While the Severn crossing is often seen as a barrier to setting up in Wales, there are also incentives for going west. Kristian Dando reports.
Three miles doesn't sound very far. But for businesses, the concrete, tarmac and steel of the Severn crossing is more than a stretch of connective motorway. It is a psychological barrier - but is the distance really just in the collective heads of business?
Relocation to Wales is a tough choice to make for companies in the South West of England. The cost of travelling by car is on the rise, and in the light of last month's Budget there is little sign of this abating. An additional £35.30 toll every day is unwelcome which ever way you look at it. The cost of moving freight is even greater - vans cost £310.60, with HGVs weighing in at a profit-sapping £315.60.
The second Severn bridge is thought to have made upwards of £3600m since opening in 1996 - enough to pay for it three times over.
Liberal Democrat assembly member Mike German believes the entry fee puts Wales at a considerable handicap. "The Severn Bridge tolls are a barrier to Wales' prosperity and a real disincentive to people visiting Wales or setting up business opportunities," he says. "One of the best ways to close the prosperity gap between Wales and England would be to remove the financial barrier at the border. Scrapping the tolls would put the area on equal footing with Bristol."
Despite the perceived high cost of crossing the bridge, it is still perfectly feasible to move from the West Country to South East Wales - be it Newport, Cardiff, or the areas around Cwmbran and Chepstow, and still make a saving.
And although even Cardiff may struggle to rival the economic powerhouse that is Bristol, the business parks and industrial estates on the outskirts of Wales' urban areas are staking a serious claim for the same corporate clients. Wages are lower, the workforce is ready and willing, and the cost of living cheaper than eastwards over the estuary. So perhaps the question is not: "Why set up in Wales?" but rather, "Why not?".
With unemployment higher in Wales than across the water - the rate in Blaenau Gwent is almost three times as high as that in Gloucestershire, a mere half hour's drive away - there is undoubtedly demand for jobs.
Employers can also expect to pay less for their labour - average wages in West Newport, Torfaen and even the well-to-do areas around Monmouth all weigh in at under £3400 per week, compared to areas of the South West like Gloucester and Bristol, which are well in excess of the £3400 mark. Though the rate of pay may point to a more skilled workforce in those parts of England, Wales has the additional benefit of Assembly grants in the areas with highest unemployment.
But South Wales has much to contend with - not least the economic power of its nearest neighbour. Helen Hollard, leader of Bristol City Council, told Insider recently: "Bristol's economy is the strongest of any of the major UK cities outside London and outranks European capitals like Madrid, Rome and Berlin in terms of productivity per person. More than 160 companies have their national headquarters in the city and six of the South West's ten largest businesses are based here."
Aztec benchmark But if Wales is going to compete with the south west of England, then Aztec West is the benchmark its developments must meet. The first development of its kind in the UK, set up 25 years ago, Aztec's clients include Orange and Aardman Animation. It may be the only business park in the UK to boast an Oscar to it's name - Aardman's 2006 animated feature Wallace & Gromit: The Curse of the Were Rabbit was produced on the site. Over 100 companies call it home, with over 7000 jobs on site. The industrial sector too, has much to compete with. The likes of Emerald Park near the Avon Ring Road, with near-30 hectares of space, has long been popular with distributors - including Sainsbury's. The new £3300m Bristol & Bath Science Park will also challenge for hi-tech business and appeal to the region's established defence, digital and biotechnology sectors.
To tackle this kind of competition, the South East corner of Wales has to offer something a bit special. Newport's Celtic Springs leads the charge for business parks in the region. Although yet to be fully completed, its location - around 25 minutes away from the Severn Bridge - and potential quality of facilities will make it a credible alternative to Aztec West. The close proximity of Celtic Springs to England, compared to its M4 rival Cardiff Gate, makes some in the industry predict that Newport's location and burgeoning addition of new facilities may depose Cardiff as the region's business hub. And with regeneration of the city in full swing, it is set to offer a more attractive to set up home, too.
Military technology supplier EADS Defence & Security Systems moved to Celtic Springs recently. The company's chief executive, Len Tyler, explains the move: "We were looking for a location that would support the technology that we deliver and also wanted space that would adapt to our business growth and provide the best environment for our staff."
The measures that developers have included in the site - including a creche and gym, not always available in out-of-town locations - were also factors in EADS choosing Celtic Springs.
Further west along the M4, Cardiff Gate is heading for its tenth anniversary. With over 2,000 employees at the site - at one point, it could boast more workers than Cardiff Bay - it is an established player in the region's office make-up and the first development of its kind in south Wales. Perhaps its most high-profile occupier, director enquiry service The Number 118 118, has been a fixture at the park since its launch in 2003. The popularity of Celtic fringe accents, Welsh in particular, has gone some way to establishing South Wales as a popular base for call centres. And with grant status, potential firms looking to set up at the site are eligible for Assembly money for the provision of employment in the area.
Office developments are popping up at other sites across the area. Work will soon get underway on Linea, situated in St Mellons on the extreme east of the capital, and Cardiff city centre's status is growing as more high-profile occupiers move into developments like Callaghan Square and the Waterside area of Cardiff Bay. More attractive space is being offered than at traditional economic centres, like Newport Road.
Industry The industrial sector in Wales has fewer purpose-built facilities than the Bristol area, but the principality is capable of making cheaper offers. With the manufacturing industry slowly ebbing away to Eastern Europe and the Far East, the M4 is awash with vacant sheds that need filling. These sorts of buildings offer a far cheaper compromise, and can do so to the tune of hundreds of thousands of pounds. The logistics trade is taking advantage of this, despite the cost of sending HGVs over the Severn.
But speculative developments are thin on the ground in Wales, with only Frontier Estates' 524,617 sq ft Severn Crossing development near Chepstow flying the flag, compared to the wealth of similar projects across the water.
"South Wales simply doesn't have the geography for the sort of speculative developments that are going on in the Bristol region," says Stephen Myers, industrial property specialist at Knight Frank in Cardiff. "In the Avonmouth area developers will quite happily build 500,000 sq ft speculative developments because there's a market for it."
"But Wales has got the major advantage of cheaper rents - even if the buildings are second-hand stock which were originally purpose-built for something else - usually manufacturing. But with all the former manufacturing space, landlords have got to be a bit more creative in what they do with their properties. And through this, potential occupiers can make quite a significant saving compared to across the water - around £31 per sq ft."
Industry is taking advantage of the huge spaces - many of which were originally built with public funding - that can provide as much as 1,000,000 sq ft of flexible accommodation. With developers taking on obsolete manufacturing facilities and refurbishing them - and frequently splitting them up for multiple occupancy - the logistics and distribution sectors in particular, have found good homes in Wales with Argos, Homebase and Tesco all choosing to set up in the area around Chepstow.
Internet giant Amazon has chosen to go even further west, establishing a new distribution centre outside Swansea. With globally-recognised names like Amazon choosing Wales, the message is that the M4 corridor is as serious a proposition for mega-business as anywhere else in the country.
"In Bristol, rents have got so high on the M4 corridor that speculative developments make sense," says Lambert Smith Hampton's Cardiff industrial director, Jason Thorne. "But it's not just pounds per square foot savings that can be made (in Wales) - the actual land value is cheaper, and then there's the matter of Assembly grants, which can be a very attractive proposition for setting up here."
Avoiding the Severn entirely, Monmouthshire, the Cwmbran/Pontypool area and Blaenau Gwent are also vying with Gloucestershire for trade with the Midlands. The Heads of the Valley Road offers a straightforward and rapid route to the M50 and M5 leading to the enormous economic hub of Birmingham, the Black Country and all points north - and all with no tolls to pay. And with the Assembly eager to provide grants for the economic redevelopment of areas like Ebbw Vale and Tredegar, it's an attractive prospect. Locations like the Rassau Estate in Ebbw Vale are undergoing renovation - with regenerated office developments, including ex-council facilities, continuing to provide cost-effective choices.
The Welsh economy has grown in its own right over the past ten years, and Swansea, Newport and Cardiff - not to mention towns through the valleys - are undergoing unprecedented regeneration. So more trade from across the Severn may be desirable, but it will not make or break the principality. "What's also important to remember is that with the sheer growth in Wales - Cardiff in particular, but Swansea and Newport are catching up - is that Wales has created a market within a market," says Thorne. "These places need servicing as much as anywhere else."