Strand 3 – Sectoral Analysis
This paper offers and exploration into the sectoral make-up of the Coventry and Warwickshire Local
Enterprise partnership (CWLEP); this includes the city of Coventry plus the five districts that make up
Warwickshire: North Warwickshire, Nuneaton and Bedworth, Rugby, Warwick and Stratford-uponAvon. Warwickshire is regarded as a diverse economy with a clear north-south divergence of
economies; that is the south of the county typically outperforms the north. The reasons for this can
be explored through the sectoral base of the CWLEP.
To see the specialisms of the different parts of the County and Coventry, the table below gives the
ten largest employment sectors in 2011 across CWLEP (with the largest sector for each district
highlighted).
Table 1: Snapshot of sector employment in CWLEP by region for 2011
North
Warwickshire
Nuneaton &
Bedworth
Rugby
Stratford
Warwick
Coventry
number
%
number
%
number
%
number
%
number
%
number
%
5,411
14
8,180
20
6,017
14
8,988
16
12,666
16
22,083
16
3,921
10
1,855
5
3,312
8
5,495
10
5,380
7
8,448
6
Construction
2,074
5
2,114
5
5,103
12
2,638
5
1,991
3
3,629
3
Education
2,209
6
5,108
12
4,693
11
5,002
9
8,133
10
19,512
14
Finance & insurance
274
1
679
2
522
1
2,427
4
1,126
1
7,737
6
Health & social work
2,194
6
6,723
16
3,747
9
5,794
10
8,928
11
19,767
14
Manufacturing
5,416
14
4,752
11
4,133
10
5,397
10
6,114
8
14,278
10
1,827
5
1,531
4
3,605
8
6,619
12
8,407
10
6,243
5
482
1
1,809
4
1,258
3
1,015
2
5,282
7
6,420
5
7,417
19
3,155
8
3,233
8
1,611
3
3,602
5
4,266
3
Wholesale & retail
trade &
Repair of motor
vehicles
Accommodation &
food
Prof, scientific &
technical activity
Public admin &
defence
Transport & storage
Source: NOMIS
From Table 1 it is possible to see that for the CWLEP overall, the wholesale & retail trade & repair of
motor vehicles sector has the highest employment at 41,261 staff (15.8% of the total). For each
district this is the most important sector except for North Warwickshire where the share of
employment in the transport and storage sector is higher (7,417 employees compared to 5,411).
Leaving the retail sector aside it is important to note that the second most important sector for each
region differ somewhat. For Rugby the specialism is construction, employing 11.8% of Rugby’s
employees but for Stratford it’s professional, scientific and technical activities (12%). Coventry,
Warwick and Nuneaton and Bedworth have the same second specialism in health and social care
although this sector is more important in Nuneaton and Bedworth district (16%) as in Coventry and
Warwick the education sector (and professional, scientific and technical activity for the later) very
closely follows (for Coventry the numbers are the same due to rounding).
To see how this pattern has changed over time the graph below shows the number employed in
each sector since 1981 by broad employment sector. Figures 1a and 1b break this down further into
service and manufacturing sectors, respectively. Looking at Figure 1 it is clear that overall the labour
force has increased; manufacturing has seen a decline (of 64%) and services have seen an increase
(of 88%) in employment in the CWLEP. This decline in manufacturing has hit Rugby district the
hardest seeing a halving of the labour in the manufacturing sector. Two smaller sectors which have
seen high growth are the head offices and warehousing and post sectors; both sectors have grown
by more than five times their original employment levels from 1981 to 2012. In North Warwickshire,
growth in warehousing has seen their labour force more than triple in this sector.
Figure 1: Sector growth in CWLEP
400
Head officies
350
Energy & water
Construction
number of employees (000's)
300
Warehousing & post
250
Transport
200
Services
Manufacturing
150
Agriculture
100
50
0
1981
1985
1990
1995
2000
2005
2006
2008
2010
2012
Source: WCC analysis of Cambridge Econometrics data
Looking more in depth at the services and manufacturing sectors, Figures 1a and 1b show the
respective increases and declines in these sectors. Education has increased dramatically since 1981
owing to the growth of two large universities, as well as local colleges, in the CWLEP area. Business
support has doubled in size since 1981; ICT, finance, insurance and real estate services have also
seen an increase in growth (of 103%) since the beginning of the time period. Public administration
and defence is the only service sector which has seen a decline in employment (by 56%), although
the sharpest decline is seen in the 1980s. Figure 1b shows the decline in manufacturing. Motor
vehicles, metals and metal products, machinery and electronics have seen the largest decline since
1981 (of 37%, 71%, 77% and 96% respectively). Metals and electronics have seen a consistent
decline throughout the time series whereas motor vehicles have seen a sharp decline since 2002 and
machinery is seen to decline sharply for the first 12 years of the period. The pharmaceuticals sector
has grown by 50 employees since 1981 (not shown due to scaling issues).
Figure 1a: Of which Services
Accomodation, food, beverage
50
number of employees (000's)
IT, finance, insurance, real
estate
Legal, accounting
40
Architec & engineering
30
Business support
Public admin, defence
20
Education
10
Health
Residential, arts, recreational
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
Source: WCC analysis of Cambridge Econometrics data
number of employees (000's)
Figure 1b: Of which Manufacturing
30
Textiles etc
25
Chemicals etc
Non-metallic min. prods
20
Metals & metal prods.
15
Electronics
10
Electrical equipment
5
Machinery etc
Motor vehicles etc
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
Source: WCC analysis of Cambridge Econometrics data
Looking more in depth into the sectors themselves it is possible to calculate location quotients.
These figures give the concentration of each industry in a region compared to the nation (England).
For simplification in the CWLEP three regions are defined: South (Warwick and Stratford districts):
Central (Coventry and Nuneaton and Bedworth districts) and North (Rugby, North Warwickshire and
Hinckley and Bosworth (Leicestershire – included as a further geographical region for City Deal
partnership)). The location quotients were calculated using a three year average of employment
figures (2009-2011 taken from NOMIS). Table 2 below gives the largest three location quotients for
each region. Table 2 shows that mining of coal and lignite is 35 times more concentrated in the
North of the region than across England. This sector, however, in 2013 has seen large closures and
thus this specialism is no longer sustainable. The manufacture of motor vehicles, trailers and semitrailers is nearly 7 times more concentrated in the Centre of the region than nationally and the
repair of computers and personal and household goods is 6 times more concentrated in the South of
the region than nationally. The central and south regions seen to have a similar economic makeup;
that being of these regions share two of their three most important sectors: manufacture of motor
vehicles and water services, however for the south their second most concentrated sector is more
important than that of the second sector in the central region.
Table 2: Location Quotient for CWLEP
Region
North
Central
Sector
Location Quotient
Mining of coal and lignite
Manufacture of wearing apparel
Manufacture of other non-metallic mineral
products
Manufacture of motor vehicles, trailers and semitrailers
35.20
4.45
Water collection, treatment and supply
Information service activities
South
4.10
6.73
2.40
2.10
Repair of computers and personal and household
goods
6.14
Manufacture of motor vehicles, trailers and semitrailers
4.69
Water collection, treatment and supply
2.95
The Coventry and Warwickshire region appears to have a specialism in the advanced manufacturing
sector1 with several large companies based in the region, for example Jaguar-Landrover. Knowledge
intensive sectors are those defined where higher qualifications and skills are required to work in
those relevant sectors. Figure 2 shows the number of employees for knowledge intensive service
(KIS)2 sectors within in CWLEP, where it is seen that Warwick has the largest number of employees in
Warwickshire in KIS sectors. The largest sector for each region is Other KIS which includes veterinary
services, education, libraries and museums. The second largest KIS is market which includes
transport, legal and accounting services, market research and other professional, scientific and
technical services. This sector is important for Coventry, Warwick and Stratford. For Stratford and
Coventry financial KIS is reasonably large and this includes finance and insurance services. The
smallest KIS in the region is hi-tech which includes telecommunications, computer programming and
scientific research and development.
Manufacturing is not included in KIS but is defined itself into high, medium and low-tech
manufacturing. Figure 3 shows the breakdown of high-tech manufacturing for CWLEP. There are five
main sectors of high-tech manufacturing which are important for CWLEP: electronic components
and boards, computers and peripheral equipment, communication equipment, instruments and
appliances for measuring, testing and navigation: watches and clocks and air and spacecraft related
1
Sectors include manufacturing of motor vehicles, electronics for motor vehicles, pharmaceutical products, for
example
2 A list of all KIS sectors can be found in the appendix
machinery. Coventry and Nuneaton and Bedworth have highest employment in air and spacecraft
related machinery, whereas Coventry, Rugby and Warwick have higher employment levels in
instruments and appliances for measuring, testing and navigation. North Warwickshire borough has
higher levels of employment in electronic components than the other regions of CWLEP. Stratford is
the only region to have employment in the pharmaceutical products sector and also contributes to
the manufacture of computers.
Figure 2: Knowledge intensive services by region
Market KIS
70,000
Financial KIS
60,000
Hi-tech KIS
Number of employees
50,000
Other KIS
40,000
30,000
20,000
10,000
0
Coventry
North Warks
Nuneaton &
Bedworth
Rugby
Stratford
Warwick
Source: NOMIS
Figure 3: High-tech manufacturing by region
1,200
Number of employees
1,000
800
600
400
200
0
Basic
Pharmaceutical Electronic
Computers & Communication Consumer
pharmaceutical preparations components & peripheral
equipment
electronics
products
boards
equipment
North Warwickshire
Rugby
Warwick
Source: NOMIS
Nuneaton and Bedworth
Stratford
Coventry
Instruments &
Optical
Air and
appliances for instruments & spacecraft &
measuring, photographic
related
testing &
equipment
machinery
navigation;
watches &
clocks
Moving on from employment numbers and turning to businesses to explore the business base of
CWLEP, where micro-size firms are those with fewer than 10 employees, small firms are those with
between 10 and 49 employees, medium-sized firms have between 50 and 249 employees and large
firms have 250 plus employees. Figure 4, below, shows the proportion of the total number of firms
in each region of the CWLEP. Stratford borough has the largest number of firms followed by
Coventry and Warwick. North Warwickshire and Nuneaton and Bedworth have the fewest number
of firms. The CWLEP houses 565 medium and large firms (2% of the total) compared to 28,505 micro
and small firms; of this 25,940 are micro-sized firms (nearly 90% of the total). This is shown in Figure
5 where size of firm is broken down by industry. Medium-sized firms are only visible for
manufacturing, wholesale and retail trade and profession and scientific activities. All industries are
dominated by micro-sized firms.
Figure 4: Total number of firms by region
Coventry
6,100
North Warwickshire
6,965
Nuneaton & Bedworth
2,480
7,105
2,800
3,620
Source: NOMIS
Rugby
Stratford
Warwick
Figure 5: Number of firms by size and sector
5,000
Number of firms
4,000
3,000
2,000
1,000
0
micro
small
medium
large
Source: NOMIS
Looking more closely at the impact of the recession Figure 6 shows the net birth rate of firms for the
LEP from 2006 to 2011. Health and social work, public administration and defence, professional,
scientific and technical services and water supply, waste management and remediation sectors have
seen a continued growth throughout the time period with the professional, scientific and technical
services seeing the largest growth. Generally between 2006 and 2008 there was a positive net birth
rate of firms within the CWLEP; during the recession 2008-2009 most sectors saw a decline. Net
birth rates picked up during 2009-2010 leading to some recovery but still most sectors saw a decline;
going into 2010-2011 the majority of sectors saw positive net birth rates. Financial and insurance
services saw the largest decline from 2008-2009. From ONS data Warwickshire tends to have a
higher number of new start-ups than Coventry (for 2006, 2009 and 2010) but survival rates tend to
be fairly similar, although overall survival rates for new firms has declined from 2006 to 2010. For a
firm born in 2006 the one-year survival rate (average across CWLEP) was 97.5% (81.4% for a twoyear survival) and for a firm born in 2009 the one year average survival rate decreased to 92.1%
(73.3% for a two-year survival). For a firm born in 2010, the story is slightly different; the average
one year survival rate was 84.3% of which 87.3% of Warwickshire’s new firms survived compared to
81.3% of Coventry’s.
Figure 6: Net birth rate of firms in CWLEP by sector 2006-2011
Arts, Entertainment & Education
Health & Social Work
Education
2006-07
Public Administration & Defence
Administrative & Support Services
Professional, Scientific & Technical Services
2007-08
Real Estate
Financial & Insurance Services
Information & Communication
2008-09
Accommodation & Food Services
Transportation & Storage
Wholesale & Retail
2009-10
Construction
Water Supply & Waste Management
2010-11
Electricity, Gas, Steam & AC Supply
Manufacturing
Mining & Quarrying
Agriculture, Forestry & Fishing
-30%
-20%
-10%
0%
10%
20%
30%
Source: TBR
To conclude, this paper has explored some key issues regarding the sectoral make-up of the CWLEP.
The analysis presented shows a changing and diverse economy for the region; a region which
historically has seen a boom from the manufacturing industry (especially in cars) to a transition away
from manufacturing – which is declining on a national scale – to a service based economy. The
sectors of education and health and social work have seen an increase in Nuneaton and Bedworth
and Coventry whereas the south has seen an increase in ICT, finance and business support. The
north typically specialise in lower-skilled employment sectors for example transport and distribution
in North Warwickshire and Construction in Rugby, whereas the south have higher employment
levels in higher-skilled employment sectors which is one of the primary reasons why the south
outperforms the north in terms of value added to the local economy and average wages. In terms of
the growth strategy for CWLEP it is clear that a one-size-fits-all policy is not appropriate. The LEP
should consider its priorities and determine whether a convergence strategy should be adopted to
bring the north to ‘catch-up’ with the south or whether the north and south differences should be
accepted and treated as two different economies with alternative strategies to help both grow and
develop in each way required.
Appendix A:
Table A1: Sectors defined using 2007 SIC codes with groupings based on the Eurostat definition
Overall Sector
2007 SIC code
59
High-tech KIB
Financial KIB
Market KIB
Other KIB
High-tech Manufacturing
60
61
62
63
72
64
65
66
50
51
69
70
71
73
74
78
80
58
75
84
85
86
87
88
90
91
92
93
211
212
261
262
263
264
265
266
267
268
303
Sector
Motion picture, video and television programme production, sound
recording and music publishing activities
Programming and broadcasting activities
Telecommunications
Computer programming, consultancy and related activities
Information service activities
Scientific research and development
Financial service activities, except insurance and pension funding
Insurance, reinsurance and pension funding, except compulsory social
security
Activities auxiliary to financial services and insurance activities
Water transport
Air transport
Legal and accounting activities
Activities of head offices; management consultancy activities
Architectural and engineering activities; technical testing and analysis
Advertising and market research
Other professional, scientific and technical activities
Employment activities
Security and investigation activities
Publishing activities
Veterinary activities
Public administration and defence; compulsory social security
Education
Human health activities
Residential care activities
Social work activities without accommodation
Creative, arts and entertainment activities
Libraries, archives, museums and other cultural activities
Gambling and betting activities
Sports activities and amusement and recreation activities
Manufacture of basic pharmaceutical products
Manufacture of pharmaceutical preparations
Manufacture of electronic components and boards
Manufacture of computers and peripheral equipment
Manufacture of communication equipment
Manufacture of consumer electronics
Manufacture of instruments and appliances for measuring, testing and
navigation; watches and clocks
Manufacture of irradiation, electro-medical and electrotherapeutic
equipment
Manufacture of optical instruments and photographic equipment
Manufacture of magnetic and optical media
Manufacture of air and spacecraft and related machinery