Two cities, different tale

Cardiff's growth is set to outstrip Manchester's by more than 50 per cent despite a shared industrial past. What is the Welsh capital's secret?

KING Coal's throne room in Cardiff is in a sorry state. The floor of the Coal Exchange is freshly polished and the oak panels still gleam, but the giant skylight is filled with a tacky false ceiling and the entrance lobby is marred by a modern aluminium and glass doorway.

In the 19th century, when the price of coal drove the world economy, formally dressed traders crowded the room at high tide to swap tons of black gold for thousands of pounds. As they dealt, Cardiff grew from a sleepy seaside village of 1,500 into the capital of the steam-driven industrial empire. By 1912 it had the busiest docks in the world. But since the advent of oil, its main industries, shipping coal and bashing steel, have steadily declined.

Yet Cardiff itself has continued to prosper. South Glamorgan - which is overwhelmingly dominated by the city - is the only Welsh county with a higher income per head than the British average. And last week Ereco, a group of leading European economic think-tanks, said the city would be the fastest- growing of six UK conurbations.

The report predicts Cardiff will grow by 3.4 per cent a year on average between 1993 and 1999, compared to 2.2 per cent for Manchester, which it says will be the UK's slowest-growing conurbation. Cardiff's economy will be 26.4 per cent bigger by the end of the decade, while Manchester will grow by only 16.5 per cent.

Ereco's other growth predicttions are 3.1 per cent for Birmingham , 2.9 per cent for London, 2.6 per cent for Edinburgh and 2.3 per cent for Glasgow.

That Cardiff's growth rate should be more than 50 per cent higher than Manchester's is astonishing. A century ago both were mighty industrial cities. But Manchester, always the larger of the two, has fallen prey to its own success. While Cardiff has moved nimbly from coal and steel to financial services and tourism, Manchester, bogged down in its industrial past, has found it harder to adjust. And its army of unemployed has grown to the point where it threatens to hold the city back still further.

Cardiff's recent spurt was built on an early shift from heavy industry to a service-based economy, said Richard Lewney, managing director of Cambridge Econometrics, one of the Ereco firms. "From the early 1980s it has seen quite a pick-up. It's been through its industrial transformation, and now has a hinterland with modern industries and good infrastructure."

An influx of foreign investors - including Sony of Japan, which makes televisions there - has given the region one of Britain's few thriving manufacturing sectors, said Professor Garel Rhys of Cardiff Business School. On a typical working morning, the roads leading into the valleys are as busy carrying factory workers out of Cardiff as they are bringing white- collar workers to the city.

The city has also become a regional retail centre, attracting shoppers who used to go to nearby English cities. That is partly due to the arcades' charm, partly because of several new mini-malls. The city boasts every national chain except John Lewis, and has two home-grown department stores, although one is owned by House of Fraser.

The local economy is still short on publicly listed companies, according to Stephen Jones, managing director of the Cardiff branch of NM Rothschild & Sons, the merchant bank. The dominant ones are Allied Steel & Wire, a successful spin-off from British Steel; HTV, the local broadcaster; Thomas Bailey Investments, a property company that recently bought Cardiff Airport; and the privatised utilities Swalec and Welsh Water. Entrepreneurial skills are underdeveloped, largely because the economy used to rely so heavily on the nationalised coal and steel industries.

But Rothschild is convinced that Cardiff has potential. The city boasts many medium-size private companies, and the number that will seek full listings in the next five years will be in double figures. More will join the new Alternative Investment Market, due to open on 19 June. "There are opportunities here," said Mr Jones. "The entire culture is changing."

Ask any local politician about the city's future and they will point to Corfforaeth Datblygu Bae Caerdydd, the Cardiff Bay Development Corporation. The project is huge, the largest waterfront redevelopment in northern Europe. It has pounds 460m in government funds to spend on 27,000 acres. The plans call for industrial, residential, commercial and leisure areas to be built.

Until recently, Cardiff was cut off from the sea by derelict industrial areas. Rejoining the two is part of a grand plan. "Cardiff is an elegant European capital," said Michael Boyce, the corporation's chief executive. "Our mission is to put it on the world stage as a city of international significance." It is not, however, a task without problems and controversy.

At the centre of the project is a 3/4-mile barrage designed to turn the bay into a freshwater lake. But legislation to allow the development was delayed for more than five years as conservationists fought to protect the dunlins and redshanks that scavenge on the tidal mudflats. The corporation counters that the birds have lots of room to feed on the Severn Estuary, and that cleaning up the raw sewage pumping into the bay will improve the local environment.

The delay has hurt. With less than four years to run in the corporation's 10-year mandate, the bay area is still mostly vacant. Insurance companies - attracted by subsidies ranging between pounds 50 and pounds 4,000 a job - have opened regional offices, and Tesco has a store beside the River Ely. The biggest development promised is the NEG/Schott glass factory, which will supply screens for local television and computer monitor manufacturers.

So far less than 8,000 of the promised 30,000 jobs have been created. Private investment has been pounds 540m out of a projected pounds 2.1bn. Officials are pinning hopes on the development of a multi-media industry, but admit it could take another decade.

Possibly the biggest impact of the redevelopment has been through infrastructure. A new link road connects the eastern and western ends of the Welsh M4 and pile-drivers are finally working on the barrage. Visiting contractors are filling bed-and- breakfast accommodation during the week, raising complaints from some locals that they are missing out on the building boom. Mr Boyce counters that the corporation has set up a training centre that has already helped 1,000 residents.

The Bay redevelopment is modelled on similar projects in other cities, notably Baltimore in the United States, but its managers hope to avoid some of the pitfalls experienced elsewhere. In particular they are worried that redevelopments often cut the traditional centre out of the cities they are supposed to help. Mr Boyce is determined not to let that happen in Cardiff. "We expressly set ourselves against just moving the deckchairs about," he said.

Cardiff is in a better position than most in this respect. Government- backed development projects are usually set in cities suffering severe decline. The principality's capital, in contrast, is already growing, so the waterfront project does not need to cannibalise the city centre.

Existing growth, though overshadowed by the grandiose dock effort, may be more significant, argues Professor Rhys. "Cardiff benefits from its location. The motorway has compacted travel time, making the trip to Heathrow just two hours."

Cardiff also enjoyed the tremendous advantage of being made the capital of Wales in 1955. That attracted high-paying jobs in government, the media, arts and sports. Apart from London, no English cities have similar status.

While economic growth is seen by private and public sectors as the ultimate goal, elected officials in Cardiff admit it is a mixed blessing. More prosperity and jobs will attract people, creating a greater need for schools, hospitals, police and firefighters. It will also add pressure to develop land in a city cramped between the sea and the hills.

"We're aware of the problems," said Russell Goodway, leader of the Labour majority on the county council. "If we're not careful we could end up destroying what we have here." Being careful means pushing new development out into the valleys, spreading the prosperity without causing crowding. "There are pockets of land available within the city for development," Goodway added, "but predominantly Cardiff is becoming a place that people travel into to work." A five-year pounds 100m transport project aims to open up the valleys with light rail links.

Cities that grew faster, earlier - such as Manchester - are being hindered by the growth of their underclass, with its links to crime. Mr Goodway is determined to see that doesn't happen to Cardiff, although he admits to having areas where unemployment tops 25 per cent and children are reaching maturity without ever seeing their parents go to work. "We need to target the second-generation unemployed," said Mr Goodway. To do that, Cardiff badly needs the rising tide of prosperity predicted in the Ereco report.