South West Wales is arguably Wales’ most dynamic region, with the country’s biggest inward investment project at one end and a booming oil and gas industry at the other. Douglas Friedli takes a look at the forces at work.
Amazon chief executive Jeff Bezos is considering a visit to the Swansea area this year to inspect his new distribution centre. If he does, he will have to check that his visit does not clash with the launch of a £6bn gas project 80 miles or so down the road at Milford Haven. There is energy in South West Wales. Literally, in the case of Pembrokeshire, with £3.2bn of investments in oil, gas and renewable projects scheduled over five years.
But there is also the human kind of energy – the kind that took just 25 seconds to grant planning consent to Amazon for the biggest inward investment project since devolution, or that allowed Walters Group to build a racecourse in an area with no history of horseracing.
Milford Haven’s liquefied natural gas project and Amazon’s 800,000 sq ft distribution centre provide neat bookends for a region that has been outperforming the rest of Wales for years.
Like everywhere else, the area has suffered its share of knocks. The day before Amazon opened its warehouse at Crymlyn Burrows in April, industrial group 3M revealed it was cutting 185 jobs at its plant in nearby Gorseinon.
Fiona Rees, chief executive of Swansea Bay Futures, the economic promotion agency, says: “We have to be unafraid of the changing nature of the economy here. On occasions there is going to be bad news. Certain areas are going to go into decline. We have to accept that and make sure we are planning for the future.
“We also need to make sure local companies are involved as much as possible in the big developments that are taking place, so that they don’t feel the development is being done to them, rather than for them. It is quite a big challenge.”
Peter Jones, who heads Morgan Cole’s Swansea office, says it is easy to see improvements taking place: “Looking out of my window now, I can see three or four cranes. Frankly, Swansea has been dead for ten years, but now there is this transition taking place. You have heavy industry being replaced by the knowledge economy, the great driver for which is Swansea University,” he says.
An example of how the university’s influence reaches across the region is a recent tie-up with IBM. The venture led to the Technium Pembrokeshire building, just south of Milford Haven, being selected to host a new environmental modelling centre.
The region’s retail offering is also being upgraded, with plans to change Swansea’s St David’s Centre. Carmarthen’s town centre has been boosted by the arrival of a Debenhams store and bowling alley, while the retail park at Trostre near Llanelli continues to grow. Barry Evans, regional director for commercial banking at The Royal Bank of Scotland, says: “The retail bandwagon, which often leads development, is already on the move.”
For John Davies, head of economic development at Carmarthenshire council, the shops are just the start. “We have had a large increase in the retail offering in the area. Now we want to attract more added value companies – IT and media – with the quality of life that we can offer,” he says.
“We have Tinopolis (the TV production company) who find Llanelli is a great place to work. Companies like that offer good wages, high-quality jobs. That’s not to say we don’t want other jobs, but we also want to retain young people.”
He adds that the old perception of the region as remote does not count for much now. “With IT and communications now, we feel that being where we are should not be a barrier,” he says.
You don’t need to look very far down the Milford Haven estuary with its refineries and jetties find a growth industry. The port had its busiest year ever in 2007. That pace is set to increase this summer when liquefied natural gas (LNG) imports start arriving at the South Hook and Dragon terminals. A series of gas-fired power plants could follow.
About £3.2bn will be pumped into Pembrokeshire’s energy economy between 2006 and 2011, according to Tony Streatfield, Pembrokeshire council’s head of inward investment. That includes: £600m at South Hook, home of the LNG joint venture between Qatar Petroleum, ExxonMobil and Total; £300m on the smaller Dragon LNG project; and £800m that RWE hopes to invest at its power station near Milford Haven. If it gets permission from the Assembly, another power station or two could follow.
Then there is the planned interconnector that will allow electricity to flow between Wales and Ireland. And there is no shortage of renewable energy projects, with Eon and Lunar Energy hoping to set up one of the world’s biggest tidal energy power stations just off the Pembrokeshire coast and wave power generator Wave Dragon also hoping to harvest the natural power of the sea.
Ted Sangster, chief executive of Milford Haven Port Authority (MHPA), is delighted with the pace of change, but wary of the pitfalls. “The oil industry has has a history of coming and going here,” he says. “Every time a refinery closes, it is a significant blow to our business. It takes time to readjust. Part of our strategy is to diversify so that we are not so reliant on a small number of large customers.”
The result has been property development, improving the mix of buildings in the area, and marinas that bring a splash of life, colour and income to the area’s harbours.
Pembrokeshire seeks to avoid over-reliance on oil and gas through projects like the Technium and Bluestone, the holiday park set in 500 acres of countryside near Narberth, which is due to open this summer. Morgan Cole’s Jones says: “Bluestone will lead to other great projects. I heard it described as the ‘mother ship’ around which the convoy of tourism will gather,” he says.
High-end accommodation like Bluestone is better than the more traditional caravan sites, says Jones. It will employ more people and Bluestone’s guests, unlike the caravanners, are less likely to spend the week consuming groceries brought from home.
Cruise ships also land on Milford Haven in increasing numbers and disgorge thousands of passengers eager to sample the attractions of the area. Sangster says: “The cruise market in the UK and northern Europe is growing at about 10 per cent a year and Wales is underrepresented in that. We believe we have as much to offer as Scotland.” The authority hopes to increase its attractiveness to cruise lines by extending the berthing point so that passengers can get to shore without having to transfer via a smaller boat.
Carmarthenshire is also making a play for the tourist market, although its offering is different from its western neighbour’s coastal appeal, with a focus on activities such as mountain biking. And Ffos Las racecourse, due to hold its first race early next year, will attract a good share of Irish punters who travel through the area every year on their way to Cheltenham.
Barry Evans, regional director for commercial banking at The Royal Bank of Scotland (RBS), says there is money to be made for those willing to venture west. “I see the market as quite immature in terms of deal catalysts and advisers,” he says. “A lot of the big players have forgotten about west Wales and that is why we are on the front foot there.”
But the region has its challenges, and transport comes up most often. MHPA’s Sangster insists transport needs to improve: “Pembrokeshire’s potential is made more difficult by the approach taken by the Assembly to transport. The train network is diabolical, and some people choose not to live here because of the road network. It didn’t stop LNG coming, but it was a barrier they had to overcome.”