JANET SNAITH Head of Business Investment SUNDERLAND CITY COUNCIL

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JANET SNAITHHead of Business
InvestmentSUNDERLAND CITY COUNCIL
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BACKGROUND
In common with the rest of the UK, Sunderland is
facing significant challenges arising from the
economic downturn.Unemployment has increased
bymore than a third during the pastthree
months, with many more joblosses in the
pipeline. However, the City is much
betterplaced than in previous recessions,with a
local economy that is morediverse, resilient and
dynamic. Also, the effects of the
currentdownturn are not compounded bythe
collapse of the traditional industries -which
closed during the 1980s and 1990s.
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SUCCESS STORIES
Sunderland has been highly successful in
attracting internationally-mobile inward
investment, and is now home to a host of
world-class companies, including
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Throughout the past decade Sunderland has
attracted more inward investment jobs than any
other location in the North East - in some years
more than the rest of the region put together.
Over the past five years alone, the City has
attracted 7,500 new jobs and capital investment
totalling more than 1 billion.
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Foreign Direct Investment has become a major
component in the local economy. This began with
Nissan in the mid-1980s and includes supply chain
developments in the automotive manufacturing
sector. More recently, the attraction ofcontact
centres (2Touch, T-Mobileand EDF) has increased
therepresentation of employers in thecustomer
services sector.Around 60 foreign
ownedbusinesses originating in a dozendifferent
countries together employ17,500 people in the
City.
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STRUCTURAL ISSUES
Sunderland has been highly successful in
attracting investment and creating jobs, leading
to significant convergence with the national
averages on both productivity (GVA per head) and
participation (tackling worklessness).
However, even before the current economic
downturn, it was clear that there were structural
issues to be addressed.
DWP Benefit Claimants
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There continues to be a strong reliance upon
employment in manufacturing (and a corresponding
under-representation of sectors thought to have
better long-term job growth prospects).
The Citys manufacturing base is highly
productive and has a positive future in the City
- but there is continual downward pressure on
employment levels as companies invest in
technology tomaintain their competitiveness.
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There is also a high degree of reliance upon
large employers, which despite their commitment
to the City, inevitably makes us vulnerable
during an economic downturn.
There are 50 large employers in Sunderland.
Together these account for 50,000 people - or 43
of all jobs in the City. Having more than a
quarter of the Citys employment in the public
sector provides a degree of resilience in the
current economic climate.However, excluding the
public sector and major educational
establishments, most large employers are engaged
in automotive manufacturing and financial and
customer services.Significantly, these are
among the sectors that have been hardesthit by
the economic downturn.
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There are few corporate headquartersin the City,
the only notable exceptionsbeing Arriva, Gentoo,
Berghaus, SCS,Leighton and Nike UK.This
increases the Citys vulnerabilityto rounds of
corporate rationalisation. It also implies a
lack of highly paid positions, such as senior
management roles and jobs in RD.This in turn
makes the City less attractive as a location for
highly qualified people, such as graduates.
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Paralleling the dominance of large employers, the
City suffers from a low level of enterprise
formation and an under-representation of SMEs -
with less than half the national average of VAT
registered firms. Taking into account
firms below the VAT threshold makes the lag less
severe (at 61 of national average), but we are
still in a poor position
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Due to the work of partners there has been some
improvement, butlittle convergence with the
national average
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SUNDERLAND SOFTWARE CITY
Towards addressing these structural issues,
Software City has been developed as a key
component in the City's economic vision.Through
this industry-led initiative, Sunderland is
emerging as the regional centre for software
development industries. This highlights the
success of local businesses engaged in the
sector, as well as efforts to tap the creativity
of local people and the scope for attracting
software-related inward investment.
Software City will seek to develop new and
existing businesses engaged in software
development through providing facilities for
start-up and growth, intensive coaching and
access to research, finance and markets.
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Software City as an Innovation
ConnectorSoftware City will be a major driver
for technological innovation and business
formation and growth throughout the region -
helping to meet goals for boosting regional
competitiveness.The initiative will help to
diversify the local economy and attract
large-scale investment - focussing on the higher
value aspects of the sector (in particular,
business software).A feasibility study produced
by consultants Deloitte independently confirmed
Sunderland as the optimum location for Software
City.The initiative is being taken forward by a
partnership of public and private organisations,
and has gained the full support and financial
backing of the Regional Development Agency, One
NorthEast.
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Why Software?During the past two decades, jobs
lost from the traditional industries
(shipbuilding, coalmining etc.) have been
replaced by automotive manufacturing and
financial and customer services. These sectors
have a strong future in Sunderland, but we need
to identify ways of creating even more jobs and
further closing the productivity gap with the
rest of the UK.Software development is a high
value-adding activity that capitalises upon the
knowledge found in business and education.In
the longer term, it has the potential to be a
significant source of highly paid employment and
an opportunity to encourage graduate retention,
as well as generating jobs in supporting
businesses. Sunderland is the only location in
the Region seeking to specialisein software,
building upon the Citys unique features.
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Why Sunderland?Sunderland has a range of assets
that make it the optimum location for Software
City

The City can offer a very high standard of
broadband connectivity. Specialist business
support agencies - including the Business
Innovation Centre and Codeworks Connect - are
located here.Developing the ICT skills of the
City's workforce has long been a priority for
public agencies. The University of Sunderland
hosts the largest ICT training facility in the
UK, while the City of Sunderland College is home
to the Computer Networking Academy. The main
private sector partner - Leighton Group - has its
global HQ in the City.




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Programme Delivery This is initially a five
year programme, with project management staff now
appointed and full scale implementation getting
underway.Funding will be drawn from a range of
public and private sources,the key players being
ð Sunderland City Council ð One NorthEast ð
University of Sunderland ð Business Innovation
Centre ð Codeworks Connect ð Leighton Group
Software City Board - the members of which are
drawn from these organisations - is responsible
for overseeing implementation of the Strategic
Plan.
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Work Strands

• ð Enterprise
• business incubation and growth
• cluster development
• inward investment
• stimulating enterprise
• Innovation
• innovation
• research development IP links with
  academia
• Infrastructure
• incubator premises
• connectivity
• Education
• learning and skills awareness

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Targets
The initial five year programme for the roll-out
of Software City is associated with some
ambitious targets, including
ð 870 jobs createdð 193 jobs safeguardedð
224 businesses establishedð 80 businesses
attractedð 70 software products developedð
171 business collaborations.
Delivering on these targets will necessitate
drawing upon the full range of available funding
opportunities.
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European Involvement
Software City is well-placed to take advantageof
the availability of European funding. The
European Economic Recovery Plandeveloped in
response to the economicdownturn prioritises
investment that leads to long-term improvements
in competitiveness.This is at the core of the
Software City concept, which seeks to secure a
step-change in regional productivity through
developing an existing specialism in a rapidly
growing sector.Enhancing skills to meet future
needs is a key priority for the Recovery Plan,
and from the outset Software City has been
developed through a partnership with major
educational establishments.
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From 2010, up to 125 million of funding will be
available through a JEREMIE (Joint European
Resources for Micro to Medium Enterprises)
programme that One NorthEast is currently
developing. This aims to facilitate business
formation andexpansion, with a strong emphasis
upontechnology-based enterprises - makingit
particularly relevant to Software City.Given
the problems businessesare having in accessing
funding,and the high level of risk
often associated with technology
projects, programmes such as JEREMIEcan play a
key role in getting Software City off the ground.
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JANET SNAITHHead of Business
InvestmentSUNDERLAND CITY COUNCIL
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Questions