It’s time for a local focus on business
There must be few times in living memory when running a business has been such a daunting experience.
The commercial world seems caught up in a perfect storm of pandemic, price rises, delivery delays, skills shortages and official bureaucracy.
Most everyone I speak to, regardless of activity, is finding things tough. Even those who are coping nonetheless complain about challenges linked to the ridiculous cost and unavailability of materials.
Inevitably the B-word and its impact comes up as a factor it’s not always top of the list.
Pricing has become impossible for one manufacturer who runs a firm supplying assembled goods to the construction industry. He experienced a 10% hike that happened while components he’d ordered were still in transit. His customers on the other hand expect fixed price contracts to be honoured and margins take a subsequent hit.
The situation is no less tough in the service sector. Rod Lloyd, managing director of Lo-Cost vans, a leading commercial vehicle leasing company, told me how the supply of new cars and vans had virtually dried up, despite a steady increase in demand.
The firm has extended current leasing deals while negotiating with manufacturers to secure a new supply later this year. It’s a tricky balancing act that many others are also having to perform..
Those working in construction have managed to navigate their way over a series of hurdles in recent times. Few would have predicted though how a scarcity of timber has made it one of the priciest commodities in the industry.
A firm of house-builders shared the story of how a container ship loaded with specialist timber originally destined for European ports was redirected across the Atlantic to a berth in Newark, NJ.
This outbreak of pseudo-piracy is thanks to market interventions financed by the so-called “Biden Boom” that is currently pumping billions of dollars into the US economy.
Even when goods are finally ashore in the UK, a further downside is the nightmare facing anyone who relies on a timely service from an increasingly chaotic transport system.
One frustrated business owner who operates a specialist product manufacturing outfit in the region spoke to me about how delivery delays weren’t just caused by backlogs. A lack of expertise among depleted haulage contractors was also causing shipments to be damaged or left behind on loading bays.
On-off Covid measures have meant that parts of the hospitality sector are still some way from regaining a viable footing.
Like others building back their custom, Emily Hunt who runs sales and marketing at the Village Hotel in SA1, reported bookings up with the staycation trend now firmly established. The corporate side is also improving. The question is how long this can last with belts tightening elsewhere.
The key message I picked up from conversations is that while many problems facing business are patently part of a bigger picture, there are other issues we can address at a more local level.
Local authorities have played a pivotal supporting role during the past two years. There’s no doubt they will continue to be looked to for future leadership.
As such, what clearly needs to happen in the short to medium term is a way for councils to match high-level economic strategies with a better day-to-day commercial awareness of business dynamics. This applies to both political and professional spheres, in my opinion.
Running a local authority effectively and efficiently requires a highly complex combination of targeted resources with sufficiently equipped and trained personnel. Running a successful business involves pretty much the same demands.
The key difference is that a business balance sheet works very differently from a council budget. Things are a lot more immediate when they start to go wrong. For example, you seldom see a school close its doors due to poor cash-flow.
At a time when recovery is firmly on the agenda, you’d think that companies looking to expand or relocate would be getting priority attention. Unfortunately this isn’t quite the case for firms who find themselves having to deal with uninformed officialdom.
There are those who would argue that this kind of indifference is nothing new. For myself, I don’t think this is the case. Where problems do occur though is when disinterest turns into negativity, especially in relation to planning approvals.
The best that can be said about headlines whereby councillors accuse developers of “doing their best to avoid payments” – a reference to cash contributions linked to planning consents – is that those charged with managing development control may not fully grasp how the commercial concept works.
Basically, you don’t make homes affordable by adding a stealth tax into the equation. Similarly, throwing up your arms in horror at a 15% profit margin by developers only confirms an unfamiliarity of how future land purchases are financed.
Whether it’s new development, new premises, relocation or expansion, we need a step change away from decision-making that regards local businesses as less beneficial to the regional economy than the elusive multi-national big fish.
This coming May will see local elections and a new intake of elected councillors across the Swansea Bay city region.
Perhaps this would be the time for candidates to think about a regional industrial and business strategy that not only provides a sense of direction but also offers some clarity as to how councils relate to local business.
It couldn’t hurt.