Region gets £350m from Esh Group's plan
Apr 28 2009 by Rob Pattinson, The Journal
A COUNTY Durham construction company’s 'buy local' strategy has become worth more than £350m to the North East economy.
The value of Esh Group’s locally-focussed spending has been calculated as part of a new study by Durham Business School (DBS).
Phase 1 of the Durham City Council-backed two-year research project has shown the significant impact the firm’s policy of actively seeking regional suppliers, contractors and staff has had on the region.
The most recent full set of results shows Esh and subsidiaries, including Lumsden & Carroll Construction, Dunelm Property Services, Wilkinson Facilities Services, Dunelm Homes, Deerness Fencing, and Sones Landscaping, benefited the North East by around £357m in 2007.
Professor Rob Dixon, Dean and Professor of Management Accounting at DBS said: “The findings of this study are very important.
“They clearly show that Esh Group, through employing a conscientious commercial strategy has delivered significant financial benefit to the economic territory in which it is based.
“This is a powerful message for all those seeking to invigorate the North East economy in these challenging times. Our findings suggest that we need look no further than our own backyard in order to infuse economic vibrancy.”
The total value has been gauged using the Local Multiplier methodology (LM3), which measures the multiplier effect of income into a local economy over three rounds of spending. Researchers tracked the monetary movements of Esh Group’s turnover and employee budget, how the budget is spent, and how Esh suppliers and employees re-spend their incomes.
Professor Dixon said: “The key principle is that money entering an economy has a multiplied impact on that economy based on the way people spend and re-spend money. More re-spending in the local economy results in a higher multiplier effect because more income is generated.
“Esh Group’s very good LM3 figure of 2.38 shows that for every £1 Esh Group receives in income, a further £1.38 is generated in the local economy. Grossed up against Esh Group’s turnover in 2007 of £150m this equates to a boost of over £357m to the local economy.”
Brian Manning, chief executive of Esh Group, said: “We are obviously very pleased with these findings. It’s really satisfying to have solid evidence that the way we run Esh Group is so beneficial to the North East economy.
“Now we believe it’s important to ask ‘what next’? We hope that by showing the very real benefits of our ‘buy local’ policy that others may follow our lead.”
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