Can regeneration in Speke Garston survive a Jaguar sale?

South Liverpool, the former engine room of the Merseyside economy, is back in business. After decades of neglect and industrial decline resulting from the exodus of big name employers such as Bryant & May, Dunlop, Standard Triumph, Metal Box and GlaxoSmithKline, the area is buzzing with corporate activity once again.

Whilst attention has focused on the regeneration of Liverpool’s city centre, culminating in next year’s European Capital of Culture celebrations and the opening of Grosvenor Estates’ £1bn Liverpool One retail complex, arguably the renaissance of South Liverpool is a more impressive regeneration success story.

South Liverpool, a loosely drawn area covering Garston Docks, Liverpool John Lennon Airport, the council estates of Speke Garston, and the Halewood car plants in neighbouring Knowsley, had far less going for it than Liverpool’s city centre.

Memories of the 1981 closure of Triumph’s TR7 sports car plant at Speke, after years of strikes and low productivity, came to symbolise all that was wrong with Liverpool in the eyes of outside investors. The exodus of South Liverpool’s industries added to its downward spiral with rising long-term unemployment, soaring crime and increased poverty making the area ever less attractive to outside investors.

Today’s South Liverpool – just eight miles from Liverpool’s Pier Head – is virtually unrecognisable from ten years ago. It is a bustling community with landscaped business parks which have attracted several highprofile greenfield investments – such as a £120 million printing plant for Germany’s Prinovis and the 1,200-strong headquarters of
Littlewoods Shop Direct, the UK’s biggest home shopping group.

Liverpool John Lennon Airport, the UK’s fastest growing airport in three of the last six years, has just been voted UK airport of the year, and the environment surrounding Speke Boulevard, one of the four gateways into the City of Liverpool, could easily be mistaken for that of any prosperous US city.

The first landmark at Liverpool’s Southern entrance (technically it is still in Knowsley) is Jaguar’s heavily modernised car plant at Halewood.

Over the last seven years it has been transformed from a volume car producer which spewed out more than five million Ford Escorts, into a flexible luxury car plant producing both the X-Type Jaguar and the new Land Rover Freelander 2.

Ford’s investment in more than a million hours of re-training for its 2,500 workers, and its backing of Partnership for Learning, an innovative joint training venture with other local employers, has paid off handsomely. Halewood was named as the top European car plant in JD Power’s 2005 gold quality awards.

Halewood’s success has attracted a growing cluster of automotive suppliers in the adjacent Boulevard Industry Park. Some, such as Johnson Controls and Decoma Merplas, supply the Ford plant, and others, most notably Getrag, supply other manufacturers.

A second very visible reminder of the growing international investor confidence in South Liverpool is last year’s arrival of Novartis, one of the world’s leading pharmaceutical firms. It took over the old Chiron flu vaccine plant in 2006 after it ran into serious quality control problems which led to the US Food and Drug Administration (FDA) taking the draconian step of temporarily suspending the plant’s permit to produce US flu vaccine – its main product.

Novartis has invested heavily in modernising the facilities and expects to export 35 million doses of flu vaccine to the US this year, more than twice the plant’s output in 2005. It is the biggest employer in a growing Speke biotech cluster which includes other “Big Pharma” names, such as Eli Lilly and MedImmune.

“For many years Speke Garston was the industrial heartland of South Liverpool”, says Mark Fuller, who manages the £100 million Merseyside Special Investment Fund. “It is now an exciting, vibrant area with a history of attracting quality businesses.”

Dolphin Music, an internet musical instrument retailer set up by two university students, and Agility Logistics, a management buy-out of the logistics operations of the old ICI Chemicals, are part of a growing portfolio of South Liverpool success stories that MSIF is championing.

“There’s a great deal still happening in the area and we expect to continue to see a good flow of investment opportunities emerging for us,” says Fuller.

The renaissance of South Liverpool over the past decade is one of the North West’s public/private regeneration success stories.

The starting point was the 1996 establishment of the Speke Garston Development Company, a joint venture between Liverpool City Council and the Northwest Development Agency. It was responsible for physical regeneration and job creation. Although its functions have since been taken over by other public bodies, such as Liverpool Land, it is credited with laying the groundwork which attracted several high profile investors to South Liverpool.

Estuary Commerce Park, established on part of the old Liverpool airport, is its flagship project. The derelict art deco terminal building has been turned into a four star Marriott hotel and one of the old airport hangars has been converted into the headquarters for Littlewoods Shop Direct.

Other recent arrivals include Communisis (cheque book printing) and Keepmoat (social housing). However, Estuary Commerce Park’s biggest prize is the £34 million National Biomanufacturing Centre which opened last year. It fills a gap in the market by providing small scale manufacturing facilities so that fledgling pharma companies can test their own drugs in clinical trials instead of having to surrender their knowhow to a big competitor.

South Liverpool has also benefited from other public sector initiatives, such as South Liverpool Housing (SLH), which has transformed the rundown council housing it inherited from Liverpool City Council in 1999. The new £32 million South Liverpool Parkway, a transport interchange close to the airport, and the £36 million Speke District shopping complex, underline the large sums of public money that have been poured into the area.

But this public sector pump priming would have been of little use without the active support of the private sector. Three companies stand out. Two are property developers – John Whittaker’s Peel Holdings and Tom Bloxham’s Urban Splash – and the third is Ford.

Ford’s decision to open a new £300 million car plant in 2001 to manufacture X-Type Jaguars and its subsequent decision to base all Land Rover Freelander 2 production at the same site was one of two private sector building blocks underpinning South Liverpool’s remarkable renaissance.

Peel’s 1997 acquisition of Liverpool airport was the second. Over £100 million has been invested in the airport which has seen a more than seven fold increase in passengers to five million a year. It is now one of South Liverpool’s prime commercial assets attracting a growing number of companies around its perimeter.

Urban Splash’s stylish redevelopment of the old Bryant & May match factory and its newly built Matchbox office complex have won acclaim. But it is Peel’s rapid development of Liverpool International Business Park (LIBP), next to the airport and Estuary Commerce Park, which has been one of the area’s biggest economic drivers.

Peel has seen land values in Speke Garston rise tenfold, to £30,000 an acre over the last five years. The once rundown New Mersey Retail Park has been transformed into the UK’s seventh-largest retail park.

British Land bought the site for £4 million in 1997 and invested £40 million. Last July it was valued at over £400 million. The rapid rise in property prices is the clearest sign that public sector investment has started to pay off and there is no longer any need for public sector “gap funding” to entice private investors.

“The private sector has been driving the South Liverpool economy for the last couple of years,” says Mark Basnett, operations director of The Mersey Partnership, a promotional body.

Meanwhile, South Liverpool’s social indicators are pointing to substantial progress over the last decade in areas such as the reduction of crime and poverty and improved educational standards.

But South Liverpool’s recovery remains fragile. Its over-reliance on a handful of big multinationals to provide much of its employment is a worry.

Novartis, for example, is the fourth owner of its Speke vaccine plant in five years, and Ford’s Halewood plant is up for sale as part of its parent’s plan to divest itself of its Jaguar and Land Rover brands. It is the only plant in the Jaguar/Land Rover Group which produces both products and is vulnerable if the two brands are sold off separately.

Jaguar faces particular problems that could have grim repercussions for Halewood. US sales of its X-Type Jags fell by 45 per cent in the first nine months of 2007 and the Jaguar group’s long-term survival rests heavily on its new XF model, which goes on sale next March.

However, the XF will be produced solely at Jaguar’s Advanced Manufacturing Centre at Bromwich, raising doubts about the long-term future of Halewood as a Jaguar plant.

At the time of going to press three bidders had emerged for the Jaguar/Land Rover business: Indian companies Tata Group and Mahindra & Mahindra, and private equity company One Equity whose bid is being led by former Ford chief executive Jacques Nasser. If Jaguar’s new owners were to pull out of Halewood then much of South Liverpool’s new found confidence would vanish overnight.

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