Wholesale markets – myth busting

By on 23/08/2011 in Factsheets, News, Rebuttals

The following seeks to clear-up myths that have developed surrounding the future of Birmingham's wholesale markets (last updated 24 August 2011)

Myth: The city council is “closing” the wholesale and retail markets in Birmingham in 2013.

Fact: The city council is seeking a private sector organisation to locate and develop a new home for the wholesale markets. This is not “closing” the facility, and the plans have no impact on the current location of the retail markets. The council has tasked an officer with the specific role of achieving this.

Myth: If a new site is not found for the markets by 2013, they will be forced to close.

Fact: The council has always stated that 2013 is a realistic timeframe to complete a search for a new wholesale markets site. A deadline does not exist, however it must be recognised that the current wholesale markets are nearly 40 years old and are not a viable long-term solution, and increasingly will become further unfit for purpose.

Myth: The council's plans will create another “MG Rover” in the city, in terms of the scale of job losses.

Fact: The city council is not closing the wholesale markets. Simply put, there is absolutely no comparison with the demise of MG Rover. Even if such claims were accurate, the wholesale market directly employs 535 people - roughly a tenth of the number working at Longbridge when the car manufacturer folded. (Figures based on March 2011 Tenants survey).

Myth: The council will not be able to find a private sector partner to develop a new wholesale markets site.

Fact: Both Sheffield Market and Western International (adjacent to Heathrow) are recent examples of wholesale markets which have successfully relocated as a result of local authorities working with private sector organisations. Privatisation in part or in whole is a growing trend and some private sector provision of the existing wholesale markets service already exists in Birmingham outside of the current wholesale markets precint.

Myth: The wholesale markets can only be based in the city centre - elsewhere is not an option.

Fact: Elsewhere is an option and always has been. In 2006, a survey showed that 76 per cent of businesses reported their customers were based in the west of Birmingham and the wider West Midlands. Another location will enable the wholesale market to take advantage of its regional and national food chain role.

Myth: The council should be able to fund a move, without needing private sector support or assistance.

Fact: The wholesale markets operate at a loss for the council. In 2010/11 this was £0.8million and is predicted to worsen.

The previous plans to relocate to Witton relied on a financial model featuring substantial support from Advantage West Midlands, which is now in the process of being wound down, meaning its contribution has been withdrawn. Previously favourable rates for public sector borrowing are also no longer available.

Coupled with the global economic difficulties and the savings challenge faced by the council, private sector support is essential for the relocation.

Myth: Renovation of the existing facility is the only feasible option for the markets to thrive.

Fact: The option to refurbish the existing wholesale markets was considered and discarded as far back as October 2006 as part of the Birmingham Wholesale Markets Outline Business Case.

The existing wholesale markets are in a poor state of repair, but refurbishment is not a financially viable option. The council has repeatedly said that it wants a functioning wholesale market to remain in Birmingham, so relocation is the only option.

Although it is not clear that a refurbishment would create an actual closure of the existing site, it would create massive disruption to the service.  The cost of a refurbishment would have to be passed onto the tenants by way of increased service charges which would be in the millions and traders would be unlikely to meet these additional costs.

Myth: Most business is done with traders in Birmingham city centre, meaning the wholesale markets must be in the city centre. Put simply, retail market traders (indoor and outdoor) will go bust if the wholesale markets move.

Fact: A trader survey conducted in March 2011 revealed that almost three quarters of traders said that at least 80 per cent of their trade was from the wider region - showing the markets are not simply Birmingham focused.

Just four wholesale traders out of the 75 who responded to the March 2011 survey indicated that more than half of their trade came from the city centre.

73 per cent of those surveyed were willing to move to the Hub in Witton (the site which had been previously earmarked for relocation). Just 18 per cent said they did not want to move.

66 per cent of indoor market traders indicated they would still use the Wholesale Market if it relocated.

Myth: The council is rushing into a decision and has not considered all options.

Fact: Seven detailed options have been costed and considered, from a complete closure through to a new site developed solely by the city council. All seven were discounted as they are all substantially loss-making or would require large investment by the City Council that would not have a guaranteed return.

The current search for a new private site offers the best long-term prospects for the markets to thrive.

Note: 75 of 94 traders responded to the March 2011 trader survey.

LINK TO LATEST CABINET REPORT ON WHOLESALE MARKETS (25 JULY 2011)

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