Bradford - The Next Big Thing?

Transcription

1 BRADFORD DISTRICT CREATIVE AND DIGITAL INDUSTRIES SECTOR DEVELOPMENT Draft Report to City of Bradford MDC Date: January 2014 Ref: BFDMDC-YORE-96NHYN ewlocations.com

2 Table of Contents Bradford District Creative and Digital Industries Sector Development...1 EXECUTIVE SUMMARY...1 Project Aims...1 Profile of Creative and Digital Industries...1 Future Trends and Opportunities...3 Key Findings...8 Key Recommendations INTRODUCTION The Growth Opportunity of Creative and Digital Industries Creative and Digital in Inward Investment Terms DATA ANALYSIS OF THE CREATIVE AND DIGITAL SECTOR DCMS Based Creative Industries in Bradford A Broader Definition CDI SECTOR PESTLE ANALYSIS Political and Economic Issues Social / Technology Issues Legal / Environmental Issues Creative And Digital Industries In Bradford - SWOT BUSINESS CONSULTATIONS & SECTOR DEVELOPMENT ISSUES General Sector Issues Business Growth Issues PROJECT THEMES AND RECOMMENDATIONS Connecting Bradford Theme Investment Landscape Theme - Funding Investment Landscape Theme Inward Investment Under-Utilised Resources Theme...39 ANNEX 1 CREATIVE AND DIGITAL INDUSTRIES SECTOR DEFINITIONS... i East West Locations / Breeze Strategy

3 EXECUTIVE SUMMARY PROJECT AIMS This report reflects the findings of a project focused on Creative and Digital Industries (CDI) in Bradford commissioned by The City of Bradford Metropolitan District Council. The project s aims were to investigate the sector s main activities in Bradford, understand key changes and future developments relevant to businesses in the sector and, through a series of local and national consultations, recommend initiatives and projects that can help further develop and grow businesses active in the sector. Recommendations for future actions are included in the main report and at the end of this Executive Summary. PROFILE OF CREATIVE AND DIGITAL INDUSTRIES The official definition of the CDI sector has been developed nationally by the Department for Culture, Media and Sport using official industrial classification codes. This definition includes the following broad activities; Advertising Architecture Art and antiques Crafts & Design Designer fashion Video, film and photography Music and the visual and performing arts Publishing Software, Computer Games & Electronic Publishing Digital and Entertainment Media (including radio and television) As the use of digital technologies by a large number of non CDI businesses fall outside of the official definition a broader classification is necessary to adequately trap the influence of digital in Bradford. In future, this will become even more the case given the use of digital technologies across almost all manufacturers in designing, making and marketing their products. An example of this would be the inclusion in the official definition of fashion designers but the omission of any digital inputs that occur in the supply chain of designers. In Bradford a local company operate a (part digital) design function as part of their wool weaving business. This firm is not identified as involved in the digital industries when using the DCMS definition of the sector. Other Bradford companies as diverse as a large furniture manufacturer and specialist automotive designers and trimmers integrate computer aided design inputs heavily into their day to day work and would also fall outside of the traditional view of the CDI sector. East West Locations / Breeze Strategy 1

4 It is therefore necessary to take a broader view of the activities in Bradford s creative and digital industries in order to include the rapidly increasing wider use of digital technologies in almost all businesses regardless of their principal recorded activity. Using a more technology based definition there are 1,100 businesses recorded as working mainly in the CDI sector within Bradford by official data on business activity. These businesses create some 8,100 jobs in Bradford, split as follows; Table 1: Creative and Digital Industries (ICT/Digital Media) in Bradford, 2011 BRADFORD LEEDS CITY REGION GREAT BRITAIN Jobs % Jobs % Jobs % ICT & Digital Media 8, % 46, % 1,467, % Employment of which; ICT Manufacturing % 4, % 212, % ICT Services 3, % 25, % 792, % Telecommunications % 9, % 205, % Digital Media Content Creation 3, % 7, % 257, % Source BRES 2011; NOMIS - columns may not add as data is rounded to nearest 100. The ICT definition is dominated by one or two activities in Bradford. Computer consultancy and programming firms make up 36% of the total. Other IT and computer related services account for a further 11% as does printing (excluding newspaper and magazine print). Dedicated digital industries manufacturing is small but, as we detail below, this masks the almost universal spread of digital activities into businesses engaged in all types of activity. Of the 1,100 employers in Bradford s ICT sector, 89% are micro-businesses employing fewer than 10 staff. A further 100 (9%) of employers employ between 10 and 50 staff. Neither the Leeds city region nor the national picture differ in this respect. In considering future growth opportunities, it is extremely important to appreciate that even this wider definition does not adequately reflect the use of digital technologies that are rapidly being adopted across manufacturing and professional services firms. Business consultations as part of the project focused mainly on businesses in the core creative, digital and media industries. However, we have also reached out to example firms who would traditionally be covered by other standard classifications, mainly in manufacturing activities. A recent National Institute for Economic and Social Research report, measuring the UK s Digital Economy with Big Data, found that the digital economy is larger than previous estimates. Moreover, digital clusters are especially important to local and regional economies because they tend to feed the growth of other sectors. In total, the reach of creative and digital activity in UK businesses is now estimated as greater than the construction, manufacturing and financial services sectors for example. East West Locations / Breeze Strategy 2

5 FUTURE TRENDS AND OPPORTUNITIES Digital is everywhere. The pace of change in the digital industries is rapid. Beyond the largest global businesses, no single company can keep pace with the full extent of change and identify all potential opportunities. Collaboration and knowledge sharing are emerging as essential components of the future digital industries marketplace. This is as relevant for the way in which locations work as it is for the activities of the businesses themselves. Digital activities are at the heart of the UK economy, underpinning growth through both the development of new technologies and the provision of services to businesses and consumers. The digital sector employs 3 per cent of the UK workforce and contributes nearly 69 billion Gross Value Added to the UK economy (7.4% of total GVA). Per employee job, the sector is one of the most productive in the UK economy. Digital related employment increased by 5.5% between 2009 and 2012, three times the growth across the economy as a whole. All national trends and forecasts predict the continuation of demand for high level skills in the sector. Key market growth areas identified by national and international level research include; Cloud computing Mobile technologies Cross-platform mobile applications Computer games and digital entertainment Cyber-security products and services Green/low carbon IT products The importance of growth in internet access and data interchange through non-traditional devices, the so called internet of things and associated mobile and cloud-based technologies should not be underestimated. A recent report by McKinsey 1 has estimated the relative scale of potential economic benefits associated with new technologies. The top five by a significant margin involve; Automation of knowledge processes and work The mobile internet The internet of things (IT embedded in other technologies and products) Cloud based technologies, and Advanced robotics Globally, the demand for digital products, from music, TV and film production to games and other software development is increasing rapidly. The take up of technology by both consumers and businesses that have not as yet embraced their use is rising fast. Demand for technology related products as well as the services that the technology allows is rising. Consumer spending on digital goods and services across Europe has increased by 25% since 2001 with growth in the UK reaching 28% over the same period. Bradford s CDI sector features firms operating across almost all of these markets, from digital technology and sub-component manufacturers through to software development firms and more localised creative service industries. 1 See main report, page 12. East West Locations / Breeze Strategy 3

6 These future developments have far ranging implications for businesses of all sizes in Bradford and the city region as the cost of new technologies, data storage and processing power is reduced and adoption becomes more pervasive. Developments in technology are not only affecting CDI sector businesses, but are increasingly embedding CDI activities across all businesses regardless of their main activity. Regardless of which of these new, often disruptive technologies emerge as viable products and services, most commentators are clear on one impact summarised well by a recent McKinsey report, Business leaders and policy makers and society at large will confront change on many fronts: in the way businesses organize themselves, how jobs are defined, how we use technology to interact with the world (and with each other).. Many technologies on the horizon offer immense opportunities. We believe that leaders can seize these opportunities, if they start preparing now. UK-wide research on labour market impacts of the growth in digital activities highlights a growing need for IT staff with the ability to analyse and interpret big datasets. Big data is becoming increasingly valuable to organisations as they seek to gain competitive advantage from the knowledge that can be unlocked from this new resource. This applies in equal proportion to SMEs as well as larger firms given the quantity of open (i.e. free) and low cost data that is now becoming available online. Access to data will not be the limiter, access to analytical skills will be. In those businesses that do not fall easily into the CDI sector classification, adoption of digital technologies means that skills needs are also changing. There is now a need for mechanical engineers who also have a knowledge of digital elements of manufacturing processes and machines for example. In service industries outside of the IT marketplace, managers with data analytic skills will become more commonplace. National research shows that employers are optimistic about the disruptive impact of emerging technologies and rather than being seen as a negative issue, they are thought to foster innovation and benefit future growth in the digital sector and across the wider economy. Employers in Bradford, as nationally, have raised concerns about the future supply of talented IT people that will be needed to fill the ever growing number of roles created by emerging technologies. Locations that successfully address these future skills needs will be in a strong competitive position to grow their indigenous business base and attract inward investment projects. The opportunity for creating additional growth in Bradford through attracting inward investment projects in the CDI sector is reflected in the fact that Information Technology, Electronics & Communications (ITEC) is the largest category of inbound inward investment activity to the UK. East West Locations / Breeze Strategy 4

7 These projects tend to be centred on internet services and design companies. UKTI data show the dominance of a very large number of software companies moving into the UK, 254 projects last year. Electronics and IT hardware such as data centres and telecoms are the third and fourth largest sources of inward investment activity. Sector Growth What s Possible? It is understandable that local authorities like Bradford want to take a proactive role in the attraction and retention of businesses; but any activities undertaken must be tempered by asking what is possible in the short term and where can the council achieve maximum impact, both on its own and through leveraging its public and private sector partnerships. The overwhelming majority of companies choose to start, grow, locate or relocate with absolutely no reference to government agencies but the public sector can ensure Bradford is considered, its existing benefits fully understood and help to shape the future of the city s attractiveness to companies using digital technologies. This goes further than inward investment promotion to those not yet in the district. If there were no inward investment activities, companies would still expand, they would still choose new locations and they would create wealth and prosperity. When Henry Ford chose to make his Model T cars in Manchester more than a hundred years ago, he went through a very similar thoughtprocess as Jaguar Land Rover and Nissan do today. The only difference is that there is an almost limitless amount of options and information available at the click of a mouse; and there are now dozens of councils and Local Enterprise Partnerships sending in glossy brochures. Through a thorough understanding of the location and growth drivers of businesses Bradford can stand out from this crowd. An important starting point is this sector review. What A Council Can Influence Through both its scale and range of partnership working, there is a huge amount of influence that Bradford council can have on the business, social and cultural fabric of the city. As the largest employers in Bradford and the largest purchasers in the city, the public sector, especially the council, has the ability to influence the local business environment like nobody else. Every hiring decision and every purchasing decision has the potential to make Bradford a place that is more conducive to business growth. The council s annual budget of over 900 million pounds 2 already passes on a significant positive benefit to local companies. Whilst it is clearly not practical for every tender to be awarded to Bradford firms, the opportunity now exists to extend existing commitments and provide more and better targeted information on the range of contract opportunities to local firms; not just those of the council but also its wide range of partners across the city region. Several councils now provide and actively promote a localised portal that aims to do this; blackcountrybusiness.co.uk is a good example. 2 Total includes 544.5m expenditure on education services. DCLG Local Authority Revenue Expenditure and Financing England: 2013 to 2014 (individual local authority data) East West Locations / Breeze Strategy 5

8 Enhancing the impact of the council s spending locally applies equally to the direct purchase of goods and services, providing a direct impact on growth in the digital sector through the procurement of creative, digital and IT services for example. This would benefit Bradford s digital sector SMEs in particular. Let Go of Data Councils have typically been massive data holders. Bradford council s departments will have millions of data points across datasets from environmental health through to social services. Just as with planning departments performance tables, there are league tables of council openness. Other city councils in the UK have begun to open up access to their data and we would strongly recommend Bradford speeds up its initial investigations in this area. Open data will bring significant benefits and opportunities for local business. It is perhaps one of the biggest catalysts that the council can provide for local app developers for example. Experience around the world shows that whenever a city opens its data chests, there are hundreds of unexpected positive results, in terms of new products and services that emerge on the back of open data. Opening up data for others to use, digitally or otherwise, often leads to efficiency improvements in delivering council services too. Inward Investment Is Important.. Growing existing businesses is important but inward investment activity will nevertheless be an important part of growing Bradford s digital economy base into the future. Bradford can t compete with Tech City in London. Nor with MediaCityUK in Manchester. But what it can become, is the UK s most ambitious tech and media city, with a vision that inspires and encourages the next generation of creative, coders and digital entrepreneurs. Recent data shows the large number of IT projects entering the UK. However, the competition for them is more fierce than ever before. Many projects are currently concentrated into one marketplace around the national promotion of Tech City in London. Other successful cities including Manchester, Birmingham, Nottingham and Newcastle have begun attracting digital projects through development of extremely competitive offers compared to Bradford. Bradford cannot at this stage compete with these more developed propositions and therefore needs to consider how best to position its offer in such a competitive marketplace. However, collectively the Leeds city region offer is as good as other large north of England locations. Bradford has an opportunity to place itself at the heart of it. A clear and well resourced inward investment proposition, backed up by case studies of the use of digital technology across many different types of business in Bradford and the substantial research resources including the University and the Advanced Digital Institute, would provide a better understanding of the range of opportunities to outside businesses developing their location strategy. We present several immediate opportunities for Bradford to attract business interest in the digital arena in our recommendations below. East West Locations / Breeze Strategy 6

9 ..But All Startups Have to Start Somewhere However, across the creative and digital sectors, inward investment still plays a smaller role than organic growth and local startups in most local economies, including in Bradford. It is in this area that the council can make a real difference immediately. Moreover, inward investors will be looking for evidence of a home-grown base of talent and activity before they shortlist Bradford as a viable new operating location. The world s biggest technology companies did not exist a generation ago. The next big things from Silicon Valley to Silicon Roundabout didn t exist five years ago. The creative and digital ventures that will provide jobs and wealth in the next twenty years will be created by boys and girls at school today. Not just at schools in San Jose, Boston, London and Bangalore, but also in Bradford. Two centuries ago, the basic raw materials for the industrial revolution were coal, iron ore and water. Bradford s proximity to these spurred the most successful period in its history. Today s raw materials are to be found in the minds of young people. If there s one thing that Bradford has in abundance it is young people. The youthful nature of the city is an important feature of Bradford that helps it stand out from the crowd of other locations. Entrepreneurs are not born and tech-savviness is not something unique to existing tech clusters. Ubiquitous access to computing and mobile technologies means that the biggest difference between a teenager in Bradford and one in Bangalore or Boston, is the presence or otherwise of inspiring role models and encouragement. This is where the council can play a major role. Encouraging computer coding clubs and facilitating digital workspaces in schools from primary to sixth forms, would lift Bradford onto a different growth curve for the future. Far from needing grants or new equipment, most schoolchildren just need a bit of inspiration and leadership. Successful entrepreneurs and business leaders can play their part in this. A city centre based learning resource or demonstration laboratory would serve as a focal point for further stimulation of interest and would place Bradford in the top tier of forward thinking areas in the country in terms of future proofing itself as a healthy location in which to locate and grow the full range of emerging digital opportunities. This will have the benefit of boosting start up activity and engaging the attention of businesses not yet in Bradford. East West Locations / Breeze Strategy 7

10 KEY FINDINGS A number of key observations about the digital economy and CDI sector in Bradford emerged from our consultations and analysis of the district s current offer. Almost all firms consulted with, regardless of their particular product or service, identified a range of generic business growth sticking points around access to finance, local physical infrastructure and workforce recruitment and skills. This however, is no different to anywhere else in the country. There is almost universal agreement that current national vocational education provision fails the needs of CDI businesses in terms of the skillsets they require in their business. Many are under the impression that it would be better for their business needs to take an individual earlier and train them in-house or through an apprenticeship scheme, making high quality, relevant school-leaving age skills in ICT of the utmost importance to get right. Many businesses appear open to interaction with schools and colleges to ensure the full range of employment opportunities are better understood and the necessary skills are embedded as early as possible in the education system. Bradford is home to a relatively large presence of national and internationally recognised assets and organisations that offer a ready-made platform for the promotion of CDI activities in the district and to an external (in some cases international) audience. Among these are the National Media Museum, the Advanced Digital Institute, Bradford College WWI Film School, Kala Sangam, Bradford s City of Film status and the presence of animation and film festivals. The University of Bradford deliver established courses in both creative industries related skills and digital/technology related qualifications. However, their connect with established businesses in the district in terms of dissemination of research and direct working is much less evident. Bradford is a place populated by a stable set of individuals and organisations that have operated from the city over a long period of time. Many in the CDI sector feel this fact makes it easier for new initiatives to be launched successfully in Bradford than in less developed and larger cities. The established history of collaboration in Bradford s CDI sector among creative and smaller digital economy organisations does however need some re invigorating, and crucially extending to include newer digital industries and a higher engagement of larger businesses from the district. East West Locations / Breeze Strategy 8

11 Bradford s computer software industry is generally made up of re-sellers of out of the box business software, with only a very small contingent of code-based producers of bespoke software. The firms that are in Bradford are however, well established and selling into international markets. More specialist software is also developed in-house by manufacturing firms. Although small in scale, the breadth of software development activity therefore offers an important stage upon which to increase indigenous activity and attract further investment - something that Bradford should capitalise on in order to make the digital offer somewhat different to other parts of the country. There is no existing cluster of computer games development despite the presence of an established games developer in Four Door Lemon, the National Media Museum and the proximity of an internationally important cluster of firms and University courses in Leeds and Manchester. The University in Bradford has a degree course but this is at present small in scale relative to the two larger cities. Beyond software development, the adoption of digital technology across a broad range of manufacturing activity, not just in telecommunications and IT manufacturing, is high in some firms in Bradford and places those firms in a competitive position nationally. Against the backdrop of rapid growth of commercial opportunities in the online economy, a number of yet to be explored opportunities for specific digital firms and/or the growth of local specialisms around online retail (with national retail firms already operating in Bradford being important potential beneficiaries and thus project sponsors). The same is true of alternative finance opportunities with large financial services firms in Bradford. The work of the Advanced Digital Institute spreads much wider into the Bradford business base than firms that are traditionally classified as CDI sector businesses. As a result, there is a large contingent of manufacturing businesses utilising digital technologies and a vast resource of knowledge and links that could be quickly mobilised through the ADI. The existence of the ADI also presents one of the most significant immediate opportunities for Bradford to engage with other parts of the Leeds city region in defining and influencing activity around a digital corridor. A significant proportion of those consulted with wish to promote Bradford to their own supply chain and customer base. A lack of access to detailed information on the city as an investment location or training on how to do so was identified by some of these businesses. East West Locations / Breeze Strategy 9

12 Historically, Bradford was an important centre of the traditional print industry in the UK and home to an international Print Biennial until 20 years ago. Digital printing for both commercial and retail markets is still an important part of Bradford s economy and across the wider Leeds city region. There may be a short-term window of opportunity to develop activities based on Bradford s important historic position in order to raise its profile in the national print industry. East West Locations / Breeze Strategy 10

13 KEY RECOMMENDATIONS The project was asked for at least five recommendations of business development activities. We have grouped a series of opportunities into the following, often overlapping, themes; Connecting Bradford Theme The Council should investigate the who? and how? of developing a digital mapping resource for Bradford as soon as possible. This would ideally involve existing CDI organisations and businesses collaborating to create content (a database of local businesses and organisations) for a searchable map tool available online and on mobile devices. In the medium term, the Council should investigate how the digital mapping tool can be extended into the production of a hyperlocal app. Hyperlocal apps, deployed on mobile devices, offer digital platforms that can be used by businesses and residents to stimulate demand for local products and services. The most beneficial of these apps allow users to contribute to the development of the app itself, listing places, companies and experiences as they use them through check ins, reviews and ratings. The council can also provide targeted municipal information through such an app, increasing its use still further. As a more long term aim, the app and other initiatives should open up opportunities for analysis and use of public and other datasets in Bradford. Ideally, the app itself should produce a large quantity of raw data. As a major potential beneficiary, the local authority could play a leading role in ensuring this. The University should be further encouraged to connect its substantial international linkages, research activities and student-based resource with businesses in Bradford, through both events and direct engagement connecting graduates and course materials with the needs of local businesses. Investment Landscape Theme (funding and inward investment) The Council should investigate how it can promote the use of online crowdfunding by Bradford s CDI sector businesses and residents. This helps secure growth or start up loans for businesses through a collective online lending facility open to anybody to invest small amounts into local businesses. Linked with this, the Council should consider deploying a small amount of its own funding via a crowdfunding platform into local businesses. This activity is already being pursued by several other councils and central government on the major UK crowdfunding sites. Beyond promoting and using existing online lending channels, a Digital Investment Fund for Bradford should be considered. This would allow residents and existing businesses to become financial sponsors and/or equity investors in the city s young talent. East West Locations / Breeze Strategy 11

14 Alongside stimulating procurement, training and levels of activity in Bradford s digital sector, increased investment in the Invest in Bradford team would bring the city in line with resources available to its peer group of north of England cities. Targeted activities should aim to provide a unique Bradford offer and lead to successful engagement with potential domestic inward investment projects in the sector. Many of these will be expansions of earlier foreign investments, primarily those into the London market. Similarly, encouragement of local businesses to promote Bradford in their supply chain and customer base should be supported by the provision of targeted materials from the Invest in Bradford team. Regular briefing exercises for existing businesses would maximise the exposure of the city to potential investors from their suppliers and customers. In the main body of the report we suggest measures to strengthen the resources of the Invest in Bradford team. Under-Utilised Resources Theme There are a number of activities and resources that are not being fully exploited in the district. An open laboratory and business development space should be set up in the city centre, potentially linked to a scheme to recruit those from relevant University courses into the space to collaborate and develop new business ideas focused on the digital economy. The Council should undertake a feasibility study of the viability of a post-film production space in Bradford. This would work to trap the significant economic activity that takes place after outside film crews use locations across the district and that are currently lost to other established, but mainly higher cost, production locations. A Businesses into Schools project should be launched to boost knowledge of the range of opportunities that are available in digital industries throughout the district along with a focus on getting a thousand local schoolchildren into coding clubs in the next five years. Many of the recommended actions and projects overlap one another. Through a more open design and collaborative approach to identifying and solving issues there is a significant opportunity to change the process and working relationships of all businesses and supporting organisations currently involved in Bradford s digital sector. This will ensure impacts that benefit all firms regardless of whether they are in digital manufacturing or providing digital services and run deep into the labour market, including children at the earliest stages of learning, to ensure Bradford is the best place to start, grow and locate digital businesses into the future. As a final note, it is imperative from our research and the breadth of existing digital activities in Bradford that when considering the CDI sector locally the broadest possible definition is used. Bradford s manufacturing sector and almost all of its professional and financial services industries benefit from and use digital technologies of various forms. This should be encouraged further. East West Locations / Breeze Strategy 12

15 1.0 INTRODUCTION The following report contains data analysis on the Creative and Digital Industries (CDI) sector in Bradford and the Leeds city region alongside a discussion of PESTLE and SWOT analysis. We have also undertaken in-situ face to face and roundtable consultations and report back here on the key issues emerging from our discussions with businesses and organisations operating across the full range of CDI activities and others for whom digital products or services are becoming increasingly embedded within their business model. In the final section of the report we set out a series of recommended business support and sector development projects. These have been informed through wider national exposure to similar initiatives elsewhere. A number of these projects are small, short term in nature with others being longer term, more transformational projects in terms of how the Council interfaces with CDI businesses. 1.1 THE GROWTH OPPORTUNITY OF CREATIVE AND DIGITAL INDUSTRIES The creative and digital sector, broadly defined, continues to buck the trends of the economic downturn and remains one of the fastest growing areas of the economy. Recent research by Nesta reports that the creative industries employed 1.35 million people (4.7% of the total workforce) in 2011, contributing 69.9 billion to the UK economy. A slightly broader definition to include all creative occupations increases employment to 9.7% of the total workforce. Employment has grown at four times the national average since A more recent National Institute for Economic and Social Research (NIESR) report, measuring the UK s Digital Economy with Big Data 4, found that the digital economy is larger than previous Government estimates. Digital clusters are especially important to local and regional economies because they tend to feed the growth of other sectors. In total, the size of the UK creative and digital economy is now estimated as greater than the construction, manufacturing and financial services sectors. Globally, the demand for digital products, from music, TV and film production to games and other software development is increasing rapidly. The take up of technology by both consumers and businesses that have not as yet embraced their use is rising fast. Demand for technology related products as well as the services that the technology allows is rising. Consumer spending on creative and digital goods across Europe has increased by 25% since 2001 with growth in the UK reaching 28% over the same time period 5. Bradford s CDI sector features firms operating across almost all of these markets, from digital technology and sub-component manufacturers through to software development firms and creative service industries. 3 NESTA 2013, A Manifesto for the Creative Economy. 4 NIESR and Google 2013, Measuring the UK s Digital Economy with Big Data. 5 Booz and Co. 2013, The Digital Future of Creative UK The Economic Impact of Digitization and the Internet on the Creative Sector in the UK and Europe. East West Locations / Breeze Strategy 13

16 One feature is common to all activities. The vast majority of all growth generated by today s CDI sector is digital. Depending on the industry, the non-digital part of the business is generally stagnating or shrinking, but all industries have one thing in common; digital is growing. Future digitisation will reach beyond frontline media and entertainment businesses. Innovations in digital fabrication methods for manufacturing, machine-to-machine communication and wearable computing are expected to lead to the emergence of an internet of things in which material goods become far more compatible with each other and customizable than they are today 6. In this way, the issues facing the CDI sector today are beginning to face all industries. This pace of change is forecast to increase rapidly over the very near future. Regardless of which of these new, often disruptive technologies emerge as viable products and services, most commentators are clear on one impact summarised well by McKinsey, Business leaders and policy makers and society at large will confront change on many fronts: in the way businesses organize themselves, how jobs are defined, how we use technology to interact with the world (and with each other).. Many technologies on the horizon offer immense opportunities. We believe that leaders can seize these opportunities, if they start preparing now. 7 Opportunities cannot be aligned with the traditional sectoral view of the economy. The benefits calculation from McKinsey s recent work summarised on the next page highlights a better way to interpret where growth opportunities in Bradford s economy are likely to arise in terms of creative and digital activity. This uses the technologies themselves rather than the largely irrelevant but traditional view of the sector s (SIC codes) that businesses are coded into, and reinforces the central role of the internet, technologies that allow automation within the service sector and digital innovation within manufacturing. 6 MIT s MediaLab is at the forefront of publicising these emerging technologies and their opportunities. See for examples across all consumer and business activities. 7 McKinsey Global Institute, May 2013, Disruptive technologies: Advances that will transform life, business, and the global economy. East West Locations / Breeze Strategy 14

17 To prepare for the opportunities as they emerge will require new ways of working. In particular, increasing openness, debate and collaboration between groups involved is showing real gains in innovative ideas and processes leading to the exploitation of opportunity and creation of value, wealth and employment in some parts of the UK. Recent work around digital cluster businesses in Brighton for example, shows faster than average rates of growth among local creative, design and IT firms as elsewhere in the UK, but growth at twice that speed among those who are fused and ten times that among superfused companies. Fused businesses are those that combine creative art and design skills with technology expertise. Fused firms actively collaborate with other types of business, education providers and other organisations in their local economy 8. The creative and digital economy now touches every other sector, driving productivity and creating new opportunities for growth. 8 The Brighton Fuse - Final Report 2013, brightonfuse.com East West Locations / Breeze Strategy 15

18 Enabling much of the growth in mobile and the internet of things is the emergence of cloud computing and the need that arises as a result of significant increases in storage volume and processing power. Whilst there are opportunities for some UK locations to develop themselves as server/storage locations, these do not make much of an impact on local employment. The critical factor for the growth of digital industries and associated jobs in Bradford will be adequate access to a fast and resilient connection to resources elsewhere, regardless of where a business is located in the district. This is not just a matter of installing hard infrastructure and network capacity. It often, more practically, relies on the ability of a local authority to ensure installations can be done in the shortest timescale possible, through a smooth planning process for example. 1.2 CREATIVE AND DIGITAL IN INWARD INVESTMENT TERMS At national level the increasing integration of creative and digital activity across both manufacturing and service businesses is reflected in the UKTI definition of the digital sector termed Information Technology, Electronics & Communications (ITEC). The opportunity for creating sustained growth is reflected in the fact that ITEC is the largest category of inbound inward investment activity to the UK. UKTI data show the dominance of a very large number of software companies moving into the UK, 254 projects last year. Inbound ITEC projects tend also to be centred around internet services and design. Electronics and IT hardware such as data centres and telecoms are the third and fourth largest sources of inward investment activity. Major Inward Investments in ITEC in 2011/12 Although ITEC represents one of the largest sectors for inward investment, both from foreign and UK companies, the number of jobs created in individual projects tends to be far less than is the case in manufacturing or business and professional services. Table 1.1 shows the largest projects recorded during 2011/12. For Bradford, the growth story is more interesting and important than the data on first investments into the UK however. The typical inward investor in this sector will be setting up a small sales office in London or Thames Valley with a handful of staff. The interesting moves occur a few years later when they look to ramp up their UK presence and often either expand into new regional facilities or relocate their headquarters. This second stage growth is one of the most significant opportunities for Bradford to increase employment in CDI sector businesses locally. It does however, need the city to be able to demonstrate a skilled workforce with software and analytical skills. East West Locations / Breeze Strategy 16

19 Table 1.1: ITEC Projects by Location and Scale, 2011/12 Company Source HQ Town/City Region Activity Industry Jobs New / Expansion Telefonica Digital Spain London LO HQ ICT 400 New FDI Avaloq Switzerland Edinburgh SC HQ ICT 300 New FDI Ceridian USA Glasgow SC HQ Business Services FDI/UK 300 Exp FDI Shed Productions London Glasgow SC Media ICT 230 New UK HTC Taiwan Slough SE HQ ICT 150 Exp FDI Daisy Nelson Nelson NW HQ ICT 100 Exp UK Communications De La Rue Basingstoke Gateshead NE Printing Business 100 Exp UK Services Markco Media London London LO HQ ICT 100 Exp UK UKFast Manchester Manchester NW Data ICT 100 Exp UK Centre Kainos Belfast Belfast NI HQ ICT 80 Exp UK Micro Focus Berkshire Belfast NI R&D ICT 72 Exp UK Gensler USA Birmingham WM HQ Business 50 New FDI Services Xaar Cambridge Cambridge EE HQ ICT 50 Exp UK Altitude Group Manchester Middleton NW HQ / IT ICT 45 Exp UK Tribold USA Cwmbran WA R&D ICT 45 New FDI Informa Switzerland Colchester EE Publishing Business 30 Exp FDI Services Dada Events Glasgow Glasgow SC HQ Business 23 Exp UK Services MyJobGroup Sheffield Sheffield YH HQ Business 20 Exp UK Services Source: UK Projects Database (2012) The latest UKTI national level ITEC inward investment data for 2012/13 show: 475 projects by foreign investors in the ITEC sector in the UK 9,776 new jobs were created in the sector (i.e. 21 jobs per project average) 250 (53%) were new companies entering the UK 225 (47%) were expansions of existing investments The strongest sub-sectors were: Software (254 projects) Creative/Digital (92) Electronics (71) Communications (41) East West Locations / Breeze Strategy 17

20 Software related skills are once again highlighted as the most important selling point for a location given this pattern of inward investment projects. Inward investment interest will not be attracted into Bradford from these types of projects until the local offer is made ready for the needs of such businesses. This focuses most short term opportunities onto local initiatives before any significant promotional campaign can be undertaken. UKTI sub-sector focus priorities for 2013/14 are: Software: - Cyber Security, Online Games, Cloud Computing, E&M Commerce, Data Centres, Big Data, Animation, Post-production, Digital Media, Mobile Apps and Social Media. Hardware: - Consumer Electronics, Semi & Electronics Design, Lighting & Displays, Sensors & Systems, Power Electronics, Mobile & Wireless Components, Fixed Line Infrastructure The list of hardware related priorities offers more of an immediate opportunity to build on Bradford s existing manufacturing offer given that digital related design is already taking place across manufacturing firms in the district. This is where early activity on inward investment can take place whilst the supply of skills is built with other projects. East West Locations / Breeze Strategy 18

21 2.0 DATA ANALYSIS OF THE CREATIVE AND DIGITAL SECTOR All attempts to define creative and digital industries carry with them subjective decisions on activities that fall in or out of the classification. The increasing use of digital and related technologies across all firms, service or manufacturing in focus, as indicated in section 1.0 of this report means that any data analysis using official definitions of CDI should be treated with caution. As such, they represent only a small sub-set of businesses that will be making use of digital and other creative activities in any local economy. Two methods of cutting the District s CDI sector data have been undertaken; the first is to use the current Department for Culture, Media and Sport (DCMS) definition for the creative industries developed in Secondly, we assess a broader grouping of ICT and Digital Media activity. This latter approach takes in many more ICT manufacturing and services activities not contained in the official sector classification method. The spread of digitisation and use of digital platforms and services across the entire economy, often in firms far removed from the traditional creative and digital sector of the official definition, means this should be treated as a de minimis for digital activity in Bradford. It is notable that the current DCMS definition has been the subject of consultation on proposals to change the classification method during the period of our work, moving from the use of industrial to occupational measures to classify creative activity and closer to the method used by NESTA. However, the new definition using industry codes omits computer games and music related activities and for this reason we have not produced our analysis on the basis of the proposed new structures. 2.1 DCMS BASED CREATIVE INDUSTRIES IN BRADFORD In terms of active businesses, creative industries are broadly representative of the wider area economic structure across the Leeds city region. 1,085 firms or organisations are active in the creative industries in Bradford, making up 13% of the Leeds city region creative sector total compared with 14.4% of the city region total when considering all firms 9. In employment terms, close to 4,000 jobs arise in creative industries in the district, 11.5% of the city region total. This employment accounts for 2% of all jobs in the district against 2.7% in the city region and 3.5% nationally. These jobs can be broadly grouped into the following activities, highlighting the dominance of other publishing and, to a lesser extent, software, electronic publishing and consultancy activities. 9 Not all jobs in the 1,085 local business units will be in creative activities given the employment weighting factors inherent in some activities (see Annex 1). East West Locations / Breeze Strategy 19

22 Table 2.1: DCMS Defined Creative Industries in Bradford, 2011 BRADFORD Jobs % total Creative Industries (DCMS definition) 3, % of which; Advertising % Architecture % Music, Visual & Performing Arts % Digital, Computer Games & Entertainment Media % Software, Consultancy & Electronic Publishing 1, % Other Publishing 1, % Other Creative Industries % Source BRES 2011; NOMIS columns may not add as data is rounded to nearest 100. As Figure 2.1 shows, the structure of creative industries in Bradford follows the shape that is found in the wider city region but is more pronounced in its lower employment share of those operating in the visual arts, computer games and entertainments media and software, consultancy activities and electronic publishing. Figure 2.1: DCMS Creative Industries Activities in Bradford, % Bradford Leeds CR LEP GB 40.0% 30.0% 20.0% 10.0% 0.0% Source BRES 2011; NOMIS. East West Locations / Breeze Strategy 20

23 The predominance of other publishing and other creative industries also follows the pattern of the LEP area in forming a larger share of creative industries employment than nationally, more pronounced still in Bradford itself as these two account for 55% of the area s creative sector jobs. The former of these is heavily weighted by newspaper publishing and greetings card manufacture. Other creative industries include art, crafts and fashion related activities. Location quotients (LQs) are a measure of the employment density of various activities in a local economy relative to a wider area structure. Albeit reliant on historical data and being limited to employment share only rather than indicating any future competitiveness or strength or reflecting the value of output of a sector, Bradford demonstrates very high LQs in crafts and design (1.31), designer fashion (1.44) and publishing (1.88). In each case, total employment is in excess of 25% greater than in Britain in these activities. Compared with the Leeds city region, crafts and design maintains its 25%+ share (1.27) and there are almost 20% (1.17) more publishing jobs in Bradford than in the national profile. We discuss issues around funding and what the current funding agency datasets imply for Bradford s creative and cultural industries further in section 3.0 below. 2.2 A BROADER DEFINITION Whilst the DCMS defined view of creative and digital activity allows for comparison across other parts of the country and national studies, it fails to fully showcase the local economy s range of digital related activity. An example of this would be the inclusion in the official definition of fashion designers but the omission of any digital inputs that occur in the supply chain of designers. In Bradford for example William Halstead still operate a (part digital) design function as part of their wool weaving business. This firm is not identified using the DCMS definition of the sector. Other companies such as Knightsbridge Furniture and Kahn Automotive Designs integrate computer aided design inputs into their activity and also fall outside of the traditional view of the CDI sector. It is therefore necessary to take a broader view of the activities in Bradford s creative and digital industries in order to include the increasing wider use of digital technologies in other firms. This wider definition identifies just over 8,100 jobs across almost 1,100 local business units in all ICT and digital media activities. This figure is equivalent to 4.2% of the district s jobs total against 3.7% in the city region and 5.5% in Britain as a whole. The ICT definition is dominated by one or two activities in Bradford. Computer consultancy and programming firms make up 36% of the total. Other IT and computer related services account for a further 11% as does printing (excluding newspaper and magazine print). Digital printing for both commercial and retail markets is still an important part of Bradford s economy and across the Leeds city region. The continued presence of international firms such as Xerox close to Bradford and the presence of major international retail printers in Bradford is a somewhat unique defining feature. East West Locations / Breeze Strategy 21