Putting the steel back into a broken economy

Derwentside in County Durham was once an industrial powerhouse with ample jobs, either in the many coal mines or the steelworks at Consett.

By the time the steel plant closed 25 years ago, most of the pits had already shut down and the district was facing an economic crisis.

Between 1977 and 1981, it lost 8,000 manufacturing jobs and unemployment peaked the year after, with 28 per cent of the population out of work.

At the time, it held the unwanted record of the highest jobless figure in Britain. However, this dwindled as thousands of families moved away in search of work.

Today, the picture has been reversed - low unemployment, a growing population of 85,000 and an economy increasingly based less on manufacturing and more on e-business.

Part of this success is due to the Derwentside Industrial Development Programme. It was one of the bodies to grow out of the Derwentside Task Force, set up by the district council in the wake of the steelworks' closure.

The programme is delivered by the council's business support unit, at Consett Civic Centre.

This provides business advice, marketing support, ICT advice and other help in the form of grants, loans and equipment hire.

So far, it has helped establish 134 businesses, bringing an estimated 6,735 jobs.

Success stories include Aerospace and Systems Technologies, in Consett. Established in 1991, it employs 251 people and supplies parts for the Airbus, the world's largest commercial passenger aircraft.

Other home-grown companies it helped establish include Derwent Valley Foods, in Medomsley Road, Consett, which was set up in 1982. It produces the Phileas Fogg snacks. It was bought by United Biscuits in 1993, but still employs 178 people.

The programme has also helped another 81 companies, safeguarding 928 jobs.

Peter McDowell, head of economic and community development at the council, said: "Intervention has sought to address problems associated with a declining and ageing population, problems of long-term limiting illness resulting from the legacy of heavy industry, and has encouraged a diversified economy."

Part of his remit has been to examine the level of Derwentside's dependency on manufacturing, with 30 per cent of jobs provided by the sector, compared to the national average of 13 per cent.

"Continued intervention by the local authority and its partners has been necessary to develop the local economy and society from the nadir of the early 1980s," he said.

"The thousands of jobs created and the diversity of its new economy speak for themselves."

This employment creation has essentially nullified the adverse effects of manufacturing job losses. The number of people employed in the district now stands at 24,522 - which is higher than in 1981.

Mr McDowell said: "The latest progress review shows employment levels being maintained in the district at a time of low unemployment, but with increasing numbers of new businesses being established with high growth potential."

Unemployment in Derwentside is at 1.8 per cent. The latest figures from the Office for National Statistics stated there were 931 people claiming Job Seekers Allowance in the district.

Mr McDowell said: "Job creation remains important, but is no longer the primary consideration for the council in maintaining the economic development of Derwentside.

"The council now aims to increase the number of value-adding business start-ups, support the growth of existing businesses, increase modern business floorspace availability and support the development of local education, skills and enterprise."

A progress report commissioned last year found that 56.4 per cent of all jobs created in Derwentside were through business start-ups.

Another 18.2 per cent were in firms that had relocated or expanded into Derwentside.

The remainder were new jobs created by firms that were already located in the district.

However, Derwentside is still generating fewer new businesses than it should, although they have a much better survival rate than those set up elsewhere in the region.

The Local Authority report carried out by the Government Office for the North East found that VAT registrations for Derwentside are at 8.7 per cent, compared to the regional average of 9.6 per cent and the UK average of 10.1 per cent.

But de-registrations for Derwentside stand at 7.7 per cent, lower than the North-East average of 9.4 per cent and a national average of 10.1 per cent.

The business support team is broken down into four main sections.

The most recent addition is the Emerge project, which launched in 2003 and offers specialist advice and financial support to help set up new e-businesses in the district. It has already helped create 42 businesses and 82 new jobs.

Mr McDowell said: "It supports the entrepreneurial culture of Derwentside, helping to raise aspirations and confidence and create new, knowledge-based businesses."

Emerge last year opened a "hot desk" facility on the new £1.6m E-Business Centre at Consett Business Park.

This means entrepreneurs can time-share an office before making the transition from working at home to being a fully fledged business.

Mr McDowell said: "Improving business start-up rates for high-growth businesses and improving business competitiveness has never been more important for the long-term economic prosperity of the district.

"Emerge, in particular, directly addresses the district's needs by encouraging people to start a business, by supporting new and existing small business and by building on the skills and knowledge base of these businesses."

The Information and Communication Technology department aims to encourage better use of ICT, including e-trading, Broadband and system networking.

Its consultants carry out IT audits and advice on issues such as software web development and data protection.

A marketing advice service was established in 2002, to help firms increase market penetration and with new product development. There is also help for tourism businesses in Derwentside.

It has assisted 142 businesses and estimates it has helped create 123 jobs and generate increased turnover of £5.6m.

Financial support officers offer aid so companies can access direct grants from the council or secure support from organisations such as County Durham Development Company and One NorthEast.

Joanne Urquhart Arnold, business development officer, said: "There are many different ways to help businesses, and funding is often top of the list.

"Our project is putting the funding where companies need it most, and this helps strengthen the district's growth."

The latest customer feedback survey found that more than 90 per cent of the unit's clients felt their needs had been attended to promptly and with a helpful service that was courteous and attentive.

More than 80 per cent of those surveyed said the team delivered what they had expected.

Last November, the business support unit was nominated for the Government's coveted Beacon status for Supporting New Businesses.

Derwentside is the only council in the North-East to be shortlisted in this category and is one of only seven nationally.

Case Study: Start-up companies

CHARTERED building surveyor Andrew Richardson set up his own business in June last year.

He said he was able to establish Richardson Associates, thanks to the Derwentside Industrial Development Programme.

Born in Consett, he worked for the Duke of Northumberland on his North-East estates before deciding to strike out on his own.

The council's business development team helped him find office accommodation in the Derwentside Business Centre on the outskirts of Consett.

The 27-year-old also secured a £3,000 grant through the Emerge project for computer equipment and website development.

"The business has exceeded my expectations in the first six months and is going well this year," he said.

"When I first looked into setting up the business, one of the most important factors was finding an office that would be both a comfortable place to work and attractive enough to bring clients to," he said.

"The council were really helpful."

Another firm to benefit was Tracey Russell Greetings Cards.

Miss Russell, 29, started out making cards in 1998, to bring in extra cash while she studied a degree in international textiles at Cleveland College of Art and Design in Hartlepool.

"I originally wanted to be a textile artist," she said.

"I learned very quickly that people were buying the more practically-priced items, such as cards, rather than pieces of art that can cost £400."

She began making cards from the spare bedroom of her parents' house in the village of Esh, near Durham City.

With help from the council, the business has grown to employ ten people. From its premises in Langley Park, near Durham, it produces up to 10,000 cards a week.

It became a limited company in April last year and expects to turn over £420,000 in its first 12 months.

She received a business relocation grant from Derwentside and is presently getting help from the Emerge team to set up her website.

Miss Russell said the council gave her a very warm welcome.

Case Study: Firm enjoying growth

UNION Snack, the UK's only pretzel manufacturer, was established with help from the Derwentside Industrial Development Programme, in 1996.

Director and co-founder John Pike said: "Derwentside District Council have been very supportive ever since we first ran our flag up the mast.

"They were slick and very professional in finding grants to help us get started."

The £2.2m plant, on the Tanfield Lea Industrial Estate, near Stanley, originally employed just eight people and made losses of £664,000 in its first year.

It has grown organically and last year enjoyed a much more healthy turnover of £6.4m. The workforce has expanded with the plant and it now employs 102 people.

Customers include airlines such as British Airways, which buys 20m bags of snacks a year, and Virgin Atlantic, plus the major supermarkets. It also has its own brand, Penn State, which is now a domestic market leader.

Before Union Snack, Mr Pike had helped establish another home grown success story, Derwent Valley Foods in Consett. This produces the Phileas Fogg brand snacks and was bought out by United Biscuits in 1993.

As exclusively revealed in The Northern Echo last week, Union Snack has just completed a £3m expansion to its factory.

The 1,600sq metre extension will enable it to start production on a new snack line and is expected to create 50 jobs over three years.

Derwentside District Council provided a £44,000 grant towards the cost.

Mr Pike said: "When a project costs £3 million, this grant does not appear to be a huge amount.

"But the reality is that we are still a young business and this helped minimise the risk of things going wrong or getting delayed.

"With this project there have been a number of delays and it was great to have the grant to help us bridge that gap."