Expert Opinion: How major infrastructure projects can solve the productivity puzzle

Manchester Airport Managing Director Chris Woodroofe says major infrastructure projects like Northern Powerhouse Rail (NPR) will help Northern firms go global and boost productivity outside the capital.

Mr Woodroofe pointed to UK Trade Barometer data gathered by YouGov for Manchester Airport’s parent company MAG and the Growing Together Alliance of business groups. It shows 63% of London-based businesses that trade internationally increased global sales in Q2 of this year.

That this is in contrast to the North where only 57% reported an increase. In the capital, more than half of businesses (51%) expect to grow their order books in Q3 compared to just 22% in the North.

Mr Woodroofe said there is an opportunity for Government – through its new Industrial Strategy – to get more businesses trading internationally as a way of driving up productivity and growth outside of London.

And he drew a connection between that and plans to revive NPR, which would unlock the full potential of Manchester Airport’s two runways, building on its own £1.3bn transformation, which is set to complete this year. It is understood Government is gearing up to make an NPR announcement before Labour Party Conference.

He said:

“It is no secret this government is on a growth mission. Recent GDP figures were cautiously welcomed by the Chancellor but paint a similar picture to the UK Trade Barometer – growth, but slightly slower growth than before. The conundrum is how to turbo-charge it.

“What we have now is clarity – in the form of the Modern Industrial Strategy, which picks out the sectors we have strengths in and that have the highest growth potential.

“The good news is that these industries don’t just exist in London. They are abundant across the North – from AI clusters in Liverpool to medical device specialists in Yorkshire and the “Atom Valley” in Greater Manchester.

“A new Liverpool-Manchester line that goes via Manchester Airport and on to Bradford, Leeds and beyond has the backing of public and private sector leaders across the North and we await announcements eagerly.

“There are lots of reasons this scheme would be transformational, but chiefly it will radically improve how easy it is for people across the North to access their international gateway – Manchester Airport.

“It will put trips to key global markets within reach for the first time, encouraging businesses to trade globally.”

Mr Woodroofe pointed to the impact of Manchester Airport’s new route to Mumbai with Indigo as an example of the powerful effects international connectivity provide to businesses. 

It is estimated that route will deliver a boost worth hundreds of millions of pounds to the North in the next three years, including more than £32m each year in exports and £9m each year by cutting travel costs for businesses who already travelled indirectly.

But Mr Woodroofe pointed out that these benefits are felt most keenly by those businesses that are directly connected to the airport – and at the moment that is limited by the lack of a high-speed rail line that connects towns and cities across the North. He added:

“When the time taken for surface journeys to airports is reduced, the airport’s catchment area increases. Put simply, more people live within an easy commute than did before – and that helps us attract new routes.

“Research conducted for us by Arup estimates up to another 50 long haul routes could be added to our departure board if NPR is delivered in full and the Northern economy fires on all cylinders.

“To fire on all cylinders, it needs all the Industrial Strategy sectors to maximise their potential right here in the North, creating jobs and driving higher wages.

“So my vision for the North is a world in which there are no headlines speculating that an east-west high speed rail line is finally going to be delivered, because we already have it.

“And it is a world in which research like our UK Trade Barometer doesn’t reveal such a stark contrast between where firms are located and the extent to which they are excelling on the global stage. These are long-term aspirations, but the next few months will go a long way to indicating whether they will become a reality.”

The UK Trade Barometer  – from the UK’s largest airports group MAG and The Growing Together Alliance of business groups – surveys more than 2,000 businesses about their export performance over the past three months and their expectations for the quarter ahead.

The most recent data, released last week, shows 35% broke into a new market in Q2, compared with 47% in Q1. Looking forward, one in five (20%) expect to enter a new market in the next three months, broadly flat against Q1 (21%).

In the North, 57% of exporters increased sales to existing markets, down from 69% in Q1. The US was the most popular market, with 36% naming it as the territory they grew sales in. That was up from 31% in Q1.

Across the North, 38% entered a new market in Q2, compared with 50% in Q1. America also topped that chart, followed by Germany, Canada and Australia.

There were differences within the North, though. North West and North East firms fared similarly, with 40% and 42% respectively growing sales to existing markets. In Yorkshire and Humber, the figure was only 20%.

It was North West firms that grew their global footprint the most, with 68% entering a new market for the first time. That compared with 35% in Yorkshire and Humber and 28% in the North East.