Associate feature: The makings of a strong comeback for the Highlands and Islands

It has become something of a truism to state that 2020 was a difficult year, but for businesses in the Highlands and Islands, it was exceptionally hard.

Independent analysis shows the region is expected to see an estimated loss of between £1.5bn and £2.6bn of GDP for the year, a drop of around 11 to 19 per cent, with the tourism and hospitality sector, an important one for the region, shutdown or heavily curtailed as well as impacts on other sectors. But it is not all bad news.

More than £30m of additional government funding has so far been distributed in the region by Highlands and Islands Enterprise (HIE), including the Pivotal Enterprise Resilience Fund (PERF), the Creative, Tourism and Hospitality Enterprises Fund, the Islands Green Recovery funding and the Supporting Communities Fund, as well as HIE’s digital enablement grants and £3m for destination management organisations.

This combination of additional government funding and HIE’s own resources helped create or retain around 1,700 full time equivalent jobs between 1 April and the end of December, many of which would otherwise have been at risk due to the pandemic.

Around 700 were new jobs across a range of different sectors, with a significant number supported in fragile areas.

Some positive signs of recovery include 250 new roles in finance and business services at Capgemini, which has bases in Inverness and Nairn.

Other examples include the HIE-backed multi-million pound investment at AJ Engineering in Forres that will create 36 new skilled manufacturing jobs, and the expansion of Jamieson’s Spinning in Shetland.

HIE’s most recent survey of its 1,000-member business panel, in October, reflected widespread concerns over the impacts of COVID and Brexit.  More than 80 per cent of respondents were confident of their future viability, although only 37 per cent felt confident at that moment.

“It’s too early to say what the full scale of impacts resulting from COVID and Brexit will be, but we have a great deal of confidence in the resilience of companies in the Highlands and Islands,” says Alistair Dodds, who was appointed chair of HIE in May 2020, during the first lockdown.

“Our organisation’s structure combines strategic and sectoral expertise with a place-based approach across the region where colleagues work closely with local businesses and communities and have the power to take significant decisions.

“That blend gives us an ability to react quickly and positively to regional and local needs and opportunities even as conditions are changing rapidly.

“The business base has a high proportion of small and micro businesses in our region, and that in itself brings a degree of resilience. We’ve seen adaptability and flexibility of firms taking advantage of opportunities that have emerged through the crisis.”

One example of that is the collaboration of commercial firms ODx Innovations, Aseptium and 4cEngineering working with academic organisations at Inverness Campus to provide clinical testing and diagnostic expertise, laboratory facilities and PPE for the health service during the pandemic.

“There’s some great examples of how people have reimagined and reinvented what they’re doing to respond to opportunities in crisis,” agrees Charlotte Wright, HIE chief executive. “And a big part of that has also been a shift to online.

“The digital enablement grants, which come directly out of HIE’s core resources, are really focused on supporting businesses to move as much of their transaction capability and reach into online, and that’s been something that has really taken off.

“There’s been a real shift in the capability and capacity for business to be digitally smart, which is something to really build on for the future.

“We moved our own events online too, including workshops and conferences that provide information, advice and networking opportunities. XpoNorth, Scotland’s largest creative industries conference, was a great success, with digital delivery enabling almost 6,000 to participate live in the two-day event in June or through streaming sessions afterwards.”

Digital also offers an opportunity as more people realise they can do their business from anywhere.

That puts the Highlands and Islands region in a strong position, with its attractiveness as a location to live and work, which is something HIE is keen to focus on, since growth and support to the population base in the Highlands and Islands has always been a key strategic ambition.

With the country still in the midst of the pandemic, but recovery on the horizon with the vaccine rollout, HIE is making sure it maintains a dual focus on both supporting business resilience and survival in the short term while also looking ahead strategically to building back greener and stronger.

Dodds explains: “We’ve got to be quick to move and respond to whatever happens next, but also making sure we’re looking ahead to the future.

“As an organisation that’s been around for well over half a century, we’ve seen the benefit of taking long-term strategic decisions alongside tactical responses in the short term.”

When it comes to future growth, the region has a lot of advantages, with the natural environment, resources and open spaces offering possibilities to support the green recovery from both traditional and renewable energy production to aquaculture, outdoors and adventure tourism, life sciences and space technology.

HIE is making significant investment in infrastructure, such as the Enterprise Park in Forres, the Inverness Campus and the European Marine and Science Park, near Oban.

The agency has invested heavily in other major projects, including £10m in the £49m development of Stornoway Port, funding for Kishorn dry dock in Wester Ross, Dales Voe in Shetland and Scrabster Harbour, and work to reinstate the Cairngorm funicular railway.

Growth deals in partnership with local authorities throughout the region will see further investment in infrastructure and the economy.

 “The government’s agenda on net zero, and the focus on good green jobs and the green economy, gives the Highlands and Islands a real opportunity here,” says Dodds.

“The green economy, and the blue economy around marine developments, means we have natural advantages in marine science, aquaculture, marine tourism and other renewable opportunities.

“The investments we’ve been making, for example, in ports and harbours, will strengthen our region’s capacity to benefit from opportunities that focus on the green and blue economy right across the Highlands and Islands.”

There is also the opportunity for existing businesses to re-evaluate what they can offer and how to promote the advantages of the region.

“We’ve really seen during this past year how people value their green spaces and the environment,” Wright says.

“We’ve got that in spadefuls in the Highlands and Islands. That’s a real opportunity to capitalise for the region.

“So again, it comes down to supporting that resilience in the short term but looking at those longer-term investment pieces.

“We’ve done a lot of work over the year to provide advice and information to businesses online, particularly through our webinar programme, and a great many have been able to take part in this.”

Another key growth area that HIE is predicting could be significant for the region is space technology, including satellite launching.

HIE itself secured planning permission last year to build a spaceport on the A’Mhoine peninsula in Sutherland and launch sites are also planned for Shetland, the Western Isles and Argyll.

“The Highlands and Islands is leading the way with the development of a new sector for Scotland in the space industry with a number of really significant opportunities for launch and manufacturing,” Wright tells Holyrood.

“We’ve seen Space Hub Sutherland get planning permission, which is a massive step forward. Shetland Space Centre has attracted new investment.

“Orbex, our launch partner for Sutherland, has also attracted really significant investment from the private sector into their business with more exciting plans to design and build their low carbon rockets in Moray.

“The Western Isles and Machrihanish in Argyll also have exciting plans to create facilities for the space sector and we expect regular launches from the Highlands and Islands within the next few years.

“So we’re on the cusp of something really important for Scotland. With its natural geographic location and advantage, the Highlands and Islands can take a lead.

“We have seen the success of the aquaculture sector over the last 50 years, an example of using a place-based natural advantage to create world leading industry.”

But of course, none of this is achievable by HIE alone and Dodds is keen to highlight the importance of strong partnerships as well as local knowledge.

He says: “I certainly can’t think of a time when the value of partnership across our region, and indeed Scotland, has been better demonstrated than in this past year.

“Collaboration between agencies, Scottish Government, local authorities, universities and the private sector is vital in making remote and rural communities sustainable.

“Whether that’s ensuring local access to skills and training, to housing and transport, there’s a whole range of things that make a community viable.

“Our region faces disproportionate challenges as a result of COVID and Brexit. It’s up to all the partners working together to make sure we tackle these challenges effectively, as well as capitalise on new opportunities.

“There’s a great understanding across the Highlands and Islands that such an approach can make a huge difference, so we do have good grounds for confidence and optimism.”