Appendix A – Areas of Economic Activity Technical Note 2. Purpose 3. Selection Approach 4. Definition Criteria 5. Key areas of economic activity 6. Summary

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Appendix A – Areas of Economic Activity Technical Note

Date

1 October 2007

Authors

Tribal

Subject

SWP3 – Areas of Economic Activity

Ref

B0306700/ITN19/v4/SWP3

1. Introduction

The remit for the Strategic Transport Projects Review (STPR) is to assess the existing and future performance of the transport network, identify gaps and shortfalls, identify and appraise potential interventions and produce a prioritised programme of such interventions that will make a significant contribution to three key strategic outcomes, namely:

  • Improve journey times and connections;
  • Reduce emissions; and
  • Improve quality, accessibility and affordability.

To assist the analysis process, different elements of the network have been identified - four urban networks (Aberdeen, Dundee, Edinburgh and Glasgow), two strategic nodes (Inverness and Perth) and 20 land based corridors of national importance.

In defining the appropriate level of detail to assess the urban networks and strategic nodes, the role of the STPR in the urban networks and strategic nodes has been identified as connecting the strategic corridors, providing access to international gateways or access to areas of economic activity of national significance and access to regeneration areas.

2. Purpose

The purpose of this paper is to identify areas of economic activity which are of national significance in order to provide a framework to assess the performance of transport within these urban areas and strategic nodes.

The paper describes the broad approach, defines the criteria used and lists the identified areas of economic activity with reasons for their selection. The paper identifies such areas within the urban networks and strategic nodes as well as similar key concentrations of economic activity elsewhere in the transport network. This paper does not seek to define regeneration areas as these have been identified previously819 as Clyde Gateway, Clydebank, Inverclyde (particularly Riverside Inverclyde URC) and Ayrshire (particularly Irvine Bay URC).

3. Selection Approach

The following approach was used to select areas of economic activity of national significance:

  • An initial review of each of the four urban networks and two strategic nodes was undertaken. Specific sub regions were identified as potentially containing areas of nationally important economic activity. These areas were selected by drawing upon the knowledge and experience gathered by the study team during previous work in each city region and the review of the local and strategic planning documents carried out during SWP3. Areas were selected on the basis of their existing status as employment centres as well as their status as areas in which strategic employment developments are planned in future.
  • In selecting these areas, the analysis recognised the importance of city centre locations in each of the urban networks and strategic nodes. A broad geographical definition of ‘city centre’ was adopted at the core of each city.
  • Beyond the city centre, a number of key areas of economic activity were identified and included for consideration. These areas concentrated on key existing industrial sites and areas with high profile new or planned developments.
  • Each of these areas was then assessed against a number of criteria to determine whether they could be considered of national and strategic importance as centres of economic activity.

4. Definition Criteria

Throughout the selection approach the analysis adopted a definition of ‘nationally significant areas of economic activity’ which is consistent with key objectives for the Scottish economy as set out in policy documents such as The Framework for Economic Development in Scotland and Smart Successful Scotland. In particular, the selection approach paid specific attention to the Growing Businesses strand of the Smart Successful Scotland vision which aims "to enable existing businesses to grow to a scale where they can compete effectively on a world stage" and to "achieve global success in key sectors" 820.

Towards this, the analysis defines an area of nationally significant economic activity in Scotland as one which exhibits two key characteristics:

  • A concentration of employment in key strategic sectors of the economy; and,
  • A concentration of large companies operating on a global scale and employing significant numbers of staff on site.

The next stage of the analysis assessed each of the areas identified during the initial selection process against this definition using data gathered from secondary sources.

In order to assess areas against the first characteristic, an analysis was undertaken of the employment density (measured as number of jobs per hectare) of each area. Each area was defined in terms of datazones821 and the employment density in each area was calculated. The employment densities were calculated for total employment in the area and for employment in key strategic industries. Key strategic industries have been defined in line with the 6 national priority sectors identified in the Scottish Enterprise Operating Plan for 2007-2010, specifically – electronic markets, energy, financial services, food and drink, life sciences and tourism. Data gathered in this part of the analysis is presented in Appendix A, along with a listing of the Standard Industrial Classification (SIC) codes used to identify and gather data on key strategic industries.

When defining the areas in terms of datazones, it should be recognised that there are limitations in terms of the physical size of datazones. Datazones are defined to represent areas with populations of between 500 and 1,000 people. Hence, the actual size of the zone (in hectares) varies considerably throughout Scotland. This distorts the employment densities as some of the zones outside the city centre will cover a physical area well beyond the area on which the economic activity is located. This means that some areas have employment densities which are lower than would be expected due to the physical size of the datazone. Such potential distortions have been considered during the analysis.

Data gathered on employment densities for each site were compared against the average for the local authority in which the site is located. This approach was adopted to allow the analysis to identify key areas of activity within urban networks and strategic nodes. An alternative approach would be to compare employment density of our selected areas to the average for Scotland as a whole. Given the rural character of much of Scotland, however, the average employment density across the country is very low. As such, it was considered that a single, nationwide comparator would not provide a meaningful benchmark for this analysis.

Within the Urban Networks and Strategic Nodes (Aberdeen, Dundee, Edinburgh, Glasgow, Inverness and Perth), therefore, sites were accepted against the first criteria of a nationally significant area of economic activity if they exhibit an employment density in key sectors above the average for their local authority area.

For other areas an additional indicator was adopted. In many local authorities outside the large urban networks, the rural nature of much of the country again means that average employment densities are often too low to usefully identify areas with important concentrations of employment. To account for this, alongside the analysis of employment density, sites in non-urban local authorities are also assessed against the scale of employment located at each site. Sites are accepted against the first criteria of a nationally significant area of economic activity if they contain more than 33% of all employment in key sectors located in their local authority. As such, the approach aims to avoid the inclusion of sites which show high employment densities compared to the rest of their local authority, but which are actually relatively small in absolute employment terms.

Using this approach the analysis assessed each area identified in the initial selection process against the first definition criteria – i.e. concentrations of employment in key strategic sectors. While the approach used is useful in identifying areas which exhibit this characteristic at present, it is recognised that the analysis reflects an historic view of economic development across the country and may not recognise sites and areas of potential growth in future. To correct for this, where areas do not meet the criteria at present the analysis has also considered the future potential of the area in terms of any known plans for development which are currently in place and the likely impact and scale of these developments.

Overall, this approach is considered a useful way of identifying areas or concentrations of economic activity in most of the national priority sectors listed by Scottish Enterprise. In the case of tourism it is recognised that employment is often less high density in nature than other key sectors and as such the approach used here is unlikely to select areas which are important tourism destinations. For tourism destinations, the strategic corridors are considered most important for this sector and they are covered elsewhere in SWP3.

As well as reviewing areas in terms of the first definition criteria, the analysis also examined areas against the second criteria – the concentration of large companies operating on a global scale and employing significant numbers of staff on site.

In this part of the analysis, ‘large companies operating on a global scale’ were defined as international businesses identified among the largest companies in the UK, listed on the FT Global 500 or Scottish Business Insider 500 and which employ a minimum of 250 staff in the location being assessed. To determine whether each of the selected areas met the second criterion, an analysis of local business directories and other sources was undertaken.

By using these two key criteria, the analysis focuses not only on areas with high levels of employment density, but on areas where key strategically important employers and sectors are located. Overall, the analysis identifies broad geographical areas which are home to concentrations of such activity and differentiates areas of national economic importance from residential areas and local economic centres.

5. Key areas of economic activity

This section provides an overview of the locations selected as areas of economic activity of national importance. The analysis gives a brief description of each area in terms of employment density, key sectors and key employers. A discussion of other locations which were not considered to be of strategic importance is also included. Reference should be made to the employment density data in Appendix A and the maps in Appendix B.

Within the Urban Networks and Strategic Nodes, the following locations have been defined as areas of nationally significant areas of economic activity:

  • Aberdeen City Centre
  • Dyce
  • Aberdeen South East
  • Dundee City Centre
  • Kingsway
  • Edinburgh City Centre
  • Edinburgh West
  • Edinburgh South East
  • Glasgow City Centre
  • Inverness City Centre.

Outside these networks, the following locations have been defined:

  • Grangemouth
  • Livingston
  • Glasgow Airport Corridor.

Urban Networks and Strategic Nodes

Aberdeen City

Key concentrations of economic activity within Aberdeen City are shown on Figure 1 and include the following:

City Centre:

  • Exhibits an employment density of 18 jobs per hectare in strategic industries, considerably above the local authority average of 2 (see appendix A). Overall, 10,500 jobs in strategic industries are located in the area;
  • Key sectors include – finance and business services, energy, and tourism;
  • Strategically important employers include – Aberdeen Asset Management, Talisman, and Mobil.

Dyce:

  • Exhibits an employment density of 11 jobs per hectare in strategic industries, considerably above the local authority average. The area employs 4,400 people in key sectors;
  • Key sites – Fairburn Industrial Estate
  • Key sectors – energy, tourism
  • Strategically important employers include – BP, Kvaerner, Baker Hughes

South East Aberdeen:

  • Again, an employment density of 10 jobs per hectare in strategic industries is well above the local authority average. The area employs 5,600 people in key sectors;
  • Key sites – Altens Industrial Estate
  • Key sectors – Energy
  • Strategically important employers include – Shell, Amec, Kerr McGee, and Total.

Other areas within Aberdeen which were considered but did not meet the criteria used in this assessment included Aberdeen North (including Bridge of Don, Aberdeen Energy Park and Aberdeen Science and Technology Park). While the business parks located in the area are of importance to key industry sectors and some international companies, the density of employment in the area was recorded at lower than the average for the local authority area (see appendix A).

Dundee City

Key concentrations of economic activity within Dundee are shown on Figure 2 and include the following:

City Centre:

  • Exhibits an employment density of 5 jobs per hectare in strategic industries compared to a local authority average of 2 jobs per hectare. Some 4,300 people are employed in key sectors in the area.
  • Key sites: Dundee Medipark
  • Key sectors include – finance and business services, tourism, life sciences;
  • Strategically important employers include – BT, Ninewells Hospital, Norwich Union,

Kingsway area:

  • While the area shows an employment density of only 2 strategic jobs per hectare (equal to the local authority average), the area is still considered a key strategic site, with a number of key employers and locations such as Dundee Technology Park which is subject to significant expansion plans in the near future. The area employs 1,100 people in key sectors.
  • Key sites: Dundee Technology Park, Dryburgh Industrial estate
  • Key sectors include – finance and business services, life sciences
  • Strategically important employers include – NCR, Tesco Customer Services,

No other areas within Dundee were considered to meet the criteria used in this assessment in terms of high levels of employment in key sectors.

City of Edinburgh

Key concentrations of economic activity within Edinburgh are shown on Figure 3 and include the following:

City Centre

  • Records an employment density of 40 strategic jobs per hectare, significantly above the local authority average of 3. The area employs 42,700 people in key sectors
  • Key sectors include – finance and business services, tourism
  • Strategically important employers include – Clydesdale Bank, Standard Life, HBOS

Edinburgh West

  • Records an employment density of 7 strategic jobs per hectare, significantly above the local authority average822. The area was home to an estimated 13,800 jobs in strategic industries in 2005;
  • Key sites: Edinburgh Park, Gogarburn
  • Key sectors include – Finance and business services
  • Strategically important employers include – Royal Bank of Scotland, BT, Scottish Equitable, BAE Systems, Diageo

South East Edinburgh

  • While the area records a very low employment density in key industries at present, it is included here as a nationally significant site as a result of its status as the site for the Centre for Biomedical Research and other developments adjacent to the Edinburgh Royal Infirmary. Such developments are expected to create an estimated 6,000 jobs on the site over the next 15 years.
  • Key sites: Centre for Biomedical Research
  • Key sectors include – life sciences
  • Strategically important employers include – University of Edinburgh, Edinburgh Royal Infirmary.

Other areas within Edinburgh which were considered but did not meet the criteria used in this assessment included Edinburgh Waterfront and retail parks at Kinnaird Park and Straiton. Whilst the waterfront area is identified as a key expansion area in the Edinburgh and Lothians Structure Plan, for the purpose of this paper it is considered to be a predominantly residential development rather than a nationally important area of economic activity and records an employment density lower than the average for the city as a whole. Kinnaird Park and Straiton are primarily retail and leisure sites.

Glasgow City

Key concentrations of economic activity within Glasgow are shown on Figure 4 and include the following:

City Centre

  • Records an employment density of 106 strategic jobs per hectare, considerably higher than the local authority average of 4. The area employs 34,000 people in key sectors;
  • Key sectors include – financial and business services, tourism
  • Strategically important employers include – Scottish Power, Clydesdale Bank, Direct Line, Lloyd’s TSB

Other areas within Glasgow which were considered but did not meet the criteria used in this assessment included West of Scotland Science Park (including Beatson Cancer Research Institute. The area exhibits an employment density no higher than the local authority average, while the analysis could not identify any companies meeting the large employer’s criteria.

As noted at the beginning of this report, this analysis has concentrated on identifying areas which have not already been included for analysis in other parts of SWP3. In particular the analysis has not considered areas which have already been identified as key regeneration sites. In Glasgow this covers large areas along the Clyde Gateway and Clydebank developments and includes key sites at Glasgow Harbour, Atlantic Quay and Pacific Quay.

Inverness

Key concentrations of economic activity within Inverness are shown on Figure 5 and include the following:

City Centre (defined as covering the area from the River Ness, through the city centre to include key sites such as Longman Industrial Estate, Raigmore and Beechwood Business Park)

  • Records an employment density of 5 strategic jobs per hectare, considerably higher than the local average. Some 2,700 people are employed in key sectors in the area
  • Key sectors include – financial and business services, life sciences, tourism
  • Strategically important employers include – Centre for Health Sciences, Johnson and Johnson.

Other areas within Inverness which were considered but did not meet the criteria used in this assessment included Inverness Airport. At present the site does not meet the selection criteria in terms of employment density. Although it is recognised that there are significant plans for development on the site, little evidence has been found as to the nature of employment likely to be generated and the fit, therefore, with the strategic industries being assessed here.

Perth

While Perth town centre was noted to record an employment density of 3 strategic jobs per hectare, this was not considered particularly high compared to the other city centre densities. At the same time, no specific concentrations of sites housing major strategic industries or employers were identified. As such, Perth town centre was not considered to pass the criteria for definition as a nationally important concentration of economic activity.

Areas outside Urban Networks and Strategic Nodes

Using the criteria outlined earlier, it is difficult to identify many significant concentrations of employment outside the main urban centres of sufficient scale to be considered of national and strategic importance. While there are many locations with clusters of key strategic sectors and concentrations of locally important employers, there are relatively few which provide the same combination of high job density, key sectors and internationally important companies located together as is seen in the areas above.

In terms of employment densities in strategic industries, (as was noted earlier for sites in the West of Edinburgh), due to the non-residential nature of some of these locations the datazones used to define sites in this analysis are significantly larger than those located in more urban locations. As a result, they include wide rural areas surrounding the key sites which has the effect of understating the true density of employment at these key sites. Such biases are unavoidable in any approach to collecting data for small, local geographies and it is considered that a datazone based approach remains the most appropriate method for collecting the information required for this study.

Areas outside the main urban centres which are considered as nationally important economic locations using the definitions outlined in section 3 include the following:

Grangemouth (Figure 6)

  • Records an employment density of 2 strategic jobs per hectare, significantly higher than the average for Falkirk region. Overall, some 2,200 jobs in key strategic industries are located in Grangemouth. Accounts for 33% of all jobs in strategic industries located in the Falkirk local authority area
  • Key sites – Grangemouth;
  • Key sectors– energy
  • Strategically important employers include – BP, Avecia

Livingston (Figure 7)

  • Employment density of 4 strategic jobs per hectare, significantly higher than the average for West Lothian as a whole. Overall, some 6,900 jobs in key strategic industries are located in the area, accounting for 46% of all West Lothian employment in these sectors
  • Key sites – Alba Campus, Kirkton Campus, Deer Park, Almondvale Business Park
  • Key sectors – financial and business services, electronics, life sciences
  • Strategically important employers include – Intelligent Finance, Quintiles, Johnson and Johnson, Encap, GE Network Solutions, Motorola

Glasgow Airport corridor (Figure 4)

  • Records an employment density of 2 strategic jobs per hectare. While this ratio is not high when compared against the average for Glasgow City, it is considerably higher than the average across other areas in Renfrewshire and the surrounding region. At the same time, the area is of strategic importance in providing access to Glasgow airport and associated employment sites. The area supports 3,400 jobs in key sectors, accounting for 35% of all such employment in Renfrewshire;
  • Key sites include - Hillington Industrial Estate, Hillington Innovation Centre, Inchinnan Industrial Estate, Braehead
  • Key sectors include – financial and business services, electronics, food and drink
  • Strategically important employers include –Diageo, Chivas Bros, Fujitsu

In addition to these areas a number of other locations were considered but did not meet the criteria for inclusion as nationally significant areas of economic activity. These included:

  • Prestwick in South Ayrshire - employment density in the key sectors identified here is no higher than the local authority average (although the area is an important concentration of employment in sectors such as Aerospace, defined by Scottish Enterprise as a regional priority industry);
  • Eurocentral in North Lanarkshire - the area does not account for a sufficiently high proportion of local authority employment in key sectors to be included here;
  • Bellshill in North Lanarkshire (including Strathclyde Business Park) – similarly, the area does not account for a sufficiently high proportion of local authority employment in key sectors to be included here; and,
  • Hamilton in South Lanarkshire (including Hamilton International Park) – the area does not account for a sufficiently high proportion of local authority employment in key sectors to be included here.

6. Summary

This note has identified the nationally important areas of economic activity, both within and outwith the urban networks, and described the criteria used for their selection.

Table A1
Employment density in key strategic employment sites
Urban Networks and Strategic Nodes

Area

Area (Ha)

Employees in Employment (2005)

Employees Density (jobs/Ha)

Area of Strategic Economic Activity (Y/N)

All sectors

National Priority Sectors

All sectors

National Priority Sectors

Aberdeen City

Aberdeen City Centre

580

52,925

10,492

91

18

Y

Aberdeen Dyce

403

11,200

4,439

28

11

Y

Aberdeen North

1,359

8,401

2,037

6

1

N

Aberdeen South East

542

18,499

5,569

34

10

Y

Rest of Aberdeen City

15,793

76,289

14,369

5

1

N

Total

18,676

167,314

36,906

9

2

 

Dundee City

Dundee City Centre

806

28,045

4,301

35

5

Y

Dundee Kingsway

657

9,136

1,120

14

2

Y

Rest of Dundee City

4,547

39,350

5,143

9

1

N

Total

6,011

76,531

10,564

13

2

 

Edinburgh, City of

Edinburgh City Centre

1,080

137,510

42,674

127

40

Y

Edinburgh South

446

6,064

4

14

0

Y

Edinburgh Waterfront

278

3,205

429

12

2

N

Edinburgh West

1,935

35,620

13,809

18

7

Y

Rest of Edinburgh

22,733

134,728

25,551

6

1

N

Total

26,472

317,127

82,467

12

3

 

Glasgow City

Glasgow City Centre

320

153,634

33,957

480

106

Y

W. Scotland Science

110

993

462

9

4

N

Rest of Glasgow

17,362

256,266

29,753

15

2

N

Total

17,792

410,893

64,172

23

4

 

Highland

Inverness City Centre

551

22,064

2,707

40

5

Y

Inverness Airport

4,758

781

93

0

0

N

Rest of Highlands

2,566,912

72,524

13,683

0

0

N

Total

2,572,222

95,369

16,483

0

0

 

Perth & Kinross

Perth town centre

1,362

26,317

4,372

19

3

N

Rest of Perth

529,348

33,687

8,865

0

0

N

Total

530,710

60,004

13,237

0

0

 

Source: Annual Business Inquiry, Scottish Neighbourhood Statistics

Table A2
Employment density in key strategic employment sites
Areas outside Urban Networks and Strategic Nodes

 

Area (Ha)

Employees in Employment, 2005

Employment density

% of local employment

Area of Strategic Economic Activity (Y/N)

All sectors

National Priority Sectors

National priority sectors

National priority sectors

Falkirk

Grangemouth

1,368

12,686

2,156

2

33%

Y

Rest of Falkirk

28,401

45,340

4,387

0

67%

N

Total

29,769

58,026

6,543

0

100%

 

Renfrewshire

Glasgow Airport Corridor

1,435

24,014

3,435

2

35%

Y

Rest of Renfrewshire

24,675

51,770

6,415

0

65%

N

Total

26,110

75,784

9,850

0

100%

 

South Ayrshire

Prestwick

1,777

4,984

373

0

6%

N

Rest of South Ayrshire

120,594

40,116

6,168

0

94%

N

Total

122,371

45,100

6,541

0

100%

 

West Lothian

Livingston

1,782

28,302

6,938

4

46%

Y

Rest of West Lothian

41,144

45,061

8,007

0

54%

N

Total

42,926

73,363

14,945

0

100%

 

North Lanarkshire

Eurocentral

1,031

4,680

1,077

1

6%

N

Bellshill

277

11,295

2,587

9

15%

N

Rest of North Lanarkshire

45,936

108,816

13,633

0

79%

N

Total

47,244

124,791

17,297

0

100%

 

South Lanarkshire

Hamilton

164

2,687

2,222

14

10%

N

Rest of South Lanarkshire

177,064

119,986

19,071

0

90%

N

Total

177,227

122,673

21,293

0

100%

 

Source: Annual Business Inquiry, Scottish Neighbourhood Statistics

Table A3
Key Strategic Industries defined by Standard Industrial Classifications

Sector

SIC definition

Electronics

30-33

Energy

10-12, 23, 40

Financial Services

65-67

Food and drink

15

Life Sciences

33, 24.4, 73

Tourism

55

Appendix B

Figure 1: Aberdeen

Figure 1: Aberdeen

Figure 2: Dundee

Figure 2: Dundee

Figure 3: Edinburgh

Figure 3: Edinburgh

Figure 4: Glasgow

Figure 4: Glasgow

Figure 5: Inverness

Figure 5: Inverness

Figure 6: Grangemouth

Figure 6: Grangemouth

Figure 7: Livingston

Figure 7: Livingston