West Midlands Building Technology Cluster – Cluster Analysis

Topics Covered

Background

Cluster Analysis

Business Concentration

Product Manufacture

Systems Manufacture

Support Industry

High Hits

Background

This article is an extract from a report by West Midlands Building Technology Cluster Research, published May 2002, which details the results of a study commissioned by Advantage West Midlands to outline strategic options to facilitate the future development of the building technologies cluster in the West Midlands region.

Cluster Analysis

This section of the report quantifies the depth and breath of the West Midlands building technologies cluster i.e the “business concentration” based on employment location quotients, interdependency established links with related sectors and support institutions. It also identifies unique characteristics that will differentiate the West Midlands from the rest of the UK and the importance of the building technologies cluster on the regional economy. Due to the diversity of the sector and availability of suitable industry statistics, the following analysis is based on primary research using Companies House financial data from company returns.   Top

Business Concentration

Results from the study indicate that over 135,000 people are employed directly or indirectly by over 600 companies in the West Midlands buildings technologies supplies and support industries, with a combined turnover of around £12.4 billion. This does not include employment or turnover from civil engineering and construction work. Due to the lack of available financial data, this is an under estimate of the full size of the industry. However, the analysis provides a reasonable overview of the buildings technologies in the West Midlands.  It should also be noted that, although these represent the main trading sectors, a significant proportion also supply other market sectors and therefore share the same pool of labour and used similar materials and technologies.  Top

Building Technologies
Supply Sectors

 Total No of
companies

Est Turnover (£m)

% of Total WMBT
Turnover

WMBT
Employment

% of Total WMBT
Employment

Raw Materials Production

53

3084

25%

27523

20%

Building Product Manufacture

261

4132

33%

56537

42%

Building Systems Assembly

99

1943

16%

26460

20%

Building Installation Work

56

883

7%

5002

3%

Support Industries

144

2370

19%

19870

15%

Total

613

12412

100%

135392

100%

Figure 7.  Building Technologies Companies in the West Midlands

Product Manufacture

Building product manufacture and raw material production jointly account for over 50% of turnover by companies and over 60% of employment in the West Midlands building technologies sector. This reflects the strong and diverse manufacturing base in the West Midlands, covering a broad range of supply industries and 16 building material and 20 product sub-sectors in the region. A significant number of the companies in these two sectors also trade to other regions in the UK and overseas, especially for materials and standard products where there are significant natural resources and well established product manufacturing industries. For example, the UK’s ceramics industry is heavily concentrated in the potteries (Stoke-on-Trent) area of Staffordshire, which has spawned a number of ceramic-based product manufacturers that supply building products (e.g tiles, sanitaryware, brick and blocks etc) to many parts of the UK. The West Midlands also has a high concentration of metal processing/product manufacture in the Black Country supplying a wide range of sectors such as aerospace, automotive, machinery, construction etc  Top

Systems Manufacture

Building systems manufacture and integration, which include 14 different sub-sectors, employing about 20% of the workforce in the West Midlands buildings technology sector but only accounts for an estimated 16% of turnover. Although this is higher value added work it is more labour intensive than high volume product manufacture. A number of major systems integrators are located in the West Midlands, examples include Wolseley plc (heating systems), ABB (HVAC), Bowater (glazing systems) etc. Building installation work, which includes nines sub-sectors, employs around 5000 people, or 7% of the building technologies sector, with a turnover nearly £900m. This is not surprising as a considerable amount of this work is carried out by small mobile contractors from outside the West Midlands that operate UK wide.  Top

Support Industry

Apart from the above building technology supply sectors, a significant support industry exists in the West Midlands supplying a range of equipment, machinery, specialist technical and consultancy services to the main to companies in the core building technologies supply chain. The study identified 144 companies employing over 19,800 people and generating an estimated turnover of £2.4 billion, although not all of this can be attributed building technologies alone. Toolmakers and technical service companies also supply to a wide range of other industry sectors. Within the support industry there are major companies supplying UK and global markets. JCB for example, which has its headquarters in Uttoxeter, Staffordshire exports to nearly every country in the world. Indeed the UK has the largest production volume of construction machinery in Europe and the highest export ratio of any major producing nation. The West Midlands also accounts for the highest UK employment in machinery and equipment, followed by the South East and East of England regions. Machine tools are used in a wide range of industries including specialist ceramic processing machinery (e.g Reece plc based in Stoke-on-Trent).  Top

High Hits

Employment quotients, where the number of companies that employ >0.5% of the regions workforce, called “high hits” provides a good measure of the relative depth and breadth of the building technologies cluster in the West Midlands. One high hit suggest that there is a shallow cluster exists in the region

Building Technologies
Supply Sectors

No of Companies Accounting for
>0.5% of WM Employement

Activity

Materials Production

4

Aggregates (1), Timber (1), Cement (2),

Building Product Manufacture

9

Metals (4), Sanitaryware (1), Tiles (1), Insulation Products (1), Paints & Finishes (1),

Building Systems Assembly

6

HVAC (1), Glazing Systems (1), Safety Systems (1), Monitoring Systems (1), Electrical Systems (2),

Building Installation Work

3

M&E (1), Building Services (1), Building Installation (1)

Support Industries

1

Construction Machinery (1)

Figure 8.   Companies With High Regional Employment Ratios

The study identified at least 23 “High Hits” within the West Midlands buildings technology cluster map across all the industry and especially materials, building product manufacture and building systems manufacture/integration. This suggests that the cluster has both breadth and depth in certain areas. Top

Source: West Midlands Building Technologies Cluster Research

             A Summary of the Results and Recommendations, May 2002

For more information on this source please email [email protected]

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