News
February 2002
UK economy outperforms European neighbours
The UK is appreciably better off than its European neighbours, according to new figures from consultancy Oxford Economic Forecasting. In 2001 UK gross domestic product (GDP) per head was $23,712: five per cent ahead of Germany, seven per cent better than France and 16 per cent above the average in the 12 European countries that adopted the euro as their currency on 1st January. Ten years ago, GDP in the UK lagged 19 per cent behind Germany’s, 16 per cent behind France’s and 9 per cent behind that of the Euroland countries overall. The dramatic turnaround is partly due to the strength of the pound against the euro but is equally attributable to the underlying strength of the UK economy, which last year grew faster than in any other leading industrial country.
Head of Oxford Economic Forecasting Adrian Cooper said that the UK economy had grown consistently faster than those in the eurozone over the past five years. It has registered an annual average growth rate of 2.7 per cent, compared with 1.8 per cent in Germany, and Mr Cooper predicted that the gap would widen this year. It still has some way to go before it catches Japan and the US, however. GDP per head in those economies was, respectively, 27 per cent and 35 per cent higher in 2001.
One sign of the UK’s prosperity relative to Europe comes in an official study by Eurostat, the European Union’s statistical office, which reveals that Britons spend more on holidays and leisure than any of their European compatriots. Drinking, socialising, eating out and holidays are the top priorities for UK consumers, who spend on average $4,774 per year on recreation, or 21.3 per cent of the household budget. This compares with 14.5 per cent in France and just 10.9 per cent in Italy, where per capita income levels are similar.
The consultancy points to higher income levels (up 65 per cent since 1985), longer working hours and the decline of the traditional family as reasons for the increase in leisure spending. People are now more likely to have children in their 30s than in their 20s and subsequently have a far longer period of freedom when personal spending is accorded a higher priority.
If they can’t afford luxuries, Britons are also more likely than any nationalities to reach for a credit card. Another survey, by market research company Datamonitor, shows that consumer borrowing rose by $6.7 billion in November 2001 to reach a record $1,106 billion. Britons are also more likely to be binge spenders. Datamonitor reveals that UK households spend $3.1 billion per year on ready-made TV dinners, second only to the Swedes.
Rail plan welcomed by industry
The rail industry has broadly welcomed the Strategic Rail Authority’s proposals for developing the national rail network over the next 10 years. The SRA plan, set out in a 116-page document, raises government funding in the network to $47 billion and makes firm commitments to a number of projects, including upgrades to both the east and west coast main lines from London to Scotland, improvements to rail links in the South East and enhanced train safety systems. A similar amount, however, will need to be raised from the private sector, a task which the SRA concedes will be made more difficult by recent disruption on the railways and the government’s decision to put track operator Railtrack into administration.
Around 400,000 tones of freight are carried in the UK every day, and freight will receive some $6.3 billion from the public purse. The 20,000 trains in operation also carry 2.5 million passengers each day. The government has set a growth target for passenger traffic of 40-50 per cent over the next ten years, from 38 billion passengers in 1999-2000. The growth target for freight is 80 per cent over the same period, starting from 18 billion tonne kilometres in 1999-2000.
Inevitably prioritisation means that some projects have had to be mothballed. These include the proposed new CrossRail and Merton-Hackney lines in London and a dedicated north-south high-speed line. Some rail industry figures have also criticised the plan for a perceived bias towards the South East. The SRA, however, points out that some 70 per cent of rail journeys either start or end in London and so major investment in the region’s network is essential.
IT sector gets a helping hand
E-commerce minister Douglas Alexander has announced a number of schemes to boost the UK’s IT sector. In collaboration with the Engineering and Physical Sciences Research Council, the government is to contribute $33.6 million to fund a range of collaborative projects between companies and universities. The money will be used mainly to provide flat panel displays and high-capacity data storage capacity, crucial elements in the development of technologies such as next-generation internet, digital television and multimedia systems.
A new $3.9 million training scheme is intended to increase the numbers and skills of printed circuit board designers. The UK is a world leader in PCB design, with more than 5,000 designers and 40 per cent of all the independent design houses in Europe. PCBs are found in virtually every electronic product, from hi-fis to mobile phones, and overall the UK’s electronics industry is worth around $63 billion every year. To maintain this position at least 500 new designers will be needed over the next four years. Under the Printed Circuit Board Design Scheme, six training centres will be established - three in England and one each in Scotland, Wales and Northern Ireland - and distance learning will also be offered.
Government initiatives already under way include a competitive analysis of the PC hardware manufacturing sector, which will be developed into a joint action plan with the industry; the SMART awards scheme for research and development by small companies; and the Electronics Design Programme, which provides free design project support and advice to companies in the IT field.
Motor industry in buoyant mood
Sales of commercial vehicles in 2001 were at their highest levels since the record year of 1989 and the third highest ever, according to figures from the Society of Motor Manufacturers and Traders. Demand was strongest in the light vehicle sector, with registrations of small vans in December increasing 29 per cent year-on-year and those of panel vans (such as the Ford Transit) rising by 40 per cent. Demand for trucks grew at a more modest 2.6 per cent, but the total of 55,573 vehicles for the year still represented a 12-year high. The healthy sales figures indicate that the UK economy is standing up well to recessionary pressures. Industry executives warn that a downturn is inevitable this year, but most believe that it will only be marginal.
Automotive component manufacturer Magna Kansei is to extend its factory in Sunderland, North East England at a cost of around $8.5 million. Formed in 1990 by Magna of Canada and Calsonic Kansei of Japan, the company supplies components to Nissan, BMW, Land Rover, Jaguar, MG Rover and General Motors. The expansion, which will create 79 new jobs over the next four years, will introduce new vacuum forming and laser cutting technology, allowing the company to produce complete instrument panel models.
Optare, owned by North American Bus Industries and one of the biggest bus-makers in the UK, is investing $2.8 million to expand its production facilities at Hellaby Industrial Estate in Rotherham, Yorkshire and Humber. The new investment will add 35,000 sq ft of covered space to the company’s 5.5-acre site, including a new showroom, and will enable it to double its output to more than 1,000 vehicles a year. In particular it will create more production space for the Alero, a 16-passenger low-floor vehicle designed for community use and offering roll-on wheelchair access. Optare expects to produce around 500 Aleros a year and is investigating export opportunities for the niche vehicle, particularly in the US.
On a sportier note, a 500-horsepower ‘supercar’, the Farboud GT, was unveiled at motor industry show Autosport International in Birmingham in January. Farboud Cars is owned by businessman Arash Farboud, whose family controls European medical packaging and services company Rocialle Group. The two-seater car is due to go into production in Cambridge, Eastern England in March and is expected to sell for around $119,000.
Meanwhile, the owners of Silverstone, the 800-acre motor racing complex in Northamptonshire in the East Midlands, have proposed a $112 million, five-year upgrade programme that would also incorporate technical, engineering and training facilities to help train new engineers. The British Racing Drivers Club and its partner, Octagon of the US, are asking the government to supply half the funding for the project and at the end of January met with sports minister Richard Caborn and other officials to discuss the proposal.
However, it was thought likely that the plan would clash with a separate initiative being developed by trade minister Brian Wilson and the regional development agencies. It was understood that Mr Wilson had met motor sport officials to discuss ways of developing skills and technologies in the motor industry and then transferring these skills to other industries, although probably at a lower cost than that of the Silverstone proposal. The government sees motor sport as a flagship industry: it is a world leader, with 50,000 employees and an annual turnover of $7 billion.
Planning process to be more business-friendly
The government is aiming to overhaul the planning process and make it more responsive to the needs of business. Business leaders welcomed a green paper - Planning: delivering a fundamental change - launched at the end of December and presented by the government as the biggest shake-up to planning in 50 years. It proposes a major streamlining of the current system, with more attention paid to strategic planning at the regional and national levels but with more decision-making power at the local level.
At present, around 550,000 planning applications are processed each year, 30 per cent of them for major commercial or industrial schemes. However, only half are processed within the time limits, a situation which, according to Digby Jones, director-general of employers’ organisation the Confederation of British Industry (CBI), is undermining the UK’s competitiveness. "A system that serves business better is good for the economy, jobs and people," he said.
The green paper, drawn up by planning minister Lord Falconer, was followed by three daughter documents on planning gain, major infrastructure projects and compulsory purchase. A consultation period will run until 18 March and legislation will be introduced either this year or next.
Office market shows signs of slowdown
Global economic concerns are beginning to make themselves felt in the office rentals market, according to a report on the M25 area by consultants DTZ Research. Higher levels of availability, reduced take-up and static or falling rents within the area bounded by the London orbital motorway are all signs of a weakening market, says the company. Availability in the area increased by one third in the third quarter of 2001, from 4.5 million sq ft to just under 6 million sq ft. Newly built or refurbished property accounted for nearly 50 cent of this, although fewer new schemes are in progress, suggesting that the market will be reasonably well placed to weather the downturn, according to DTZ.
Take-up fell by more than 30 per cent over the quarter, from 870,000 sq ft to 560,000 sq ft, while the amount of speculative space under construction fell from 1.3 million sq ft to 830,000 sq ft. The slowdown was most marked in the western section of the market. "Although the direct effects of the terrorist attacks on 11th September are not as yet clear, they have undoubtedly contributed to increased economic uncertainty and impacted on occupier confidence," said DTZ. However, despite the decline, annualised take-up in the first three quarters of 2001 was still 10 per cent above 1999 levels and the total investment activity of $245 million was only marginally below the average since 1997.
Regus, the serviced office provider, has signed its first franchise deal in the UK. In a three-year deal, property company Business Spark will open five franchised centres under the Regus name, including two 20,000 sq ft buildings in Winchester and two in Farnham, both in South East England. The first, in Farnham, is due to open in early 2003. Within five years Regus expects some 50 per cent of its centres to be franchised. It is offering franchisees access to $1.4 million of capital in return for a $70,000 fee and a royalty of 8 per cent on turnover.
London manufacturers build links to local schools
A joint initiative by London manufacturers’ group Made in London and local education authorities has seen teachers from four north London boroughs visit local businesses in a programme aimed at improving their knowledge of manufacturing and the opportunities it offers for young people. The group of 14 teachers, from primary and secondary schools and further education centres, visited 16 companies over the course of a week, ranging from micro-businesses to large production plants such as that of Coca-Cola Enterprises. Other companies participating in the Making Your Future programme included Johnson Matthey, Tate & Lyle, GE Lighting, Visteon, Parker Knoll and Ford.
Some of the companies already have links with local schools, while others are looking at ways to increase their involvement. Under the project, case studies will be compiled for use in schools and colleges, company staff will visit schools to talk to pupils and pupils will visit companies to see how manufacturing works for themselves. "The project is an excellent example of partnership," said Richard Davies, general manager at Coca-Cola. "It is starting to build a solid foundation from which we can develop the skills and attitudes required to sustain and nurture a strong manufacturing base in the capital."
East Midlands at the cutting edge
Serviced office provider Innov@te Office has opened a purpose-built serviced business centre aimed at ICT companies at Sherwood Park business estate in Nottinghamshire, in the East Midlands. Located just a mile from junction 27 of the M1 motorway, the centre offers broadband connectivity, telecommunications and support services, meeting rooms and even a café. Tenants need no capital outlay to get up and running immediately: they can choose the size and layout of their space and are immediately allocated a dedicated company telephone number with voicemail and remote message retrieval.
Innovate Office Team celebrating opening of new premises
Innov@te Office, which also offers on-site training, is targeting both existing technology companies and locally based start-ups and accelerator ventures. The company is working in close collaboration with the East Midlands Development Agency (emda) and Nottingham University Business School. [see picture]
emda is also currently involved in promoting the region’s creative industries. The East Midlands has burgeoning strengths in fields such as arts and crafts, architecture, advertising, design, fashion, film and video, music, performing arts, publishing, software, TV and radio, and between them these sectors employ some 85,000 people. An evening to celebrate the region’s creative talent was recently held at a Nottingham club and a regional website - www.shoutout.org.uk - has been launched to provide online access to the industry’s best work.
Games set to strengthen Manchester’s trade links
Manchester, in the North West of England, is set to raise its international profile this summer when it hosts the Commonwealth Games. To foster business links between companies from Commonwealth countries, the Commonwealth Games Business Club is organising a programme of conferences, meetings, seminars and business breakfasts around the Games. Most events will take place at the Bridgewater Hall from 24 July to 6 August; to register your company, log onto www.nwbusinessclub.com.
A survey by MIDAS, the Manchester Investment and Development Agency Service, of 1,035 major employers in 100 UK centres saw Greater Manchester emerge as the best location for business in 2001. Key criteria included workforce, operating costs and accessibility. MIDAS has recently launched a new website that acts as a comprehensive guide to the city’s customer contact sector. The site - at www.contactmanchester.com - is part of the portal website www.manchestercalling.com, which promotes the city as a world-class business location. Another useful site was recently launched by Manchester Digital, a trade association formed to promote the digital sector in the Manchester area. It can be found at www.manchesterdigital.co.uk.
Coventry reaches out to investors
The city of Coventry, in the West Midlands, is aiming to raise its profile with the publication of a new 42-page brochure detailing the city’s many attractions. Aimed at investors and developers, Coventry - The Facts includes maps of development sites, industrial and commercial profiles, information on communications, demographics and education and also a section on relocation services.
Coventry is home to more than 130 overseas-owned companies and, over the past five years, more than 270 companies have located there, creating 11,400 jobs. Areas of speciality include the automotive industry and the food and drink, medical and healthcare and ICT sectors. Big names with a presence include Peugeot, Jaguar, Rolls-Royce, Agco, Mission Foods, Carlsberg, Micropathology Ltd, Marconi and Jabil Circuit.
In recent developments, Jaguar has received outline planning permission for its 100-acre site at Whitley, including just over 1 million sq ft of industrial, office R&D and warehousing space. A new business park - Paragon Business Park - is set to be developed at Foleshill Road, a main artery between the M6 motorway and the city centre. Work is already under way on the first development, an 80,000 sq ft pre-let warehouse facility.
Coventry, which has a population of 300,000, is centrally placed, right at the heart of the UK, with direct access to five motorway links that put any UK destination a maximum of five hours’ drive away. There are extensive train and air links, and the region is well provided with schools, universities and leisure facilities. For more information and a copy of the brochure, contact the Inward Investment Team on +44-(0)24-7683 1391 or go to: www.invest-in-coventry.co.uk
Dundee looks to digital future
The Scottish city of Dundee - the ‘City of Discovery’ - is aiming to build on its reputation for excellence in the high-tech industries with a new website which it hopes will attract further overseas investors. The site, at www.locate-dundee.co.uk, offers a virtual view of the city, including business news and information on property and developments, together with contacts and direct links to the inward investment team, who can deal with specific queries. There are also city maps, information on schools and a guide to life in the city. In addition, another site set up by the Dundee & Tayside Image Bank (www.d-t-imagebank.co.uk) offers more than 800 images to view of the area.
Dundee is a centre for ‘knowledge economy’ companies, especially those in the digital media and biotechnology sectors. Its two technology-oriented universities - Dundee and Abertay - are involved in many projects linking academia and business and are responsible for the launch of many spin-out companies. Abertay has links with Sony’s video games operation at Gifu University in Japan. The city is a member of the Global Digital City Network, along with cities from all around the world, including China, Korea, Japan, Russia and Australia. The only UK member, it is preparing to host the association’s annual general assembly this autumn.
As part of its model for the future, the city is developing a Cultural Quarter, which includes a theatre, arts centre, shops, bars and cafés, as well as the headquarters of several digital media companies. It is also undertaking a number of regeneration initiatives based on the concept of the ‘urban village’. Recent industrial developments include the completion of three new 10,000 sq ft units on the West Pitkerro Industrial Estate. The estate is well placed for road links to Edinburgh, Glasgow and Aberdeen and companies already based there include Michelin, Tokheim and Kolfor Plant.
Around the regions
A $9.8 million office development is planned for Baglan Energy Park, near Port Talbot in South Wales. The 50,000 sq ft Talbot gateway project will provide flexible accommodation either for traditional office use or for a customer contact centre, and has the potential to create up to 500 jobs. It is being supported by local development agencies and the National Assembly for Wales.
The 2002 Spring Conference of the British-American Business Council (BABC) will be held at City Hall in Cardiff, Wales from 12-15 April, when more than 300 business leaders from the UK, US and Canada will meet to discuss ways of furthering Anglo-American trade links. The theme of the conference will be ‘Meeting the Challenge’ and key speakers will include Sir Edward George, Governor of the Bank of England, and Digby Jones, Director General of the CBI (Confederation of British Industry). This is the first time the 4,000-strong BABC has held its twice-yearly conference in Wales - apart from one gathering in London, the organisation has previously met in major cities in the US.
US-owned Borders Books & Music, one of the fastest-growing retailers in the UK, is to establish a 50,000 sq ft distribution centre at St Columb Major in Cornwall, South West England, relocating its existing centre from nearby Penryn. The $4.9 million facility will employ 87 people in 2002, rising to 117 in 2003, and will form an important part of the company’s expansion plans. Borders currently has 12 superstores in the UK and also owns the Books Etc chain, which has 36 outlets.
A new technology park consisting of four speculative units with total space of 53,000 sq ft is to be built on Plymouth International Business Park at Plymouth, South West England. Priority Sites, a public/private partnership between the government regeneration agency English Partnerships and the Royal Bank of Scotland, is set to start work on 11 February. Housed in three buildings, the units will range in size from 4,844 sq ft to 30,667 sq ft and will provide space for high-tech clean manufacturing and office use. This is the first project to be approved at the 165-acre site, which is being promoted as an inward investment site for research and development , technology and innovation.
North Lincolnshire Council, in the Yorkshire and Humber region, is to open a 20,000 sq ft managed workspace for companies in the IT and knowledge-based industries at the Normanby Enterprise Park, near Scunthorpe. Managed by a private company, Zemike UK, the centre will offer its tenants both generic business advice and more specific IT support.
In North East Lincolnshire, the Food Technopole, part of the Innovation Centre at Grimsby's Europarc, is offering five days of free technical and commercial consultancy to small and start-up companies in the local food technology and manufacturing sector. The area has diversified from its fishing heritage to become one of the most imortant food producing areas in Europe. For information, contact the Innovation centre on +44-(0)1472-500350 or at foodtechnopole@europarc.com.
Atrica, a Santa Clara, California-based provider of optical Ethernet platforms to next-generation network service providers, has opened a UK sales and support office in London. Fellow Californian company Invoq Systems has established its European headquarters at Richmond, Surrey, just outside London. Invoq supplies data centres with software for automated notification of critical events.
US software company TrelliSoft, based in Glen Ellyn, Illinois, has opened a European subsidiary in Manchester, North West England. The company, established in 1999, was the first in the industry to provide a Java- and web-based storage resource management solution. It is now looking to market its StorageAlert product to the UK and wider European markets.
Morphics Technology of Campbell, California has opened a European office near Cambridge in Eastern England. The company produces signal processing chips for wireless base stations and semiconductor intellectual property cores for 3G handsets and wireless data devices.
A new website set up by regeneration agency English Partnerships is to provide a guide to best practice for the recently established Urban Regeneration Companies. The URCs, seven of which are currently in operation, are intended to help regenerate depressed areas of the UK, especially run-down inner cities. The site is at: www.urcs-online.co.uk.
Grants and funding website www.j4b.co.uk is launching a range of new subscription services this month, including an e-mail update service that will alert members to relevant business support schemes. Another new feature will be a series of monthly features highlighting areas of special interest, starting with European funding. Most of the site’s facilities will remain free to users.
The Italian American Pasta company, headquartered in Kansas City, has announced its intention to open a European sales and marketing office in York, Northern England.
Danaher Corporation, a Washington, DC-based manufacturer of process/environment controls, tools and components, is to acquire Marconi subsidiary Marconi Data Systems in a $400 million deal. Based in London and formerly known as Videojet, Marconi Data Systems manufactures ink-jet printing and laser coding equipment, high-speed addressing and mailing equipment and graphic control and postal coding systems. The transaction is subject to regulatory approvals but is expected to be complete before 31 March.
Another Marconi holding, a 50 per cent stake in home appliances company General Domestic Appliances (GDA), is to be acquired by Merloni Elettrodomestici of Italy, for around $195 million. GDA, which owns the Hotpoint brand, is the biggest supplier of domestic appliances in the UK and the largest service provider for the sector. Merloni, based in Fabriano, is the third largest white goods manufacturer in Europe.
EnerSys of the US, based in Reading, Pennsylvania, has bought the Energy Storage Group (ESG), a subsidiary of Invensys, for $505 million. ESG, based in London, is a leading supplier of standby and motive batteries, with 15 manufacturing facilities in nine countries and 5,000 employees worldwide. EnerSys already has manufacturing facilities in the US, Argentina, Brazil and Mexico, together with assembly operations in Canada.
Integral Horsepower Motor (IHP), a division of another Invensys subsidiary, Brook Crompton, has been purchased by Singapore-based Lindeteves-Jacoberg for $24 million. Brook Crompton, based in London, manufactures low-voltage motors for applications such as extractor fans, cranes, elevators and ski lifts. Lindeteves-Jacoberg is a diversified group with interests in electric motor businesses in China, Italy, Australia and Germany.
Electrical recycling company MIREC of the Netherlands has acquired asset management company Frazier International of Dumfries, Scotland for an undisclosed sum. Frazier International specialises in the recovery, refurbishing and re-marketing of used ICT equipment and counts OEMs such as Dell, Sun and BT among its customers.
Leading independent music company edel music of Germany has acquired a majority stake in London-based record, video and television programming company Eagle Rock Entertainment. edel, involved in all aspects of the music industry from the development of new acts to the manufacture and distribution of CDs, plans to capitalise on Eagle’s strong position in the audio-visual programming business.
The Thomson Corporation of Canada has acquired Gardiner-Caldwell, a medical education and communications company based in Macclesfield, Cheshire in North West England. It plans to build on the company’s strength to create a leading global education resource. Gardiner-Caldwell has an integrated portfolio of traditional and online resources spanning many therapeutic categories and counts some of the world’s biggest pharmaceutical companies among its clients.
Business Objects, a supplier of business intelligence solutions based in San Jose, California, has acquired Blue Edge Software, based in Leeds, Northern England, for $6 million. Blue Edge already works to develop applications based on Business Objects software for web-based information delivery and the acquisition is seen as a logical integration of the two businesses.
K-Tron International, a New Jersey-based manufacturer of conveying systems, has bought Pneumatic Conveying Systems (PCS) of Stockport, North West England, for around $850,000. PCS designs and installs conveying systems for the food, pharmaceutical, chemical and plastics industries.
Iverson Financial Systems, of Sunnyvale, California, has opened a European office in London. The company specialises in financial market data products, including data on equities, a global index monitor, a sector watch service and an outsourcing service for managing and cleansing securities data.