My speech at the Insider event Growing Business In Neath Port Talbot
It is great to see so many people here and I think it speaks volumes for the potential to grow business in Neath Port Talbot.
I will come onto what I see as a promising future of the County Borough and the region, but first it’s important that we put this into global and national context.
Globally it has been a difficult few years since 2008 when the global economy looked to be heading over the precipice. Seven years on and there are worrying signs that the global economy is once again heading for choppy waters.
Austerity across much of the developed world has combined with sluggish growth in China and political turmoil in the Middle East.
But the current position also presents big opportunities around emerging markets in Africa, while the Chinese slow-down may actually lead to a global re-balancing, particularly as their labour costs start to rise.
The theme at Davos in January was a ‘Fourth Industrial Revolution’, an industrial revolution that will be characterised by new forms of renewable energy and the exponential outward expansion of technological innovations, driven by the internet. It is this fusion of new forms of energy and communications that drive industrial revolutions, powering society wide changes, creating jobs and raising living standards.
Neath Port Talbot can be at the forefront of this revolution with the new Bay Campus just across the road from us today, part of the Fabian Way business corridor. A new state of the art facility producing cutting-edge research focusing on science and innovation.
It is one of the biggest knowledge economy projects in Europe and next month the Campus will host the launch of the Wales Stronger In campaign.
The In/Out Referendum later this year will be a critical crossroads for the British economy.
A Brexit would be a massive risk with the EU accounting for over half our goods trade last year and nearly 200,000 UK businesses trading goods with the EU.
The economic case will be central in the debate going forward. Businesses are adverse to uncertainty and will want to know exactly what an exit will mean.
What we do know is that Membership has torn down walls and barriers giving UK business access to Europe’s single market of 500 million consumers, the world’s largest free trade zone and access to Free Trade Agreements the EU has with over 50 countries.
Because of the EU we punch above our weight in economic terms.
The EU is the largest source of investment bringing growth, new jobs, better jobs and higher wages. Much of our global investment from outside the EU is encouraged by the fact that we provide a gateway to the European Single Market. Incentives such as these are why companies like Tata Steel locate business in the UK. Without a doubt, these companies would pull the plug if we were to leave the EU.
I mentioned emerging markets in Africa earlier – this is not a zero-sum game, we should be growing trade with both these emerging markets and the EU.
To follow the Swiss or Norwegian model would leave Britain still paying in to the EU but without the power to influence the trade agreements. Of course reform of the EU is needed, bit it is a process not an event.
When we last voted on Europe, manufacturing accounted for one third of the British economy. In 2015 it stands at barely ten per cent.
The dramatic decline of our manufacturing sector is the root cause of three structural weaknesses in the British economy, namely:
• our trade deficit is currently 5.9% of GDP – the largest in peacetime since 1830. This has played a big part in shaping the consumption-driven nature of the British economic model, and is a major contributor to debt and insecurity;
• the gap between our productivity and that of the other G7 nations is at its widest since 1992. According to the CBI, if the UK were to raise its productivity to the same levels seen in the US then our GDP could grow by up to 9%, or £144 billion;
• the British economy lacks balance. We are over-reliant on the services sector, and a dangerously large share of our economic activity concentrated in costly, congested London and the South-East. Manufacturing provides a far better spread of high-quality, high-pay jobs than our service sector, and those jobs tend to be far more evenly distributed across the country;
The starting point for this manufacturing renaissance has to be a comprehensive industrial strategy and investment plan that cover skills, access to finance, research and innovation, energy and infrastructure.
An industrial strategy is of course crucial to the steel industry right now. Steel has been caught in a perfect storm of high energy prices, a strong pound, the fall in steel price and cheap steel being dumped.
These problems are acutely felt just across the bay in Port Talbot where 750 workers are set to lose their jobs. A national problem that is being played out in the local arena.
There are few positives that can be drawn from this crisis like this but one is the emergence of Port Talbot as an Enterprise Zone. Seven already exist in Wales and while the one in Port Talbot will have huge consequences for the Tata Steel in Port Talbot the benefits go far beyond just Tata.
Enterprise Zones provide businesses with Welsh Government support, tailored incentives, access to finance, skilled workforce and industry-led academic research. The Bay Campus is one such example of this with its Engineering Quarter collaborating closely with Tata and Rolls-Royce.
Amidst these challenging economic times significant developments are taking place.
I have already mentioned the new Bay Campus but through a mixture of European, Welsh Government and Local Authority collaboration improvements are being made across the area. Port Talbot railway station is nearing completion on its refurbishment, a modern station for a forward looking town.
The Baglan Bay Energy Park is emerging as one of the regions premier business locations with its own onsite power generation a unique selling point. It is now home to Italian firm Intertissue; Hi-Lex Cable Systems Ltd, a Japanese owned company which manufactures components for the automotive industry and employs 230 people; and the Baglan Bay Innovation Centre, an environment for young, innovative, high tech, sustainable led businesses to grow. Later today I will be visiting RWEInnogy, a renewable energy company based at the Innovation Centre.
Port Talbot town centre is due to undergo physical and economic regeneration thanks to £9.65million of funding as part of the Vibrant and Viable Places programme.
The work will transform the living and working environment of the town centre through an integrated transport hub to complement the railway station improvements, re-opening the Plaza as an arts and culture centre, an Employability Centre on Water Street, right opposite my constituency office, and new links connecting the town with the surrounding areas.
Yet there is still more potential for business.
Neath Port Talbot is part of the Swansea Bay City Region area and the Council is a key player in the Economic Regeneration Strategy for the area. The strategy looks to accelerate growth so we can reduce the gap in performance between the region and the rest of the UK in wealth creation terms.
It has identified the Harbour Way area in Port Talbot as a site for inward investment and development for business purposes. This would complement the multi million pound redevelopment of the town’s former docks quarter – Harbourside – into a knowledge focused business hub, home to a £6.3m R&D village.
The dock area in Briton Ferry is also ripe for regeneration to supplement the work already done at Port Talbot docks, Baglan Bay and Fabian Way. There is obviously a historical element to this with the Brunel Tower and floating dock but the Brunel Dock Group have exciting plans to integrate this with the creating of business opportunities on the wharf.
Already Swansea and Neath have Business Improvement Districts (BIDS), pulling in vital investments for small and medium sized local businesses. But there is potential for Port Talbot to join them too.
Part of the Fourth Industrial Revolution I mentioned earlier was new forms of renewable energy and again Neath Port Talbot is playing its own part in that with the Tidal Lagoon.
A renewable energy project capable of generating 240MW nominal rated capacity averaging 14 hours of generation every day. This is enough energy to power 120,000 homes (enough to power 70% of Swansea Bay's annual domestic electricity use) for 120 years.
In the first instance it brings with it construction opportunities but in the long term it brings tourism and leisure opportunities.
There are similar untapped tourism and leisure opportunities across my Aberavon constituency. With the right backing and vision the whole area could become the gateway to west Wales, somewhere where you can take in the culture of Margam Park, the beauty of the Afan valley or the adventure of the mountain bike trails in the Afan forest.
These are undoubtedly difficult economic times but history has shown us that they also massive opportunities to grasp the nettle and create something bold and new.
Neath Port Talbot not only has the potential but also the vision to do this. And I look forward to working with all of you to see this happen.