The region’s 200 biggest companies have grown albeit it at a slightly slower rate, however employment has been given a boost with almost 20,000 new jobs being created in the region in the last year, according to the West Midlands Report 2016 published by accountancy and business advisory firm BDO LLP in Birmingham.
The BDO West Midlands Report 2016 compiles the latest published accounts from the West Midlands’ largest 200 companies based on revenues, and serves to create a barometer of economic health for the region.
According to the analysis, combined revenues grew by 5% to £130.48bn, compared to £124.11bn the previous year. Operating profits also grew by £153m to £10.43bn.
However, a stable fiscal environment and firms’ sustainable growth trajectory have impacted recruitment and pay positively. According to the BDO analysis, almost 650,000 people are employed by the region’s biggest companies – nearly 20,000 more than the 12 months previous.
Despite the boost in workforce numbers, productivity remains an issue in the region. For the top 200 companies in the West Midlands the average productivity per employee is £52k, which is on par with the national average. However, the region as a whole lags behind the rest of the UK, with an overall productivity shortfall of just over £20k per head.
Richard Rose, partner and head of BDO LLP in the West Midlands, commented: “Companies have a sustainable foundation for growth. Revenues continue to increase, albeit at a slower rate than in previous years, and with the job market and real wage growth improving, there are many reasons to be optimistic.
“The West Midlands Combined Authority and the building momentum of the “Midlands Engine” should give the region a combined focus resulting in increased opportunity both in domestic markets and on the global stage.”
Manufacturing is the region’s most imposing sector with 82 firms making the regional top 200 list. The retail & wholesale sector is represented by 53 companies.
The BDO report also finds that Coventry and Warwickshire is home to 52 companies in the top 200, followed by Birmingham (48) and Staffordshire (36). Additions to the list include Delphi Diesel Systems Limited, Orbit Group Limited and Molson Coors Brewing Company (UK) Limited.
The county home of JLR, Coventry & Warwickshire, generates the largest amount of revenue, accounting for 47.6% (£62bn) of the top 200’s £130.5bn total turnover. The biggest revenue increase came from Staffordshire firms, which have increased their turnover by 66% to £16.9bn from £10.2bn the previous year and now contribute 13% of the total turnover of the region’s top 200 companies.
Richard adds: “I’m confident we can look forward to regional prosperity for many years to come, however the government must ensure firms’ aspirations are not stymied by outdated red tape or unnecessarily complex tax systems.
“For example, a tax system designed to help ambitious mid-market businesses to get over the hurdle of their first sales abroad or enhance existing activities could transform our export success.”