The coronavirus crisis has hit businesses hard as they battle with closed factories and shops, home working and furloughed staff.
The economy of Birmingham and the West Midlands has been particularly vulnerable because of its strong automotive and business tourism sectors, with several studies suggesting it could be one of the worst affected areas in the whole UK.
So what will the future post-lockdown look like for business owners and corporations in the region?
BusinessLive teamed up with Colmore Business Improvement District (BID) to bring together a panel of business leaders to hold an online debate on the theme ‘Birmingham’s covid-19 Recovery Plan: What happens Next?’
– Steven Banham, divisional director of Brewin Dolphin
– Nicola Fleet-Milne, founder of FleetMilne and chairwoman of Colmore BID
– Mark Orton, senior partner in restructuring deal advisory with KPMG
– Lara Ratnaraja, freelance cultural consultant
– Marc Reeves, editor-in-chief of BusinessLive publisher Reach Midlands and panel chairman
– Cllr Ian Ward, Birmingham City Council leader
– Sam Watson, general manager of Selfridges and chairwoman of Retail BID
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The discussion started with Cllr Ward being asked how far he “dared” to look into the future and what he thought Birmingham’s fortunes would be over the coming years.
“I would hope we will see fairer recognition for those working in the caring services. It has always puzzled me why we place those we love the most into the care of those we pay the least.
“We have all got used to virtual platforms so we will see a lot more working from home and less travel for business purposes.
“We have experienced over the past eight weeks less traffic on our roads, cleaner air and a better environment. I don’t want to see us go back to congestion and the kind of issues we’ve had in the past.
“You are likely to see us giving more road space to those who are cycling and walking over the coming months.
“In the longer term, we will have to think carefully about unemployment. We have already seen a rise and are at 12 per cent now in the city.”
Cllr Ward emphasised the importance of major projects such as HS2, the Commonwealth Games in 2022 and Peddimore industrial site near Sutton Coldfield.
“How can we bring forward those big strategic investments in order to get jobs on stream more quickly than we were planning to do so?,” he told the panel.
“High-speed rail becomes even more critical as it provides a huge number of jobs and the housing need we have in this city.
“The 2022 Games has become more difficult to deliver because of the problems created by the lockdown but the economic benefits have now become more important.
“Finally, we need to ensure the Government provides longer-term support to the hospitality industry than it is planning at the moment with the furlough scheme coming to an end in the autumn.”
Mark Orton, a partner with financial services giant KPMG, is a specialist in restructuring, an area which is likely to be increasingly busy over the coming months as the economy emerges from lockdown.
He said his sector was already seeing businesses rapidly assessing what the expectation of sales and revenue would look like on the other side.
“Our chief economist is of the view the West Midlands is likely to be one of the hardest hit regions during the course of this year, driven by a big reliance on the automotive industry,” he said.
“It has been fantastic for the local and regional economy over the last five years but is now proving a challenge for us. We have many engineering, aerospace and automotive businesses and those are the sectors which are likely to be hard hit this year.
“If there is to be some brighter news, it’s that the expectation from our economist is there will be some bounce back next year.
“We will see an average nine per cent reduction in GDP this year but for the West Midlands that could be around 11 per cent. Not a huge differential but slightly more impact.
“We are seeing our clients taking steps now to reflect the rightsizing of their businesses and undoubtedly there will be redundancies and parts of business that do not reopen.
“Government schemes cannot mask the underlying problems forever.”
Lara Ratnaraja, a freelance consultant who specialises in the arts and cultural sector, warned it could be especially badly hit due to social distancing rules impinging on how venues such as theatres could function.
She cited a major recent survey which suggested 75 per cent of respondents missed the shared experience of being at a live event.
“But when you look at bookings going forward, it is tiny – no-one is booking tickets at the moment because of all the concerns related to health such as hand sanitizer and queueing,” she told the debate.
“A theatre cannot just suddenly reopen. They can only have a certain percentage open to enable social distancing within the theatre.
“How do people enter and exit, how do they ensure everyone is safe?
“One of things people can learn from the creative industries is that it has an agile workforce.
“How are people moving about and working from home? When we look at resetting things, we will need to look at all of these aspects.
“Resetting needs to be inclusive as there will be many people who are shielding for a lot longer so we have to make sure they are included.”
Sam Watson wears two hats as her day job is general manager of iconic Birmingham department store Selfridges and she also chairs Retail BID.
Retail’s most pressing issue is declining footfall and having the strange position of not being able to encourage people back into their physical stores in large numbers.
“From a high street point of view, we had already seen a lot of casualties last year and have done so far in 2020 and we will absolutely see more – that’s a sad state of affairs,” she said.
“People’s needs and desires may change and they have probably become used to shopping online.
“At Selfridges, we pride ourselves on retail theatre and experience and we put events on to draw people into shopping centres and our store but we are already having to think very differently about that.
“We will definitely look at holding digital events.
“From a bricks and mortar perspective, we rely on people walking through our doors and we know they will be cautious about returning to the high street.
“We’re forecasting that footfall will be down significantly and with that comes lower sales as well.
“Retailers will be restricting the amount of people who can physically be in stores so we can observe social distancing and, if there are queues, making sure they are managed.
“Retail has lots of changes ahead. There is lots of creative thinking going on at the moment about when we get customers back into stores.”
Steven Banham, from investment management firm Brewin Dolphin, brought a financial perspective to the discussion, saying a key factor was getting money into the bank accounts of businesses so they could continue functioning.
“The most pressing issue is sorting out the transmission mechanism, certainly in the short term,” he said.
“Money created by the Government and the Bank of England in their fiscal response needs to make its way through the banking sector and onto companies’ balance sheets where it is needed – and it is needed pretty quickly.
“If it isn’t expedited efficiently we are going to incur unnecessary closures, job losses and ultimately the erosion of confidence across the city.”
Sourcing of goods was also referenced, with Mr Banham saying that investing more money into the supply chain rather than choosing the cheapest option may be the way forward.
“As we have become a more globalised business entity, we have had to source cheaper goods, leading to sourcing from the Far East really to keep costs lower,” he added.
“One thing this situation has highlighted is the need for reliability and I think companies will pay a little bit more now to have greater reliability and visibility over the supply chain.
“Because we have had such a surplus supply of cheap labour, the requirement to invest in businesses has been pretty low which is one of the reasons why our productivity hasn’t really recovered since the global credit crisis.
“But in order to keep costs down, some capital expenditure needs to be spent to drive those efficiencies through if some of the base costs have risen.”
Nicola Fleet-Milne runs property lettings and sale agency FleetMilne and is also chairwoman of the debate’s organiser Colmore BID.
She was asked what the business community and educational institutions could do together to forge a path post lockdown.
“Meetings like this online are the new normal and universities and schools have been putting in some serious time and effort into skilling up,” she said.
“It’s a world where you are immersed in something for an hour, it takes all of your brainpower and then the screen goes down and you are left to your own devices, unwatched by management to motivate yourself to still do your job.
“I think there’s a huge amount they can be helping with on that front.
“I am sitting here thinking about the future of my workforce and one of the challenges I’ve had is that people are reacting so differently to working at home.
“Obviously, everyone is putting a brave face on it and saying ‘I am fine’ but ultimately they were not equipped for this.
“That would be a wonderful place for them to start.”