Solent summit focuses on economic opportunities ahead
Stumbling blocks plus opportunities for Solent businesses were discussed at a roundtable organised by The Business Magazine and hosted by accountants and business advisers James Cowper Kreston (JCK) at its Southampton office.
JCK Partner Alex Nicholson chaired the informal event, asking what measures businesses are taking to survive and prosper in the current economic climate, how to attract and retain talent and maximising the region’s potential.
Tackling headwinds
A daunting checklist of challenges businesses face includes rising energy costs, interest rate hikes, runaway inflation and a changed political landscape. That said, the panel expressed broad optimism amid the relative gloom.
But upbeat views were tempered by some caution. Lifelight, a healthcare technology company, is currently seeking Series A fundraising for its mobile phone-based technology that measures vital signs, including blood pressure. “We remain upbeat about building success, especially as novel technology, despite what has rapidly become a difficult capital market,” said CEO and founder Laurence Pearce.
Airsys is one of Europe’s largest radio technology distributors and the increased cost of the products it imports from the Far East, due to the Covid-19 pandemic and higher transportation costs, is a concern. Neil Boxer, CEO at Airsys, said:
“Supply delays mean these higher costs have not yet fed into the market. They probably will in another six months.”
He added that the company is determined not to pass on the higher energy costs it incurs to customers. “We’re investing in solar panels so we won’t have to.”
Full-fibre broadband provider Giganet avoided many of the shortages from supply chain issues by buying goods in advance to hedge against price increases. Another challenge for the company is recruitment in what it sees as a cooling jobs market. Simon Leather, Giganet’s Chief Product & Innovation Officer, said: "People are looking at job security and staying put, which poses certain challenges for growth companies like Giganet."
Unsurprisingly, energy provider Utilita finds itself in the spotlight. Its Chief Finance Officer Ashley Milne supports the Government’s price cap on consumer energy prices for consumers but feels wholesale prices remain higher than expected. He said: “We don’t know how the war in Ukraine will continue to affect the situation," adding that next year:
"China’s energy demand is likely to rise after being suppressed during Covid-19 lockdowns, which could cause further problems for energy supplies in Europe.”
The energy crisis is forcing high-volume users to consider alternative energy sources, observed Gareth Evans, Area Director, Corporate Banking, at HSBC. “This is bringing sustainability higher up the corporate agenda for many businesses. Greener energy can only be a good thing and we are supporting businesses to fund the investment that is required for this transition.”
Former Southampton City Council leader and businessman Daniel Fitzhenry pointed out that the double boost from Government investment during the pandemic and to help with elevated energy costs has created an opportunity for the region to focus on growing productivity. He said:
“This is a period of opportunism that the region can grasp. I think capital infrastructure, such as energy and transport, will be key areas."
Skills and people to boost productivity
Business confidence is apparent in a buoyant recruitment market. JCK faces challenges at either end of the age spectrum, as Partner Mike Bath explained: “We are taking on the highest number of graduates and school leavers in our 100-year history, although professional services face greater competition for young talent than in previous generations. In terms of experienced hires, many of the older generation are opting for early retirement, which leads to succession challenges.”
Demand for staff is at unprecedented levels, according to Richard Dibden, Commercial Director at CMA Recruitment Group. “It has tempered slightly over the summer period, but the market continues to be incredibly busy with job volumes at record highs. Working from home (WFH) has brought forward the transition to more flexible working, which is now a key expectation for a new generation of workers.”
However, WFH isn’t the only answer to attracting staff. “There's a growing appetite to come back to offices,” noted Boxer. “This is forcing employers to look at the whole package they offer, be that benefits or employee engagement. Focusing on only offering flexible working is a lazy approach for employers to take. In the last nine months, we have reviewed all of our employment contracts and re-written job descriptions to make sure everyone understands how they contribute and what they can gain from working here. I think this is one of the biggest steps we can take to drive up productivity.”
For Lifelight, the talent search extends beyond the region. “Lifelight is in an exciting place as a start-up and we expect to grow from 25 people to over 200 in the next few years. We have to hire people who can cope with this pace of change. Covid-19 lockdowns and WFH mean we are recruiting from a wider, national talent pool. The Solent region is a great place to come to for a few days a week at our office, so there is a ‘touristic’ element that we emphasise when we look for the best-qualified people.”
As well as the new dimension that WFH offers, Pearce has noticed a generational shift in attitudes toward pay:
“Jobs are not just about the money. Companies need to offer much broader support, for example, wellbeing programmes.”
CMA Recruitment’s figures back this up. “Salaries have hardly featured in candidates’ top five priorities in recent years. It’s been more about company culture, employee experience and progression opportunities, although the ‘financials’ are likely to appear more given the cost-of-living pressures,” said Dibden.
While the education sector has an important role to play in delivering a high-performance workforce to local businesses, it is actively working hard to reduce the impact of the lack of face-to-face contact during the pandemic. Encouraging students’ ability to interact and develop social and networking skills is an essential part of employment readiness.
“The trend for companies to recruit a nationally-based ‘virtual’ workforce makes it harder for our students to find jobs locally. We are working with businesses, inviting them onto campus to talk to students about opportunities. This provides early access to talent with work placements, where approximately 70% of students who work on placement are then employed when graduating,” said Gillian Saieva, Director of Enterprise and Executive Education at the University of Southampton Business School. “Accuracy of hire is also important so companies take on the right people while recruiting locally lowers companies’ carbon footprints.”
Business opportunities in the Solent
As is probably the case for many businesses in the region, Utilita isn’t sure whether it will benefit directly from the freeport, but Milne feels corporate customers might need more energy to power growth fuelled by the freeport.
Nicholson thought some misconceptions about what the freeport will deliver needed to be overcome. “Perhaps we should view it more as being like a Special Economic Zone as well as look to broader benefits, particularly the opportunity it will offer the UK on the global stage,” he said, adding:
“If we are to maximise the freeport's potential to attract business to the region then we have to have the right infrastructure in place.”
What’s needed now is strong leadership to achieve the freeport’s ambitions said Fitzhenry: “The real benefit is in value creation – as a funding mechanism for investment in areas such as skills training and green technology. I don’t think we can wait to receive government money, we need to start attracting investment now. So, the challenge is having a vanguard of people who can make it happen. The appointment of a freeport chief executive should provide the momentum for this to happen.”
Although Southampton was runner-up to Bradford as the 2025 City of Culture, the work on the bid and the vision it created should leave a positive and lasting effect, thought the panel. They felt that the momentum can continue if businesses and other groups maintain links forged during the bidding process.
Tech-driven future
Tech hubs could deliver significant economic growth opportunities and are a priority for funders like HSBC, said Evans. “The University of Southampton Science Park has been successful and similar funding for other initiatives must continue,” he said.
The freeport will hopefully be a catalyst for further tech hubs populated by start-ups, suggested Nicholson. But consideration should also be given to more established companies that are innovative, added Boxer. “Airsys has a 30-year history and is an innovator, with our new software-based business. Yet we don’t get the same benefits as start-ups, for example, the tax breaks. It would be good to create an environment in tech hubs where companies like ours could collaborate with business start-ups.”
The freeport should help Southampton compete with tech-heavy Oxford and Cambridge, thought Bath. Hubs and other types of business facilities must be accompanied by good housing and transport connections to make the Solent more attractive, said Fitzhenry, who cited Southampton’s new water taxi scheme as a good example.
Improvements in these areas should encourage more of the many international students who study in the region to stay, said Saieva:
“Often, students don’t realise that the action is happening in smaller, high-growth organisations, where they can develop, gain experience and promotion.”
Straw polls
Question: Do you think Prime Minister Liz Truss will introduce pro-business measures to drive growth?
Result: Yes. Her rhetoric is encouraging but we need to see more substance.
Question: Is Solent freeport a business opportunity for the region?
Result: Yes, but the direct benefits aren’t yet known.
Roundtable takeaways
• It feels as if demand for goods and services is strong but there are supply-side issues
• It could take two to three years before energy costs are back to normal and sustainability is high on company agendas
• To attract and retain staff, companies need to offer a whole package of personal and professional measures. Employees need to understand their purpose and what drives their company’s productivity
• The jury is out on how Solent freeport will benefit local businesses. The initiative needs to gain traction before its success for the region can be assessed.
• As well as the freeport, the region needs good housing, transport links and leisure facilities to attract people and businesses.
This event was supported by James Cowper Kreston.
