Business Competitiveness & Productivity
The West Midlands economy is undergoing a renaissance. Outside London and the South East, we are the strongest performing region for business births, FDI and exports. While productivity is growing, it still lags behind the UK average in absolute terms.
- The WMCA business base is growing and there are currently 159,355 active companies (390 per 10,000 population compared to 432 for UK) in the WMCA. There were 27,550 new businesses started across the WMCA in 2016 – double the UK growth rate.
- Out of 13,975 business births in 2011, 93.1% survived their first year, the same as the UK. Their five-year survival rate across WMCA was 43.8% compared to 44.1% across the UK.
- GVA per employee varies significantly across sectors in the WMCA. Our high productivity sectors are Business, Professional and Financial Services (£64,194), Advanced Manufacturing and Engineering (£48,728), and Digital and Creative (£57,112). While the enabling sectors have low productivity, this includes Retail (£31,952) and Cultural Economy (£21,997).
- In the WMCA 9.6% of businesses have a turnover of over £1m while there are 42.6% with a turnover of less than £100k.
- West Midlands is the fastest growing UK region for goods exports (27% growth between 2015 and 2017) and is the export capital of the UK: outside of London & the South East it exports the most by value (over £33bn in 2017). Recent Centre for Cities research suggests that to raise regional productivity there needs to be a sharper focus on improving the performance of already highly- productive businesses. With 94% of UK businesses in the bottom third for productivity only serving local markets, the research identifies exporting firms as vital for productivity enhancement.
- Findings from the WMCA Leadership Commission report that organisations with diverse workforces perform better. Companies in the top quartile for gender and ethnic diversity are more likely to have higher financial returns than their industry average. Organisations with a more diverse board or governing body also tend to attract top talent, have greater employee satisfaction and are better at problem solving, decision making and innovation.
Key indicators
£5m +
- (3,375) High Achievers - 2.3% (UK = 2.2%)
£1m - £4.99m
- (10,630) Growth Pioneers - 7.3% (UK = 7.6%)
£250,000 - £999,999
- (26,290) Potential Gazelles - 19.4% (UK = 19%)
£100,000 - £249,999
- (41,200) Solid Performers - 28% (UK = 31%)
£0-99,999
- (61,980) Lifestylers - 42.6% (UK = 41%)
WMCA (2015) - 358
WMCA (2016) - 390
UK - 432
WMCA - 6.4%
England - 4.5%
2011 - 13,975 Business Births
2012 - 3,095 Businesses (UK - 93.1%)
2013 - 2,505 Businesses (UK - 75.6%)
2014 - 1,965 Businesses (UK - 60.0%)
2015 - 1,675 Businesses (UK - 51.0%)
2016 - 1,410 Businesses (UK - 44.1%)
Deepening our evidence base
The West Midlands is one of three trailblazer areas starting to develop a Local Industrial Strategy (LIS), co-designed with government and underpinned by a strong evidence base. A partnership approach to evidence gathering has resulted in a large in-depth intelligence base across our LIS sectors, which will inform a suite of WMCA sector action plans. Beyond the headline data, we want to truly understand the nature of these sectors in the WMCA and their productivity challenges. Identifying our competitive advantages and genuine strength is key to unlocking the activities required that will catalyse growth productivity in the region.