Harbouring the secret of our economy
Anyone looking for signs of how the Northern Ireland economy will perform this year could do worse than look towards Belfast Harbour.
The port has become a barometer of the economy, often providing a leading indicator of the province’s financial health, months before other figures confirm a boom, or in the case of the last few years, a recession. Signs for this year look promising, with trade for the first quarter of 2010 up 7.2% on the same three months last year.
Speaking to Business Telegraph at the Harbour Commissioners Office in Corporation Square, chief executive Roy Adair was positive about what the trade figures signal, but was not getting carried away.
“We have clearly had a spike in the early months of the year, but if you asked us whether we have gone to a new run rate and if it is going to stay up there, it is hard to make that call,” he said.
“Our overall call was that 2010 wasn’t going to be any worse than 2009, and that seems to be a correct call. 2010 absolutely does not look like as if it is a further retraction, and we are fans of long term tonnage trends — all of those have either gone to the bottom or are on the way up again.”
The Harbour’s annual report shows the Port’s performance has remained stable through the turmoil of recent year, reporting a £0.4m rise in turnover to £33.1m, and a £0.3m lift in operating profits to £15.1m in 2009.
Trade through the port was down 4% to 15.7 million tonnes, but this was signfiicantly better than rival ports such as Dublin and Cork, and it managed to increase its market share of the Irish Sea container sector by 20%.
While Mr Adair is happy the port has so far been “gloriously wrong” in its forecast for a 0.1% increase in activity this year, he says many other factors are at play that make it hard to conclude this is a sure sign economic recovery is on the way.
“There is undoubtedly a restocking element among manufacturers preparing for recovery, and that will cease if the order books don’t result into people consuming those stocks,” he said.
“In Northern Ireland, a huge chunk of a manufacturing company’s sale is someone else’s investment decision. Terex, FG Wilson, Bombardier et cetera are all depending on somebody else’s investment. It’s quite typical in a recessionary cycle that one of the first casualties is business confidence, which means investment decisions get put on hold. If you are in the capital goods sector, that then immediately affects you.”
Still, the importance of the Port to the local economy should not be underestimated. Some 60% of the province’s sea borne trade comes through it, as does 20% of all island trade. Pure port turnover is £20m of its £33m total, and that £20m relates to goods worth £20bn.
Providing an essential gateway for the
construction, consumer goods, manufacturing, energy, and agri-food sectors, it estimates that one third of Northern Ireland’s GDP and employment has a relationship to the port. The main markets served — both in terms of imports and exports — are Great Britain, Europe, the US and then rest of the world.
In addition, some 17,000 people come to work on its 2,000 acre estate, which is home to around 500 organisations. The Port has prospered by investing in its facilities at a time when cost management is of the utmost importance to businesses.
For example, while the number of ships visiting was down last year, the size of those ships was up because bigger ships are cheaper to charter.
By investing £30m in its new deep water wharf, it is able to accomodate those larger ships, while Dublin — which focused on container trade in the boom times — finds this harder.
“There is plenty of room in the market for everyone,” said Mr Adair in reference to the other ports on the island. “But our facilities are fit for the bigger boats. When you come to make a logistics chain decision, there are two issues: speed and cost. What happens is a lot of markets in the boom times valued time over cost. Where we are right now is that cost is much more important. People will wait for something an extra few days or a week if they can get it cheaper. That plays to the advantages of Belfast.”
While the time to final destination on the island of Ireland still plays a major part in decisions because trucking costs are high, Mr Adair believes investment in both the facilities and services the port offers will continue to pay off.
“We’re well positioned for growth. When you talk about growth and creating facilities you have to have the spare land, the vision, and the financing to do it and we’ve got all of those things. It’s part of the reason why Dublin can’t respond in the agri-food sector the way we can, because they don’t have the development opportunities we have,” he said.
Almost £1bn of property development has been facilitated by the Harbour in the last 15 years, and its land holds major potential for the future.
Though some companies are based at the port by necessity — for example Musgrave has storage facilities close to where goods are delivered — others are there for convenience, and Mr Adair believes staying in tune with the demands of potential investors is key.
“In some ways the port is like a mini city,” he said. “We have our own police force, we have about 50km of roads we take care of, all of that street lighting, all of that sewerage, etc. If we need to tweak part of our commercial offer because that is what’s demanded, we do it.
Those include the Titanic Quarter, which is being built in partnership with Harcourt Developments. This year the harbour put £13.9m into the Titanic Signature building. It is soon to put a proposal for a 20 acre mixed used development called City Quays to planners, that would include office space, restaurants, a hotel, convenience stores, and residential buildings. At a time when there is a glut of empty office space in Belfast, Mr Adair sees it as a calculated move rather than a risky one, based on what they hear that outside investors want.
“There is empty office space but the question we would ask is, is it the right property for the end use,” he said. “A lot of those developments are not exactly what the customers want. If you go and talk to a US corporation, they are not simply interested in what happens when they walk through the doors of their building. If the building isn’t in the right place with the right support systems around it they are not interested. People who might be working late, coming out of the office at 8pm, they don’t want to come out to a deadzone.”
He believes Titanic Quarter will differentiate itself by creating a community feel and that the Signature Project will be a focal point around which to base this in the long term. “It is all about making Belfast a more attractive location. We think the signature project will help put Northern Ireland on the map and if you put it on the map Northern Ireland does more trade. The more we can do to promote the economy the better it is for us.” he said.