Hull’s three-pronged feel-good factor
The fortunes of Hull notably changed in 2008 when the city’s football team was promoted to the top flight of English football for the first time in its 104-year history. Then, in 2017, it became the UK City of Culture, an achievement that would have been unthinkable just 20 years earlier.
The acid test is that people in Hull now think that Siemens is a Hull company, such has been its impact. It feels like we own it! It feels like family. Mark Jones, Hull City Council
Most importantly of all, however, in March 2014, just four months after the City of Culture announcement, German manufacturing giant Siemens – now Siemens Gamesa – announced that it would be investing £160m to develop an offshore wind facility in Hull’s Alexandra Dock. Associated British Ports invested another £150m in a project slated to create 1,000 new jobs. In February this year, as a confirmation of how successful the project has been, Siemens announced plans to expand its wind turbine factory in the city to enable it to make larger blades. Then, in March, the Humber region – within which Hull is the largest city by some distance – was chosen as one of England’s eight free ports, and a new £75m river port at Able Marine Energy Park on the south bank of the Humber was announced to support offshore wind farms in the North Sea.
Wind power has the potential to make Hull, along with the Humber region, a green energy hub within the UK and Europe for the foreseeable future. A city can’t survive on potential, however, and the twin challenges of Brexit and the Covid-19 pandemic look set to dominate its short-term future at the very least.
The breeze that turned into an investment hurricane
The Humber region has long played a big part in the UK’s energy make-up. Kishor Tailor, chief executive of the Humber LEP, says: “We’d had two of the largest oil refineries on the south bank of the Humber, producing about 20% of the UK’s oil, we had gas coming in at Easington on the North Sea coast, where about one-third of the UK’s gas is landed. The Humber region has long been a security point for UK plc, and we could build on the energy credentials we had on the back of that.”
And build the area did. Siemens had been on a lengthy search for a location for its turbine blade factory before the company landed in Hull. “We looked at about 55 European ports and we found that there wasn’t the perfect site; everywhere was a compromise,” says Ray Thompson, head of business development at Siemens Gamesa.
“The Humber is an enormously attractive river because of its sheer scale. There are no height restrictions, we can take the towers out vertically, and there was lots of space and good access to the sea. Hull offered the neatest solution for us. The UK’s offshore wind programme is mostly down the east coast too, and some of the largest projects in the world lie adjacent to the Humber Estuary.”
The deal was announced in March 2014, just after Hull had been named as the UK’s City of Culture for 2017. It is not often that a foreign direct investment (FDI) project has a whole city buzzing, but these combined factors created a buoyant atmosphere. One of the best-placed people to judge this mood was BBC Radio Humberside presenter David Burns. “People thought ‘this is our opportunity to shine’,” he says. “The council put up £5m or so for the City of Culture bid and that has paid off goodness knows how many times over. It put the city on the map, quite literally. One of the biggest cheers I heard around that time was when the BBC director-general said that Hull would be put on the BBC weather map.”
A marriage made in Hull
Attracting an investment the size of the Siemens project was one thing, but making it work for both the company and the city was another. From the Siemens Gamesa perspective, Thompson says: “Hull’s talent flow exceeded expectations. When we set the factory up we expected to have about 800 jobs in the blade plant, and we had 28,000 applications.
“One of the commitments we made to the local authorities was that we would give a preference to people from the local area when it came to jobs. We didn’t have a lot of resistance to the investment. When we set up, 97% of our employees were from the Hull and Humber region.”
Mark Jones, the director of regeneration at Hull City Council, adds: “Siemens has fulfilled the expectations that we had. The acid test is that people in Hull now think that Siemens Gamesa is a Hull company, such has been its impact. It feels like we own it! It feels like family, and that is because Siemens has worked hard to gain the confidence of the city and the local communities.”
Indeed, Hull’s reputation as a wind power hub has gone global. “We are seen as the go-to place for wind power,” says Jones. “We have tours in from the US and the Far East. In terms of added-value activity, jobs and business investment, Hull and the Humber are the number one wind power hub in the UK. Nowhere else has a huge production plant like that of Siemens in Hull.”
Tailor at the Humber LEP adds: “When we are looking to attract foreign investment, our tag line is now ‘the Humber is the energy estuary of the UK’. That tag line has stuck. People now recognise that the Humber is now a centre for offshore wind.”
The University of Hull’s Green Port Impact Assessment states that for every £1 of investment in the Siemens Gamesa factory, an additional £0.47 will be generated in the disposable income of the local economy of the Humber. It adds that the direct employment by Siemens Gamesa in Hull contributes up to £71.3m to the gross value added of the city.
An old-school approach to manufacturing
While wind power is grabbing the headlines in Hull, the city has a history of both innovation and manufacturing. Of the former, inventions credited to the city include boiled sweets, liquid crystal displays, Venn diagrams and even Association Football (Ebenezer Cobb Morley, the first man to write down the rules of the sport, was a son of Hull). Two other inventions Hull can lay claim to are Lemsip and Dettol, both of which were first produced in the city by local company Reckitt and Sons, which has since evolved into the multinational Reckitt Benckiser Group.
When we are looking to attract foreign investment, our tag line is now ‘the Humber is the energy estuary of the UK’. That tag line has stuck. Kishor Tailor, Humber LEP
Reckitts (as it is still referred to in Hull) retains operations in the city along with another multinational that started out within its boundaries, Smith and Nephew. Of these operations, Jones says: “Just shortly after Siemens came, Reckitt Benckiser opened its Global Centre of Knowledge in Hull. Smith and Nephew has invested heavily in its site and has a huge R&D presence in Hull. We were keen to link R&D and innovation to local productivity, with an example being Project Aura between Hull’s university and the wind industry looking at innovation. None of these things were there ten years ago. We have been keen to work with companies, universities and knowledge institutes to improve local innovation.”
Indeed, as the chart below shows, the University of Hull has shifted from being an arts-based establishment to one where the STEM topics (science, technology, engineering and maths) are becoming more prominent.
This collaborative spirit taps into Hull’s history of strong, family-run companies that give the city a community feel. Tailor says: “The families behind these businesses have a real passion for Hull and you don’t get that in many places. These people are really committed to the city; they want their business to do well, but they want the city to do well alongside this.”
Hull’s manufacturing base has helped to protect it against the worst aspects of the Covid-19 pandemic. “We used to be criticised for being a bit old school because we focused on manufacturing and production and the economy of things rather than abstract industries such as financial services,” says Jones. “We feel fortunate to have a manufacturing base now, however, as its given us a resilience through the Covid crisis.”
How Hull is coping with Covid
Every city in the UK has taken an economic hit through the lockdowns imposed because of the Covid-19 pandemic. The outbreak came at a particularly cruel time for Hull, however. “In March 2020 we had our highest employment rate, our highest formation of new businesses, and we had exceeded our house-building target for five years on the trot,” says Jones. “We were at the peak of our performance going back generations in terms of the economy.”
“Unemployment has risen dramatically, and that has had a particular impact on young people, the 18–24-year-old age group. We are really focusing on mechanisms to get these people back into work. The corporate investment in Hull is holding up well though.”
Tailor is keen to stress that there have been some positives, however, saying: “The caravan manufacturing industry, which is huge in Hull, suffered at the beginning of the first lockdown. We were fearing the worst, but then demand for caravans and mobile homes grew exponentially, as more people were holidaying in the UK.”
However, for a city that has a recent history of high unemployment and social deprivation, there is a concern that much of the progress made by Hull in recent years could be undone. “Hull has had high levels of deprivation and unemployment for decades, and the big worry coming out of Covid is that that situation will worsen,” says Tailor.
How will Hull cope with Brexit?
Despite being a Europe-facing port reliant on EU countries for much of its trade, Hull voted overwhelmingly to leave the bloc in the June 2016 referendum. How much of an impact Brexit will have on Hull remains to be seen. In the New Statesman’s Brexit Vulnerability Index, the city is ranked an encouraging 257th out of 379 local authorities.
Reassuringly for Hull, the jewel in its investment crown – Siemens Gamesa – seems unmoved by the change. “Nothing changes that much for us,” says Thompson. “We have still got no tariffs. The UK is the largest offshore wind market in the world, and it is set to stay that way, so it remains our most important market for offshore.”
For Jones, however, there is still much to be resolved. “There has been some disruption,” he says. “We are in wait-and-see mode on Brexit in Hull. We haven’t seen any notable drop off in investment interest from continental Europe, but it is early to call.”
A more pessimistic view comes from Hull Daily Mail business journalist Angus Young, who says: “I think the main loss for Hull will be guaranteed long-term development funding allocated on economic need, which is being replaced by a government funding regime likely to be influenced politically. In recent years Hull has benefitted from European Regional Development Fund support for projects ranging from a major energy-from-waste plant to a series of flood alleviation schemes following the 2007 floods.
“A large impact will be new customs checks at the docks and the resulting probable long-term reduction in trade to and from Europe as EU exporters weigh up the extra costs of trading with the UK, while UK exporters also start to belatedly realise the same thing. Overall, I expect port-related activity to decline in the long term.”
What next for Hull?
The twin challenges of Brexit and Covid have the potential to dent the momentum that Hull has built up over the past 15 years or so, but is there a risk the city could start to regress? Burns at Radio Humberside has few worries. “I think that people have now realised that there is a potential to be realised in Hull. The city should have no great fears for the future. We are in a strong position. Siemens signalled to many other firms that there is something happening here. The potential is still there.”
Hull has an important role in the wider topic of energy transition and carbon capture. There is lots of hydrogen talk. Hull has a great opportunity to be at the centre of that. Ray Thompson, Siemens Gamesa
Young, however, has some concerns. “Sadly, I think most of the City of Culture momentum has gone and the negative impact of Covid-19 will be long-lasting. Whether the free port covering the Humber is the answer is debatable. I see them as tax havens, others see them as opportunities for new jobs and business.”
Indeed, the Humber region was named as one of England’s eight free ports by Chancellor of the Exchequer Rishi Sunak in the March Budget. Although many share Young’s concerns over how effective such zones will be, it was celebrated as a big win for Hull and the surrounding region, particularly given the potential for jobs created in the aftermath of the Covid pandemic.
The announcement helped to keep the good news ball rolling for Hull too. The city is looking to the future with optimism, with the green energy industry at the heart of that. “The next piece of the challenge is carbon capture,” says Tailor. “Ineos recently bought Saltend [a site on Hull’s eastern boundary on the Humber], which only serves to fan out our green credentials. There is a real local commitment to greening up Hull.”
Thompson at Siemens Gamesa adds: “Hull has an important role in the wider topic of energy transition and carbon capture. There is lots of hydrogen talk. Hull has a great opportunity to be at the centre of that. There is real potential for Hull to grow even further in wind energy.”
When it comes to the role of FDI in that future, Jones says: “We see the inward investment market in Hull as a collective endeavour between the local community, which the city council represents, and the investor. We expect investors to be here for the long term, and our recent investment and reinvestment from big international companies has proven our strengths on that score.”
It would seem that the mood of optimism and confidence that has taken hold in Hull over the past 15 years is not going to die down any time soon. Brexit and Covid will create challenges for the city, but it has taken multiple knocks since the Second World War and has managed to bounce back. It will now look to do so again, armed with green energy credentials that would be the envy of any European city.
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Richard Gardham is the managing editor of Investment Monitor, overseeing editorial output for the site.