Towns and cities across Wales have been shaped by the industries and employers that have called them home for generations.
From the industrial communities of the South Wales Valleys to the manufacturing heartlands of North Wales and Cardiff’s role as the country’s economic centre, major industries and employers have created jobs, attracted investment and helped forge distinct local economies.
But their importance is not simply a story of the country’s industrial past. These established strengths also hold the key to its future growth.
Take Flintshire, for example, where manufacturing remains central to the local economy. Today, the sector accounts for 45.2% of the area’s economic output – one of the highest concentrations of manufacturing activity identified anywhere in Britain by our research.
The industries may have evolved considerably, but the underlying lesson is an important one. Places do not necessarily need to reinvent themselves to generate growth; often, the foundations are already there.
Flintshire is one of six areas in Wales identified by new HSBC UK and Centre for Economics and Business Research (CEBR) research as an ‘Anchor Economy’ – a place benefiting disproportionately from the presence of large employers, inward employment and concentrations of economic activity.
Cardiff, Merthyr Tydfil, Rhondda Cynon Taf, Blaenau Gwent and Wrexham make up Wales’ six Anchor Economies alongside Flintshire.
Across Great Britain, the analysis identified 147 in total, which together support around 17 million jobs and generate approximately £1.4 trillion for the economy each year. Residents in these areas earn, on average, nearly £3,000 more annually than those in other locations.
If SMEs are the backbone of our economy, then large businesses are its heart and lungs.
But Wales’ six Anchor Economies also demonstrate why there can be no single prescription for regional growth.
Flintshire’s strength is heavily influenced by manufacturing. Its 45.2% share of local economic output reflects the presence of key manufacturing employers and the specialist activity that has developed around them.
For places like Flintshire, the opportunity is to build on that established industrial base: supporting major employers to expand, strengthening local supply chains and ensuring businesses can access the skills they need to grow.
Elsewhere, the picture looks different.
Cardiff demonstrates how an Anchor Economy can develop around the scale and pull of a major city, while Wrexham, Merthyr Tydfil, Rhondda Cynon Taf and Blaenau Gwent show that the Anchor Economy effect is not confined to Wales’ biggest urban centre.
That geographical spread matters. Large employers and specialist industries can play an important role in communities of very different sizes, supporting employment, investment and wider business activity.
But concentration can also create vulnerability.
A local economy with a significant reliance on particular employers or industries can be more exposed when those businesses or sectors face disruption. That does not make specialisation a weakness. Established industrial clusters can be important sources of skilled employment, productivity and investment. But the economic foundations around them matter too.
That diversity is precisely the point.
Wales does not lack economic strengths. The challenge is understanding what makes each place successful and what it needs next.
For the Welsh Government, councils and other economic decision-makers, that means resisting a one-size-fits-all approach. Established Anchor Economies need support to help successful employers and clusters expand. Places more exposed to economic change need a focus on diversification, skills and resilience, while other areas need the investment, infrastructure and workforce required to attract major employers in the first place.
Large companies, including HSBC, are rightly held to high standards in the communities they call home. But when combined with good local policy and the right investment, major employers can also breathe new life into a place and deserve credit for doing so. Major employers are always keen to work in partnership, whoever is governing and wherever decisions are made.
Wales already has significant control over many of the levers that shape its local economies. The opportunity is to align skills, infrastructure and investment more closely with local employers and industries – helping businesses expand and ensuring the benefits spread through supply chains and communities.
Economic renewal does not have to mean erasing a place’s past and inventing a new future.
From the manufacturing strength of Flintshire, to the economic pull of Cardiff and the Anchor Economies found across the South Wales Valleys and North Wales, much of the blueprint for Wales’ future growth is already hiding in plain sight.
The task now is to build on it.
