takes place in the Rovers Return. Fans of the BBC rival East Enders will know about the role of the Queen Victoria. Put simply, a well-run pub is often the focal point of community life. This Chamber acknowledges the community benefits of pubs and their important role in our urban and rural economy.
5. Public Sector Cuts
Public sector cuts have also reduced the spending power of local residents. Thanet District Council has just announced that it needs to cut £1.5 million from next year’s budget which will inevitably impact on staffing numbers and recruitment policy. Kent County Council must reduce its spending by £97 million for 2012/13 in a budget described by KCC Leader Cllr Paul Carter as: “a challenging budget in the most difficult financial times". [Ed Hill, KoS Media, 20 December 2011]
6. Third Sector
Charities, social enterprises and voluntary groups are well represented in Thanet. In recent years, this third sector in our economy has been generously supported by Pfizer through payroll-giving, direct grants and the secondment of staff. We estimate that around £1 million will be withdrawn from charitable contributions through Pfizer’s staged withdrawal from its site in Sandwich. [ Pfizer and The East Kent Coastal Business Community, TEKC, 12 March 2011].The umbrella body, Thanet Voluntary & Community Sector Forum, has responded energetically to changes in its support network and continues to lead the way in Thanet through initiatives such as the Disability Hub events and a recently launched newsletter.
7. Thanet as a Business Location
Of course, low wage costs can attract some companies. The median gross weekly wages listed above show Thanet as having a relatively low cost base for salaries. Commercial rents are generally below those in neighbouring areas. The message may not yet have percolated through to the wider business community, as noted by the authoritative Locate in Kent which recently commissioned a study that divided Kent into four areas and found: “East Kent was once again the least favoured location with just over 4 in 10 stating that they favoured this area the least”. [ Perceptions of Kent as Business Location, Locate In Kent, August 2010]. Although the High Speed Link rail services launched in December 2010 do few favours for Margate businesses as links to the City are now slower and more expensive than before the arrival of HS1, firms located nearer to the main stations at Ramsgate, Sandwich, Broadstairs, Dover, Canterbury West and of course Ashford, now undoubtedly benefit from much improved journey times to London St Pancras. The Turner Effect detailed elsewhere in this report has also assisted in creating a more benign branding for Margate. As one property expert at The Property Tree in Margate put it recently: “We are seeing many more personalised number plates in Margate at the weekends”. Other s pecialists in finding commercial properties for purchase or rent in Thanet include Cooke & Co, Hemispheres Property Consultants, Holt & Wotton, MPG Properties and Terence Painter Properties.
8. Politics & Media
The Thanet & East Kent Chamber does not comment on political issues. Although both Chamber Co-Presidents Sir Roger Gale MP and Laura Sandys MP are Conservatives, we also enjoy warm relations with the newly elected Labour Leader of Thanet District Council, Cllr Clive Hart. As we operate in close liaison with our sister Chamber, the Dover District Chamber of Commerce, we do feel able to comment on issues that concern the East Kent coastal business community where a collective voice can influence infrastructure planning and policies at a regional and national level. We have been in regular contact with Thanet District Council about its own purchasing arrangements, the management of Kent Innovation Centre, its interpretation of planning regulations, business rates, Ramsgate Maritime Museum, parking, broadband provision and a variety of other issues that impact on the promotion of trade and commerce in the district. The voice of the Thanet & East Kent Chamber features regularly on ITV Meridian, BBC Radio and BBC television as well as in the regional and local press. We are especially grateful to Graham Cooke of BBC South East, Derek Johnson of ITV Meridian, Neal Ashford of Lavender Blue Media and Rebecca Smith, senior editor at Kent Regional Newspapers, publishers of the Thanet Times and Thanet Gazette, for their presentation and expert advice to Chamber members as speakers at our Business Networking Breakfast last month. Chamber members can take comfort from knowing that their views reach a wide audience and that their interests direct the Chamber’s public profile.
9. The Open
The Open Championship at Royal St George’s Golf Club last July produced a spend in East Kent of £12,341,395. A survey sample of over 2,000 respondents found that the 180,091 visitors produced 83,256 bed nights in East Kent paying £4,150,491 into the welcoming arms of local hotels and accommodation providers. When other factors are added to the equation, such as the amounts paid by players, media staff, event employees and so on, the direct economic benefit to East Kent is calculated as £21,180,000. [Open Golf Championship, Economic Impact Assessment, Sheffield Hallam University, November 2011] A concomitant benefit for East Kent was the television exposure to 483 million households which has an estimated Media Equivalency Value for event sponsors and tourism bodies of a massive £52.6 million. [Ibid and Repucom 2010] In the year before the London 2012 Olympics, enticing images of East Kent may well play a role in encouraging visitors to London to spend part of their stay in Thanet. We should add that the goodwill factor that accompanied the winner of the 2011 Open Championship, Darren Clarke, has provided a stimulus to membership at Prince’s Golf Club, Royal Cinque Ports Golf Club, Stonelees Golf Centre and Manston Golf Centre.
10. Regional Growth Fund
The government has recently announced a £40 million Regional Growth Fund for East Kent to consist of Springboard Grants for small companies, Investment & Growth Grants and Infrastructure Grants. We will not know the full details for applicants until Spring 2012, but this is an obvious boost to the area. The main focus of the investment will be on job creation.
11. Manston
Manston Airport, owned by Infratil, has published its plans for night flights. If these receive approval, it is likely that the airport will expand considerably. The applicable metric for airport employment is 1,000 jobs per 1 million passenger movements. Applied to Infratil’s plans for growth to 2018, this would result in 3,000 jobs. Should the airport’s owners be disappointed with the planning decisions, it is likely that the company will withdraw from Manston leaving the future of the airport very much in doubt. China Gateway International received a welcome vote of confidence last November with unanimous for the renewal of planning permission from Thanet District Council for its 1.2 million sq. ft. of development land adjoining the airport. The Chamber will be representing the views of Chamber members at a meeting with the Parliamentary Under-Secretary of State for Transport on 12th January 2012.
12. Dover & Ramsgate Ports
The Port of Dover has been in the news this year. As the largest Big Society project before the government, the bid by the Dover People’s Port Trust Ltd (DPPTL) to buy the Port of Dover could pave the way for similar community efforts to purchase the Port of Ramsgate. DPPTL enjoys the support of the main ferry companies, the union Unite, the local business community and the residents of Dover. An official poll overseen by Dover Town Council last March revealed that 97.5% of voters favoured a transfer of the ownership of the port from the current Dover Harbour Board to DPPTL. It will be difficult for the government to ignore such an overwhelming vote of confidence in DPPTL. It is perhaps also significant as an indicator of future policy on publicly-owned ports that the Public Bodies Act 2011, which received Royal Assent last month, specifically mentions the Dover Harbour Board under Schedule 5, “Power to Modify or Transfer Functions Bodies and Offices”. At the time of writing, employees of Sea France are facing redundancy, as outlined in the ITV Meridian report at http://www.itv.com/meridian-east/130-dover-jobs-at-threat60783. Workers supporting the French Union CFDT are pictured displaying a banner asking: “If Jeanne D’Arc saved France, why hasn’t President Sakorzy saved Sea France?”. Students of history will know that 500 years passed from when Joan of Arc was burnt at the stake to her canonization as a saint. With a French election planned in three months, the 127 ferry workers based in East Kent will be hoping for a saviour to act more promptly. DFDS and LD lines are currently favourites to fill the breach.
13. The Turner Effect
The success of the Turner Contemporary in attracting double its target of annual visitors in its first six months of operation certainly gives cause for optimism in Margate. A blockbuster exhibition featuring 80 of JMW Turner’s watercolours and 12 oils is planned to open on 28th January 2012. It is expected to attract new visitors and bring back first timers on a scale that has not been seen since the heyday of Dreamland. The visit to the gallery by Her Majesty The Queen on 11 th November 2011 gave an unambiguous seal of approval which can only have positive consequences on the regeneration of Margate. The Old Town has already seen an influx of new independent retailers which has revived the immediate area. Although Margate High Street remains an undoubted challenge, there are hopes that “The Turner Effect” will gradually spread its influence further afield. There are certainly some indications that the brand image of Margate is changing, as evidenced by the Mary Portas report of 13 th December 2011. Commissioned by the Prime Minister and Deputy Prime Minister to undertake an independent review of our High Streets and town centres, Mary Portas reserves especial praise for the impact of the Turner Contemporary. “I saw for myself how real vision can secure new investment at the new Turner Contemporary gallery in Margate where the surrounding area has turned a corner, bringing new businesses and footfall to the lower end of this seaside town.” [w ww.maryportas.com/wp-content/uploads/The_Portas_Review.pdf]
14. Tourism
In-bound tourists mostly spend their money and go. They tend not to demand unemployment benefit, ask for free school meals or require extensive consultations with public officials. Although a tiny proportion may need medical assistance and require a small amount of resources funded by rate-payers, on balance they might be considered ideal customers. The latest in-depth study by the ever excellent Visit Kent in partnership with Kent County Council and the European Regional Development Fund calculates the total value of tourism activity in Thanet in 2009 to have been “around £217,051,000”. This showed an increase of 10% on the figure for 2006. The sector supported 3,572 Full-Time Equivalent Jobs and 5,066 Actual Jobs, after adding seasonal and part-time employment. [The Economic Impact of Tourism on the District of Thanet 2009, Tourism South East, 2010] We can expect these figures to grow with the addition of the magnificent Hornby Visitor Centre, the expansion of the Two Chimneys Caravan Park, progress on the planning for Dreamland Heritage Park and sports related benefits from the London 2012 Olympics. It might be questionable whether the private patients at the Spencer Wings next to the QEQM hospital in Margate and at the William Harvey Hospital in Ashford can be considered tourists, but there is no doubt that the excellent reputation enjoyed by East Kent’s leading private healthcare facilities is generating revenue for the area and creating employment in what is a highly competitive sector in the UK. The two corporate Golf tournaments managed by the Thanet & East Kent Chamber and the Dover District Chamber of Commerce enjoyed record entries in 2011 at both the Prince’s Golf Club and the Royal Cinque Ports Golf Club.
15. Some Solutions
The somewhat bleak economic indicators listed at the beginning of this report have inspired the Thanet & East Kent Chamber to address some fundamental weaknesses. Following the announcement of the demise of the Business Link regional services last March, the Chamber launched free monthly Business Advice Clinics. Companies of all sizes are invited to meet business experts to discuss their trading requirements and business needs. The panel consists of seasoned professionals including a lawyer, chartered accountant, bank manager and successful entrepreneurs who give their time free of charge to assist local companies to expand and develop. Such is the success of the programme that private individuals have promised a fund of £1 million to support start-ups and established companies, subject to a reasonable return on investment. Local knowledge can sometimes lead to a more optimistic view of investment opportunities than that from high street banks which are subject to centralised control.
16. Strategic Issues
The Business Advice Clinics have also revealed some strategic issues relating to East Kent companies. There is a climate of export antipathy among many small companies. Some of these enterprises have excellent products and services which undercut their overseas competitors in the Eurozone by over 20% and yet they are supremely reluctant to meet the needs of customers overseas. The Chamber has secured the services of a French agency which is now offering market surveys, foreign language websites and a broad range of customer liaison services to local firms. Credit control remains the largest cause of company failure. The Chamber is promoting internet banking which gives instant access to bank account information and is able to introduce companies to specialists in managing cash-flow.
17. Resilience
Thanet businesses are characterized by a resilience and resourcefulness. Established firms in Thanet that survived the decline in traditional seaside towns have developed a hardiness that has prepared them well to survive downturns and recessions. Incoming companies have brought innovative technology and an openness to trading overseas from which everyone can benefit. [ TEKC, Portrait of Thanet, Dec 2011]
18. Science in Action
Vattenfall and The London Array have extended the Thanet market place beyond our shoreline and provide an example to green and renewable technology companies of world-class off-shore energy generation. Vattenfall’s Thanet Off-shore Windfarm opened on 23 September 2010 as the world’s largest. The London Array, owned by DONG (50%), E.ON (30%) and Masdar (20%) will be bigger still and is on target to have positioned its first turbines by the end of January 2012. Phase Two of the civil works at the sub station at Cleve Hill are ahead of schedule and will continue until mid-summer 2012. The Thanet Earth complex near Birchington is at the cutting edge of hydroponics. At a time when politicians of all parties emphasize the value to the UK of training scientists, we have in our district a great example of science applied to agriculture. Thanet Earth employs 450 people, has moved into profit and is now earning its keep for its parent company, the Fresca group.
19. Night Time Economy & Westwood Cross
Innovative management adapted to local needs has ensured that the night-time economy of Thanet has some attractive venues to entice higher earners. G Casino is on target to recoup for the shareholders of the Rank Organisation its investment of £12 million at Westwood Cross, encouraging others to follow suit. Primark will shortly be opening a a 70,000 sq ft store at Westwood Cross. Sainsbury’s is moving its supermarket to larger premises and building a new link road as part of its planning agreement. Marks & Spencer is also doubling its floor space at Westwood Cross. The Theatre Royal in Margate provides a large formal setting for visiting drama companies. The Sarah Thorne Theatre Club in Broadstairs offers a remarkable example of how unsubsidised theatre can be commercially successful through imaginative programming and extensive contacts. Enterprising and experienced management underlie the sustained increase in box office takings, but it must help to have patrons of the calibre of Judi Dench and David Suchet.
20. Adding Value to Heritage Assets
The Powell-Cotton Museum at Quex Park with its unique collection of artefacts and dioramas is in safe hands. But most remarkable of all is the entrepreneurial spirit shown by the Quex Park management team of what was essentially a museum and gallery within an agricultural business. By adding value to its primary assets, Quex Park has made a big success of its on-site retail operations and has brought some excellent new products to market in the form of home-grown Rapeseed Oil and Kent Crisps; both excellent examples of genuine enterprise stimulating a rural economy.
21. Generating Profits and Jobs At Cummins
The multinational Cummins Power Generators has its southern UK base at Manston and is in a period of strong growth. The third quarter figures for 2011 show a worldwide sales increase of 36% which provoked the Chairman and Chief Executive to remark: “ Cummins is having its best year ever, achieving more than 30% revenue growth and record profitability this year, despite all the uncertainty in the world”. [Cummins reports strong third quarter results, Cummins, 25th October 2011]
22. Thorley Taverns & Shepheard Neame
Thorley Taverns is one of the biggest private sector employers in Thanet. Despite the challenging trading environment, it continues to invest in training its staff and refurbishing its properties to a high standard. The Faversham brewer, Shepherd Neame, was sufficiently impressed by the Fayreness Hotel last September to make Thorley Taverns an offer it felt unable to refuse. This year, Shepherd Neame has also purchased the Royal Albion Hotel in Broadstairs and the Bell Hotel in Sandwich, proving again that the Thanet tourism sector offers some investment opportunities that should do well in the medium term. Thorley Taverns reports that summer wedding bookings for 2012 at the Pegwell Bay Hotel are already nearly at capacity, justifying again the benefits of professional staff training.
23. Training
Thanet catering has gained a worldwide reputation through the activities of Thanet College, alma mater of Gary Rhodes and supplier of staff to Buckingham Palace, British Embassies and distinguished restaurants throughout the UK. While acknowledging its past, the college now cooperates closely with local businesses in many sectors offering high standards of professional training and apprenticeships in a wide variety of subjects through its revamped site in Ramsgate Road, Broadstairs and its new training division at Manston. A new £6.5 million Centre for Environmental Technology received the green light last month with news of a successful bid for £2 million from the Skills Funding Agency putting Thanet College at the forefront of green training opportunities in Kent. Added to the mix are private training companies such as Profile Development & Training based at the Kent Innovation Centre which ensure that alternative apprenticeship programmes and IT skills courses are now readily available locally. Earlier this year, Independent Support Services opened a training facility for employers next to its Manston offices. Saint John Ambulance is also active in Thanet. When one adds the courses available at the Broadstairs Campus of Canterbury Christ Church University, it is encouraging to see that employers now have a wide choice of training providers in the public and private sectors.
24. Local Spend
One of the ways to promote a dynamic local economy is to encourage public bodies to use local suppliers. Best practice dictates that organisations funded by the tax payer have an obligation and in many cases a statutory duty to secure the best combination of price, quality and service, see Public Contarcts below. We point out that it can be expected that service from a local supplier might be of a higher order than that from a firm outside East Kent. Some public bodies have responded enthusiastically to this Chamber initiative. We are pleased to report that in the last financial year, Thanet College spent £1.3 million with local suppliers, a dramatic change of policy that has brought benefits to all the parties involved. We note that Chamber member Vattenfall is now committed to spending £15 million with local suppliers should it proceed with an extension of the Kentish Flats wind farm off the coast of Whitstable. For 2012, the Chamber has published an East Kent Business Directory in the format of a diary, available free of charge to Chamber members, which is now operating as a source document for public bodies looking to support local business.
25. Public Contracts
Local Authorities are obliged by law to procure goods under Public Contracts Regulations. Failure to do so can result in heavy fines and costly contract challenges. In brief, there are thresholds for contract values, which apply from 1st January 2012 to 31st December 2013. [See Procurement Policy Note, New Threshold Levels for 2012 and changes in the use of the Accelerated Restricted Procedure, Cabinet Office, 12 th December 2011]. For many goods, the threshold value is £174,934, but this is higher for Security, Defence and some R&D and telecoms purchases. The Cabinet Office is happy to answer specific enquiries; tel 0845 000 4999 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Local authorities also may partake in collective purchasing arrangements which are defined in true civil service style as; “ Framework agreements are set up by public sector bodies with suppliers to provide goods, works or services according to certain requirements”. [Overview on selling to government, Procurement regulations for public sector contracts. Business Link, December 2011 ]. Despite the heavy hand of EU regulations and the ending of the relaxation on the rules relating to an accelerated restricted procedure which was brought in as an emergency measure, there remains considerable scope for enterprising public bodies to go beyond telling others to “Buy Local” and to implement themselves the policies they are urging others to follow. The Chamber is encouraged by developments at Dover Town Council and Dover District Council.
26. Confidence Boost to Thanet
It is a continuing mark of confidence and pride that successful enterprises such as Hornby, Silent Gliss, Emco Wheaton, China Gateway International and W W Martin all have their headquarters in Thanet. Around 85% of the Small and Medium Enterprises (fewer than 250 employees) in Thanet are family-run businesses with a long-term investment in the fabric of society. Not only has this served to bolster resilience, but it has created strong ties with schools which in some cases have served many generations of the same family. Continuing best practice developments at Hartsdown Technology School, the Marlowe Academy, Cliftonville Primary School, St Lawrence College and Snappy Play Centre encourage ambitious workers to remain in Thanet. TV One in Margate continues to win awards for its world beating CORIO®3 Technology products which proves that advanced electronics are not the sole domain of Asian or US companies. Thanet Waste is now the leading independently owned waste management company in Kent; setting new national standards with the ‘Zero to Landfill’ policy in operation at its 8 acre site at Richborough. The success of OFP Timber Framed Homes reached a wide audience on 9th August 2011 when it came to the aid of single mum Louise and her autistic son Thomas on the television programme DIY SOS for a Big Build special in Dartford. [http://www.bbc.co.uk/programmes/b013938w ]. Carol Peters Travel beat the competition throughout England and Wales to win the 2011 “Best Operator, Small Fleet” which has already encouraged this coach operator to expand its business considerably for 2012. The winning of sizeable new contracts by Lavender Blue Media, M&S Brickwork, Sota Solutions, MPG Properties. Flambeau Europlast, Kinetic Advance, Drinks Warehouse UK and AEI Compounds show that Thanet can offer a profitable trading environment for companies willing to adapt their traditional services and products to new meet new demands in the market place.
27. Summary
While 2011 was a challenging year for Thanet businesses, there were some highlights illustrated most vividly by the visit of Her Majesty The Queen and the Duke of Edinburgh on 11th November. Serious development in the medium term may well depend on the future of Manston airport, the success of the Discovery Park and greater awareness from some public bodies of the key role of the wealth creators. As an ex-BBC producer, our Chamber Co-President is hardly in need of any external assistance to put his message across. Nevertheless, the award of a knighthood to Roger Gale MP in the New Year’s Honours List will add weight to his wise words in backing local firms and was welcomed with great satisfaction by the very many local businesses who have gained from his guidance. The Thanet & East Kent Chamber will continue to support local firms of all sizes in 2012 and looks forward to contributing to a business environment that provides more opportunities for school leavers and more reasons for graduates to return to East Kent with their new skills and wider experience.
David Foley
Chief Executive
Thanet & East Kent Chamber Ltd
www.tekc.co.uk
© David Foley, 9 January 2012
