The factors behind why some regions prosper economically and others fail are diverse and complex. Once a major employer downsizes or ceases to operate, some regions are able to regenerate themselves, building on existing skills, expertise and infrastructure. Others seem to be stuck in permanent decline. Dr Adkins’s research examines the reasons behind these different outcomes. Here he shares his thoughts with specific reference to Plymouth’s economy.
I am interested in regional development from the perspective of the maritime industry. Plymouth has a rich maritime heritage. Whilst it is home to the largest naval base in Western Europe, future plans to reduce the scale of the dockyard will impact both the city and regional economy. When the Royal Navy closed the air station on the Isle of Portland in 1999 the surrounding area suffered economic decline. This could happen here too, but we have the opportunity to learn the lessons from Portland’s experience and ensure Plymouth does not experience the same economic pain.
Building on what we do well
Stimulating economic development so that sectors where there is existing expertise can continue to grow is one ingredient in a successful regional economy.
In and around Plymouth there is expertise in the marine and maritime industries. Both are constantly evolving and exploring how existing workforce skills and expertise could be applied differently. Seafaring experience and knowledge can be used in the development, installation and production of offshore and renewable energy for instance.
Plymouth and the surrounding area are home to a lot of small and medium-sized enterprises (SMEs). Many have world class expertise.
I am particularly interested in SMEs as my research includes economic clusters and cluster policy. An economic cluster is a concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Clusters can be a powerful tool for connecting groups of specialised SMEs, research bodies and other innovation organisations. Their full potential can be unlocked when policies and SME support measures are in place that can help the co-creation process. Successfully linking up the main players in the regional ecosystem to overcome sectoral, regional and departmental silos can lead to greater economic resilience and higher employment growth.
In developing modern clusters, policy makers, politicians, business leaders and others need to look at creating the right environment, identifying what institutions and support tools can be put in place to provide growth opportunities and address the challenges a region faces. I will be conducting more research on the management and governance of clusters, looking at how small businesses can engage with each other and collaborate. This builds on my experience in the Ministry of Defence’s policy team. I remember receiving complaints from SMEs who were prevented from taking part in tender processes because the needed security clearance. To get security clearance, they needed to be awarded a contract! It was a catch 22 situation we were able to resolve. It is important to understand how SME’s navigate bureaucracy, to identify areas of shared interest and explore how they can work together in procurement processes to mutual advantage, even if they are competitors.
When a region has distinct specialities, we say it has agglomeration economies. These external economies of scale develop when an area specialises in the production of a certain type of good such as car manufacturing in the West Midlands or steel production in Sheffield. Firms in an agglomeration can all benefit from good supply networks, a pipeline of skilled and trained workers educated locally and an existing infrastructure built specifically for that industry. Agglomeration economies attract people, housebuilding and firms to particular areas as people tend to move to cities where is there is a greater choice of jobs, social activities and specialist services
HMNB Devonport has been the bedrock of Plymouth’s economy for many years. It plays a critical role in the maintenance of nuclear submarines and is growing expertise in nuclear technologies that could benefit the wider UK economy. This agglomeration of expertise, facilities and capabilities in nuclear submarines, hydrography and amphibious vessels has been built up over decades. There is an opportunity for a significant return on any investment by building upon this critical mass.
Whilst agglomeration offers a lot of benefits, there is always the risk of dis-economies of scale, where firms become too big and average costs start to rise. It is important to assess the impact of economic clusters: is public and private money invested to good effect? Is the skills pipeline sustainable? How are resources being used? There are development and growth opportunities from bringing people and firms together and letting them apply their skills and expertise in a slightly different way that could add value to their business, the community and wider region. In Plymouth this could explore how the city could contribute to the wider maritime economy, both nationally and further afield.
The future’s blue
There has been a lot of talk recently about the blue economy. Definitions of the blue economy vary. The World Bank sees it as the sustainable use of ocean resources for economic growth, improved livelihoods and jobs whilst maintaining ocean and ecosystem health. It can encompass fishing, tourism, climate change, waste management and maritime services such as insurance, brokering and chartering. Picture a group of people sitting on paddleboards and fishing within sight of a wind turbine; all of these activities intersect in the blue economy.
Not sold down the river
The city of Plymouth sits within a unique physical environment. It has some great assets. The River Tamar waterfront is valuable real estate. We have seen recent developments like Oceansgate, which will bring together marine businesses to create a world-class hub for such industries in Plymouth. The Ocean Futures programme will see government, industry and researchers working together to provide the testing, development and manufacturing capability to make the UK an international centre for clean, autonomous and digitally-enabled maritime technology. This will benefit from a wider, world-class ecosystem of SMEs alongside other regional assets such as the UK Hydrographic Office, the University and Plymouth Marine Laboratory as well as some of the world-class ocean technology test facilities.
Safety in numbers
We need to bring companies together to leverage opportunities.
This is one of the challenges of business research; it can offer up important insights but applying these can be tricky. Well-defined cluster organisations need to have cohesion. I looked at some of the organisations in other countries. Many had engineering, maintenance and support functions. Cornwall had the biggest group of leisure sector members. Another in Norway looked at clean technology, demonstrating considerable focus on environmental issues. Firms needs to work together to solve common problems. People cannot solve today’s challenges in isolation. SMEs need to work together to tackle shared issues.
Plymouth has a long maritime history; there is lots of expertise here in marine engineering. We have fantastic natural resources on our doorstep. A lot of innovation could take place down here when expertise and creativity come together. There is a willingness to embrace change and develop new ideas. I hope these build on and enhance our maritime heritage.