Glasgow has been facing big challenges for a long time and anyone looking at the bare statistics is left in no doubt about the size of them. But it is also worth reminding ourselves Glasgow still employs just over 400,000 people and is a big driver of the Scottish economy. Its activities range from whisky production to financial services and it remains the biggest shopping centre outside London
Glasgow has been facing big challenges for a long time and anyone looking at the bare statistics is left in no doubt about the size of them.
The city's unemployment rate is currently 6.2 per cent against the Scottish average of 4.4 per cent, with some of the biggest jobless hotspots such as Maryhill and Springburn. Since 2008 unemployment has doubled due to the recession and continuing downturn. Nearly 30,000 people in Glasgow are without jobs out of a Scotland-wide total of 150,000.
But it is also worth reminding ourselves Glasgow still employs just over 400,000 people and is a big driver of the Scottish economy. Its activities range from whisky production to financial services and it remains the biggest shopping centre outside London.
Property giant Land Securities are currently developing a new s70m retail and apartments complex in Buchanan Street and planning a further 350,000 sq extension to the existing Buchanan Galleries.
Earlier this month the Scottish Government gave the go ahead for a s80m tax incremental financing to support the controversial extension."
Glasgow Chamber of Commerce chief executive Stuart Patrick sees a clear split in the city's economy. He says on one side are a very stretched and pressured group of his members trying to see if they can soak another pound or two out of Scottish consumers. "I think for the SMEs it is still an issue how to manage cash, nd new business and deal with the resourcing that is needed to keep on going through really hard times."
But it is a very different picture for large companies involved in international markets. "Just now it seems as if you are in whisky or engineering or business conferencing there are lots of really good stories to tell," says Patrick.
On the day of our interview some 4000 international delegates were at a diabetes conference at the Scottish Exhibition and Conference Centre. Later in the year there are a series of other medical conferences in the city with thousands of delegates attending. Patrick points to a recent survey which showed Glasgow was 29th in the world for the number of business delegates visiting the city. "Edinburgh had a shot at saying they were 29th in the world but they are 29th for the number of conferences," says Patrick, with a bit of a mischievous twinkle in his eye. "I think I prefer the wallets."
As a consequence hotels are seeing better occupancy than expected.
For the retail sector it is also a tale of two cities. "The footfall in Buchanan Street seems to be holding up well but we know there is downward pressure on rentals for the extremities of Argyle Street," he says. "Clearly there are more vacancies that have become available as some of the major chains have gone under and there is no question we are seeing the impact on both hotels and on restaurants and bars. All the services are nding there is not so much cash in the street."
Patrick argues the financial services district is holding up pretty well. In a recently published global financial services index Glasgow was in 33rd place - just below Edinburgh in 32nd position. Another report has shown Glasgow's International Financial Services District has seen a net increase in employment over the past four years despite the downturn.
Alison Newton, who heads commercial and private practice law firm HBJ Gateley in Glasgow, says the city shouldn't be compared against London or Aberdeen because they have both developed distinct economies. But she says external investors who are going to buy outside London and in the regions will only really look at Birmingham, Manchester, Glasgow and Edinburgh.
"Glasgow is regarded as having enough standing and enough economy and enough prospects," she says. "So if you are a German fund you are still happy that Glasgow continues to sit within these top four regional cities. Could Glasgow do better? Yes. Is Glasgow moving forward compared to competing cities? Not sure. It is holding its own but should be stealing a march."
Newton argues that the city needs clear leadership. "We need something that shows Glasgow is flexible, open for business and committed to making things happen without getting stuck in old fashioned politics," she says.
Recently Patrick and Douglas Smith, who heads the Scottish arm of commercial property agents CBRE, as well as David Coyne, head of business and the economy at Glasgow City Council, took part in an event in London to encourage investors to invest in the city.
Smith says there is an imminent shortage of supply for class A office accommodation in the city. But there is also no funding available for new speculative development at this point in the cycle. He also believes there have been some misconceptions about the Glasgow property market including claims it is overly dependent on the public sector. "Whilst there has been some growth over the last five years it has represented only 11 per cent of take up in Glasgow's office market," he says. "More important is banking and finance, the professional sector and business services."
The only new building which is currently empty is Cuprum in Argyle Street. However Smith is hopeful that one new build scheme by Abstract Securities may be first off the blocks. The 11-storey, 170,00 sq St Vincent Plaza has just received planning permission and is due for completion in the third quarter of 2013.
Cbre is also understood to be acting for ScottishPower to find it a new headquarters in the city. The Spanish-owned energy giant has its corporate HQ in Broomielaw but its main administrative office in Cathcart on the other side of the city. It needs to identify a site and developer to deliver about 220,000 sq for occupation by late 2015.
One recent event which has been of major concern to Patrick has been the well publicised financial problems at Glasgow Rangers football club. An economic impact study published around 2005 showed that between them Rangers and Celtic produced around s100m in gross value added and supported some 3000 jobs. He also says there is an issue about what the problems of the club project to the rest of the world.
Patrick says when he was talking to Barcelona's investment agency it was clear the fortunes of its main football club had a real impact on the way the city was perceived around the world as to whether it was strong or weak. "I wonder, with a certain amount of tentativeness, just what impact it has on international perceptions if your major football brands are not healthy. You can't get any figures but I think it doesn't help that sense of Glasgow's role in the world and self image."
But there is one very strong, positive sports story focusing on Glasgow and that is the Commonwealth Games which are being staged in the city in 2014. Anyone visiting the east end will have seen the huge Sir Chris Hoy Velodrome and National indoor Sports Arena now competing with Celtic Park to dominate the skyline. And across the city at the SECC the new 12,000-seat Scottish national arena is well under way.
In October the Commonwealth Games organising committee moved into its new offices in the Tontine building in the Merchant City which had been derelict. Glasgow 2014 communications director Gordon Arthur says it is now getting onto the very steep bit of the curve in terms of growth. "We are up to 132 paid staff now with a couple of apprenticeships and eight secondees," he says. "To put it into perspective when we came back from Delhi Commonwealth Games 18 months ago we were a staff of 30. Now we are getting nearer to 150 and by the end of this year or April 2013 we will be between 350 and 400. Then between April 2013 and about April 2014 we will go from 400 to 1100. It is a huge number of people coming on six-month contracts at games time, particularly all the venue teams delivering all the services and the venues."
Patrick says the games give Glasgow something tangible to exploit. Arthur says it is not just about the games in 2014 but the legacy they create for Glasgow. "It is really important for us to make sure we leave as much knowledge behind as we can," he says. The city is already bidding to host the Youth Olympic Games in 2018.
"Quite a number of the people who have come in over the last six months have been people with previous games experience and they have tended to be coming in at head of department level," says Arthur. "The basic plan is that they have got the games knowledge and experience and then we can bring people in from the local market to learn from them over the next two and a half years, some of whom will probably go offand work in events elsewhere and some of whom will hopefully stay in Glasgow and work on the major events which were already scheduled to come to the city let alone the ones it is aspiring to."
Arthur says things are currently going really well. "We genuinely feel we are in good shape. There is a lot of scrutiny on us for good and proper reasons because we are so heavily funded. We had the first Commonwealth Games Federation Co-ordination Commission visit last October and they were happy.
"This is a really big year for us in terms of developments. The squash courts at Scotstoun, the hockey facilities at Glasgow Green and the mountain bike course at Kathkin Braes will all start and finish this year. The new six-lane pool at Tollcross will be finished and opened later this year. There are the start of houses appearing on the Commonwealth Games Village. The other thing in that part of town which is looking terrific is the east end regeneration route which, along with the refurbishment of Dalmarnock station which is now under way, will create a fantastic walkway up towards Celtic Park and the Commonwealth Arena."
The games committee is also well on the way to achieving its commercial target of s100m in sponsorship. "Taking into account the two broadcast deals and the three sponsorship deals we have done to date we are a third of the way to that target," says Arthur. "No Commonwealth Games has ever been anywhere near that two and half years out from the games."
Glasgow firms have also won s181m-worth of games-related contracts so far with more to follow.
The city council is co-ordinating the city's legacy issues and jobs are a big part of that. It has launched a Commonwealth apprenticeship scheme, the Commonwealth graduate scheme and the Commonwealth jobs fund for the longer-term unemployed.
Arthur says people in Glasgow have a fantastic track record of getting behind big events. "Even when you had the UEFA cup final with two Spanish teams here the whole city came to life. Glaswegians and the city have a record of supporting events and this will be the biggest event that has happened in Glasgow's history by a long way.
"There will be huge numbers of visitors, there will be a huge cultural programme as well as the games' sports programme. The city will be alive for the best part of three weeks in a way it just hasn't experienced before and the more we get that excitement across to people the more people will be encouraged to come and be part of it."
IN FOCUS: Glasgow City Building
John Foley leads a workforce of some 2200 at construction giant City Building, which is wholly owned by Glasgow City Council but run independently of it. The company has 500 apprentices and is the largest apprentice employer in Scotland.
Foley took over the reins of City Building last year but he has been with the company since 2007 when he joined as finance director shortly after it became a limited liability partnership. To enable City Building to tender for further GHA work it had to become a separate entity so it could enter the bidding process but it also had to make up the shortfall due to the decline in Glasgow City Council work.
At that point roughly 70 per cent of the turnover would have been Glasgow City Council and 30 per cent GHA. Today its £200m turnover is roughly a third GHA, a third city council and a third external.
The company is now a house builder and engages in a range of construction activities, refurbishments, skills building, office building, fit-outs, and manufacturing. It has built around 500, predominantly social, houses in the past three years.
One of its unique features is The Royal Strathclyde Blind Industries factory which makes kitchen and bathroom furniture and fittings as well as timber frames for houses and employs 240 people - more than 50 per cent of whom are blind and have some other form of disability.
Among its recent work has been the refurbishment of the Tontine building in the Merchant City which is being used as the headquarters of the Commonwelath Games organising committee. "It was in extremely poor condition and to get it to where we have it now was incredible. We did that job in approximately four months and it would normally have taken about 14 months to do. We were determined we would not have the first project in Glasgow for the Commonwealth Games go over the deadline."
It has also worked on the new Sir Chris Hoy Velodrome as a sub-contractor to McAlpine.
The company also has its own apprentice training school in Paisley which does not restrict itself to only teaching professional skills. "The young people have a lifestyle course as well. There is a citizenship programme and they are trained how to be a good citizen, how to look after themselves in terms of health, education, anti-sectarian messages, intervention messages - there are all sorts of courses they have to undertake. The idea is when they get to the end of their apprenticeship they are coming out qualified as a joiner or whatever but they also have a sense of what it means to be a citizen."
Foley admits his favourite subject is energy efficient housing. His company has designed and built some new experimental energy-efficient houses in the Gorbals. "They are fabulous but they are not space age. They don't look techie, we kept them as simple as we could. We reckoned the average energy cost per household in Glasgow is roughly £1600 per annum. We set ourselves a target of reducing that significantly. And remarkably the energy cost of these houses is estimated to be less than £300 a year.
"Through time this will become the future of housing in Glasgow. You can't do it overnight because you are talking about housing replacement here. It will take a while but I think we are at the forefront of that."
IN FOCUS: Glasgow City Council
Next month voters will decide who to put into power at Glasgow City Council. To date it has remained a Labour stronghold but after the last Holyrood election when the SNP took control of the Scottish Government there are no certainties. However, what is certain is that action needs to be taken to tackle the city's economic challenges.
One council initiative which has gone down well with the business community was the formation of a team of experts who will steer Glasgow's economic development over the next decade. The Glasgow Economic Leadership Board was established in response to an independent report which set out a range of measures aimed at helping the city harness its strengths, renew its economy and identify new trade and investment opportunities.
It is chaired by Professor Jim McDonald, principal of the University of Strathclyde, and members include Benny Higgins, chief executive of Tesco Bank; Keith Cochrane, chief executive of The Weir Group; Jim McColl, chairman and CEO of Clyde Blowers Capital; and Glasgow Chamber of Commerce's Stuart Patrick.
The board will oversee the implementation of a new strategy aimed at supporting the city's economy over the next 10 years, based on the findings of the Glasgow Economic Commission, a high-level independent group which issued a report last year after a widespread nine-month consultation with city businesses.
According to the report, Glasgow has generated more jobs in total, including twice as many private sector jobs, than its main UK competitors Birmingham, Manchester and Leeds. Five key growth sectors were identified as providing the greatest economic and employment opportunities: low carbon industries, with Glasgow as a global hub; engineering, design and manufacturing; life sciences; financial and business services; and tourism and events.
The council is also a partner in the new South Glasgow Hospitals project which is due for completion in 2015. It will give Glasgow one of the most advanced hospitals in the UK and will be the largest critical care complex in Scotland with 1109 beds in the adult hospital and 256 beds in a linked children's hospital. It is hoped the project will act as a catalyst for growing more quickly the commercialisation of life sciences opportunities.