How are companies in SW England fairing in this prolonged downturn? At one level, this is a silly question. There is no such thing as an average SW business that can characterise the experience of them all. I would, however, make three broad generalisations.
First, there are the large multinational businesses operating in world markets. Many of these, especially manufacturing exporters, faced a difficult time in the second half of 2008 and 2009 but recovered relatively well in 2010 and the first half of 2011, following an exaggerated stock cycle. Selling valued, niche or differentiated products and services to solid overseas markets has served them well and will do again in 2012.
Second, there are a range of non-prime suppliers to business who have experienced mixed fortunes: the ‘commodity’ producers finding it tough to compete with lower cost rivals, despite a sterling exchange rate advantage, versus the ‘bespoke’ suppliers of services and goods still in demand and more favoured by shifts in some cost/market differentials. Some of the latter will come out stronger and growing in 2012 whilst some of the former will disappear.
Third, there are the more local, sub-regional businesses, mostly dependent on domestic demand from UK households and the state, especially in the central and peninsula parts of the South West. In the early stages, these businesses, such as in tourism, were relatively unaffected, even supported, by the switching of demand to more local suppliers. As the downturn has wound on, however, with consumers under greater financial pressure and the public sector curtailing spending growth, these areas have come under more pressure, particularly those providing discretionary items and services. For these, 2012 may be the worst year yet of this cycle.
To an extent, these three images of business reflect the ‘normal’ process of adjustment through a downturn as some of the less competitive, surplus capacity built up during the ‘boom’ is reduced and resources are allocated to the more efficient and competitive. The problem, of course, is the depth and length of this downturn, exposing many more than usual to the need for re-adjustment. In the end, as always, the innovative, the skilled and the entrepreneurial are more likely to survive and prosper: those with good, desired products and services; those flexible in adopting new processes and approaching new markets; and those with a clear strategy for growth. It was ever thus.