As opportunities for contracts go, it’s one of the biggest free-for-alls in the UK for more than 50 years, says Sir Victor Blank, chairman of Lloyds TSB, of the 2012 Olympics.
The bank was quick out of the blocks, becoming the first official partner of the London 2012 Olympic Games organisation. Now it is stressing both the business potential and the opportunity to create a lasting legacy.
The bank’s area director for the North East, Mike Mullaney, says the Olympics could represent a £21bn cash boost for British business, of which £12.2bn could go to firms in the regions.
The potential, he says, for the North East and North West could be in excess of £4.4bn. Work has been progressing since 2006 on the main Olympic Park and related infrastructure in London.
So far, 11 North East companies have won business; more than half of them in the small and medium size sector. However, though nearly half the contracts signed to date have gone to firms from outside London, only 627 firms out of 42,000 in the North East have asked to be considered to tender.
“There are still many firms in our region that could be in with a strong chance of bidding success,” Mike says. “We are aware of myths circulating to the effect that the games will only benefit London and that only big contracting firms will gain. We want to dispel those myths.
“Where firms in London and the South East are better located to win contracts, the opportunities for North East firms may be limited. But where firms in the North East have particular expertise and experience that is scarce locally, they will be in with a great shout.
“We won’t be able to complain we didn’t get a fair share if we don’t apply. There are great opportunities there.” Companies – particularly Tier 1 suppliers with a well-established supply chain - are being advised that working on a project linked to the games will be just like any other contract.
The key issue, Mike Mullaney says, is to keep up the critical long-term relationships that businesses have within their supply chains. “This will ensure you are part of the equation when contracts come through,” he explains.
He says the current rundown elsewhere in the economy is raising the appeal of 2012 possibilities. “There is no doubt about this market. It is definitely going to happen. While there might be a tendency to regard it as just a one-off, that is not necessarily so.
“The Commonwealth Games follow in Glasgow two years later. While these are on a smaller scale, there will definitely be opportunities there too. Once you succeed with one games tender, you are well prepared for future opportunities.” On the second Wednesday of each month, Lloyds TSB Corporate Markets now holds briefing calls for North East companies registered on its database.
On the line, besidesMike, are four colleagues - an economist, a financial markets representative and two other area directors. These 30-minute updates include economic and treasury briefings. Listeners can question the team directly, and accompanying speaker slides to illustrate the briefings are sent out a day before.
The bank is advising firms interested in tendering to set an appropriate overdraft facility, make optimum use of business loans, revolving credit facilities and commercial mortgages.
With banking’s current aversion to lending, this may appear to be inappropriate, but Mike Mullaney says: “We are trying to support our customers in any new business opportunities there are.
We regard 2012 as a definite opportunity to benefit. It is not a maybe. It is a positive.“We acknowledge that some banks may have been struggling over credit. If any business, regardless of who it banks with, has had a no to any request for help in 2012 bidding, we would certainly give it consideration.
“We cannot give an unqualified Yes, but we can consider each case on its business merits in the usual way. We are well placed to commit, given our increased market share here. We saw a 30% rise in our business levels in the North East last year.
Throughout January we have been telling customers we are here to lend through the difficult trading cycle.”