FINANCING SMALL FIRMS IN WALES

In 2009, a new fund was established in partnership between the Welsh Assembly Government (WAG), the Welsh European Funding Office and the European Investment Bank.

Known as JEREMIE and managed by Finance Wales, it would have the ability to invest up to £150 million in Small to Medium Sized Enterprises (SMEs) across Wales.

So what has been the performance of the fund to date?

According to the latest data, it had invested £42 million in 256 SMEs by the end of September 2010 and leveraged in another £75 million of private sector investment.

One could argue that is a remarkable achievement, given that the economy was still struggling out of recession and there was little appetite for growth amongst the business community. On the other hand, the high street banks had reduced much of their lending to the private sector during this time and the fund could be seen as potentially the only source of cash for companies wanting to expand across Wales.

One key factor in its success could be the fact that the funding is available across the whole of Wales. Previously, there had been criticisms that the organisation had, due to financial restrictions, focused its efforts only on the poorest parts and thus neglecting those more prosperous areas in which firms with the highest potential for growth, and this need for finance, were based.

For example, the majority of this year’s Fast Growth 50 firms were based outside the less prosperous areas of Wales and, under the previous funding mechanism supported by Objective 1 funds, would not have been eligible for access to this type of support.

Another positive aspect of the fund is its sectoral approach which (thankfully) seems to be in contrast with the rest of WAG’s economic policies.

As those who regularly read this column are aware, the Economic Renewal Programme (ERP) has restricted the industries it will help through its business support programme. Indeed, the Minister is on record as stating that “We are a small country and can’t give support to everybody and so we have to prioritise and we have made that priority the six key sectors.”

Of course, academic research has shown that such an approach does not reflect the reality of growth within the SME sector. In fact, business services and the wholesale/retail sector - two industries that have been excluded by WAG - provide almost half the high-growth firms in the UK and the diverse range of companies featured in the Fast Growth listings over the last twelve years backs up those findings.

Given this, it is fortunate that this fund is not restricting its investment activities to those six key sectors identified by WAG. In fact, it is the tourism industry, with £6.8 million of investments in 16 businesses, that has attracted the most funding to date. Other sectors neglected by the ERP, such as the food industry and business services, have also attracted high rates of investment from JEREMIE.

In contrast, high technology businesses in areas such as aerospace, pharmaceuticals, energy and biotechnology have attracted only a third of the fund to date.

This unequivocally demonstrates that funding to businesses, whether in the form of loans, grants or equity, has to be market driven and not restricted by the sectoral foibles of policymakers and politicians.

To date, the majority of the fund has been in the form of loans, although Finance Wales is increasingly taking equity positions in companies. There has also been a lower default rate than expected since the fund started, a situation that can be partly explained by an examination of the type of investment by stage of growth.

However, the fund is not being used by start-ups as a source of finance. Only nineteen of the investments to date have been classed as “early stage”, with the vast majority of the money earmarked for expansion of existing businesses.

This suggests that whilst growth companies with potential are finally being supported in Wales, new businesses are not getting access to the vital funds required at the start of a new venture.

The decision not to invest in new businesses is clearly one for Finance Wales and it directors but given WAG’s so-called emphasis on entrepreneurship, one would expect such a large public fund to have a more balanced portfolio especially there has been a 28 per cent decrease in the number of new businesses being created in Wales during the last five years (compared to a 2 per cent increase in Scotland).

With evidence suggesting that banks are increasingly reluctant to lend to new companies, then it is clear that in such a “market failure” situation, the government must be encouraged to fill this finance gap through mechanisms such as JEREMIE.

Yes, it is encouraging that existing growth companies are being given the funding to expand their operations but equally, there is a duty on a public financial fund to have a more balanced portfolio of investments and to support new businesses as well as those that have been growing for a number of years.

If the aim of the Assembly Government, through its focus on a knowledge-based businesses within the ERP, is to create the Googles of the future then it must surely provide an increased level of support to new businesses.

It may increase the risks to the overall fund but it will also make capital available to those entrepreneurs, especially within technology sectors, who are currently starved of cash but have the ability, ideas and talent to transform the Welsh economy.

MINISTER SHOULD LISTEN TO MICHAEL MORITZ

According to the National Assembly’s Enterprise and Learning Committee, STEM (science, technology, engineering and maths) skills amongst young people are is simply not up to scratch, highlighting a lack of high-quality specialist teachers, poor student performances and negative perceptions of the subjects.

Their report showed that the proportion of students in Wales taking sciences and maths at A-level is significantly below the rest of the UK, and the teaching of combined science as opposed to separate biology, chemistry and physics at GCSE was proving ineffective. 

The Committee recommends that WAG works to recruit and retain teachers with specialist expertise, and says government and industry need to address gender stereotypes in the subjects, which were seen as “male” domains. It also calls for more partnerships between schools and employers to allow pupils to get work experience. 

Interesting to note that whilst the WAG spokesperson noted that “The minister has made a clear commitment to raising standards across the board in Wales", I believe that there has been no major announcement, in the year since his appointment, on STEM subjects.

Perhaps he should take a leaf out of the book of Mike Moritz, Wales' most successful businessesman. 

During my visit to his headquarters in Silicon Valley earlier this year, the man who invested in Google, Yahoo and Youtube was unequivocal that

"nurturing, developing and attracting the best talent is the key economic strategy that Wales should focus on...providing the resources necessary at the primary and secondary school level to nurture the home grown scientists, engineers and technologists of the future. For example, by stimulating and supporting science within Welsh schools, Mike Moritz believed that you could develop a whole new generation of idea-driven young people that could help develop the industries of the future".

As I wrote at the time, it is a simple message but again one that has been largely ignored by policymakers and politicians in Wales. 

Given the concerns raised by the Committee, surely it is time that WAG took this seriously, not only for the sake of the economy but. more importantly, for the future of our young people.

In fact, some would argue that there is little point of WAG giving public money towards a £400 million university project in Swansea if we are simply not producing the quality and quantity of Welsh students from our schools in STEM subjects.

FURTHER DEVOLUTION - A CHALLENGE FOR WELSH BUSINESS

On Monday, I had a response to the Yes for Business article from the VoteNoWales2011 twitter that asked   "How many businesses in Wales support more powers?".

I naturally replied by asking "How many businesses in Wales are against more powers?".

Obviously without a detailed survey, that may be a difficult question to answer but it is worth noting what the FSB, which has 10,000 members in wales, said last year on the matter after a survey of their members, namely:

“Generally the FSB supports the transfer of power from Westminster to Cardiff Bay where it can be demonstrated that the powers would be used to benefit Welsh business. We would stress the importance of ensuring that the decisions made by the National Assembly for Wales should not put business in Wales at a disadvantage to counterparts in the rest of the UK."

Personally speaking, I feel that the Yes for Wales campaign has been weak in terms of explaining what further powers would do for the business sector in Wales. Certainly, it would seem its leading lights have largely ignored my article on the subject!! In addition, there has been some critique on the blogosphere regarding Peter Hain's hyperbole regarding further powers on the Welsh economy.

Yet, as I explained on Saturday, Wales may soon be able to create its own laws directly, laws that can, if properly enacted, create a real competitive advantage for Welsh business.

So, here is a challenge for anyone in business in Wales?

Let the Yes for Wales campaign know whether there is any current law that is negatively affecting your business or, better still, which could make your business more competitive, and how you would like that law changed for the better through the National Assembly for Wales.

That would demonstrate the real and tangible benefit of further powers for Wales and the Welsh economy.

THE CBI IN WALES AND THE UK - A DIFFERENCE OF OPINION?

Is there a difference of opinion developing between the CBI in Wales and its UK parent organisation?

During the last few years, there has been an obsession by the Welsh CBI in backing large businesses, a focus which culminated in their backing for the Economic Renewal programme and the statement that CBI Wales agreed

"with the first minister that Wales largest 'anchor' companies are key to economic growth and prosperity. In fact, Wales is more dependent on large companies than England, as Wales' largest 1.8% of companies account for 69% of national turnover. As a result, we stated that only targeted government action to support these 'anchor' companies will deliver real growth and employment".

In contrast, John Cridland, the new CBI Director-General-Designate, recently stated that

“With the UK’s 4.8 million SMEs providing 60 per cent of private sector jobs and accounting for half of all private sector turnover, we have much to do to help these companies achieve their full growth potential.”


In addition, Sir Richard Lambert, prior to leaving the CBI this week, supported his successor by stating that:


"What I want to focus on this morning is the short-term, and the need to do everything possible to support the creation of new jobs in the private sector over the next few years. For a number of reasons, this means developing policies that are specifically targeted at supporting small and medium-sized enterprises. SMEs are the main source of new jobs in the UK. The big multinationals - the companies that the Prime Minister usually gathers around the Cabinet Office table when he is discussing these matters - taken together and over time are reducing their headcount in this country."


I know who I agree with and you must wonder why the CBI in Wales takes a very different view of what is needed to boost the economy and why the Welsh Assembly Government seems to be in complete agreement.

YES FOR WALES, AND WELSH BUSINESS

Over the next few weeks, there will be considerable debate over whether the National Assembly for Wales should be granted further powers.

The two camps supporting and opposing further powers are putting their arguments to the public, with each hoping that they will prevail when the polling booths open in just under six weeks’ time.

So, let me take this opportunity to put my own cards on the table.

For those who have read this column during the last seven years, my views have always been that that Wales should be given every opportunity to maximise its economic potential.
As a result, I will be voting ‘Yes” on March 3rd.

But not because we have a devolution deficit relative to the other parts of the UK as some politicians have argued but because I believe that greater powers can make a real difference to Wales and the Welsh economy.

Indeed, I believe that the assumption that full law making powers for the Assembly would not help Wales, as indicated by several business organisations during the original devolution debate, is no longer valid.

In fact, the real question is how we can use further powers to support indigenous businesses to grow and flourish and make Wales a more attractive business environment for inward investors?
I believe that a more radical Assembly Government, with increased devolved powers, could use legislative powers to boost investment and profitability whilst cutting administrative burdens for companies in a range of areas. This would certainly be an improvement on the current settlement where economic development policy in Wales has been largely straitjacketed to pre-devolution economic levers previously operated from Westminster.

More importantly, if further powers are devolved to Wales, then it does give the Assembly the opportunity to adopt a pro-business approach to legislation.

Only last week, the First Minister stated that he believed “in seeing a burgeoning and thriving Welsh private sector being the engine of recovery. I want to lead a country where business feels Government its on its side, not on its back”.

Now if that not just political rhetoric and is how Carwyn Jones really feels, then I challenge him and the leaders of all the main Welsh political parties to immediately pledge that any new powers devolved to Wales will have no detrimental effect on business.

In my opinion, that would have an immediate and positive impact on the campaign for further devolution amongst the Welsh business community.

After nearly twelve years of devolution, Wales still needs to improve its economic performance relative to the UK and further powers must be used to positively enhance the economic performance of individual businesses and the Welsh economy as a whole.

For example, the National Assembly could look to reduce much of the legislative burdens on the tens of thousands of micro businesses that spend the majority of their time dealing with unnecessary red-tape. Such a move by legislators would make an enormous difference to the competitiveness of the vast majority of Welsh firms.

We have waited too long to argue the case for greater legislative powers and its effect on economic and enterprise development. During the enquiry by the Richard Commission into further powers for the Assembly, I was extremely disappointed that the economy was not discussed in any real depth. In fact, I believe that when the vote is won in March, the first step that the National Assembly should take is to set up an internal cross-party commission to thoroughly examine how additional powers can create competitive advantage for Welsh businesses over the next four years.

Since devolution, our nation has experienced a growing confidence, especially amongst our entrepreneurs. Unlike the lukewarm attitudes from many business organisations and their members back in 1997, the last decade has seen a growing number of businesses, especially those in new knowledge-based sectors, embrace the opportunities created by greater self-government.

Devolution has also encouraged larger businesses, especially within banking and finance, to create Welsh headquarters for their divisions that were previously managed from Manchester, Birmingham and Bristol.

With increased legislation that can positively enhance their opportunities, I expect that more investors and large firms will look to Wales to support a pro-business type of legislative environment over the next few years, and that can only be good for the Welsh economy.

Therefore, I can only be hopeful that a higher proportion of those heading Welsh businesses will consider the possibility of adopting a more positive approach to further devolution that can make a real difference to Welsh businesses and, more importantly, those sixty members elected to the fourth Assembly after May will respond positively to this opportunity.

To me, Wales is the greatest nation on this planet and there is now the opportunity to create a legislative environment in which entrepreneurs and innovators can flourish.

Used properly, further powers can help us fulfil the potential we all know exists amongst our business community and I hope that everyone who wants to create a more prosperous Wales will make the right decision on March 3rd.

THE END OF THE IWA'S POLITICAL INDEPENDENCE?

Having been a member of the  Institute of Welsh Affairs for many years, I was under the impression that despite have becoming part of the Welsh establishment, it remained an independent, membership-based think tank that "owes no allegiance to any political or economic interest group".

Yet last week, it allowed the First Minister to give a speech at the North Wales branch’s annual dinner that even the most independent observer could only describe as highly political.

Here is one extract:

"So, I say to all Welsh Liberal Democrats – voters and members alike. If you still think of yourself as a radical. If you still believe in social justice. If you want to build a better society, then there is a home for you in Welsh Labour. That is my message. Come home. Come and join us. Help us build a better Wales together. Because of our values and radical traditions it falls to Welsh Labour yet again to be standing up for Wales. In the coming months this will be Welsh Labour’s benchmark – on the economy, jobs for young people, welfare reform, public services, the environment, broadcasting, investment and infrastructure. Standing up against the Tory / Lib Dem broken promises over tuition fees, standing up against getting rid of the essential Educational Maintenance Allowance for our young people, on the VAT rise, on scrapping the St. Athan military academy, on fuel prices. I will be standing up for Wales. Welsh Labour will be standing up for Wales".

All good knockabout stuff on the hustings or at the local Labour Club dinner.

However, it is simply unacceptable for an independent thinktank's event to be used as a political soapbox by the leader of one of the parties who will be contesting an Assembly election in less than five months time, even if he is First Minister.

By pandering to the Labour Party in this way, has the IWA finally crossed the rubicon of political independence?

Worst of all, consider how those attending the dinner whose political allegiances are different to the First Minister must have felt listening to this party political broadcast?

I can just imagine the howls of protest from the Welsh Labour establishment if a Conservative leader had made a speech at an IWA annual dinner that directly attacked his or her political opponents.

Owen Smith's PA would be working overtime!

Of course, if the IWA is politically independent, then I am sure it will have no problems in  giving the other three party leaders the same opportunity to attack their opponents at the other annual branch events during the next few months.

SITTING DOWN FOR WALES

Last week, I wrote a piece about China’s Vice Premier trade mission to the UK which started with a trip to Edinburgh where separate talks were held with the Scottish First Minister.

I also noted that, during the visit, the Chinese Vice Premier did not come to Wales, and the fact that many were now starting to ask why Wales was excluded from the agenda for the visit by this high-powered Chinese delegation, an agenda which resulted in trade deals worth £2.6 billion with most regions of the UK except Wales?

I made the case that part of the answer lies in the fact that there has been a real personal commitment by the Scottish First Minister - who has visited China twice a year for the last two years - and whose discussions with senior Chinese officials undoubtedly influenced the Scottish trade deals that were made last week.

In contrast, I questioned the trade record of our own First Minister since he was appointed to the post at the end of 2009 and asked ow many times has he led trade delegations to major economies around the World during the last 12 months?

The blog entry was picked up by Matt Withers in the Western Mail. In his article, the Welsh Assembly Government refuted my analysis, with a spokesman saying that Wales’ business links and relations with China were “extremely strong and stretch back many years” and stating that:

• In October, the Deputy First Minister met with the Chinese Ambassador to discuss Wales-China relations
• In 2000, Premier Wen Jiabao, then vice premier, visited Wales and this led to a Memorandum of Understanding between the major industrial area of Chongqing and the Welsh Assembly Government, agreeing to collaboration and co-operation in a number of areas, from education to sustainable development.
• WAG is directly promoting Wales to China and has offices in the capital Beijing, China’s largest city Shanghai and in Chongqing. It also regularly run trade missions to China for Welsh companies.
• Cardiff has an office of the China-Britain Business Council that helps companies to grow and develop their business in China.

Sounds all well and good one talk with the Chinese Ambassador didn't make any difference in getting this delegation to visit Wales did it? Indeed, the fact that WAG has to point to a trade visit that took place over a decade ago demonstrates their desperation to defend their poor track record.

Given that it was the current Chinese Premier who led that delegation, you have to wonder what sort of impression WAG made to stop them returning again and, more importantly, what investment has resulted  during the last ten years as a result of that meeting?

Certainly, the Scots have every right to toast each other with 30 year old single malts after a series of deals signed last week which:

• secured the jobs of more than 2000 workers after Grangemouth oil refinery signed a partnership deal with PetroChina. 
• led to a multi-million pound contract to deploy Scottish energy-from-waste technology in China has been hailed by the Chinese vice-premier as further evidence of a "flourishing" green technology exchange between the two countries. 
• allowed Scottish salmon to be directly exported into China for the first time, helping to support a rural industry that supports 6,000 jobs in Scotland and is worth £500m to the economy.

As I noted, Alex Salmond has made a real effort to build links with one of the World’s fastest growing economies and this dedication has obviously paid dividends with various commercial deals signed between China and Scotland.

And how many deals came to Wales as a result of the Chinese trade visit? I think we all know the answer to that.

It is no good sitting down in Cardiff Bay waiting for the leading investors such as the Chinese to come to Wales. Personal and professional links with overseas governments and companies take time to build, especially with Asian nations where the concept of “guanxi” (or relationships) are critical.

One visit is never enough and, as Alex Salmond has shown, you only get the opportunity to make significant commercial deals if you demonstrate commitment and dedication to your potential partners.

If Wales is to succeed internationally, then our government’s attitude must change, and change quickly, as it is clear that they have yet to realise that an overseas visit from a leader of a nation can open doors to commercial opportunities that entrepreneurs can only dream of.

Despite the usual bluster of WAG's press office, there is little evidence that Wales has any real profile with one of the most powerful nations in the World. China, in looking to develop strong international partnerships in sustainable technologies, preferred to look to our Celtic cousins in Scotland whose leaders had made a greater effort to sell the strengths of their nation.

That is clearly not acceptable in an increasingly globalised World, and it is critical that in the future, our own political leaders make a real and sustained effort to sell the advantages of Wales to the World. If they do not, then there are other parts of the UK, such as Scotland, that will work hard to develop such links and attract jobs and investment to their region.

Welsh Labour have adopted the slogan "Standing Up for Wales" for the May elections.

Certainly, on the evidence of their performance in attracting Chinese investment into the Welsh economy during the last decade, then "Sitting Down for Wales" may be a more apt slogan.

HAS WAG ALREADY DONE A BROADBAND DEAL WITH BT?

In the Economic Renewal Programme document, it was suggested that 

"all businesses in Wales will have access to next generation broadband by the middle of 2016, and that all households will be enabled by 2020. This is ahead of the EU’s target of ensuring that all of the EU population can access 30Mbps broadband by 2020 with over half able to benefit from speeds of 100Mbps by this date. We need a full procurement exercise and State Aid approval to achieve this aim. The next steps are to engage quickly with the market during summer and autumn 2010 and then to commence a full procurement exercise by spring 2011".

Yet at least one business is ahead of the game when it comes to getting this multi-million pound procurement contract. 

According to the Daily Post on Wednesday, the Director of BT Wales allegedly suggests that BT is already in talks with the Welsh Assembly Government over its procurement plans, which will result in all of Wales having access to high speed broadband technologies by around 2015.

In fact, the article seems to suggest that a deal is already on the table with regard to the broadband rollout:

"The WAG has put in £50m and we have put in £78m to do this, as it’s a wholesale deployment...The technology is available on wholesale basis to any provider wanting to offer that product, not just BT. It’s up to the WAG how quickly this all happens in Wales but it is doable by 2015.”

Of course, BT may just be "pushing the envelope" when it comes to trying to secure the contract (and who can blame them). 

However, unless this has been misreported, it suggests that WAG is already in discussions with one potential contractor before the procurement exercise has started.

Personally speaking, I believe that WAG, through the European Structural Fund programme, could have done a deal with BT over broadband years ago, as as happened in Cornwall.

Yet I can only wonder what other potential contractors will feel about this, especially as businesses are being urged "to attend an event to learn about the Welsh Assembly Government's plans to procure a first class, globally competitive next generation broadband network for Wales" on March 26th at Cardiff City Stadium?

Deal done?

PRAISE WHERE PRAISE IS DUE?

Excellent news today from Trojan Electronics, one of the 2010 Fast Growth 50 companies, regarding their plans to create an additional sixty jobs through their expansion.

What is not so edifying is the sight of the Welsh Assembly Government trying to claim some sort of credit for these jobs because they had partly funded the premises into which Trojan Electronics is expanding.

It is a shame that WAG was not so quick off the mark in congratulating Trojan and the other FG50 firms back in October 2010 when the 2010 list was announced. In contrast, the UK Government will be inviting the fifty firms to a Westminster reception to celebrate their success later this year.

Does this mean that the next time a private property developer has any new tenants within an office block in Cardiff, that they will also be claiming credit for the jobs created?

Are we now going to get a Ministerial press release every time a company uses any road paid for by WAG to deliver goods to a new customer?

To be honest, you can't blame them.

The Economy and Transport press office currently seems to be scraping around for any sort of news story to try and justify the poor economic record of this current government. Indeed, the whole department seems have done very little since July (when the Economic Renewal programme was launched) apart from reshuffle senior staff across responsibilities.

In fact, the only worthwhile stories they have to present (and ones which seem to be kept below the radar) are related to the last round of Single Investment Grants, a policy which has now been abolished by the Minister who is so keen to congratulate the companies receiving government support!

WALES LOSES OUT ON ECONOMIC OPPORTUNITIES (AGAIN!)

According to various press reports, several lucrative business and Government contracts are due to be signed with China this week when Li Keqiang, its vice premier, visits the UK.

Mr Li, who is widely expected to become Chinese Premier in the future, began his four-day trade mission yesterday with a trip to Scotland to hold separate talks with Alex Salmond, the First Minister, and Michael Moore, the Scottish Secretary.

He was scheduled to visit the Pelamis wave energy project in Edinburgh as much of the bilateral talks will focus on Scotland’s renewables and low-carbon energy industry. The First Minister also hosted a lavish state banquet at Edinburgh Castle, having visited China twice in each of the last two years to promote Scottish enterprise.

Mr Salmond said: “It is important the Scottish Government, our agencies, businesses and educational organisations continue to do all they can to advance our relationship with China, particularly as we pursue every opportunity to build sustainable economic growth across Scotland. I am delighted the vice premier will begin his state visit in Edinburgh. China already has the largest deployment of on-shore renewable technology and Scotland is a world leader in off-shore energy.”

Of course, the obvious question is why is Wales being excluded from the agenda for the visit by this high-powered Chinese delegation, which consists of 50 Government officials and 100 business leaders, and is viewed as important to increasing Britain’s trade with China?

Given that our export performance is the worst of all the UK regions and we have the lowest proportion of exporting businesses, surely it should be a WAG priority.

More importantly, has anybody asked why WAG is so slow off the mark when it comes to building links with the major economies of the World?

Is it because, for much of 2010, the civil service and politicians were obsessed with the internal wranglings of the now defunct International Business Wales (IBW), rather than on going out there and selling Wales to the World?

As the visit is being organised by UKTI, there is obviously an issue here regarding the relationship with the UK Government's main overseas business advocate. Surely, it isn't that difficult for WAG and UKTI to work more closely together?

Only last week, Ieuan Wyn Jones went on record to say that  “Raising the profile of Wales in the UK and overseas has been a goal and a priority of mine for some time. One of the key priorities of our new policy ‘Economic Renewal’ is making Wales a more attractive place to do business and the image and reputation of Wales is an important influence on and reflection of the business environment".

It doesn't say much for the profile of Wales in the UK and overseas when we are snubbed by one of the the most important business delegations to visit these shores in recent years.  More importantly, what efforts are being made by our civil servants to build these links with major trading partners rather than relying on spending millions of pounds on yet another trendy, visually pleasing but ultimately pointless marketing campaign?

If Alex Salmond has visited China twice in the last year, what is the record of our own First Minister in this regard? How many trade missions has the Deputy First Minister led during 2010?

Someone suggested to me recently that Welsh politicians are being told not to travel abroad because it is not "the thing to do" when public finances are under pressure. If that is the case, then someone has clearly lost the plot because of the increasing obsession by the press and some politicians over the travel expenses of those who are trying to promote our nation to the World.

Indeed, if such attitudes are prevalent within those who advise our senior politicians and prevent them from visiting key trading partners, then it is no wonder that Wales has been ignored by one of the most important trade delegations to visit these shores in recent years.

TWITTER - IS IT OF ANY USE TO BUSINESS?

Having once worked at the cutting edge of technology – I was using email twenty years ago – I must admit to have become increasingly isolated from many recent technological developments on the internet.

I did eventually start blogging four years ago and, like another half a billion people, now have an active Facebook profile.

After only three months of activity, I have over 600 contacts on the linkedin business networking site. However, the one piece of social networking that I have avoided like the plague has been Twitter.

Until now.

For those of you who are still blissfully ignorant about Twitter, it is a service that enables its users to send and read messages called ‘tweets’, which are text-based posts of 140 characters or less displayed on the user's profile page. This enables users to update their current profile succinctly and quickly.

Whilst it can be used on a computer, it is the growth of the mobile phone, particularly the iphone, which has enabled Twitter to explode as a vehicle for social networking.

Since its official launch in July 2006, it has grown to over 175 million accounts, with the number of users increasing by 300,000 daily. There are currently 95 million Twitter messages (known as tweets) posted every day, which equates to roughly 640 tweets per second.

Perhaps the fascinating aspect of Twitter is that it enables the user to “follow” other users of their choosing. This causes their updates to appear on your home page or phone and they, in turn, can follow you, enabling a sort of personalised social news network to be created.

That all sounds well and good for those who simply want to let their friends know whether they are in the pub or sitting on top of a mountain. But why should businesses become involved with Twitter? What can 140 characters say about your business that is meaningful in any way?

In fact, detractors of Twitter say that it takes you away from other productive work, is just for nerds, can’t replace proper marketing and opens up your business to potential cyber attacks from competitors. On the other hand, those who use Twitter suggest that it can be used to undertake market research, improve brand awareness, increase networking and generate new opportunities.

Like any other tool, it is the way you use it that is important.

At the simplest level, Twitter can be used to share the latest news and events about your business, and can be set up to notify customers about the availability of new products or services. You can also offer incentives, such as discounts, samples and free coupons to those who follow you on Twitter, generating interest in your company.

For example, numerous businesses have begun to ask customers to turn over their Twitter account information as part of a loyalty programme. Frequent shoppers get a point for every pound they spend and an extra point if they post a message about their purchase on Twitter, thus utilising word of mouth marketing online to sell the company’s products and services.

Therefore, an estate agent will tweet about new homes on the market, a restaurant will tweet about their lunchtime specials and a local business group will tweet about events and promotions.

As well as keeping in touch with external stakeholders, Twitter is a great collaboration tool for communicating with your employees and work colleagues. Rather than sending endless emails, short tweets to your team members will enable people to learn about the type of work you do.

Of course, whilst there are advantages to Twitter as a great communications tool, there are also drawbacks that can seriously damage your reputation and that of your business, especially if you post whilst in the wrong frame of mind. Indeed, the one rule of thumb that everyone should live by in the world of social media is “Don't Twitter while you're bitter"!

However, for many, including myself, the beauty of Twitter is that it enables you to keep up with those people within the same ecosystem as yourself, be it in politics, business, sport or even stamp-collecting. In a society where information is truly power, Twitter can give you access to almost instantaneous news and opinion as well as enabling you to send your messages or thoughts to the world.

Two weeks ago, I was ignorant of Twitter and what it can do.

By the time you read this article, I will probably have tweeted at least twice this morning on business and the economy.

Whilst it will never replace my columns in the Western Mail and Daily Post, Twitter has the potential to be used as a discussion area during the period between each one, a conduit for more ideas or just as a way to engage in conversation with me.

I look forward to your tweets @DylanJonesEvans.

THE DECLINE OF CARDIFF AIRPORT

In the excellent article by Rhys David on the IWA Click on Wales website, he notes that

“we should aspire to make 2011 the year when Cardiff airport begins to offer a range of important European business city destinations rather than the broadly holiday destinations currently on offer.

Difficult, indeed, when our international business links are withering with the withdrawal of many of the multinational operations that used to populate the Welsh business scene, but essential if we are to build a competitive economy.”

A truly important aspiration for South Wales (as I would expect that North East Wales benefits from the proximity to both Manchester and Liverpool Airports). However, it is an aspiration that is, unfortunately, dying a slow death, as the graph below shows.

From a peak of 2,024,428 passengers in 2006, the number flying from the airport in 2009 had fallen to 1,631,236. This represents a decrease of 19.4 per cent. In contrast, over 5.3 million people now fly from Bristol Airport.  

According to the CAA, Cardiff is now the bottom of the league table of "second tier" regional airports in the UK.

The question is whether anyone is interested in doing anything about this abject situation and it is worth reading a recent article from Denis Campbell  of UK Progressive which should have started a real debate about the future of our only international airport but didn't.

In fact, the comments from the current managing director seem to be in complete contrast to the detailed Master Plan put forward in 2006 in response to the UK Government's White Paper on the future of aviation in the UK and which outlines how Cardiff Airport could grow over the upcoming years. Indeed, whilst the Master Plan estimated that there would be 3.25 million passengers flying from Cardiff Airport in 2010 and yet the CAA's latest statistics indicate that only 1.42 million did so last year. 

The announcement of the new route from Newquay to Cardiff announced this week is obviously better news but it is hardly going to add massively to passenger numbers nor link South Wales to major business centres in Europe.

To put it bluntly, something serious has gone wrong over the last few years. Worst of all, the perception is that very little seems to be done about addressing the decline of the airport.  

Given the importance of an international airport to the attraction and retention of foreign direct investors as well as the development of tourism, surely it is time that Cardiff Airport, along with the Welsh Assembly Government and organisations such as Cardiff and Co, to come together to try and solve this problem once and for all. 

MORE GOVERNMENT FUNDING FOR POTENTIAL ENTREPRENEURS

The UK Coalition Government has announced that twice as many unemployed people as previously planned will receive government funding to help them set up a business.

The new enterprise allowance will now be available for up to 40,000 new businesses by 2013, as the coalition seeks to boost the recovery by encouraging private-sector growth.

Under the terms of the allowance all those who persuade business experts that they have a feasible plan for a start-up will be eligible for the funding.

Whilst this is a non-devolved area, then one would assume that Wales should be targeting for at least five per cent of this support to support the long term unemployed here, especially within our more deprived communities.

This would mean an additional 2,000 businesses being created at a time when the number of Welsh entrepreneurs has been in decline although I would expect that our business support agencies could, with their experience and expertise in this area, get a higher share of the funding for Wales.

Certainly, it would be interesting to know what WAG is doing to ensure that this fits in with the existing entrepreneurship “strategy” it claims to have in place under the Economic Renewal Programme and maximises this support to ensure we make the most of this funding.

WALES OFFICE BUSINESS ADVISORY PANEL

Over Christmas, I have been asked whether I am a member of the new business advisory panel set up by the Secretary of State for Wales in December.

Well, I am glad to say that I actually have been invited to be a member of the panel and attended the first meeting in Gwydyr House on December 14th (I am third from the left in the photograph above).

It was a very different type of meeting to the ones I have previously attended as a member of the Business Partnership Council organised by the Welsh Assembly Government, which tended to be formal and dominated by politicians and civil servants.

In contrast, this event was far more relaxed, everyone was given the opportunity to have their say and yes, there were actual entrepreneurs and businesspeople sitting around the table in addition to the CBI and the FSB. There was even a representative from the Welsh Assembly Government to ensure that there was joined up thinking between Westminster and Cardiff Bay. Indeed, David Rosser and I seemed to agree on the majority of issues we raised at the event!!

Certainly, there was a frank and open discussion (especially about the rail link between London and Cardiff) and it is clear that the Secretary of State intends to listen very carefully to the group on a  range of issues.

The panel will also be given access to other members of Cabinet during future meetings. For example, Vince Cable may be attending the next meeting and a number of us are keen to discuss the role of the non-devolved Technology Strategy Board in Wales and its role, to date, in stimulating innovation.

I feel very privileged to be part of the group and it should be a fascinating series of meetings over the next few years.

REFLECTIONS ON 2010

This week, I begin my eighth year as a columnist within the Western Mail and my ninth with the Daily Post.

More relevantly, as today is the first day of 2011, it is a good time to look back at the economic events of the last twelve months.

In January 2010, there could be no doubt that the Welsh economy had been hit hard during the recession of the previous year.

Statistics would later show that whilst the public sector was largely protected from the worst ravages of the economic downturn, over 88,000 jobs were lost in the private sector across Wales.

Perhaps the biggest symbol of the inability of politicians in Wales to plan properly for the fallout from the changing state of the global economy was the news that Bosch was to close its South Wales plant with the loss of 900 jobs, with hundreds more lost through the supply chain of small local companies.

For a number of years, some of us had been urging the Welsh Assembly Government to create strong relationships with the major employers across Wales, and yet again, the politicians were left to bemoan the loss of another major employer by trying to shut the gate after the horse had bolted.

One can only hope that the Bosch episode finally hammered home the importance of having regular dialogue with the five hundred major inward investment companies that currently account for almost a third of employment in all large businesses in Wales.

Whilst tens of thousands of jobs were being lost across businesses in Wales, those working within the bowels of the Department of Economy and Transport were busily preparing the government’s new economic strategy.

Widely heralded as ending the grant culture even before it went out to consultation with business, this “Economic Renewal Programme” promised to re-energise the Welsh economy, a promise that politicians have been making since the Assembly was born in 1999.

The regular readers of this blog will know my views on a strategy that clearly did not reflect the views of the business community and offered little empirical evidence back to its conclusions. Indeed, most of the strategy now seems to be predicated on abandoning business support and funding at a time when small firms need every help they can get and instead using this money “saved” to pay for superfast broadband across the country.

The jury remains out as to whether the new economic renewal programme will work or not, but given that the Director General of the Department of Economy and Transport has been sent to Anglesey by his Minister, it doesn’t exactly show confidence in those officials who devised the strategy in the first place. Indeed, much work remains to be done by those replacing him to persuade the private sector that government in Wales is really on its side.

The highlight of my year was, without doubt, the hour I spent with Michael Moritz at his Sequoia Capital headquarters in California. Being the Welshman who invested in companies such as Yahoo, Google and YouTube, the 60 minute meeting was an opportunity to learn from someone who is widely seen as one of the leading gurus of the internet age.

And what was Cardiff born Moritz’s simple message to Wales?

It was one of encouraging the import of global scientific talent whilst, at the same time, providing the resources necessary at the primary and secondary school level to nurture the home grown scientists, engineers and technologists of the future. i.e. if you nurture, develop and attract young talent within science, engineering and technology and surely as day follows night, venture capital will follow that talent to create the industries of the future.

Yet, there is little evidence of this approach being embraced by either the public or the private sector in Wales. Given the spectre of increased youth unemployment across the nation over the next few years, it is a message that politicians at both Westminster and Cardiff Bay should begin to take seriously over the coming months.

The end of the year saw the ritual round of reports stating that Wales remained firmly at the bottom of the prosperity league table.

Given the fact that the first Assembly Government had set a target to increase Wales to 90 per cent of the UK’s prosperity by 2010, the fact that Wales remains at 74 per cent in 2009 demonstrates that successive governments have simply failed to utilise the economic levers at its disposal along with billions of pounds of additional European funding.

After twelve years of devolution, our competitiveness remains the worst of any British region, we have the lowest number of new business starts, the R and D spending by private sector companies remain pitifully inadequate, and we have the smallest proportion of exporting companies in the UK.

One can only hope, with the fourth Assembly election looming in May 2011, that the political parties will finally say enough is enough and finally begin to ask some serious questions over the ability of the Welsh economy to grow and develop and their role in enabling this.

Our over-dependence, relative to other UK regions, on the public sector at a time of government cutbacks will mean that we will need private firms, both large and small, to take on the burden of growing the Welsh economy.

The question is whether, after the abject economic performance since 1999 that has seen the worst growth record of any UK region, there we will finally see a radical set of policies put forward by the main political parties during the next four months, policies that can transform this nation.

For the sake of Wales, one can only hope so as we need a new approach that encourages entrepreneurship and innovation to create a flourishing economy that is driven by the skills and talents of its people.