Feasibility Study for the Industrial Area - Part 1 (PDF 5 MB)

3. Property and
Development: Overview of
Current Situation
An analysis of property supply and market trends is outside the
scope of this study. The following overview, providing background
information, is based on the March 2003 Walker Riverside –
Supply and Demand Study, updated by the information provided
by the businesses interviewed as part of the information gathering
stage (see Chapter 2).
A strategic assessment of the potential future position of Walker
Riverside is included, in addition, in Section 2 of this report, to
provide a foundation to the development of strategic options for
the the area.
3.1 Summary Market Outlook
The Walker Riverside has the ambition of developing as a cluster
of marine and offshore industries (see Chapter 5, Planning Policy
Audit). This sector of the industrial market is a global one, with
very strong competition, with countries that can manufacture
products cheaper (the Far East for instance) winning large
portions of the market share.
Moreover, traditional, labour intensive sectors (shipbuilding, oil
and gas production) are in long term decline, with virtually only
MOD commissions still available in the UK. Other newer, and
knowledge intensive, industries in the offshore and renewable
sectors are, however, still growing.
- Shipbuilding: Japan, South Korea and China share around
76% of the global market, while the EU captures about
10%, particularly in high value/ small scale production. Of
this the UK has only around a (progressively decreasing)
1%. The sector, however, is a major employer (approx.
423,000 jobs in 2002, including the Royal Navy, compared
for example with 297,000 jobs in agriculture).
- Offshore oil and gas: despite the fact that the UK is a
major gas and oil producer, there is a marked downward
trend. Oil rig construction has virtually halted and has been
supplanted by floating platforms. The sector supports
104,000 jobs directly and 161,000 indirectly (2002 data).
- Renewable energy: it is a small proportion of the energy
market (around 3% in the UK), but an expanding one.
Europe is the main market for renewable energy and the
UK Government has a target of 10.4% energy supplied by
renewables by 2010/11. It is likely that UK production
growth will concentrate on offshore sites.
- Subsea cabling and technologies: fabrication of umbilicals,
subsea piping, cables and other floorlines is global, with a
limited number of companies with plants all over the world.
The sector is much specialised and rapidly growing. There
is a risk, however, of sudden over supply as happened with
the collapse of subsea telecommunication cabling in 2000.
3.2 Competitiveness of Walker Riverside
Walker Riverside is predominantly occupied by companies of the
marine/offshore-related sector. The key industries of the sector
have global operations and could advantageously locate in many
other areas in the world.
Tyneside, however, has a cluster of such industries and is one of
the strongest of the UK. As such, it enjoys policy support.
In the UK, competition is limited to few areas:
- Teesside, mainly associated with Corus and
petrochemical/ chemical industries and Teesport, a
substantial container and bulk good terminal;
- the Clyde, serving essentially BAE Systems shipbuilding;
- Aberdeen, serving the oil and gas industries, but also
developing in research, design and development in two
Technology Parks;
- Belfast, where the main yard, Harland and Wolff employs
less than 500 people;
- Portsmouth and Southampton, with storng connections
with the Ministry of Defence, but increasingly diversifying
into electronics, mechanical engineering and research; the
Regional Development Agency (SEEDA) has encouraged
the creation of knowledge intensive enterprise hubs on the
South Coast;
- Limited marine sector industries at the Firth of Forth,
Barrow on Furness, Mersey.
The main advantage of the Walker Riverside is its long history of
marine and offshore industry, which is part of the Tyneside cluster
and recognised by strategic policy. There is also an established
image and working tradition. Other more specific advantages
identified by the 2003 Property Study and through the interviews
with local businesses are:
- The availability of a 1000m long deep water quay, with
heavy lifting capacity, which is an essential requirement for
the large companies;
- The presence of Duco and Wellstream, which generate a
sizeable demand of supplies from other local
manufacturers;
- The presence of complementary and competing industries
and the “cluster effect”;
- The relatively good strategic accessibility;
- The availability of sites capable of accommodating
significantly sized businesses;
- The availability of skilled workforce within the Region (not
always locally); and, very importantly,
- The availability of grants and incentives in some instances,
which counterbalanced the otherwise relative expensive
accommodation.
10 Colin Buchanan