News

 

October 2000

Refinery site to become UK’s biggest port

A former refinery at Thurrock, Essex in Eastern England is to be jointly redeveloped by Anglo-Dutch oil company Shell and UK shipping company P&O to create the UK’s largest container port. The 1,500-acre Shell Haven site, on the Thames estuary to the east of London, will be transformed into one of the biggest port operations in the world, with an estimated annual capacity of 3.5 million teu. The scheme will create up to 10,000 jobs.

The new port will outstrip the capacity of Felixstowe, owned by Hutchison Whampoa and also in Eastern England. Felixstowe is currently the country’s largest port with a capacity of 2.7 million teu and has plans to expand its operations by a further 500,000 teu. The next largest port is Southampton on the south coast, which this year handled 1 million teu.

Work is expected to be undertaken in stages, with a first phase costing $150 million earmarked for completion in 2003/04. Initial operations could begin as early as 2002. The port will have 3km of quay line providing berths for up to 10 ships, while the surrounding land will be developed to provide port-related facilities such as logistics services, warehousing and road and rail links.

Growth in the deep-sea container market is expected to be 4.9 per cent a year until 2011 and the UK’s ports are expected to reach full capacity within five years. As well as competing against other British ports, Shell Haven will be challenging continental hubs such as Rotterdam and Le Havre for growing volumes of European sea traffic.

 

Nissan steps up North East production as Atmel replaces Siemens

Nissan is to introduce the UK’s first round-the-clock assembly line at its car plant in Sunderland, North East England, after reaching agreement with its 5,000-strong workforce. It has invested $300 million in the plant for production of the new version of its popular Micra model. A new three-shift production pattern could double the plant’s capacity to 500,000 cars a year, making it the biggest car factory in the UK. A two-shift system will start at the end of October, gearing up to three shifts when orders reach their seasonal peak.

Meanwhile, at nearby North Tyneside, the Siemens semiconductor plant, unexpectedly mothballed two years ago when the German giant stopped production, has been given a new lease of life. San Jose, California-based Atmel, a designer and manufacturer of integrated circuits, is to re-open the plant, creating between 1,000 and 1,500 jobs over the next three years. A taskforce, including Regional Development Agency One NorthEast, had been searching for a high-quality occupier for the plant since Siemens’ departure, and Atmel has received a $41 million Regional Selective Assistance grant from the government to help set up its operation.

Siemens had invested close to $1 billion in the plant and had been in production for 15 months before a world collapse in DRAM microchip prices forced its withdrawal. It has since pulled out of the microchip market altogether, spinning off its Infineon arm in March this year. Now, however, the market is booming again for the microcontrollers and non-volatile memory chips that Atmel will manufacture at the plant. Under the terms of the agreement, Atmel will buy the plant from Siemens at a knockdown price of $150 million. The two companies have also signed a framework agreement under which Siemens will buy microchips products from Atmel worth $1.5 billion over the next four years, some of which may come from Tyneside.

The plant is Atmel’s first in the UK although it has three other European plants, in France and Germany. It plans to invest $800 million to bring it up to full capacity and will be in commercial production, with a workforce of 600, by next September. Further jobs will be created in supply chain companies. There are 50 acres of undeveloped land next to the plant that allow for future expansion.

Siemens meanwhile remains committed to the UK. Its subsidiary Roke Manor Research has opened a $9 million research and development centre in Hampshire, South East England, which will expand the company’s R&D capacity in communications, information technology and electronic sensors.

 

BTopenworld launches broadband access for consumers

BTopenworld, the internet division of British telecom (BT), has launched the UK’s first consumer broadband internet access service based on Asymmetric Digital Subscriber Line (ADSL) technology. The launch follows that in July of BTopenworld’s multi-computer service and portal for small businesses. The new service, also available in a small business version, offers fast, ‘always on’ internet access and is among the first in the world to use USB ‘plug and play’ computer technology.

The new service is priced at around $60 per month with a one-off installation fee of $225. It runs at speeds of up to 500Kbps upstream, offering subscribers access up to 10 times faster than with conventional modems, a permanent e-mail connection with 10 addresses and a portal with content from more than 90 international providers. The small business version features a portal offering business content. Users can make voice and fax calls at the same time as accessing the net, eliminating the need for a second phone line.

 

Everybody’s getting online

The UK’s small businesses have comfortably outstripped government targets for the adoption of e-commerce and the internet, with 1.7 million small and medium-sized (SME) enterprises online compared with a target of 1.5 million by 2002, according to figures from the Department of Trade and Industry (DTI). This is an increase of 1.1 million since last year, testifying to the rapid spread of technology that has made the UK the biggest e-commerce market in Europe.

Some 81 per cent of the UK’s businesses are now online compared with 63 per cent last year and nine out of ten of UK employees work in businesses connected to the internet. Of companies with fewer than 10 employees, 55 per cent are online compared with 15 per cent a year ago. Some 27 per cent of UK companies are actually trading online, including 450,000 SMEs.

The government has announced an extra $22.5 million of funding for information web site UK Online, which advises small businesses, in addition to $15 million allocated in this year’s budget. It is also to launch Learndirect, an online training resource for businesses, and 600 online centres to extend internet access to disadvantaged sections of the community. Government departments themselves however have come in for criticism for their slow adoption of internet technology and, in response, the Cabinet Office has recommended the creation of a civil service ‘incubator’ and increased spending to speed up electronic delivery of public services. As a first step, a new web site - www.ukonline.gov.uk - has been set up.

 

Hi-tech boom attracts new arrivals

The UK’s e-business and high-technology sectors continue to boom, with a large number of companies establishing new bases. The Americans are very much to the fore. Virginia-based OneSoft, for example, has opened an office in London to service its European, Middle East and African markets. The company provides e-business application software and services to traditional companies deploying e-commerce web sites and to new companies building internet-only sales channels.

Massachusetts-based Unisphere Solutions, a provider of next-generation voice and data products for communication services providers, is opening a London office as part of a European expansion. The office will handle sales but will also house the company’s first European demonstration centre, including laboratory and testing facilities for its internet protocol routing, broadband access and voice-switching products.

GlobalSight Corp of San Jose, California, a provider of software and services for e-business globalisation, has opened its European headquarters in London, as has MobileSys of Mountain View, California, a provider of global wireless data and messaging platforms. Another new arrival is RespondTV of San Francisco, which develops infrastructure and applications for interactive TV, including shopping and information services.

Yantra Corporation of Massachusetts, whose speciality is e-business solutions for high-volume transaction management, has established a European base in Maidenhead, South East England, just outside the capital. Nearby at Heathrow is the new office of NetEffect, based in Atlanta, Georgia, a provider of converged communications solutions for service providers, e-business and enterprise clients. Also in the South East, in Reading, web-enabled billing and electronic banking solutions provider Bottomline Technologies of Portsmouth, New Hampshire has acquired UK e-commerce and electronic payment solutions provider Checkpoint Holdings in a deal worth $78 million.

In Bristol, South West England, customer communications outsourcer Telecom Potential Group (TPG) has been acquired by iSKY of Columbia, Maryland, a leader in outsourced customer care. OTG Software Inc, also from Maryland, has opened a European headquarters in Cambridge, Eastern England. The company is a leading developer of software for online storage, data access and e-mail management solutions. And a French company, A Novo, has acquired a 50 per cent stake in DigiTec Direct, based in Manchester, North West England. The company specialises in the maintenance of decoder and information products, and offers logistics, inventory management and call centre support.

 

R&D investment reaps dividends

British companies increased their spending on research and development by 8.5 per cent last year, according to the 10th annual R&D Scoreboard published by the Department of Trade and Industry (DTI). The 576 companies on the scoreboard invested $19.5 billion in R&D in 1999, a rate of growth from 1998 that comfortably outpaced both sales growth and inflation.

The figures include new analysis by the DTI’s Future and Innovation Unit that show a strong statistical link between higher R&D spending and faster corporate growth. A share portfolio of R&D-intensive companies, begun in 1995, showed an increase in stock market value more than three times higher than that of a FTSE 100 index-tracking portfolio. Companies that spent more on R&D also exhibited much faster sales growth and better productivity per employee.

The pharmaceutical sector dominates science-based industry in the UK, according to the scoreboard. It accounts for 40 per cent of all corporate R&D and invests more intensively than its international competitors. The aerospace and defence sectors also spend above the international average, though engineering, electronics and IT spend less than their European counterparts.

 

UK holds its own in competitiveness rankings

The UK has slipped slightly in the World Economic Forum’s international table of countries ranked according to growth potential - although in a different table from the same organisation, assessing competitiveness, it has improved its position. In both cases it remains well ahead of most of its European rivals.

The Geneva-based organisation’s annual table ranks growth potential according to factors such as the quality of a country’s infrastructure, its skills base, institutions and tax system and the sophistication of corporate operations. Britain fell to ninth place from eighth last year and fourth in 1998, although this is still much higher than the 18th place it recorded in 1995. The US took the top spot and Singapore and Luxembourg came next, followed by the Netherlands, Ireland, Finland, Canada and Hong Kong. The UK maintained its lead over its main European rivals Germany and France, which came 15th and 22nd respectively.

In the current competitiveness table, which rates countries according to their sustainable level of GDP rather than their growth potential, the UK climbed two places from 10th to eighth, reflecting improvements in productivity. The US, enjoying its longest ever period of growth, again took first place and the Forum singled out the technological dynamism of its economy for praise. It was less enthusiastic about the euro zone, however, criticising it for "the lack of progress in removing structural impediments that are key factors hindering potential output to grow faster".

 

Unions pledge commitment to co-operation

John Monks, general secretary of the Trades Union Congress (TUC), used his keynote address at the organisation’s annual conference to reiterate that unions were committed "unambiguously to economic success" and to underline their determination to work in co-operation with employers. "High workplace standards and genuine participation [are] the best means of delivering change and high productivity," he said, citing more than 200 partnership deals that have been struck in recent years between employers and unions. "Trade unionism has worked through the front door of countless new workplaces," he added.

Specifically, he called for a dialogue with employers on productivity, investment, innovation, R&D and especially training. TUC delegates at the conference, held in Glasgow, Scotland in early September, backed a series of moderate motions on employment rights and overwhelmingly threw out a "non-compliance" motion proposed by far left miners’ leader Arthur Scargill.

 

Service sector on the up

Growth in the UK’s service sector accelerated further in August, according to by the Chartered Institute of Purchasing and Supply (CIPS). A CIPS survey of purchasing managers showed a rise of 0.4 points in the overall business activity index to 58.4 in August, its highest level since May. Any figure above 50 indicates growth. Service sector output grew 0.9 per cent in the second quarter.

The employment index rose by 0.1 points to 52.8, again the highest since May. Unemployment is at its lowest level for 25 years, although this has led some managers to express concerns about possible shortages of skilled employees and a consequent rise in wages. Retail prices (excluding mortgage interest payments) rose 2.2 per cent in the year to July, 0.3 percentage points below the government’s target ceiling.

Manufacturing output, however, unexpectedly fell 0.3 per cent from June to July, according to the Office for National Statistics, largely driven by a 1.5 per cent slide in the transport equipment industries. Analysts said that high oil prices and the strength of the pound were largely to blame.

 

Rents rise as demand for space grows

Rentals for office and industrial premises accelerated from the first to the second quarters of 2000, growing at a rate of 9.5 per cent in the three months to June, according to the latest quarterly market report from property analyst Healey & Baker. Demand for office space was particularly strong in London and the South East, where telecoms, IT and content providers led the way. The Thames Valley, the western M25 and the area around Heathrow remain the top locations, although supply is limited. Elsewhere in the country, hotspots include Cambridge in Eastern England, which is home to clusters of hi-tech companies, and Edinburgh in Scotland, where prime rents have hit $43.5/sq ft and pre-lets are becoming increasingly popular.

In London itself, the core areas of the West End and the City reported strong demand for space, particularly from financial and IT companies. This has led to a ‘rippling out’ effect, with areas around the core such as Victoria, Southwark, Waterloo and Paddington growing in popularity. Fringe areas such as Clerkenwell and Farringdon remain popular with hi-tech and dotcom companies.

Another report, from DTZ Research, shows that 2.15 million sq ft of speculative development schemes have been started in London since February. A large proportion of this space is at Canary Wharf, in the Docklands area of East London, where two large schemes are under way. DTZ concludes that much speculative development is in response to the current shortage of new and refurbished accommodation. This has put strong pressure on rents, with rises of up to 25 per cent in the West End over the year to June 2000.

Take-up in 1999, at 19.1 million sq ft in Central London, was at its highest level ever but this looks certain to be exceeded in 2000, according to DTZ, with 12.6 million sq ft already taken in the first six months of the year. Developers are now concentrating their attention on fringe areas. In Southwark, for example, developer CIT plans to begin work on a speculative 130,000 sq ft site (Site 6) before the end of the year, while at Paddington Goods Yard in West London, W2 Development Securities is about to start phase one of a development that includes 335,000 sq ft of speculative office space.

 

Nottinghamshire plans hi-tech corridor

North Nottinghamshire, in the East Midlands, is to develop a hi-tech corridor on the site of the region’s former coalfields. The 15km Sherwood Technology Corridor will skirt the town of Mansfield and will connect Newark, which is currently undertaking a major regeneration of its riverfront areas, to the M1 motorway. Four sites are already established on the route, with mobile phone giant Ericsson and medical technology firm Cyromed among the investors, and 12 new sites and five large developments are planned.

The corridor will be driven by new technology, with a purpose-built fibre-optic communications infrastructure being installed to provide service standards comparable with any site in the UK. A new road, the Mansfield Ashfield Regeneration Route, is being planned, and education and retraining schemes are being targeted at the local workforce, many of whom are ex-miners.

In the county town of Nottingham, a $270 million tram project is due for completion in 2003. Around 30,000 passengers a day are projected to use the system, which has 18 stops and terminates at the town’s railway station. In the city centre, a rash of new development is under way as hotels, restaurants and cafés open up around the National Ice Centre, a new leisure facility in the central Lace Market area. The centre will be the new national home for sports such as ice hockey and speed skating, as well as providing a rink for leisure skaters and a venue for pop concerts. Nottingham is already home to nationally recognised centres for tennis and water sports such as rowing and canoeing.

The quarterly magazine, Introducing Nottinghamshire, contains details about development and investment opportunities in the county. Contact inward investment service manager Tracy Croft at: tracy.croft@nottinghamcity.gov.uk for further details.

 

Investors flock to the Celtic fringe

‘Silicon Glen’, the area around Edinburgh in Scotland which already manufactures half of the UK’s semiconductors and 13 per cent of the European total, has welcomed another substantial slice of investment. Motorola, the US electronics giant, is to set up a $32 million software design centre at the Alba Centre in Livingston, a campus development set up three years ago by regional agency Scottish Enterprise to encourage inward investment. Already Scotland’s biggest manufacturing employer with 6,500 workers. Motorola plans to take on an additional 550 software designers by 2005. The new facility, to be housed in a purpose-built 100,000 sq ft building, will focus on the production of software for wireless communication and mobile phone systems and embedded software for manufacturing processes and for e-commerce.

Elsewhere in Scotland, Strategic Software Solutions Ltd is to expand its plant at Alloa, Clackmannanshire, moving into a new 8,500 sq ft facility and taking on more than 130 extra skilled staff. The company, recently taken over by e-commerce infrastructure provider iATMglobal.net of the US, will focus on developing technology to enable internet access for automated teller machines for the banking industry.

Micron Europe, a subsidiary of Micron Technology Inc of the US, has officially opened a $15.5 million manufacturing facility at East Kilbride, which will employ 360 people by 2002 and will produce semiconductor memory upgrades for personal computers. US electronics designer and manufacturer Galgon has invested $2 million in an expansion of its plant at Glenrothes, East Fife that will see it treble its floor space to 75,000 sq ft and double its workforce to 100. In a different sector, mobile phone operator One-2-One, owned by Deutsche Telekom of Germany, is to build a customer contact centre at Dundee on Tayside. The centre, the company’s sixth in the UK, will employ 1,000 people and will feature a state-of-the-art training centre.

Not to be outdone by the Scots, Northern Ireland has been active in attracting its own new investment. Pivotal Corporation of Canada, for example, has opened a new e-business centre of excellence in the provincial capital Belfast. The centre will focus on R&D, technical support, training and professional services. Altogether, over the past six months Canadian companies have committed some $536 million to technology-focused projects in Northern Ireland, making a total of at least $2.5 billion over the past decade, according to Sir Reg Empey, the province’s minister for enterprise, trade and investment. Leading Canadian investors include Bombardier Aerospace and Nortel Networks.

TeleTech Holdings of Denver, Colorado is to set up a customer contact centre for telephone and e-commerce customer care operations in Belfast. The centre will cost $128 million and will create 900 jobs. TeleTech provides customer-interaction management services for Global 100 companies in the telecommunications, financial services, technology and transport sectors. Meanwhile Armstrong Steel, a subsidiary of Klockner Werke AG of Duisburg, Germany, is to invest $1.4 million and create 14 jobs at a new steel service centre in Belfast.

In Wales the focus is on the automotive sector. Calsonic, a subsidiary of the Calsonic-Kansei Corporation of Japan, has opened two major new facilities at its European Technical Centre in Llanelli, South Wales, where it already employs 1,200 people. A new advanced learning centre and a climatic wind tunnel will expand the research capability of the centre, which is the company’s base for R&D in Europe.

Another Japanese company, Hitachi Cable Ltd, has bought the former Lucas Varity TRW power steering systems plant in Ebbw Vale, also in South Wales. A new company, Hitachi Cable UK Ltd, will retain the 47 staff and will produce 2 million power steering hose assemblies a year from a 5,750 sq ft base on the Rassau Industrial Estate. It will have a sales target of $22.5 million in its first year. Jordan Industries of Deerfield, Illinois, which recently acquired injection-moulded office products manufacturer Yearntree for $2.5 million, has announced plans to expand the company. It will safeguard the jobs of the Welsh firm’s 60 current workers and will take on a further 44.

And in something of a coup for Wales, leading Japanese soy sauce producer Shoda Shoyu has acquired The Speciality Sauce Company of Blaenau Gwent, and is to start manufacturing soy sauce for the European market. Shoda is one of Japan’s best-known companies, with a history stretching back to 1873. It has installed new equipment and introduced new technologies at its Welsh subsidiary, where the workforce has doubled from 14 to 30. Shoda will initially focus on the production of sachet soy sauce, in which it is the global market leader.

 

Around the regions

To find out about business exhibitions and events happening around the United Kingdom click on the Events button.


WHY THE UK || DECIDING WHERE || NEWS || CASE STUDIES || GRANTS || MORE INFO || ABOUT || HOME

Copyright 1996-2008 Invest in the UK