News

 

March 2001

Nissan’s vote of confidence boosts car industry

Nissan’s announcement in January that it was to build its new Micra small car at Sunderland in North East England has been welcomed by all sectors of the UK automotive industry. The Japanese car giant pledged an investment of $329 million that will boost production at the plant from 330,000 cars a year to 500,000 by 2003-04, safeguarding 1,300 jobs and creating 500 more, while securing the future of the plant as its European manufacturing hub for the next ten years.

Nissan awarded the contract to Sunderland in preference to a plant in France, despite concerns about the strength of sterling relative to the euro. The British government reassured the company that it was committed to "a competitive and stable" exchange rate, and put together a $58 million regional assistance package to help secure the investment. Workers and managers at the plant contributed by committing to cut production costs by 30 per cent by 2003.

Sunderland, the most efficient of Nissan’s plants worldwide, is hugely important to the North East, being the region’s biggest employer and the focus of its automotive supply sector. [see picture] "This announcement is great news for Sunderland. It is good for jobs and for the future," said trade and industry secretary Stephen Byers. "Won against international competition, this demonstrates in the clearest possible way that Britain is best for business."

Surbjit Nagra, MD, LuK (UK), Waleswood, Rotherham, supplier of clutches to Nissan.

Nissan is not the only company to put faith in the UK car industry. Ford Motor Company has announced a $350 million expansion of its engine plant at Bridgend in Wales, where it assembles motors for Jaguar cars and other premium marques. The expansion will create around 600 new jobs and production will start towards the end of 2002, with annual production of V6 and V8 engines set to reach 325,000. Many will be destined for the company’s new X-Type ‘baby Jag’, which will be launched this year following the refurbishment of the Halewood car plant on Merseyside in North West England.

Ford’s arch-rival General Motors has announced a $280 million investment plan for its Vauxhall Motors plant at Ellesmere Port, also on Merseyside. The plant will become a ‘flexible’ facility capable of producing both Astra and Vectra models, starting with the next-generation Vectra in 2002. The continued investment by both Ford and GM allays fears of a slump in the industry following decisions to cease car production at their Dagenham and Luton plants respectively.

Meanwhile German-owned Volkswagen is planning a further increase in production of its luxury Bentley brand. The company has already announced an $840 million expansion programme, which will see production grow from 2,000 to 9,000 vehicles over the next three years. It is now looking at niche markets worldwide, such as luxury recreational vehicles and high-performance super-cars, that could be developed without compromising Bentley’s upmarket image. A new ‘cheaper’ Bentley is due for launch in 2003 but even so its starting price will be in the region of $120,000. Some $140 million is already being spent at the company’s production plant in Crewe, North West England, where the size of the assembly buildings will be doubled and new R&D and engineering facilities installed.

Another luxury car company, DaimlerChrysler UK, has bought car dealer Lex Autosales in a deal worth $26 million. The company, owned by Mercedes-Benz of Germany, has acquired seven Lex sites across the country in a bid to strengthen its brand management.

 

UK offers best climate for entrepreneurs

The UK does more to stimulate entrepreneurial activity than its European neighbours, and is even outdoing the United States, according to a new report from Arthur Andersen and GrowthPlus, a pan-European non-profit-making organisation. The study analysed a number of key factors identified by Europe’s fastest-growing entrepreneurs, including funding, people and the business environment, and awarded the UK a score of 49 points out of a possible 60 - compared with 45 for the US. The UK performed at an above average standard in 24 of the 28 topics identified as most affecting a company’s ability to grow and develop.

Meanwhile Invest.UK, the government’s national inward investment agency, has a new chief executive. William Pedder arrives on 5 March from investment bank Dresdner Kleinwort Wasserstein, where his responsibilities as a director included project and export finance and advice for companies investing in Asia and Europe, particularly in the power sector. Previously 50-year-old Mr Pedder worked at Lazard Brothers, where he was seconded as an advisor to the Department of Trade and Industry (DTI)’s Projects and Export Policy Division.

 

Manufacturing growth reflects strength of technology sector

Growth in the UK’s manufacturing output in 2000 was the best since 1994, rising 0.5 per cent in the last quarter to give an overall figure of 1.6 per cent for the year, according to official figures. A regional trends survey by the Confederation of British Industry (CBI) showed growing optimism in the South West, Yorkshire and Humber and Northern Ireland, although confidence was down in traditional manufacturing regions such as the North East, the West Midlands and Wales.

This reflected performances in different sectors. Outputs of metals and textiles both fell, but chemicals output was up 3.2 per cent and engineering up by 4.6 per cent. The latter included a rise of 28 per cent for telephones and telephone equipment and 75 per cent for electronic components. Generally speaking, sectors with a high technological content did better than more traditional commodity-based industries. As well as electronics, electrical engineering and telecommunications, the best-performing sectors included pharmaceuticals and the service sector, including business services.

 

Government sets out vision for future of industry

The government has unveiled an ambitious approach to industrial policy over the coming years in a White Paper on Enterprise, Skills and Innovation. The White Paper, launched jointly by trade and industry secretary Stephen Byers and education secretary David Blunkett, aims to steer a course between intervention and market forces, allowing limited intervention but avoiding large-scale subsidies. It also aims to promote competitiveness while taking account of globalisation and technological advances.

The government is keenly aware of the need for structural changes in the ‘new economy’, where better-educated workers are required by the high-tech, value-added businesses that are replacing traditional heavy manufacturing. The White Paper addresses five key areas:

• encouraging investment in high-tech sectors such as computing and communications infrastructure;
• reform of the regulatory and financial environment to ensure that companies have access to capital and are not hampered by unnecessary legislation;
• the development of clusters of companies in the regions, particularly through links between businesses and universities, together with improved business start-up and survival rates and more R&D activity;
• improving workforce skills, especially in the information and communications technology sectors; and
• ensuring that European Union bureaucracy is cut and encouraging overseas entrepreneurs to start businesses in the UK.

Specific proposals include a review to look into means of accelerating the take-up of broadband technology; funding injections of $42 million for UK Online for Business, the government’s e-business programme, and $126 million for research and commercialisation of leading-edge technologies; and reviews of access to finance and investment. The Regional Development Agencies (RDAs) will be asked develop ‘Strategies for Success’, building on existing networks and business clusters, while University Business Partnerships will be set up to support large-scale R&D collaborations between academic institutions and business. Flexible and partnership working will be actively promoted in all sectors.

There will be increased emphasis on vocational training. National training organisations will be reorganised, more apprenticeship schemes, vocational GCSE qualifications and foundation degrees will be made available and up to 20 new Centres of Technological Excellence in information and communications technology will be established. Five world-class university innovation centres will also be set up, involving among others Boeing at Sheffield in Northern England and Marconi and Sun Microsystems in the West Midlands.

 

New fund to back RDA investment initiatives

In a related development, the government has launched a new Regional Innovation Fund, which in 2001-02 will share $86 million across the nine RDAs, with a particular emphasis on developing the manufacturing sector. The money, intended to promote innovation and enterprise and support business clusters and networks, will target regions that are historically weak as well as support the more successful ones.

The funding will be allocated on the basis of each region’s economic position, taking into account GDP, R&D spending and levels of unemployment, and will complement other government initiatives such as Regional Selective Assistance and tax credits. The biggest shares go to Yorkshire ($14 million), the North East ($12.5 million) and the North West ($10.3 million), while more prosperous regions such as the East of England ($4.9 million) and the South East ($4.5 million) will receive smaller cuts.

Development agencies themselves are taking a whole range of initiatives. One NorthEast, for example, plans to spend $140 million on regeneration projects over the next three years, an investment that it expects will attract a further $560 million from public, private and European sources and kickstart projects that could create up to 22,000 jobs. Nearly 1,500 acres of derelict land will be reclaimed, 10 million sq ft of commercial floorspace will be created and 2,000 new houses built on brownfield land. One of the biggest schemes is the Newburn Riverside Industry Park, which will create up to 5,000 jobs and bring $160 million of investment to the city of Newcastle. The 228-acre development is one of the largest brownfield regeneration projects in the UK, and is expected to provide 590,000 sq ft of industrial space. One NorthEast is currently looking for a private investor to develop the first 25-acre plot.

Two agencies, Advantage West Midlands and the East Midlands Development Agency, have joined forces to market their regions to US and Canadian investors. Under the banner of The British Midlands, the two have opened offices in Chicago and San Diego and have launched a co-agency website (www.thebritishmidlands.com). More than 1,000 North American companies, employing 150,000 people, are already based in the Midlands. The two agencies are planning next to target investors in Japan. Another initiative in the region is Medilink East Midlands, a healthcare industries network that will bring together medical companies, hospitals, universities and business support organisations. Leading the initiative is AstraZeneca, one of the region’s major pharmaceutical companies, based at Charnwood in Leicestershire.

RDA Yorkshire Forward has achieved accreditation as a new Europe-wide computer skills testing centre. The European Computer Driving Licence (ECDL) provides computer users with a certificate of competence that is recognised across the European community. And the Northwest Development Agency (NWDA) and business support organisation Nimtech have been chosen by UNIDO (the United Nations Industrial Development Organisation) to host and operate its focal office in the UK. The office will provide support and advice for investors and entrepreneurs considering commercial opportunities in developing economies overseas and will work with a range of organisations including chambers of commerce, trade associations and individual companies.

 

Manchester reaches out to the world

Business leaders in Manchester, North West England, have formed an alliance with scientists, venture capitalists and other financial institutions to promote the city globally. The initiative, backed by investment bank NM Rothschild and venture capital firm 3i among others, is to hold a global enterprise convention - the International Finance and Enterprise Week - in May to attract investors from Europe, the US and Asia. The alliance, which plans to set up a $20 million venture capital fund for emerging industries, hopes to draw 1,500 delegates to the convention, and has already signed up eight US states.

Manchester is particularly strong in IT industries, with the largest concentration of high-tech companies outside the South East. It is home to more than 1,000 businesses in this sector, with 10 per cent of the UK’s computer software and services companies based in the city or in the surrounding region, employing 30,000 people. Brother International Europe, Sharp (UK) and Siemens Energy and Automation Division all have their UK headquarters here, and other international firms with a presence include ICL/Fujitsu, IBM, Hewlett-Packard, Cap Gemini, Sun, Sema, Oracle, Bull and Andersen Consulting.

The University of Manchester is opening a new centre of excellence, one of several University Innovation Centres (UIC) announced as part of the government’s Knowledge Economy White Paper. The $12.8 million centre, which will focus on organic materials, has been largely inspired by the North West Chemical Initiative, a grouping of local companies that will retain close links with the centre and will benefit from knowledge transfer and commercial exploitation.

In a separate development, outline planning consent has been given for a 340-acre international office park at Davenport Green in south Manchester, after a ten-year battle by developers Amec Developments and Scottish Life. Plans have been approved for the first 500,000 sq ft of the 1 million sq ft scheme, which will be located near the M56 motorway.

 

Regional airports seek expansion

Many of the convention delegates will be arriving at Manchester Airport, which has just opened its long-awaited second runway. The $240 million development should double the airport’s capacity to 40 million passengers a year over the next three years, and is a key part of its strategy to overtake Gatwick as the UK’s second busiest airport by 2010. More direct global flights are another part of the strategy. British Regional Airlines, for example, is to operate a new 55-minute service between Manchester and Gothenburg, Sweden’s second largest city, from 25 March.

Manchester Airport is also looking to strengthen its position as a regional operator beyond its own immediate area. It already owns Humberside International airport in the North East of England and is in negotiations to buy Bournemouth (in the South West) and East Midlands airports, with an eye also on Newcastle, also in the North East.

The government is keen to encourage the expansion of regional airports to help stimulate local economies and alleviate congestion in the South East. Another set to grow is Glasgow Prestwick International Airport, near Ayr in Scotland, which has just been acquired for $47 million by a consortium involving New Zealand-based Infrastructure & Utilities NZ and Scottish company Omniport. Omniport, which will manage the facility, says that the acquisition is the first in a global chain of regional airports.

Prestwick - which achieved fleeting fame in 1960 when Elvis Presley touched down briefly on what would be his only visit to the UK - has Scotland’s biggest runway, at 9,500 ft, and is sited away from built-up residential areas. It has been an airfield since the 1930s and a full airport since the 1960s, and in 2000 was the UK’s third fastest-growing regional airport, handling more than 900,000 passengers. The new owners are keen to restore its status as a designated transatlantic link, lost in 1990, and to compete with nearby Glasgow and Edinburgh airports.

 

Orange expands as serviced office provider enters fray

Mobile telecoms operator Orange (owned by France Telecom) has signed up for the biggest corporate prelet in the West End of London for more than 10 years. The company has taken the entire 232,000 sq ft of The Point, a new building in the Paddington Basin development, a major new project under construction on the site of former goods yards in the vicinity of Paddington Station. Orange has also taken 135,000 sq ft of space at Aztec West, an out-of-town business park in Bristol, Western England, as well as 75,000 sq ft in Bristol city centre. Its 20-year lease at Aztec West completes the 15-year development project of leading business park developer Arlington Securities.

Meanwhile, a new player has entered the serviced office market, with three companies joining forces to challenge Regus, which currently leads the market in the UK. Harvard Business Centres of the UK, Multiburo of France and EPCOR Business Centers of the US have linked up under the new name Locartis, and are aiming to provide 100 centres worldwide within a year. They will open 20 in the UK, Germany and France on 1 March, with another 35 planned across Europe and 25 in the US over the next three months. The Locartis brand will function as a franchise, with affiliate companies paying a fee to join. The three partners already have clients such as Microsoft, Lotus and Kodak.

 

Exhibition venues battle for centre stage

The 25-year-old National Exhibition Centre (NEC) in Birmingham, West Midlands, is planning a $280 million refit in response to growing competition from rivals such as the ExCel centre, the new conference and exhibition venue in London’s Docklands. The NEC plans to build a new, $28 million conference centre to keep abreast of the trend for joint trade shows that include conferences, a type of event that tends to attract a higher-spending category of visitor. The new conference centre will be able to accommodate 1,500 delegates, and optical cabling will give them high-bandwidth telecommunications access. The development will include hotels, restaurants and leisure facilities in a bid to capture visitor spending that currently takes place off-site.

ExCel, which opened in November 2000, has less than half the NEC’s 650,000 sq ft of floorspace, but it can accommodate 5,500 visitors and is planning to build a wide range of additional facilities such as restaurants, a nightclub and serviced flats. It has so far poached only one show from the NEC, but has had a far greater impact on the venerable west London exhibition centres of Earl’s Court and Olympia. Around 25 events, including the prestigious International Boat Show, have transferred so far to the Docklands venue. On 13-15 March it will host the Power Electronics 2001 exhibition.

However, there may still be room for everyone. There were 817 shows in 1999, and the market seems to be growing strongly. The Association of Exhibition Organisers reports that exhibitor spending at UK trade shows grew by 5 per cent annually between 1995 and 1999, to reach $2.45 billion a year.

 

Northern Ireland maintains high-tech focus

A fresh wave of investment is set to boost the already buoyant high-tech sector in Northern Ireland. C-MAC Network Systems Inc, of Canada, for example, has announced plans to build a new plant at Carrickfergus at a cost of $21 million. The company provides electronic manufacturing services to the telecoms industry, in particular switching and transmission systems, and first established a presence in the province in 1999. The new plant will create 154 new jobs.

Taiwanese computer manufacturer Acer is to set up a multi-lingual marketing and technical customer support centre in the provincial capital Belfast. The $3 million centre will serve countries in Northern Europe, including Denmark, Sweden and the Benelux countries, as well as the UK. Initially the centre will employ 36 people, with the workforce rising to 143 when it becomes fully operational at the end of 2003. Also in Belfast, HUCO Lightronic, a subsidiary of German company HUCO electronic GmbH, is to invest $3 million to expand its plant at Limavady, where it manufactures energy-efficient lighting circuits. It also plans to introduce a new range of rectifier products for automotive lighting systems, in a move that will create 25 new jobs.

M&M Software GmbH of St Georgen, near Stuttgart, is setting up a development office in Belfast that will employ ten software and electronics graduates. It has a well established portfolio of blue-chip clients such as Mannesmann, Bosch and Hewlett-Packard. And CardBASE technologies, a Dublin-based supplier of smart card solutions for electronic commerce, has announced a $2.6 million expansion of its Belfast facilities. The expansion will provide the company with R&D resources and will create 90 jobs over the three years.

 

Memory breakthrough promises mobile computing power

Scientists at Keele University, in Staffordshire, West Midlands, have made a series of breakthroughs in computer memory technology that would make it possible to squeeze the entire contents of the British Library onto a single credit card. The team has invented four separate technologies: one a new way of reading and recording data stored on magneto-optical disks; one a new disk coating material which provides a 30-fold increase in capacity; and one a new method of storing text in binary form, which compares each word with its predecessor and records only the changes, thus compressing the text to an eighth of its normal size. The fourth invention involves a closed-unit memory system that enables up to 10.8 terabytes of data to be stored in a credit card-sized area.

The team has applied for patents and has formed a spin-off company, Keele High Density, to commercialise the technology. The company, currently looking for development partners, says that the technology could be produced commercially within two years, with each unit costing no more than $50 initially. Possible applications include handheld computers and mobile phones, which require large amounts of memory in compact form.

 

Around the regions

• Investment firm Bowman Capital of San Mateo, California, has opened a European office in London. The company specialises in expansion-stage companies in the software, telecoms and semiconductor industries, and currently manages more than $5 billion in assets.
• Seattle-based aerospace giant Boeing is to help fund a new aerospace manufacturing research centre at the University of Sheffield, in Northern England. The centre will be the most advanced in the world for materials cutting technology, and will investigate the uses of new materials such as titanium. Boeing’s investment is expected to stimulate further investment in the region.
• York Inward Investment Board, working with Science City York, has forged a business partnership with the city of Denver, Colorado. York and Denver have many similarities, including fast-growing biotechnology and IT industries and top-class universities. A national newspaper survey recently named York University as a leading alternative to Oxford and Cambridge, while three of the northern city’s science parks are among the first locations in the UK to be cabled for high-speed ADSL internet access technology. Several US companies are already active in York, including Thrall Europa, Autopatch and Washington Inventory Services. The two cities will work together to foster industry, research and academic links.
• Pharmaceuticals manufacturer Genzyme of Cambridge, Massachusetts is to invest $77 million in expanding its plant at Haverhill in Eastern England. The investment will boost the manufacture of Sevelamer, a raw material used to make the company’s potential top-selling drug Renagel, to ten times the current level, while the current workforce of 120 will more than double.
• International telecoms conferencing provider Peer Digital of Boulder, Colorado has opened a European operations centre in Glasgow, Scotland. The company, which offers video, audio and data services across both traditional networks and the internet, will employ 70 people in its new venture.
• Singapore-based iSoftel, a provider of next-generation carrier solutions, has opened its first European office in London. The company’s product line includes enhanced service applications, real-time rating and billing and web-based traffic management.
• Global communications company Sprint, based in Westwood, Kansas, has chosen London as the location for its European headquarters. The company specialises in the integration of long-distance, local and wireless communications and has already established an active internet node in the UK capital as the first link in a Europe-wide network.
• The frequency of ferries between Liverpool in North West England and Ireland is set to increase following the merger of two companies, Norse Irish Ferries and Merchant Ferries. A new company, Norse Merchant Ferries, will now operate four separate services on the Irish Sea, including a twice-daily ro-ro freight service linking Liverpool with Belfast and Dublin.
• Among the exhibitors at the Power Electronics 2001 exhibition at the ExCel Centre, in London’s Docklands, from 13-15 March will be the Swansea Bay Partnership, a South Wales initiative that involves the Welsh Development Agency, the University of Wales Swansea and a number of local councils. The region has a particular strength in power electronics and the university’s Power Electronic Design Centre is seen as a powerful promotional tool in attracting new investment.
• Jabil Circuit, based in St Petersburg, Florida, is to acquire two units of the London-based Marconi Group. Employees of the two units, in Liverpool in North West England and Coventry in the West Midlands, will transfer progressively to the US company. Jabil Circuit, a manufacturer of circuit board assemblies and systems for electronic products companies, will supply electronics manufacturing services to Marconi.
• German IT company twenty4help is to establish a base in North East England, where it promises to create a number of high-quality IT jobs. It has taken temporary accommodation in the Atmel Building on North Tyneside while it looks for a permanent base in the region.
• Virtio, the Virginia-based creator of internet virtual prototyping platforms, has opened a development site at the high-tech Alba Centre in Livingston, Scotland. Virtual prototyping allows system designers to create high-performance software models of complete systems, without the need for physical hardware.
• Citiraya of Singapore has set up a UK subsidiary in Irvine, Scotland. The company provides a range of recycling services for defunct electronic products, principally computers. The new facility will create 46 jobs over the next two years.
• Companies looking for business premises in the booming South East of England would be advised to look at Horsham in West Sussex. A number of developments around the town have accommodation on offer, including the Broadlands Business Campus, which currently has planning permission for 123,000 sq ft of office space, and the Oakhurst Business Park at Southwater, which will eventually offer 350,000 sq ft of mixed-use premises. Chichester Business park at Tangmere is expanding from 14 to 18 acres and will have several new buildings ready by the autumn. All locations are within easy reach of Gatwick Airport.
• Glacier Vandervell Bearings, a division of Dana Corporation of Toledo, Ohio, is to establish a global R&D facility and a European headquarters at Rugby in the West Midlands, where it will employ about 100 staff. The company is a leading supplier of components to vehicle manufacturers and after-sales markets.
• German company Ensinger, a world leader in the manufacture of engineering plastics, is to set up a UK base in Birmingham in the West Midlands. The 2,300 sq ft facility will include warehousing and accommodation for sales and production staff, and will employ 20 to 30 people. Ensinger supplies materials and finished components for a range of industries, including the aerospace, medical, electronics, oil, chemicals and food and drink sectors.
• The Telford Development Agency reports that it helped to create or safeguard 2,300 jobs in the West Midlands town during 2000, a figure which could rise to 3,600 as overseas companies expand. The agency dealt with 600 enquiries and helped 60 companies relocate, expand or move within Telford, 50 per cent more than in the previous year and the highest level since it was set up in 1991. Thirty per cent were overseas companies, and most of these were European. German firms were particularly active, with new arrivals including Denios UK and Phoenix Contact, which both set up branch offices.
• Wipro Technologies, a subsidiary of Indian IT company Wipro Corporation, has opened its first European development centre in Reading, South East England. The centre will provide applications development for information systems and support and maintenance for the company’s UK customers. It will initially employ 50 people.

 

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