The West Midlands has seen solid financial progress in the past year, with net profits of the top 200 companies growing with 52% and international sales doubling in two years, a report by BDO shows. According to the firm, this post-recession revival should act as an economic health barometer for the whole region and all sizes of companies should invest in the future and pursue global expansion plans to profit from export opportunities.
Professional services firm BDO recently released its West Midlands Report 2015 report, titled ‘A truly global perspective – The international appeal of the West Midlands’, which focuses on the largest 200 companies in the region based on revenues and is compiled from the latest published accounts from these companies. According to the consulting firm, the report is intended to act as barometer of economic health for the region as these companies have continued their post-recession revival with a “hat-trick of increased revenues, profits and international sales.”
In the past year, the net profits of the top 200 companies increased from £5 billion to £7.6 billion, which is an increase of 52%, and total turnover grew with 13% to £124 billion. The stabling economy also reflected in recruitment efforts and the number of employees, with an increase of almost 40,000 in the past 12 months. BDO’s data shows that especially directors seem to be benefiting from the more stable economic environment, with an increase in total directors’ remuneration of 26%, compared to an increase of 14% in total remuneration.
International sales, which account for more than a quarter of turnover for the top 200 companies, especially did well and more than doubled in the past two years from £14.4 billion to £31.4 billion – overseas expansion described as ‘the guiding principle’ for the region. While exports slowed across the UK according to HMRC figures, for the Midlands West Midlands they have leapt 100%.
Manufacturing, an industry suffering in the UK since 1980s market reforms, is the region’s most successful sector, with 70 companies of the top 200 active in this sector and Machinery and Transport making up 71% of goods sold abroad. Richard Rose, Partner and Head of BDO West Midlands remarking on the region’s strong international performance, that local businesses “are delivering value in areas such as niche manufacturing, where they can create competitive advantage on the back of intellectual property assets and a wider appreciation of British build quality.”
Especially automotive manufacturing is doing well in the region. The West Midlands now boasts ten vehicle assembly plants and two engine plants, with 29% of all cars produced in the UK made in the Midlands. The sector has grown 59% since 2008 and is projected to break its all-time record for production by 2017. The region’s ‘biggest success story’ is Jaguar Land Rover (JLR), which contributes one fifth of all UK exports to China and employs 30,500 people. JLR is planning to invest £3.5 billion in new models and facilities. This, and further investment, will see JLR move towards its aim of annually producing more than one million cars.
“This solid financial progress shouldn’t be seen as a coup just for the region’s biggest companies but should be welcomed by the thousands of businesses in their supply chain and across the region, regardless of size. The growth in international sales is a huge step in the right direction and seems to be the guiding principle behind a growing number of large and mid-market businesses across our region,” comments Richard Rose, Partner and Head of BDO West Midlands. “The time is now to cast aside economic worries, invest in tomorrow and forge ahead with global expansion plans, turning a worldwide thirst for British build quality into a major export opportunity.”