Let's start with a tale of two cities. They are almost exactly the same size – a quarter of a million people – but whereas one has been doing pretty well in economic terms, the other has been finding it quite tough.
Yesterday the news broke that the city that has been doing well was about to lose 1,400 jobs. There was, understandably enough, uproar. The city that was struggling was greeted by the news that one of its businesses was planning to expand and would create another 1,000 jobs. It was barely reported. The first city was of course Derby; the second Plymouth.
There is not much to be added to the story about the loss of the Thameslink train contract except perhaps to note that Derby has a remarkably resilient economy. It bills itself as No 1 city in the UK for hi-tech jobs, having grown faster than any other city in terms of gross value-added and is the second city for employment growth. It has vigorous economic leadership and notes that it is the national base for a number of global companies, including Rolls-Royce, Toyota and the world's leading retail property company, Westfield. And East Midlands Airport has four million passengers and is the country's second largest for freight.
Now look at Plymouth. Its airport has fewer than 150,000 passengers and is planned to close at the end of this year. There are more people within an hour's drive of Derby than the entire population of the south-west of England combined. Its economy is still heavily dependent on defence, and nearly 30 per cent of its jobs are in the public sector. It has relatively low population growth, much lower than the South-West as a whole, and parts of the city are ranked in the 20 per cent most deprived in the country. By contrast to Derby, its gross value added per head is only 80 per cent of the national average and has fallen sharply since 1998. It is trying hard, and has embedded strength in some areas, particularly marine engineering. But it is tough.
It is marine engineering that is rising to the challenge. That little-reported bit of news was that Princess Yachts was planning to invest £35m in a super-yacht yard, which will add another 1,000 to its present workforce of 2,000.
If you are not fully up-to-speed in the luxury yacht world, you might say that the Princess models are the Aston Martins of the genre. A Princess 40 featured in the Bond film The World Is Not Enough, and the famous Flybridge series appear in Miami rap videos. But the latest models are in a different league altogether, with the top end coming in at around £12m and destined for the new global rich of the BRIC nations.
The company is interesting because it was a start-up in 1965, making ordinary enough motor cruisers for the British market. It gradually built more and bigger and faster boats, surviving the vicissitudes of British recessions by focusing on the export market, with ownership passing to a South African billionaire, Graham Beck, in 1981. A couple of years ago it was bought by a group of companies, including LVMH, controlled by the French billionaire Bernard Arnault.
So you might say that Princess is not really a British company now, but then nor is Bentley, or the motor division of Rolls-Royce, or, most notably, Jaguar Land Rover. All are foreign-owned. We seem to have this ability to create great luxury products – brands that the new rich of the world are desperate to get their hands upon – but with a few exceptions we don't seem able to make a go of running them.
I find this absolutely fascinating. I wish I could explain why because the ability to sustain these great global brands is part of our unique selling proposition to the world. Ask the tough question – what can we in the present developed world do that people in the emerging nations cannot do just as well and on lower wages? The answer is not an easy or comfortable one.
For Germany, there is a clear lead at the top of the engineering ladder and that can perhaps be sustained. France and Italy have very good hi-tech sectors and also great strength in luxury products, though maybe those sectors are not big enough to carry the rest of the economy. The size of the US and the ingenuity of its brightest people will enable it to scramble through. But Britain? And why do we need foreigners to show us what to do?
There are some clues in these stories today. One is that by welcoming foreign enterprises we enable our manufacturing base to compete more effectively than you might at first sight expect. Bombardier, the Montreal-based company making the trains in Derby, has been wonderfully nimble – from making snowmobiles, to executive jets, to trains and so on. If anyone can keep that business going, it can. Princess Yachts is mightily successful because it does top-end luxury and is utterly shameless about catering to the whims of the super-rich.
We have a squeamishness about that, don't we? We have the best private schools in the world, with the new global rich clamouring to send their children here. But that is not something most people would shout about. We have great universities, the only ones in the world that can rank level with the top US ones, but politicians feel able to sneer at them. We make these great luxury products but the principal markets for those are abroad. Of course the wealth is abroad: there are now more billionaires in Asia than in Europe. But the new rich, and even the new not-yet quite rich, lack our insecurities about the display of wealth.
No answers, just a lot of questions. But let's meanwhile celebrate Princess Yachts and the billionaires queuing up to buy them, and wish for Plymouth's economic renaissance.