Object

Representation ID: 21434

Received: 11/10/2021

Respondent: Bradford Estates

Agent: Savills

The conclusions of EDNA2 are significantly influenced by the assessment of future employment growth by sector as illustrated in Fig 2.4. Basing the assessment of need for the manufacturing sector on the GVA projection appears to be a sound basis. This identifies a need for a significant amount of land for new manufacturing development. EDNA2 bases the forecast requirement for logistics floorspace and land upon the employment projection. The report provides no explanation or justification for those employment projections which are fundamental to future floorspace and therefore land requirements. As explained below, our assessment is that this significantly underestimates the amount of floorspace and land that will be required for logistics use over the plan period.
The calculation of the figures in Fig2.5 is unclear, as the projections for each sector are not applied equally to those sectors across each of the four Black Country Authorities (BCAs). Over the period 2020 – 2039 Dudley is stated to expect falling employment in both manufacturing and logistics, Sandwell and Walsall have falling employment in the manufacturing sector only, and Wolverhampton has growth in all sectors. It is not clear how Fig2.5 flows from Fig 2.4 as stated at 2.10. For the Black Country as a whole, Fig 2.5 projects growth in office employment, lower amounts of growth in logistics employment and a significant decline in manufacturing employment.
Those projections must be questioned based upon the evidence of activity in the occupier and development land markets both in the long term, and in the period since the onset of the pandemic in March 2020. Both manufacturing and logistics sectors are experiencing record breaking levels of demand for floorspace in midsize to large buildings.
EDNA2 2.11 states that past trends show a greater correlation between GVA in the manufacturing sector than employment forecasts. The swing in need depending upon the factor used as the measure is highly significant. On the employment measure Fig2.5 projects a requirement for manufacturing land of - 23.44ha (negative). On the GVA measure 2.11 states the requirement for manufacturing alone would be 866ha. A swing of 890ha. In order to reduce that requirement of 866ha EDNA2 assumes efficiency gains for manufacturing in the use of its floorspace from 1,544sqm per £1million of GVA to a range between 1,000qsm and 800 sqm of floorspace per £1million GVA. A 35% to 48% increase in efficiency across the manufacturing sector. Whilst some increased efficiency may be a reasonable expectation, there is no explanation or justification provided for such a bold assumption as to efficiency gains in the use of floorspace. The application of those efficiency gains reduces the manufacturing land requirement from 866ha to between 448 – 560ha over the period 2020- 2039. EDNA2 does not state where the change in GVA is sourced or what it reflects. It is not possible therefore to assess the degree of ambition upon which the floorspace and land requirement is based, or the likelihood of achieving the efficiency gains which are assumed. Given the SEP focus upon high value manufacturing, and technology based industry as 4 of the 5 transformational sectors of the Black Country economy, it is vital that opportunity for these sectors is adequately provided for and not artificially constrained at the land allocation stage.
EDNA2 favours the GVA based method (with assumed floorspace efficiency) for the manufacturing sector, but utilises the employment projection based floorspace requirement as the basis for land required for the logistics sector. EDNA2 forecasts a requirement of just 31ha for the 19 year period (see Fig 2.8). EDNA2 2.19 states that 94% of future land requirements will be for classes E (g)(ii)(iii) and B2, with only 6% being for B8 use. 2.17 states that evidence since 2016 indicates 13ha per annum has been taken up by manufacturing uses, with 5.6ha per annum by logistics. As a result 2.19 projects 30% of future demand for B8 and 70% for manufacturing.
Savills research shows that for buildings above 100,000sqft, the split between manufacturing and logistics take-up is the reverse of what the EDNA states. Savills evidence shows that nationally 85% of take-up is for logistics and 15% for manufacturing. For the West Midlands, the proportion of manufacturing use is higher at 23%, but 77% of take-up is accounted for by third party logistics operators and the retail industry.
We do not take issue with a GVA based approach being the appropriate basis for assessing future business floorspace and hence land requirements. As such the proportional split of demand in the market does not directly affect the assessment of manufacturing floorspace need. What it does highlight, is the under estimate of logistics floorspace that is required at a wider market level to support that manufacturing output. The relatively low levels of take-up for logistics which EDNA2 reports is likely to be a function of the lack of large and well connected sites within the Black Country, limiting the potential for logistics operations. The assessment of past levels of take-up and applying that to the future scenario, simply exacerbates the problem of constrained land supply of the appropriate quality, size and location. That should be of concern, as logistics is vital to efficient manufacturing. The gains in manufacturing floorspace utilisation efficiency which EDNA2 factors in, are likely to require increased levels of just in time delivery of materials and components, and reduced levels of on-site storage of materials and finished products. That will require increased amounts of floorspace for logistics in the right locations to serve those manufacturing business. The principle of the GVA based assessment for manufacturing is not affected by this, but the amount of floorspace for the logistics sector would be very substantially greater than has been allowed for in the EDNA conclusions on need at 2.21.
In conclusion on employment land need, the EDNA does not provide sufficient explanation of the assumptions and calculations used to derive the floorspace and land requirements. It appears that there is a very substantial under-estimate of the level of logistics floorspace that will be required over the period to 2039. There is no explanation for why the middle estimate is deemed the most appropriate basis. There is no justification for the assumed increased efficiency in manufacturing use of floorspace. There is no explanation of how the economically determined estimate at 2.8 is adjusted downwards to derive the figures in Fig2.10 and Fig4.1. It appears that the identified need should account for two additional years. As a result of these matters we consider that the employment floorspace and employment land requirement is considerably greater than is currently being planned for.