News
July 2002
Science, research and education go to top of the agenda
Chancellor Gordon Brown has put science at the top of his list of educational sectors for additional investment. He is particularly keen to improve the recruitment and retention of skilled scientists and engineers to combat skills shortages in certain areas. A recent government-sponsored review recommended that pay be increased for scientists at all levels of the education system.
Prime minister Tony Blair meanwhile has declared his determination to make the UK the best place in the world to carry out stem cell research, an area that holds out the possibility of new treatments for degenerative diseases such as Alzheimer’s and Parkinson’s. Addressing the Royal Society, the UK’s senior scientific body, Mr Blair said he hoped to attract leading scientists from overseas to work with British researchers on programmes that would bring economic success to the UK as well as social benefits worldwide. Stem cell researcher Dr Stephen Minger, an American working at King’s College, London, said: "The climate for stem cell research in the UK is so much better than in the US. The regulation is tight and clear."
There are many initiatives to encourage scientific research and innovation under way around the country, both government-led and fuelled by private initiative. In Wales, for instance, a network of Technium centres is being created, with the help of European Union funding, to support innovative high-tech businesses and to attract international investment. The aim is to create a series of sector-specific incubation centres, covering areas such as biotechnology, optics, auto technology and the media, all of which will be linked to world-class facilities at Welsh universities. President of the European Commission Romano Prodi recently visited the Swansea Technium in South Wales and praised the initiative as an excellent example of the value of links between business and higher education.
Also in South Wales, at Llantrisant, a newly-formed company is about to give the principality an advanced R&D capability in the pharmaceutical sector. Marix, backed by regional development funding and a Regional Selective Assistance grant from the government, plans to employ up to 50 staff at its headquarters at Gwaun Elai, near the Royal Glamorgan Hospital and the Welsh headquarters of the National Blood Transfusion Service. The Welsh Development Agency hopes that the new facility will encourage the development of a new science park on the site, attracting more companies in the medical, pharmaceutical and biotechnology sectors. Marix will investigate clients’ ideas for new medicines, developing those that are medically and commercially viable with a view to launching them on the market.
Darling on track to reform rail industry
Alistair Darling has replaced Stephen Byers as Transport Secretary. Mr Darling, a former number two at the Treasury, will be responsible for guiding Railtrack, the company that owns much of the UK’s rail infrastructure, through its current period of administration.
Railtrack is likely to be replaced by Network Rail, a not-for-profit company that will be ‘owned’ by more than 100 members representing the rail industry and the public interest. The government has funded the bidding costs through regulator the Strategic Rail Authority and will underwrite part of Railtrack’s debts, which are estimated at up to $13.5 billion. The influence of the SRA is set to increase, with the body subsidising the industry via direct government grants and intervening in day-to-day operations ranging from driver training to pay negotiations. The government has reiterated that neither Railtrack nor the 25 private train operating franchises are set to be renationalised.
Road freight volume rises while ports record slight decline
The number of road goods vehicles travelling from the UK to mainland Europe totalled 617,600 in the first quarter of 2002, 2 per cent more than in the previous quarter and 4 per cent more than in the corresponding quarter a year earlier, according to the Department for Transport, Local Government and the Regions. The number of powered vehicles grew by 5 per cent over the first quarter of 2001 while the total of unaccompanied trailers rose by 2 per cent. UK-registered vehicles accounted for 28 per cent of all powered vehicles, compared with 29 per cent in the previous quarter and 31 per cent in the previous year. In 2001, UK-registered vehicles carried 6.4 million tonnes of goods out of the UK, a fall of 9 per cent since 2000, and 7.4 million tonnes into the UK, a fall of 4 per cent.
DTLR statistics show that traffic through the UK’s ports also declined in 2001. Total freight traffic fell by 7 million tonnes (Mt) to 566 Mt, 1 per cent lower than in 2000. Inwards traffic rose by 12 Mt to 329 Mt but outwards traffic fell by 20 Mt to 236 Mt. The decline was due largely to a reduction in the tonnage of crude oil handled through the ports. Freight traffic through the UK’s 52 major ports accounted for 97 per cent of the total. The top ten ports in 2001, in terms of tonnage, were: Grimsby and Immingham (54.8 Mt), Tees and Hartlepool (50.8), London (50.7), Forth (41.6), Southampton (35.4), Milford Haven (33.8), Sullom Voe (31.5), Liverpool (30.3), Felixstowe (28,4) and Dover (19.1).
A new high-speed ferry link has been launched between Rosyth in Fife, Scotland and Zeebrugge in Belgium. Two $105 million Superfast vessels, owned by a Greek company, will provide the service. Each capable of carrying 626 passengers, 110 lorries and 115 cars, they will complete the crossing to mainland Europe in 17 hours, avoiding more congested routes further south. The service is expected to boost both tourism and freight traffic in the region, opening up markets in France, Germany, Holland and Belgium. Docking facilities have been built in Rosyth by Forth Ports with the aid of an $18 million grant. A new visitor terminal is scheduled for completion later this month.
Optimism returns to commercial property sector
Optimism is slowly returning to the commercial property market, with stronger demand from investors and greater stability in the occupier market after the downturn of late last year, according to Quarterly Marketbeat UK, a report from property specialists Cushman & Wakefield Healey & Baker. Overall, the agency expects a steady increase in occupier activity as the year progresses and predicts that rents, currently static, will increase by 1 per cent this year and by more than 3 per cent in 2003. Retail premises, it forecasts, will record the greatest rises.
A good deal of the activity in the first quarter of 2002 was stimulated by an anticipated increase in stamp duty in Chancellor Gordon Brown’s April budget, although in the event Mr Brown left the transaction tax unchanged and instead turned his attention to tightening loopholes. Nonetheless, Cushman & Wakefield has detected firmer signs of demand, even in areas badly affected by the downturn, such as parts of London and the Thames Valley. "At least decisions are now being made and the freeze on activity from last year is starting to thaw," it observes.
In the office market, however, little seems set to change before 2003, despite an increase in incentive packages driven by competition amongst landlords. Central London saw take-up fall in the first quarter and availability is expected to increase in the City. In the West End, on the other hand, activity in the middle and lower sectors of the market has begun to pick up. The Thames Valley market appears to have bottomed out, while in certain regional centres, such as Birmingham and Manchester, demand is relatively strong.
In the industrial sector, improving business sentiment leads Cushman & Wakefield to expect demand to increase over the course of the year. The distribution sector, it predicts, will see the greatest demand, although rents will remain relatively stable.
In a separate report, property consultant Knight Frank predicts that demand for commercial space in the Thames Valley area will remain weak for at least the next 12 months. It also said there was cause for concern in a "growing mismatch" between the prices being paid for properties and the underlying market. It forecasts that office vacancy rates around the M25, London’s orbital motorway, will rise from 6.5 per cent to 8.8 per cent over the coming year. It believes the vacancy rate in the north-west quadrant of the M25 will rise to 12 per cent and to 10 per cent in the south-west. It also predicts that rents along the M4 corridor to the west will remain stable but that along the M3, which runs to the south-west, they are set to fall by around 15 per cent.
Property developers unveil ambitious plans
Uncertainty over the property market has not stopped the flow of ambitious development schemes. In east London, for example, developer Meridien Delta Limited (MDL) is planning to turn the Greenwich peninsula and the area around the Millennium Dome into a new ‘mini-city’, in a $6 billion development that will see 14 million sq ft of new accommodation built on a 190-acre site. The plans involve 3.5 million sq ft of office space housed in a number of buildings up to 15 storeys high, with a focus on companies involved in the media, technology and R&D. There will also be 7,000 homes, as well as hotel and leisure developments. MDL will release individual development plots on the remaining 150 acres of land over the next 25 years.
The Dome itself will house a 120ft-high, 650,000 sq ft arena complex with seating for 20,000 people, which will be leased by Anschutz Entertainment Group of the US for an initial period of 55 years. Under the deal, the government will take a share of the profits from the Dome, with the first inflows to the public purse expected in 2006. Over 25 years, the government estimates, it could receive some $825 million in proceeds, making the public-private deal good value for taxpayers. Developments around the peninsula are also expected to create up to 20,000 jobs.
Another ambitious redevelopment scheme, planned for Bristol in the South West of England, has received outline planning consent. Temple Quay 2 is a $300 million proposal that will regenerate a 17.5-acre industrial brownfield site on the north shore of the city’s Floating Harbour. The mixed-use plan includes more than 654,000 sq ft of new Grade A office space, together with 500 new homes, more than 19,000 sq ft of retail space and a 60,000 sq ft waterside leisure development. The new scheme follows the success of the existing Temple Quay development.
In Leeds, the financial services capital of the North, proposals have been put forward for one of the city’s biggest ever speculative office developments, a 120,000 sq ft scheme in its West End district. The seven-storey building, which will be known as 2 Wellington Place, will feature 221,850 sq ft floorplates and parking for 100 cars.
In Swansea, in South Wales, plans for a mixed-use waterfront scheme involving more than 2 million sq ft of space have been put forward by the Welsh Development Agency. The $300 million Port Tawe Innovation Village is proposed for a 100-acre site surrounding the Prince of Wales dock and will link Swansea’s successful new marina and maritime quarter developments with the city centre. The scheme will include office, industrial and leisure space, together with 1,500 waterfront homes, two new pedestrian bridges and the restoration of historic dock facilities.
In Coventry in the West Midlands, the emphasis is on business parks. Developer Real Land Group, which was behind the successful Binley Business Park, has acquired a 150-year lease on a 3.5-acre site at Coventry University Technology Park. It plans to develop an ‘innovation village’ on the site, offering ten high-quality, self-contained office units, ranging in size from 3,400 sq ft to 10,800 sq ft and offering total accommodation of 55,000 sq ft. The development will be split into three phases and is expected to take about three years to complete. Occupiers will have close links with Coventry University; a number of prospective tenants have already expressed their interest.
At nearby Leamington Spa, outline planning consent for 600,000 sq ft of B1 office space has been granted for the second phase of the Warwick Gates Business Park development. The next phase of the 45-acre site will see plots of 15,000 sq ft and above offered for design-and-build development projects. The scheme is one of the few in the area capable of accommodating campus-style headquarter buildings in excess of 100,000 sq ft. A recent arrival was global telecommunications company AT&T, which took a 25,000 sq ft office building at a rent of $27 per sq ft. Warwick Gates is located close to both Leamington Spa town centre and the M40 motorway.
Car exporters hit record production levels
The UK’s car exporters are setting new production records, despite the effect of unfavourable exchange rates. Output of vehicles for export jumped 40.2 per cent in April and was heading towards 1999’s 20-year high of 1.78 million units. April’s surge, in which export vehicles accounted for more than 70 per cent of the total, lifted production over the first four months of the year by 15.9 per cent, to 579,296 vehicles. Export vehicles accounted for 60.2 per cent of this total.
There were a number of factors behind the increase. Peugeot’s Ryton plant near Coventry in the West Midlands has switched to seven-day working, while both BMW’s Mini plant in Oxford and Jaguar’s X-Type line on Merseyside have hit their full production capacity. Nissan, Toyota and Honda have also recorded increases in output. Production will be further boosted this month when Vauxhall starts production of its new Vectra model at Ellesmere Port on Merseyside. Peugeot is also about to introduce a new 206 model at its Ryton plant, boosting output from 190,000 to 230,000 cars a year.
The production of commercial vehicles too is on the increase. Output in April rose by 16.7 per cent year-on-year to 16,534, with production of export vehicles surging by 82.4 per cent to account for more than two thirds of the total.
At Luton, in Eastern England, government agencies are to pay $12 million into a Luton Venture Loan Fund in a move to boost the local economy after the closure of General Motors’ Vauxhall car plant. The Luton Vauxhall Partnership will spend the money on developing the Luton Dunstable Innovation Centre and the Butterfield Technology Village.
Investment maintained in mobile communications sector
Despite the recent difficulties of the mobile telecoms sector, companies from overseas continue to invest in the UK market, sending cautious signals of optimism about an upturn. For example, Siemens Information and Communications Mobile Group, of Munich, Germany, has just launched a new UK business unit, Siemens Mobile Acceleration. The wholly owned subsidiary, based at Siemens’ existing UK headquarters in Bracknell, Berkshire in South East England, will provide seedcorn funding for wireless start-up companies at the pre-market entry stage. Its aim is to encourage companies involved in developing mobile technology, applications and services for GSM/GPRS and UMTS/3G mobile telephony. It will offer funding of around $1.5 million per start-up, with the total sum for investment for the first 12 months set at $22 million.
Pinpoint Networks of Cary, North Carolina has opened a European office in London. The company provides services and software to mobile telecoms operators; its mobile application management platform, Fuel, is a carrier-class software solution that manages the distribution, accounting and settlement of mobile application and content services. Also opening a Northern European office in London is mobile communications company ProQuent Systems of Marlborough, Massachusetts. ProQuent, which was formerly known as Avian Communications, designs solutions for wireless carriers that enable them to increase revenue from their mobile data services.
Israeli company Schema, based in Herzlia, has opened a European office in Slough, South East England. Schema provides optimisation and planning solutions for wireless carriers worldwide and has developed advanced algorithm technology that allows carriers to realise optimal spectrum efficiency. Computer Access Technology Corporation (CATC) of Santa Clara, California meanwhile has opened a European technical support centre near Heathrow Airport, just outside London. The company provides verification systems and connectivity products for digital communications standards, such as USB, IEEE 1394, Bluetooth and Ethernet. Its products are used by companies in the semiconductor, systems and software industries.
Northern Ireland rolls out business plan for innovation
Invest Northern Ireland, the new inward investment agency for the province, has set itself a series of ambitious targets aimed at promoting business innovation and entrepreneurial activity. An operating plan for the year ahead will provide a framework intended to encourage fresh thinking and innovative ideas but will also provide specific targets designed to enhance the services it offers to businesses operating in the region.
One of the key measures of the plan, unveiled by Invest NI’s chairman Professor Fabian Monds and chief executive Leslie Morrison, is aimed at helping manufacturing companies to boost their business. The programme will allow up to 25 companies each to recruit a full-time business improvement agent, who will identify measures that could be taken to win new business, retain existing customers and improve profit margins through increased efficiency. The scheme, the first of its kind in the UK, is based on a successful trial programme involving three local companies, who between them predicted savings of around $1.5 million over the next two years.
Other measures proposed under the plan include client-serving and sector management teams working to agreed business plans with designated companies; a reorganisation and extension of Invest NI’s office branch network; a venture capital strategy worked out with the Department of Enterprise, Trade and Investment; and a new fund designed to promote research and development.
Regions power ahead with business development plans
Other regions of the UK are also looking to the future. The North East, for example, has announced a three-year plan involving a series of innovative projects, backed by a $957 million funding package recently approved by the Department of Trade and Industry. The way funding in the region is structured has been streamlined to channel money directly to specific schemes in four local sub-regions - Northumberland, Tyne and Wear, County Durham and Tees Valley. The plan is the first to be launched under a new government framework that is designed to measure the economic performance of the UK’s region’s more effectively.
The key themes of local RDA One NorthEast’s plans are learning and skills, innovation and cluster development, promotion and development of productive and profitable businesses, transport, the ICT sector, e-commerce and regeneration. The North East will gain a Regional Centre for Manufacturing Excellence that will be part of the national network aimed at boosting manufacturing expertise; a new North East Science and Industry Council that will establish five centres of business excellence; and further centres of excellence in the process industries, digital technology and media, nanotechnology and photonics, renewables and life sciences. In addition, there will be a new Framework for Regional Employment and Skills Action, a high-profile regional advertising campaign and a new electronic portal (at www.n-e-life.com) that will allow local businesses and residents to access a wide range of services.
Specific development schemes that have already been approved include an Imageering Centre at the University of Teesside that will form part of a centre of excellence for the region’s digital technology and media industries; a new Environmental, Health and Bio Sciences Centre at the Stockton Campus of the University of Durham; development work at Netpark, the North East Technology Park at Sedgefield, County Durham; a New and Renewable Energy Centre at Blyth; and the Last Mile ICT infrastructure project, which will connect more than 100 locations in County Durham via an internet broadband network . The region’s G6 consortium of colleges will also benefit from a $2.25 million project aimed at boosting the quality and provision of IT training. The ICT Networking Project will provide skills training on new computer and network systems, with accreditation provided by US networking specialists Cisco and Microsoft.
In the East Midlands, the Regional Innovation Fund of RDA emda (East Midlands Development Agency) has attracted some $90 million of funding over the past year, from the government and from EU and private sources. The agency is using the money to support business development initiatives in the region, particularly business clusters and incubation strategies. Local success stories to date include the Leicester Design Resource Centre and the proposed Bio-Technology Incubation Centre in Nottingham.
Another new development is a networking centre at Rawdon Business Park, on former colliery land reclaimed by local agencies and the government’s regeneration body, English Partnerships. Located at Moira, near Ashby de la Zouch in Leicestershire, the 31,905 sq ft development will provide 13 modern business units ranging in size from 1,030 sq ft to 3,875 sq ft. The workspaces, aimed at local entrepreneurs and expanding small to medium-sized businesses, will be ready for occupation in October.
In Kent, South East England, another redevelopment of former colliery land will see a new business park created on a 46-acre site at Deal. The Betteshanger Colliery site will be transformed with the aid of a $28.2 million investment under English Partnerships’ National Coalfields Programme and will ultimately house around 235,000 sq ft of business units. The project is expected to create some 670 new jobs, 400 of which are expected to be permanent.
And in Rotherham, South Yorkshire, work is about to begin a new $7.5 million riverside project at Bradmarsh Business Park at Templeborough. The development - to be known as The Point at Bradmarsh - will see the creation of 45,000 sq ft of office accommodation on a 2.8-acre site. Around 19 separate units will be built in two phases and the site will offer easy access to the M1 motorway.
Around the regions
US investment bank Houlihan Lokey Howard and Zukin, based in Los Angeles, has opened a European subsidiary in London. The new company will take responsibility for the bank’s transatlantic business and for its European clients. Houlihan Lokey’s services include mergers and acquisitions, financing, corporate alliances, financial restructuring and merchant banking. It has been ranked among the top 20 M&A advisers in the US for the past ten years and its financial restructuring practice is said to be the largest in the world.
Software solutions company Mantas, of Fairfax, Virginia, has set up an office in High Wycombe, South East England to service the Europe, Middle East and Africa (EMEA) market. The company supplies behaviour detection software for the financial services industry, which is used to combat suspicious trading activity, money laundering and fraud. Its products are also designed to improve internal efficiency and ensure regulatory compliance. Mantas numbers some of the world’s largest financial institutions among its clients.
Westport Innovations, a developer of gaseous fuel systems for diesel engines based in Vancouver, Canada, is to open a European office in London. The new division, known as Westport Europe, will handle all the company’s European operations, including government relations, relations with original equipment manufacturers, marketing and shareholder communications. Westport works closely with engine manufacturers on market and product development.
Another Canadian company, VantagePoint Systems Inc, is to acquire an East Midlands firm, Avalon Printing Software of Leicester. VantagePoint is a developer of business management software for the corrugated packaging industry, while Avalon’s expertise lies in business management software for the folding carton, flexible packaging and label industries. Avalon will henceforward operate as a wholly-owned subsidiary of VantagePoint Systems.
A second Leicester company, Druck Holdings, a leader in advanced silicon sensor technologies for pressure measurement and control, has been acquired by GE Industrial Systems, a division of the Maryland-based General Electric Company. Druck’s product range includes pressure sensors and standards, field calibrators and aviation ground support equipment for the aerospace, defence, marine, gas and petrochemical, power generation, transportation and water industries.
Wigan Borough Partnership, the economic development agency for Wigan in the North West of England, has launched a new website detailing business opportunities and investment information. The site - at www.move2wigan.com - includes an online property search facility that allows potential investors to view hundreds of industrial, retail and commercial premises, ranging in size from 100 sq ft up to 100,000 sq ft. It also provides relevant facts and figures on the borough, such as population and workforce, and gives a flavour of local life with news and features that will be regularly updated.
Another local development agency - Telford in the West Midlands - is offering a commercial property search on the internet. Potential investors can view over 200 properties currently available via the Telford Development Agency’s Property Pilot service, matching their own requirements for industrial, commercial and retail premises and development sites. The property register is part of the TDA website, at www.telford.uk.com.
US company Avexus of San Diego, California, has opened a European office at Guildford in South East England. The company specialises in maintenance, repair and overhaul software solutions for organisations involved in the long-life maintenance of highly-engineered assets, such as aviation companies and the military.
Pharmaspace, a pharmaceutical facilities design and construction company owned by Carlisle Companies of Charlotte, North Carolina, has opened offices in York in Northern England. Pharmaspace specialises in modular buildings for the pharmaceutical industry and supplies fully fitted facilities to companies around the world. It will manufacture units on a second site in York and in the long term plans to add laboratory fitting-out operations to its range of services.
Australian digital production specialist Z Space has opened an office in central London. The company creates images for the broadcast, commercials and titles industries and already has strong ties with the European market.
Danish furniture and kitchen supplier Bodilsen Group has relocated to Leamington Spa in the West Midlands, having outgrown its previous premises, and has taken on an extra 20 new staff. The company, which supplies retail chains such as Ikea, Next and Argos, has taken a 106,000 sq ft facility on the city’s Tachbrook Park, where it plans to increase its production capacity significantly.
Atos Origin, a leading European information technology services provider with headquarters in France and the Netherlands, has acquired the UK and Netherlands branches of KPMG Consulting in a deal worth around $645 million. The acquisition gives Atos a significant presence in the UK’s IT services and consulting market.
Leading Italian software company Finmatica, of Milan, is to acquire the Mercia Group, based in Birmingham in the West Midlands. Finmatica develops application software products for the e-business, finance and security sectors, while Mercia’s speciality is the development of demand and supply chain planning software. The group has 130 employees, with 83 in the UK and the remainder working at subsidiaries in the US and Australia. It has a client base of nearly 200 companies and has carried 300 installations of its products in 40 countries.
Real estate company Hines of Houston, Texas has acquired a significant site in the City of London, the UK capital’s financial district. The company plans to develop a five-storey, 88,000 sq ft speculative office building on the site, together with an adjacent 36,000 sq ft worldwide headquarters building for the vendor, charity organisation the Salvation Army. Hines is one of the largest real estate companies in the world, with 76 offices in the US and 11 in other countries, and assets in excess of $10 billion.
Supermarket chain ASDA, owned by Arizona-based Wal-Mart, is to create 1,250 new jobs in the UK in response to rising sales. The new positions are in addition to 10,000 new jobs already planned for this year. ASDA will be recruiting new drivers and warehouse workers, with 100 new jobs at a new general merchandise distribution centre, which opened in May, and a further 300 at a new clothing distribution base scheduled to open in September. The company, which employs 120,000 people in total, has announced plans to open eight new stores and to extend a further eight over the course of 2002.
Ethan Allen Inc, a manufacturer and retailer of home furnishings based in Danbury, Connecticut, has opened its first European store in Kingston upon Thames in Greater London. The store, one of five planned for Europe, will offer a wide range of goods, including wooden furniture, upholstery, drapes, bed coverings, wall and floor coverings, accessories and lighting, together with a free interior design service.