So much going for Wales... but also much to achieve

Mar 1 2008 by Aled Blake, Western Mail

As Wales celebrates St David’s Day, Aled Blake asked a selection of business people to give a flavour of the state of the economy

Walter May, managing director of Monmouthshire-based equine services venture Equinalysis.

Growing a business in Wales is the most challenging for companies that have the greatest potential to provide long-term intellectually based jobs, so desired by the Welsh Assembly Government and the people of Wales.

Ironically, it’s not the lack of ideas or the resources to transform those into technological advance products that’s the problem; it’s the inability to match often leading-edge solutions to their market. We seemingly lack the creative ability to sell.

The challenge facing young companies is how to develop a repeatable process that can effectively sell a new or improved way of addressing a business-critical problem in purely business terms.

Gaining access to top executives within some of the countries or the world’s largest companies is a prerequisite to winning business quickly and at a level that can deliver high sustainable growth.

The Welsh Assembly Government must be lauded in their desire and commitment to creating knowledge-based businesses and supporting them through the various stages of development.

However, there is a clear chasm when it comes to the sales or growth phase.

Far too many businesses are failing or being consumed by foreign companies all too eager to get their hands on valuable intellectual property on the cheap.

There is a distinct lack of a sales culture in Wales and Welsh business.

Business leaders rarely invest intellectual effort to determine who they should pro-actively seek to adopt as customers and merely default to, reactively, wasting precious resources doing low quality deals that they often live to regret.

Like no other profession, everyone thinks they know how to sell.

That may be true when selling commodities where the overriding decision criteria is price but patently untrue at the other end of the spectrum, when providing intangible, multimillion-pound, business critical solutions to large corporates.

It has been claimed that the main reason many outstanding Welsh businesses fail is due to their inability to win enough new customers. This is still true today.

Unfortunately, companies large and small, mature or start-up businesses build a website, post some adverts and sit back and wait for the phone to ring – it invariably doesn’t.

We have some fantastic businesses in Wales with huge potential. I passionately believe we need to establish a sales culture within Welsh business, in order to fully exploit our talents and establish truly independent world-class businesses.

walter.may@talk21.com

John Union, Barclays commercial banking director for Wales

WALES continues to benefit from having strong universities, with high-quality people. That helps us, particularly in South Wales where we have got strong and growing universities which supply high level of skilled people.

There is a partnership approach between the Welsh Assembly Government and the private sector. Wales is seen as a good place to set up business.

We have seen a number of Aim-listed business here. We have got some high- profile people as well – Sir Terry Matthews being an example, which helps highlight Wales as a place to come and do business.

The broader economic picture in Wales shows that the credit crunch will have an impact.

Cheap money is gone and we have seen an expected increase in prices of mortgages and some products in the mortgage area being withdrawn.

In the US, the base rate has been cut quite drastically but there are different inflationary pressures in the UK market.

The impact for us, looking at our customers, is their expectations for sales demand is lower.

There is less money around and if there is going to be a slow-down businesses are advised to adjust their business plans accordingly.

However, we are very much encouraged by what is happening, we are not seeing any slowdown.

Craig Maunder, partner at ChandlerKBS in Cardiff.

It is still early days to see how things are going to pan out.

We are in the cautiously optimistic camp at the moment. The credit crunch has had a lot of publicity in the past six months but the UK banks are lending and they are bullish.

I do see some pressure coming into the buy-to-let market but the public sector remains strong in Wales, a lot of money is still going in there.

Certain areas of the private sector will also be OK. It’s all on a bit of a knife edge.

I think the Welsh economy is still strong, there is still an enormous demand in the construction sector and there are still skills shortages in key areas.

At the moment, the economy is pushing ahead. The key thing is what will happen later on in the year.

In Wales we have quite an entrepreneurial ethos, there are good examples of businesses that have succeeded but the Welsh market is quite restricted in its size.

Businesses often grow in the Welsh economy and will have to move out of Wales to continue growth.

There are still orders coming through, and we are definitely in the cautiously optimistic camp.

The serious players are still looking to put projects on and put deals together.

Adrian Brewer, regional director of construction company Willmott Dixon Turner

We are well on the way to achieving our turnover this year of £90m in construction work which will be dealt with from this office in Cardiff.

And we are confident with a rollover for next year that we will achieve our 2008 target of £100m. As far as the sectors we work in, I would say that 70% is in the public sector and we have numerous projects going on.

The construction industry is downstream from the credit crunch.

Not trying to be naively optimistic here, we are hoping we are not heading towards a recession, rather it is a correction.

If that does not happen and the economy does go into recession, then we should not feel sheltered in doing public sector work because the Government’s coffers will not be filled by commercial cash.

Trying to measure confidence is difficult, you can’t touch it or feel it but it does affect people and how they go about their business.

Once the banks start to get cautious they don’t lend money, then the lifeblood of our industry starts to wane, albeit in Cardiff St David’s 2 will be finished and other major building projects will also be completed.

Hopefully in the short to medium term we will be able to weather the storm and most contractors in South Wales are busy and are working to near capacity.

Mike Broomhall, retail development director, of Llantrisant-based kitchen retailer and manufacturer Sigma 3.

There is a very different environment at present, but it is still a reasonable one.

We have done quite a number of soundings over the past couple of months and they are saying there is a correction in the market at the moment.

There are undoubted price pressures on raw materials coming through for manufacturers, in our case specifically on timber, nickle, steel and packaging in particular.

The reverse of that is that there is price pressure from our customers wanting better prices.

There is still business out there, what you have to do is roll your sleeves up and work even harder, it’s a different environment out there and the effect of the sub prime and credit squeeze is beginning to show its way through.

It’s not the depressing picture of the early ’90s.

Undoubtedly, most economists would agree there was an overheating in the housing market, the increasing equity in people’s properties that gave them the confidence to spend.

The infrastructure in Wales has changed and improved – the simple things like transport and roads.

What Wales has is a very skilled and loyal workforce. If you compare and contrast it to the south east of England our labour turnover is relatively modest, and always has been.

We have a skilled workforce and a better infrastructure.

Wales has adapted to the huge changes over the last 30 years. We went through a period of a lot of inward investment, some of which worked, some which didn’t.

But Wales seems to have an amazing ability to reinvent itself.

Sigma 3 as a company and Wales as a nation have both shown that we have entrepreneurial spirit to take advantages of the opportunities out there.

Hugh Hilary, general manager for Park Plaza Hotel, Cardiff

THIS year has been a struggle. Our food and beverage has made up for the shortfall in accommodation, but it is the accommodation which drives profits through.

Having talked to my colleagues at other hotels in Cardiff in the last few weeks, the consensus is the same.

There are absolutely no town events here with the exception of the rugby, there is no conference out there which normally draw additional business in for us.

There is nothing other than sporting events which have been here since the year dot driving business in.

We really want a constant flow of business through the course of the year, but for the first time I can recall, in January there was not one town event of any note.

The city need to be infinitely more proactive in terms of driving business here.

These problems are specific to Cardiff, rather than the wider economy.

We had nine years of phenomenal, constant year-on-year growth and I don’t take the view that the bubble has to burst one day.

There is not enough being driven to attract new business.

In order to attract conferences you need to have a long-term strategy, we as hotels have voiced our concerns that there has been no proper strategy in attracting conferences here for some time and now that is coming home to roost.

This is a fantastic country and Cardiff is a fantastic city. We have so much going for us and we are not exploiting that.

As an Irishman I would say Ireland has done far more to promote itself to live and work as a place to live and work and visit – and Wales has every bit as much going for it.

This country has so much to be proud of.