Tech Gears up for Growth Why Manufacturing Innovation Has Made Worcestershire It’S Home 16 2 the Worcestershire Growth Report 2019 | Bdo Llp
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THE WORCESTERSHIRE GROWTH REPORT OCTOBER 2019 TECH GEARS UP FOR GROWTH WHY MANUFACTURING INNOVATION HAS MADE WORCESTERSHIRE IT’S HOME 16 2 THE WORCESTERSHIRE GROWTH REPORT 2019 | BDO LLP THE WORCESTERSHIRE GROWTH REPORT OCTOBER 2019 CONTENTS 03 WELCOME 04 SECTOR ANALYSIS: INDUSTRIES LEADING GROWTH 08 COMPANY PROFILE: WORCESTER BOSCH 10 ROOM FOR ALL: THE QUEST FOR REAL ESTATE 12 M&A ROUNDUP: WHO’S BUYING WHO? 14 A FRESH PUSH TO PROMOTE THE COUNTY 16 TECHNOLOGY FOCUS: INNOVATION STEPS UP A GEAR 17 THIS YEAR’S FRONT RUNNERS 18 THIS YEAR’S TOP 50 FASTEST- GROWING COMPANIES 19 YOUR BDO WORCESTERSHIRE TEAM Last year we added to our annual While last year’s research provided a picture This edition goes to press amid continuing of prudent, UK-focused business leaders, uncertainty over Brexit and its potential analysis of Worcestershire’s this year’s trend analysis has revealed a impacts on the local business community. fastest-growing companies with remarkable level of sector consolidation In these ever-changing times, we hope original research into business across the fast-growing companies in the the findings of this report will be useful in county (see P4), despite efforts to foster shedding light on at least some aspects of leader attitudes. As our Growth industries such as technology (P9 & P16). what makes Worcestershire’s economy tick. Report enters its fourth year, we Whether this is a good or bad thing is Acknowledgements: figured it would be interesting to difficult to say. What it does mean, though, BDO would like to thank the take another look at long-term is that local policymakers will increasingly Worcestershire private and public sector have to bear in mind which industries are trends. Our hunch paid off. leaders who generously gave their time to driving economic growth in Worcestershire, provide views and comments used in the while at the same time perhaps striving production of this report. to maintain some diversity in among the county’s top 50 growth stars. BDO LLP | THE WORCESTERSHIRE GROWTH REPORT 2019 3 A WORD FROM GARY ROUSE DIRECTOR AND HEAD OF BDO WORCESTERSHIRE Take in the views from the Worcestershire Beacon and it is clear why our county inspired the Shire in JRR Tolkien’s Middle Earth novels. Yet while this scenery draws tourists from afar every year, increasingly we are looking to attract a new kind of visitor. As our report on p14 shows, there are moves afoot to make Worcestershire as attractive to investors and business leaders as it is to sightseers. And with good reason. Our county continues to be home to a solid group of fast-growing businesses (P18), but the diversity of that group is on the wane (see overleaf). A concentration of business growth in just a few sectors can help a region such as ours to become an industrial powerhouse. But it also exposes the economy to the risk of shocks if a high-growth sector is hit by external factors. In July, for example, Redditch-based GKN Aerospace provided cause for concern by announcing 1,000 job cuts. Fortunately for the local economy, this was a global figure over two years and thus unlikely to have a major impact on the manufacturing and precision engineering sector, whose top 50 members provided employment for around 7,000 people in the last year we were able to review. GKN Aerospace’s rationalisation programme was also largely due to internal matters and thus not relevant to other Worcestershire manufacturers. But the episode should serve as a warning that our county’s corporate golden geese should not be taken for granted. GARY ROUSE Director BDO 4 THE WORCESTERSHIRE GROWTH REPORT 2019 | BDO LLP WORCESTERSHIRE GROWTH REPORT ANALYSIS A TWO-HORSE RACE? Manufacturing has done it again. The sector The top 50’s manufacturing companies have always had the that has historically been Worcestershire’s edge over retail in terms of combined turnover and revenue growth, however even in 2017, manufacturing and precision prime engine for corporate growth has once engineering businesses in Worcestershire’s top 50 fastest- more seen off competition from a vibrant growing companies were pulling in a combined £782m, retail industry that is snapping at its heels. compared to £672m for retail, wholesale and leisure. This year the difference between the sectors, in terms of This year’s top 50 fastest-growing Worcestershire companies combined turnover, remains significant. The manufacturing (P18) include 19 manufacturing and precision engineering and precision engineering companies in the top 50 made more businesses, compared to 12 retail, wholesale and leisure players. than £1.8bn in the last year under review, compared to just Jointly the two sectors account for 62% of the number of over £1.1bn for businesses in retail, wholesale and leisure. businesses in the top 50. SECTORS IN THIS YEAR’S TOP 50 MANUFACTURING AND PRECISION ENGINEERING VERSUS RETAIL (INCLUDING MOTOR) WHOLESALE AND LEISURE, BY YEAR ManufacturingManufacturing & & PrecisionPrecision Engineering Engineering RealReal Estate Estate & Construction & Construction 20 Food & Agriculture Food & Agriculture 18 Transport & Logistics 50 16 Transport & Logistics op Retail (Including Motor) t 14 Wholesale & Leisure w Retail (Including Motor) o 12 FinancialWholesale Services & Leisure v50i e e r v 10 Technology,Financial Media Services & Telecoms 8 Technology, Media Health & Social Care & Telecoms in £bn Turnover 6 Health & Social Care 4 2 0 The number of retail companies in the top 50 has been declining 2016 2017 2018 2019 over the past three years. In our 2017 Growth Report, retail Manufacturing & Precision Retail (Including Motor) companies outnumbered manufacturers by 15 to 13. Engineering Wholesale & Leisure TURNOVER BY SECTOR IN WORCESTERSHIRE 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 Revenue £ 000s 800,000 600,000 400,000 200,000 - Financial Food and Health & Manufacturing Real Estate & Retail Technology, Media Transport Services Agriculture Social Care & Precision Construction (Including Motor) & Telecoms & Logistics Engineering Wholesale & Leisure Sum of turnover GBP - Year 2 Sum of turnover GBP - Year 1 Sum of turnover GBP - Last Year BDO LLP | THE WORCESTERSHIRE GROWTH REPORT 2019 5 WORCESTERSHIRE GROWTH REPORT ANALYSIS But what is perhaps more noteworthy is what is going on in other Only real estate and construction seems to have maintained its albeit sectors in the list. Looking back over previous editions of the top minor presence in the top 50, with seven companies this year making a 50, there is a clear consolidation of Worcestershire’s corporate combined £274m, roughly the same as in our last Growth Report list. growth into manufacturing and retail, with other sectors gradually In a nutshell, a review of our top 50 list over the years shows that disappearing from view. business growth in Worcestershire is increasingly becoming a two- As an example, the food and agricultural sector accounted for £340m horse race between manufacturers and retailers. Jointly, these sectors of turnover in our first growth report, in 2016. That level dropped to accounted for almost 83% of turnover in this year’s top 50. £269m and then £70m in subsequent years. In this year’s top 50, three This turnover trend has a direct bearing on jobs, with manufacturing and food and agricultural sector businesses pulled in less than £46m. retail accounting for more than 11,800 out of the almost 15,300 workers It’s a similar story with professional services, which was the third- employed by the companies in this year’s top 50. Furthermore, sector largest sector by turnover in the top 50 two years ago but does not growth trends do not look likely to add much diversity to the picture. appear at all in this year’s results. EMPLOYEE GROWTH PER SECTOR IN WORCESTERSHIRE 900 800 700 600 500 400 300 Number of Employees 200 100 - Financial Food and Health & Manufacturing Real Estate & Retail Technology, Transport Services Agriculture Social Care & Precision Construction (Including Motor) Media & & Logistics Engineering Wholesale & Leisure Telecoms Sum of turnover GBP - Year 2 Sum of turnover GBP - Year 1 Sum of turnover GBP - Last Year While all the companies in the top 50 are naturally notable for their high growth rates relative to the rest of the Worcestershire corporate REVENUE GROWTH IN WORCESTERSHIRE ecosystem, the number of fast-growing manufacturers and retailers in our list makes it hard for them to be outstripped by other sectors. 400,000 This is not to say other sectors in the list are not growing quickly. In this 350,000 year’s top 50, for example, manufacturers have grown on average 49% over the last two years and retailers have grown 43%. 300,000 250,000 The real estate and construction companies on the list were able to beat these rates, posting 76% growth compared to three years ago, but their 200,000 declining presence in the list perhaps indicates that it is harder for such £000s Turnover 150,000 businesses to sustain high growth rates in Worcestershire. 100,000 Overall, revenues across this year’s top 50 have grown by more than 51% 50,000 compared to two years ago. That’s not far off the average growth rate of the manufacturing and retail sectors combined, once again highlighting 0 the dominance of these two industries in the driving business growth Sum of turnover Sum of turnover Sum of turnover across Worcestershire. GBP - Year 2 GBP - Year 1 GBP - Last Available Year 6 THE WORCESTERSHIRE GROWTH REPORT 2019 | BDO LLP TOP 50 WYCHAVON IS WORCESTERSHIRE’S GROWTH CAPITAL Worcester may be Worcestershire’s Wychavon is home to two of the top three fastest-growing companies in the county town, but it is by no shire, Excool and Transcal Engineering, means the centre of business and half the businesses in the top 10.