News
May 2000
Strong pound is no obstacle to investment, say manufacturers
Japanese car producer Honda, one of the UK’s leading inward investors, has announced that it is to manufacture its new CRV four-wheel-drive off-road vehicle at its Swindon plant in South West England. Production will start in June and is expected to reach 20,000 units by the end of the year. The move is part of a $208 million expansion of the plant’s manufacturing line, which is being carried out in conjunction with development of a new $720 million production plant at the site, due to start operations in 2002. Honda plans to boost its existing 3,100-strong workforce by a further 1,000 workers. The move is in response to growing demand for sports utility vehicles. Minoru Harada, chief executive of Honda Europe, stressed that the current strength of the pound and uncertainty over the euro were no barrier to continued investment in the UK. Manufacturers must simply become more flexible and cost-efficient to deal with currency fluctuations, he said.
His sentiments were echoed by Berndt Heller, managing director of family-owned German machine tool company Heller, which has factories around the world. The company has recently started production of a new range of machine tools at its plant at Redditch, near Birmingham in the West Midlands. The expansion is expected to increase the factory’s annual output by 20 per cent to a value of around $64 million, or one-fifth of Heller’s total sales. Although 95 per cent of the UK plant’s output is exported, and therefore subject to lower margins, Mr Heller said that its 40 per cent improvement in productivity over the past two years more than justified the decision to expand operations.
Meanwhile Pennzoil-Quaker State Limited, a subsidiary of Pennzoil-Quaker State Company based in Houston, Texas, has acquired two suppliers of automotive consumer products from Armour Trust of Tunbridge Wells, South East England. The $16 million deal involves Airfresh, based in Rugby in the West Midlands, which manufactures air-freshener and fragrance products, and Bluecol Brands, of Basingstoke in South East England, which produces antifreeze and products for rust treatment, glass cleaning, cooling systems and car exteriors.
Spanish car components company Maier S Coop, based in Guernica, is to build a new manufacturing plant in a $16 million investment in Burntwood, Staffordshire in the West Midlands, its first investment outside Spain. The 100,000 sq ft facility will produce components such as bumpers and grilles and will eventually employ 200 workers.
Mobile auction marks take-off of 3G services
The UK government’s auction of licences for the third generation (3G) of mobile telephones has focused attention on the UK’s booming telecoms, multimedia, Internet and e-commerce sectors. Bidding for the blocks of spectrum, which will enable holders to launch mobile Internet and other services, came to an end in late April after intense competition between 13 consortia from around the world. At the end of it, the four incumbent operators - Vodafone Airtouch, British Telecommunications (BT), Orange and One2One - held on to their franchises while the fifth licence, reserved for a new entrant, went to Canada’s Telesystem International Wireless. The government raised $36 billion from the auction, five times more than analysts had predicted.
Anticipating the spread of 3G services, North Carolina-based SpectraSite International, a leading provider of outsourced antenna site and network services, is to invest heavily in the UK mobile communications industry. It will form a joint venture with Transco, the gas pipeline arm of the BG Group, to provide a range of infrastructure services to wireless operators. The venture will have a value of $412 million and will concentrate particularly on communications towers for 3G services, at first in the UK then throughout Europe. SpectraSite has also acquired Ample Design, the UK’s largest wireless network development services provider, for $19 million. The company, based in Hatfield, Eastern England, will play a key role in the joint venture.
Deutsche Telekom of Germany is to combine its mobile multimedia services in a new company, T-Motion, which will be headquartered in London. The company is a joint venture between the company’s other subsidiaries, T-Mobile International and T-Online International, both of which it will support in the development of mobile multimedia services.
Patricia Hewitt, the minister for small businesses and e-commerce, has announced that another spectrum auction will take place in September. This time the licences on offer will be for broadband fixed wireless (BFWA) services, which deliver cheap and fast Internet and multimedia access via radio links rather than down a telephone line. Licences will be awarded on a regional basis, with three available for each coverage area.
UK leads the way in e-technology
There is plenty more happening in the e-commerce arena. BT, for example, has recently restructured itself into six divisions, one of which, BT eLocations, is to target ‘new wave’ inward investors, particularly from North America, aiming to establish a presence in the UK’s e- commerce economy. BT hopes the company will help make the UK the premier electronic trading hub in Europe. BT has also announced a $2 billion joint investment plan with AT&T of New York to deliver e-commerce services globally via a network of 44 Internet data centres in 16 countries around the world. Backed by Concert, a global joint venture between the two companies, the investment will be spread over three years. Fourteen of the centres are already operational, while 11 new ones will open this year and 19 next year.
bex.com, a Singapore-based developer of business-to-business Internet transaction infrastructure, is to collaborate with UK-based bolero.net, the leading network for international e-trade communities, in building a global e-commerce infrastructure that allows businesses to make online transactions securely. Asera Inc of California, a provider of business-to-business Internet solutions, is to open a London office in May as part of a European expansion programme. New York-based marketing communications company Omnicom Group and ComVergIT, an Internet and digital media investment company operating from the Dutch Antilles, have invested more than $23 million in Oyster Partners, a London-based Internet professional services firm. In return for significant minority stakes, the two companies will boost Oyster Partners’ experience in European markets and accelerate its growth.
Thomson Corporation of Canada, which specialises in e-information and solutions, has bought the online information business of London-based Dialog Corporation for $275 million. Dialog currently provides six billion pages of business, science, engineering, finance and law information to more than 20,000 customers in 120 countries. Its operations will continue as before but its name will change to Bright Station plc. Internet development and e-business consultant Proxicom Inc, based in Reston, Virginia, has acquired e-business development consultancy Clarity IBD Ltd of London for $73 million. The company’s 80 consulting staff will be absorbed into Proxicom’s existing UK business, which will then be the company’s largest international operation.
One of the best-known Internet business creators in the US, idealab! of Pasadena, California, is to open a London office. idealab! Europe, the company’s first operation outside the US, will nurture European start-ups, particularly in wireless communications. Meanwhile e-messaging specialist MessageMedia Inc, based in Boulder, Colorado, has signed a letter of intent with eVentures UK to establish MessageMedia UK in London, and RealNames Corporation of San Carlos, California, has set up a business development team with headquarters in London. The company provides Internet infrastructure technology based on key words in the user’s local language, without the need to remember web addresses.
Internet communications company UUNet, a subsidiary of MCI WorldCom of Massachusetts, plans to open two new high-capacity Internet gateways serving Glasgow and Aberdeen in Scotland, as part of a multi-million-dollar investment programme in the UK. Artesyn Technologies of Florida, a provider of power conversion equipment and logistics management systems for the communications industry, has acquired Spider Software, based in Edinburgh, Scotland, for $44 million. Spider is one of the world’s leading developers of telecommunications and networking software solutions. Japanese communications company Anritsu has established a European sales centre at its facility in Luton, Eastern England.
Cambridge University, at the heart of "silicon fen" in eastern England is get a new communications technology centre after winning its biggest ever slice of corporate funding - $64 million - from Marconi, formerly GEC. The company will put an initial $16 million into the new complex, followed by $29 million over six years for university research, plus $19 million for its own ‘embedded’ laboratory within the complex. Meanwhile, the University of Kent and the Institute of Financial Services are offering what is thought to be the UK’s first master’s degree in e-commerce. The course will be taught largely online, using interactive software.
Software investors build new networks
Things are also moving in the semiconductor and software industries. Motorola of the US is to invest around $2 billion in a semiconductor plant in Fife, Scotland, which will create 1,350 jobs over a five-year period. The US giant will transform a former Hyundai complex, which houses one million square feet of buildings on a 150-acre site, into a facility for the production of its DigitalDNA solutions, based on eight-inch wafers and sub-micron technology, for the mobile communications industry. The new facility will be Motorola’s largest investment in Europe and one of its two largest semiconductor plants in the world.
Also in Scotland, NEC Corporation of Japan is to invest $96 million this financial year in its UK subsidiary at Livingston, bringing its total investment in the plant to $1.6 billion since 1982. The new investment will be used to upgrade the fabrication plant and raise chip output, and to launch production of LCD displays for mobile terminals, cellular phones and notebook PCs. In Glasgow, New York-based investment bank JP Morgan has opened a European technology centre that will develop support systems for the firm’s global financial services operations. The centre will employ 300 software engineers.
In other developments, NetScout Systems, of Westford, Massachusetts, has opened a new European headquarters in Slough in South East England. The company, which provides business network management systems, is aiming to strengthen its existing partnerships and to build new ones with systems integrators, distributors and resellers. And Dataram Corporation of Princeton, New Jersey, which provides gigabyte-class memory for workstations and network servers, has established a European sales and marketing office at nearby Egham. The new centre will provide marketing and technical support for the company’s European operations
UK a good place to do business, say German investors
German investors have an overwhelmingly positive view of the UK as a place to do business, according to a survey of German-owned companies in the UK by the German-British Chamber of Industry and Commerce. More than 90 per cent of German subsidiaries judge the UK’s general economic outlook as satisfactory to excellent, while 83.5 per cent say the outlook for their own sector is satisfactory, good or excellent. More than 70 per cent intend to expand their UK operations and increase their workforce.
Seventy per cent of respondents rated investment in the UK as good to very successful, and better than average in comparison with investment in other countries. More than half said the UK’s tax system was more business-friendly than Germany’s while only nine per cent thought its regulatory regime was less welcoming than that of their home country. More than 80 per cent were happy with the profitability and labour productivity of their UK operations, and hardly any said that they had been affected by recent labour legislation. Most companies, regardless of sector, said that the appreciation of sterling had had no effect on their investment plans although 79 per cent, a big majority, said they would like to see the UK join the euro within the next five years.
The bulk of the German-owned companies surveyed were involved in sales and distribution (56.9 per cent) or manufacturing (29.6 per cent), with most of the rest in the financial services sector. All sizes of company were represented, but the biggest categories were companies with one to 10 employees (20.3 per cent) and 21 to 50 employees (21.3 per cent), and companies with annual turnovers of $1.6-$8 million (29.9 per cent) and $8-$32 million (30.6 per cent).
Regions forge ahead as inward investment soars
Inward investment into the UK reached a record $390.6 billion at the end of 1999, an increase of 26 per cent over the previous year’s figure, according to the latest balance of payments figures from the Office for National Statistics. At the same time, the eight English regional development agencies (RDAs) have reported a successful first year of operation, creating or safeguarding some 35,000 jobs.
The RDAs, launched on 1 April 1999 with $1.6 billion of venture capital backing, are responsible for increasing business competitiveness, improving skills and regenerating derelict land and buildings in the regions. During their first year they invested $40 million in workforce training, $32 million in attracting jobs to rural areas and $640 million to improve prosperity in needy parts of the country.
The regions are now set to receive further support through government and European Union funding. The government has recently agreed an Assisted Area status map with the EU that will see UK regions benefit from $4.8 billion of Objective 2 funding over the next seven years. Its own initiatives include a $160 million regional venture capital fund to help finance small and medium-sized businesses, a $96 million package to help small businesses get online and an $8 million regional innovation fund that will support incubators and business clusters.
East Midlands targets food industry
The East Midlands Development Agency (EMDA) has created or safeguarded some 3,000 jobs in its first year of operation, helping to set up 16 inward investment projects. During the year, 1,500 acres of derelict land and 760,000 sq ft of commercial building space were re-developed in a total of 265 projects.
EMDA is now targeting development in the food industry, from small tenant farmers to multinational producers, and is aiming to make the East Midlands one of the top food-producing regions in Europe. The strategy includes encouraging the development of food ‘clusters’, in which food-producing companies will learn from one another, and school, college and workplace initiatives aimed at recruiting food industry workers.
The agency has also appointed Munich-based business consultants Löffler & Boother to target potential investors in Germany, Austria and Switzerland, particularly in the engineering, healthcare, food processing and environmental protection sectors. EMDA’s web site, at www.emda.org.uk, offers more information about the East Midlands.
London pushes back the boundaries
A consortium of businesses, local authorities and regeneration agencies in the east of London, Kent and Essex has set out an ‘urban renaissance’ plan for Thames Gateway, the stretch of the River Thames beginning in London’s Docklands and extending into the north Kent and Medway area of South East England. The group envisages waterside development that will create a series of eco-friendly ‘urban villages’ in the area, which has excellent transport links to London and to the Continent and is earmarked as a regeneration and business development hub. The proposals will be explored in detail at the Thames Gateway Conference and Exhibition, which is being held at the London Docklands Arena on 22-23 May (e-mail contact: gatepub@aol.com).
Public transport in the capital has received a boost with the opening of the Tramlink network in Croydon, South London. The light rail network, built with $200 million of government funding, links with existing rail, bus and underground services and is expected to carry 20 million passengers per year. In central London, the government has given the go-ahead for a $128 million extension of the Docklands Light Railway to London City Airport. It is expected to pledge between $32 and £48 million of public money to fund the 3.5km extension from Canning Town.
London’s population has grown by an average of 28,000 people every year since 1983 and in 1998 reached 7.2 million. The capital’s GDP per head is 40 per cent higher than the UK average, while its average weekly household expenditure is 13 per cent larger. In 1998 the city’s airports handled more than 100 million passengers for the first time in a single year. These are among the many facts to be found in Focus on London 2000, a statistical snapshot of the capital, published by the Stationery Office and available through booksellers at a price of £45 ($72).
Financial services boosted by transatlantic tie-ups
New York-based brokerage company Merrill Lynch has teamed up with HSBC Holdings, the international banking organisation headquartered in London, to form a stand-alone online bank and brokerage service that will target wealthy households with access to the Internet. The two organisations plan to invest $1 billion over five years in the 50:50 joint venture, which is yet to be named but will be based in London.
In a separate development, Chase Manhattan Corporation of New York is bidding to buy UK investment bank Robert Fleming Holdings in a deal worth an estimated $7.7 billion. Founded in 1873, Robert Fleming is one of the biggest managers in the world of non-US mutual fund assets. The deal is expected to take three months to complete, after which the bank will be renamed Chase Flemings. According to William Harrison, Chase Manhattan chairman and CEO, the acquisition will result in a wider range of investment banking services and products.
Wales raises profile with foreign investors
Japanese financial group Nomura International is to acquire the Cardiff-based utilities group Hyder, which operates power and water services, through a subsidiary company, St David Capital, for $643 million. The Hyder name and brand will be retained and the company’s headquarters will stay in the Welsh capital.
In early April Prime Minister Tony Blair officially inaugurated construction of a multi-million- dollar production facility for Britax Aircraft Interior Systems, a division of Britax International Plc, at Cwmbran in South Wales. The 85,000 sq ft plant is one of three product centres that the company is developing in the UK, and will create 450 new jobs. Britax recently won a major contract with British Airways to supply business-class cabin seats. Also in South Wales, British Telecommunications is to create 800 jobs by 2002 at Nantgarw, near Pontypridd. BT is building a $15 million call centre on reclaimed colliery land at Nantgarw Business Park.
In Mid-Wales, Taiwanese bicycle manufacturer A&J Enterprises is to establish a European manufacturing base at Newtown, Powys. The facility will produce a full range of bikes, including mountain, sports, trekking and junior models, as well as models for the professional market. The company plans to produce 340,000 bicycles a year within three years, and will employ 125 people. A further 400 jobs could be created at Llandudno Junction in North Wales, where the Welsh Development Agency (WDA) has acquired an 18-acre site for redevelopment. The site, located alongside the A55 Expressway, is within the Objective One area of North Wales and is likely to attract European funding support.
Meanwhile the WDA has launched local-language web sites for Japan, Korea and Taiwan as part of an international marketing campaign. Each site is individually tailored for the country concerned and contains regularly updated news on inward investments and technological developments, as well as links to educational establishments and industry bodies in Wales. Specially focused web sites are also under development for other key markets, including Hong Kong and China, Australia, New Zealand and Singapore.
Peterborough is centre of attention
Peterborough, an investment hotspot in Eastern England, recently played host to a delegation of Chinese civil servants who saw how the town had planned and managed its expansion over the past 30 years. The delegation, led by Hu Chun Zi, director general of the Ministry of Land and Resources, and Li Zhijian, deputy director general of the ministry’s Department of International Co-operation, Science and Technology, visited a number of development sites. They also signed an agreement for a three-year programme that will bring dozens of Chinese officials to Peterborough to train in valuation and land management.
Good transport links and a central location continue to attract investors to the town. Cummins Business Services, for example, part of diesel engine manufacturing group Cummins, recently took 7,150 sq ft of space to establish an information technology and finance services centre for the group’s UK companies. Defence contractor Vector Data Systems UK, part of US corporation Anteon, chose Peterborough for an expanded operation which specialises in digital imagery systems, technical support, training and consultancy for the UK’s Ministry of Defence. It was attracted to the town by its reputation for engineering expertise. SoGood International, a joint venture company set up by US chemical giant Du Pont and Australian company Sanitarium, has also arrived in the town, again citing its strategic location. The company is to manufacture a low-cholesterol soya-based milk substitute.
There is still plenty of capacity available. On Peterborough Business Park, for instance, an award-winning building formerly occupied by an insurance firm is available to medium-sized businesses. The 182,000 sq ft building can be converted into as many as ten separate units, starting at 48,500 sq ft, and its facilities include landscaped grounds, a gym and a restaurant with a lakeside terrace. At Cygnet Park, in the business area of Hampton, developer Easter Group is building an industrial estate on 23 acres of land. The estate will offer industrial units ranging in size between 5,000 and 25,000 sq ft, and will be ready for occupation early next year.
There are many other development sites in the area, with hundreds of acres of land and a large selection of ready-built offices and industrial units available. And to help new arrivals with contracts and legal matters, a group of four local law firms has banded together to offer a range of corporate and commercial legal services. The group has set up a web site to publicise its services, at www.peterboroughlawgroup.co.uk.
Around the regions
- Solectron Corporation, based in California and the world’s biggest contract electronics manufacturing (CEM) services company, has taken over Nortel Networks’ CEM operation in Northern Ireland, taking on 135 staff and recruiting a further 70 in an expansion drive. Nortel, which employs 1,500 people in Northern Ireland, will outsource its CEM requirements to Solectron while concentrating on higher technology processes.
- French civil engineering company Freyssinet has relocated its head office and manufacturing division to Telford in the West Midlands, creating 30 jobs. The company, which took over Telford-based Reinforced Earth Company in 1998, has invested $560,000 to centralise its UK operations in the town. It specialises in geotechnical and structural work in the construction of motorways, bridges, dams and viaducts and operates internationally.
- Meanwhile, Taiwanese personal computer manufacturer Mitac is to almost double the size of its operations in Telford with a $6.4 million warehouse, production and office expansion programme that will increase its workforce to over 300. The company recently launched an ultra-slim LCD monitor and in June is set to launch EC Land, the UK’s first 3D virtual shopping mall.
- The South East England Development Agency (SEEDA) is to redevelop the sites of two former collieries in East Kent as part of a national coalfield regeneration initiative led by English Partnerships, the government regeneration agency. Betteshanger, near Deal, was the largest colliery in the South East until it closed in 1986. The 289-acre site will be a flagship brownfield redevelopment project, and will eventually provide 250,000 sq ft of business space as well as open amenity space for the local community. A 25-acre site at the former Tilmanstone colliery, near Eythorne, is already partially developed and will eventually provide industrial units covering some 250,000 sq ft.
- Elsewhere in Kent, Lydden Circuit near Dover has been earmarked as a test circuit for the new Mercedes SLR sports car, which is to be built at TAGMcLaren’s Paragon Technology Centre at Woking, Surrey. The move follows the acquisition of a 40 per cent stake in TAGMcLaren by Mercedes-Benz parent company DaimlerChrysler.
- Yorkshire and the Humber Regional Food Technopole has opened for business at Europarc, Grimsby, in North East England. The organisation will assist the region’s food processing companies with issues such as product development, waste reduction, quality systems and marketing. It aims to build on success stories such as the AgriNord 99 event held in the region last November, which has led to 18 commercial and industrial contracts being pursued by local companies. Contact +44 (0)1472 500350.
- Europarc itself is set for expansion. The site, North East Lincolnshire’s flagship business park, is opening up new development plots while a $2.6 million infrastructure expansion project will provide new roads together with services and landscaping. When complete, the 128-acre site will be fully serviced and will have a business village, which will provide support services to tenant companies. Nearby, reclamation work has begun on Normanby Enterprise Park, the site of a former steelworks, and construction of an office development offering 38,000 sq ft and parking for 100 cars is under way in the centre of the town of Scunthorpe.
- Diebold Inc, a leading manufacturer of ATM bank machines, is to establish a multilingual service centre in Leeds, Yorkshire. The centre, which will create 60 new jobs, will provide a helpline service and billing centre for the European market. The company already has a facility at Egham in Surrey, South East England.
- Belfast, Northern Ireland, is to get a new science park that is expected to create more than 3,000 high-technology jobs over the next decade. It will be built on a 23-acre site at Queen’s Island, adjacent to the Harland and Wolff shipyards.
- Saint-Gobain, the French glass-maker, has opened a float glass plant at Selby, Yorkshire in Northern England that is the most technically advanced of its type in Europe. The plant, which cost around $100 million, is capable of producing 185,000 tonnes of glass per year, using a continuous production line that will operate 24 hours a day, 365 days a year. Most of its output will go to the construction industry.
- Interactive game simulator maker KYF, the games division of Kum Yang Co of Korea, has chosen London for the headquarters of its European subsidiary, KYF Europe.
- Anchor Wall Systems of Minneapolis has signed a manufacturing and distribution agreement with Acheson & Glover, a construction supplies company based in Northern Ireland. Acheson & Glover is to supply Anchor’s innovative products, aimed at the construction industry and the do-it-yourself market, throughout the British Isles, and plans to invest $4.8 million in a new automated manufacturing facility.
- Warwickshire, in the West Midlands, is aiming to raise its profile among potential investors with a new CD-ROM produced by Warwickshire Investment Partnership, a body that includes the local county council. For a free copy, contact inward investment officer Sackie Somal on +44 (0)1926 412102 or e-mail: wips@warwickshire.gov.uk
- TriVirix International, a medical device developer based in North Carolina, has opened a new manufacturing centre in Belfast, Northern Ireland. The facility, currently employing 15 people but with plans to recruit a further 60 by 2002, will manufacture electronic devices to check for hearing impairment in newborn babies.
- Sara Lee Corporation of Chicago has acquired London-based clothing manufacturer Courtaulds in a $239 million deal. Courtaulds is the UK’s biggest manufacturer of lingerie and underwear, with numerous facilities around the country and an annual turnover of some $1.5 billion.
- The government body responsible for planning applications and appeals, the Planning Inspectorate, has upgraded its web site to make guidance on planning appeals available online. The site, at www.planning-inspectorate.gov.uk, contains appeal guidelines, forms for downloading, articles on good practice and contact details for relevant organisations.