London the Primate City

A blog post about Munich is basically an excuse to post pictures of girls in dirindls

I’m in Munich, Germany at the moment, working on a new Internet company that is growing in leaps and bounds. We’re hiring lots and lots of people, both technical (developers) and non-technical. Something in particular about this interests me – Munich isn’t Germany’s first city, it isn’t even its second – in fact Munich is the 3rd largest city in Germany behind Hamburg and the capital, Berlin.

Why does this so fascinate me? Well, can you imagine setting up a brand new Internet company in the UK’s 3rd city? According to Wikipedia, Glasgow is the UK’s 3rd city. In fact, let’s forget Glasgae for a second, can you imagine anyone ever setting up a brand new super successful Internet company in Birmingham, the UK’s 2nd city? Nope, neither can I.

In the UK it seems that unless you’re in London, you’re nowhere. How does one city get to dominate a country so much, and is it good for the UK? According to George Zipf’s theory of rank-size for an ideal distribution of city size the 2nd city should be half the size of the largest city, and the 3rd city 1/3rd the size, and so on. Mark Jefferson described “primate cities” as those that so dominate the country that they capture most of the population and economic activity in a country. Classic Primate Cities include London and Paris, whilst the most extreme example is Bangkok, which is 40 times larger than the next city.

Compare that to Germany, where Berlin has a population of 3.3 Million, Hamburg is 1.6 Million, and Munich is about 800,000. They almost perfectly follow Zipf’s Law. So which ecomony is doing the best out of UK, France and Germany? Yeah I won’t bother answering that…

Although Berlin, where my direct employers are actually based, is itself considered a bit of a European startup hub, I never get the feeling that it dominates Germany in the same was that London dominates the UK. I don’t think many of my non-British friends in the UK would seriously consider living anywhere in the country other than London. In fact, do people even want to visit Birmingham or Glasgow? Not really. Other than a weekend trip to Edinburgh, for most people London is the UK.

Everyone had gone to Bradford for the weekend.

So for someone from a far-flung corner of the UK, that’s a bit depressing. What chance does Dundee have of becoming some kind of gaming hub, when as soon as a company gets successful it will probably up-sticks to Edinburgh, like Rockstar – developers of Lemmings and Grand Theft Auto – did (yes – Grand Theft Auto was developed in Dundee!).

The UK Government acknowledges the London dominance by trying to force some taxpayer-funded organisations to move to provincial cities. Even the BBC is getting in on the act by moving its BBC breakfast programme to Manchester – a move which is proving rather unpopular with the staff.

I doubt London will ever lose its “Primate City” status in the UK. Nevertheless, I think government is obliged to keep trying to encourage companies to invest elsewhere in the country. Which is why you will get some pretty good incentives to start a company in places like Scotland. Here’s a story in which a founder of an Internet company got a £250k grant from Scottish Enterprise. I was also pleased when my MBA classmate, Xavier, told me that one of the reasons he set up the first Better World Books overseas subsidiaries in Scotland was because he was impressed with how helpful Scottish Enterprise was.

Maybe there is hope!

Dundee Supermarket Sweep

Asda pic by Dominic

As a Dundonian away from home I like to keep a close eye on my home city’s economic news, mostly through the Courier’s website. I hate it when something bad happens there, such as when NCR closed down its manufacturing plant there, or more recently when computer game company Realtime Worlds went in to administration (although there is hope that some of it can be saved).

I’m always hoping to see good news, but I see something about once a year that really annoys me – “excitement” about a new supermarket being built in the city. Just today I’ve seen that Asda will be building a new supermarket on the old NCR site.

Alan Mitchell, chief executive of Dundee and Angus Chamber of Commerce  said the move would be a major economic boost. “The proposals will bring a significant amount of investment into the area, as well as creating up to 480 new jobs at a time when they are needed most.”

Woop-di-do! Another supermarket for Dundee!

I think this dependence on new supermarkets and treating it as if it is really good news for the city is really quite depressing. Are there thousands of families sitting around in Dundee thinking, “you know what Dundee really needs? Another supermarket! I just don’t have anywhere to shop in this fine city I wish there was another supermarket so I could shop there.” Are there folk in Edinburgh and Aberdeen looking at the news thinking, “Smashing! There’s a new Asda being built in Dundee – let’s travel there to do our weekly shopping in future!” No they are not.

Fact is there is a finite amount of supermarket shopping that can be done in an area. All that will happen once this supermarket is built is that people who used to shop in one of the other supermarkets in Dundee, will now shop at the new Asda. These other supermarkets will have slightly fewer customers and one of them will close down eventually. We don’t suddenly have a need to do more shopping just because there is a new supermarket in the city!

More likely is that the supermarket continues to put the squeeze on small and independent retailers in the city.

And as for the job creation? Well I do think it’s nice to have the construction work while the supermarket is being built, but the fact is that the jobs that are being created at the supermarket are mostly low value positions. They are still welcome and essential for a diverse economy, but I don’t believe we’ll end up with 480 net jobs created and they are in no way comparable with 480 skilled jobs being lost at a manufacturing plant.

I wish the city would show a bit more ambition. It’s become too predictable that as soon as some major employer shuts down, Dundee City Council is imagining a new supermarket for the site. Could they not have shown a bit more ambition to get a major employer in there? You know – one of the ones that actually exports something so isn’t dependent on recycling the same pot of consumer retail money the is swirling round the place. I know it’s not easy – no-one is going to move there just because there is a vacant plot – but by putting an identi-kit supermarket on the site we’re losing a potential site for something that could have had net benefit to the city.

It is disingenuous* to suggest that a new supermarket is a “major economic boost”.

Until I see a proper company bringing 480 jobs to Dundee I just can’t get excited. Until then the supermarkets can sweep off.

*yeah I’m not really sure disingenuous is the right word. Sounds quite good though!