Amember of parliament opened a debate on the regeneration of his constituency with the following words: “One thing might strike you most of all [as you journey through the area]: the proliferation of huge warehouses and massive distribution sheds in garish green and grey. They have certainly brought many jobs to the area, but many of them are low-skilled, low-paid, picking and packing, humping and heaving so-called logistics jobs.”
Another opinion former is quoted as saying: “The area deserves better than to have nothing but ‘big sheds’ everywhere, which creates few jobs and generates little wealth while at the same time occupying valuable commercial space”.
These are not the opinions of the few. This is how modern-day logistics is viewed by the people that matter in government and local government. According to Neil Starkie of Savills: “We’ve got logistically challenged people in a position of influence.” But why should the logistics industry be concerned?
For starters, John Bowles of Atisreal says: “People look at things simplistically. They see distribution use and say ‘more traffic’, but do not see how it fits in on a bigger scale. They are not provided with a context to make a more rational decision.”
Kevin Storey of Cushman & Wakefield points out that there are no votes in warehouses so there is no point in championing that cause. Paul Harknett of Savills agrees and adds: “It [opposition to warehouse development] gets politicised and because the public is not that well informed they will naturally gravitate toward a well presented case, which can often be made by a politician seeking the soapbox outside a planning appeal.”
Chris Still of Savills says: “There is a general lack of understanding and warehouses have been given a bad press. The perceptions that are held by local authorities and those in positions of influence are passed on to the public, which believes what it is told in the light of no evidence to the contrary.”
It has become even more important to challenge these perceptions because, says Still: “Local authorities are preparing their local development frameworks and within that they are looking at employment strategy for their area for the next 20 years. Many will be looking to be specific on the types of employment and there is a danger that they will look to limit the number of sites allocated to B8 [distribution warehousing] with the result that there will be a shortage of opportunities – and it’s hard enough to find land at the moment.”
Indeed Atisreal, which has done extensive research into planners attitude’s towards B8 and then investigated the truth behind the negative perceptions has concluded that local planning authorities, which restrict the development of logistics property in favour of other industrial uses, might be damaging their local economies.
Bowles says: “Despite the significant growth of the logistics sector against the decline of UK manufacturing in recent years, many planners are still basing decisions on an outdated perception that logistics doesn’t provide enough quality jobs.”
The Atisreal research takes into account four key factors to measure the benefits of logistics property compared to other light and general industrial uses. The output is a model that compares the relative economic contribution of each type of logistics and industrial use over a five-year period, which is a typical lease length. The findings show that over five years, a typical logistics development significantly outperforms manufacturing and exceeds or matches a light industrial unit in terms of its contribution to a local economy.
For example, on average across the UK, a logistics development of 150,000 sq ft contributes almost 20 per cent more to the local economy than a light industrial development of the same size.”
GVA Grimley’s Jim Whelan, who has carried out research in conjunction with Cranfield University looking at the future prospects for British Industry, says: “Aside from the million new jobs that have been created in the sector, the value of the activities undertaken in the distribution sector has also increased considerably.
“The additional value produced by distribution organisations has increased by 40 per cent over the last decade, while the manufacturing sector has seen virtually no change, in other words the overall economic benefits from distribution are greater than from manufacturing.”
Whelan says: “In addition to the greater added value to the economy produced by the distribution sector, in real terms for employees’ wages are also higher.
“Our survey of manufacturing and distribution organisations showed that, on average, salaries in the distribution sector are between 10 – 17 per cent higher than in the manufacturing sector. This applies across all skill levels.
The research also indicated that there are more job opportunities in the distribution sector than in manufacturing. The research supported this by looking at how long people had been employed at their current business. It found out that more than 15 per cent of employees in the distribution sector had been employed within the last three years, compared to none in the manufacturing sector.
“This indicates that ‘new blood’ is being brought into the distribution sector, while manufacturers are trying their best to hold on to existing staff rather than seeking additional staff.”
Jobs wise, the GVA research showed that the traditional image of distribution jobs – receiving goods and storage take up less than a third of all job types. “In fact certain activities appear to have been displaced from manufacturing businesses such as rectification and value added services, reflecting how the nature of industrial operations has been changing over the last decade,” says Whelan.
The research concludes that the distribution sector is expected to be the main source of opportunity for industrial land demand into the future. “This does require that appropriate industrial land use allocation policies are in place, otherwise there is a risk of increased operating costs, which will ultimately be passed back negatively into the economy.
“A rigid planning policy approach also has risks in that distribution organisations will be reluctant to make the investment in an area necessary to support or increase job opportunities, and they may therefore go to less suitable distribution locations, which may lead to greater traffic generation impacts. In short, a rigid industrial land use planning policy may not lead to a sustainable land use solution.”
Looking at the planner’s arguments for positively discriminating against B8, Harknett says: “Planners who argue that demand for warehousing pushes out manufacturers and therefore the more extensive and arguably more diverse job opportunities that could be generated from production, forget that the dominance of distribution in take up figures of industrial space/land has not been at the expense of manufacturing. Manufacturers have been moving to cheaper locations for 25 years or more. First they moved to cheaper areas of the UK, then when they became uncompetitive, cheaper locations overseas.”
David Newman of Matthews & Goodman says: “I think the campaign or resistance against big sheds is more from the local authorities. Their view, incorrectly in our opinion, is that they take out large areas of employment land and do not generate sufficient jobs in comparison to manufacturing. In fact, employee levels are often similar in large distribution warehouses to manufacturing plants.”
Bowles says: “Research clearly shows that attitudes, which favour light industrial employment over logistics employment are out of date and that the planning system does not properly recognise the importance of logistics to the UK economy. It is time for the logistics sector to stand up and challenge outdated perceptions.”
Harknett agrees: “The logistics industry should promote themselves and support the property industry to educate [the public] about efficient distribution.
He added: “Planners and the elected councillors who sit on Planning Committees owe it to us to be better informed and see the bigger picture and embrace distribution for all the benefits it brings into all of our lives.”
Bowles says: “When I look at other parts of the business world they are well represented in terms of lobbying. Just look at BAA, which has the UK Major Ports Group and British Ports Association. These have been instrumental in ensuring that there is a change in policy nationally for ports for example in terms ensuring there are planning permissions in place for additional capacity at London Gateway for example.
“The reason they are so important is that they are able to stand on a platform nationally. There is nothing equivalent in the logistics sector.
“Where does logistics feature in the planning system? You only have to look around at freight exchange proposals to see how highly logistics is regarded. Logistics is not being pushed properly and is slow to react and as a result the bigger picture is being missed and that is pretty fundamental especially if you are looking at the environmental agenda.”
However it is not all bad news there are some planning authorities embracing distribution. Paul Cross of Eden Park Developments says: “Unlike ten or fifteen years ago when planners were very much of the mind that B8 didn’t generate much employment, there’s now an awareness among some, although by no means all, authorities that distribution developments can generate a large number of jobs.
“The spec build nature of the beast is such that in granting consent for B8, planners are never sure how many posts will be created. The situation is much clearer with B1 and B2. If the B8 units are taken by a company which has fully automated processes it may employ only a handful of people. If, on the other hand, it is a warehouse for a large retailer with a need for a lot of picking such as B&Q or TK Maxx, the job numbers are way up.”
Nick Waddington of Knight Frank says “It is going to be the norm that planners are going to ask for manufacturing unless [the developer/applicant] can show that the number and quality of jobs are guaranteed for B8.”