September, 2004

News

UK economy growing at fastest rate for four years
The UK economy continued to grow strongly in the second quarter of 2004, driven by a stronger manufacturing sector and rising retail sales. According to the Office for National Statistics, GDP grew by 0.9 per cent quarter-on quarter, taking annualised growth to 3.7 per cent, its strongest since the third quarter of 2000. This was in line with forecasts, though robust consumer spending contributed to an unexpected 1.1 per cent rise in retail sales in June. Industrial output grew by 0.9 per cent quarter-on-quarter, its highest increase since the third quarter of 1999; this followed a contraction of 0.5 per cent in the first quarter of the year. The strong performance encouraged the Bank of England to raise interest rates by a further 0.25 per cent in early August, to 4.75 per cent, in a bid to damp down consumer debt levels and soaring house prices.

Manufacturing output dropped sharply in June, by 0.7 per cent from May, which underlines the rather erratic nature of the recovery in the sector. Overall, however, manufacturing is growing at its strongest rate for almost a decade. The Chartered Institute of Purchasing and Supply/Reuters index for manufacturing rose from 55.0 in June to 56.3 in July, its highest level since October 1994. A figure of more than 50 indicates rising activity. Growth was fuelled by a surge in domestic orders and a more modest increase in export demand, although the amount of new business destined for overseas markets went up for the 12th consecutive month. The survey’s output balance rose from 57.9 to 59.5, marking the fastest growth in production since September 1996. Manufacturing employment is also on the upturn in most regions of the UK, reversing or at least stabilising a long-term decline.
 

New home for London Stock Exchange

Its latest home is 10 Paternoster Square, next to St Paul’s Cathedral, where it occupies 140,000 sq ft of a 220,000 sq ft building designed by Eric Parry. The interior follows an open-plan design, and the building includes a Media and Business Complex, which has rooms available for meetings and events and studios used for daily transmissions by leading media organisations, including the BBC, ABC, CNBC, CNN and Sky. The Queen marked the opening by switching on a specially commissioned artwork, entitled The Source, that is intended to reflect the nature of financial markets, and the rise and fall of shares, in the electronic age. This remarkable 3D installation occupies the atrium of the building, and it is hoped it will become a symbol of the Stock Exchange in a similar way to New York’s famous bell.


RDAs report another successful year
New figures published by the Department of Trade and Industry (DTI) show that most of the nine Regional Development Agencies (RDAs) in England met or exceeded their annual performance targets for the financial year 2003/04. Advantage West Midlands, for example, reported that in the past year it had created or safeguarded 15,188 jobs, created or attracted 864 businesses to the region, reclaimed 246 acres of brownfield land, created 23,698 learning opportunities and attracted $51 million in private sector investment to benefit deprived areas.

The East of England Agency reported that it had created or safeguarded 2,909 jobs, created or attracted 450 businesses, reclaimed 80 acres of brownfield land, created 15,532 learning opportunities and attracted $22 million in private sector investment. For the South East England Development Agency (SEEDA), the figures were 4,002 jobs, 451 new businesses, 168 acres of reclaimed land, 14,953 learning opportunities and $67 million in investment. One NorthEast reported 10,538 jobs, 659 new businesses, 488 acres of reclaimed land, 26,225 learning opportunities and $66 million in investment. For the South West of England Development Agency, the totals were 2,265 jobs, 86 new businesses, 133 acres of reclaimed land, 3,842 learning opportunities and $40 million in investment.

Scores for the NorthWest Development Agency were 4,582 jobs, 163 new businesses, 318 acres of reclaimed land, 5,874 learning opportunities and $81 million in investment. Yorkshire Forward achieved 16,544 jobs, 730 new businesses, 353 acres of reclaimed land, 47,795 learning opportunities and $136 million in investment. Finally, East Midlands Development Agency (emda) chalked up 5,387 jobs, 623 new businesses, 378 acres of reclaimed land, 10,652 learning opportunities and $9.5 million in investment.

Overall, inward investment into the UK rose 14 per cent in 2003/04, confirming the country’s position as the top investment destination in Europe. The RDAs, charged with attracting investment and creating jobs, were launched in 1999. The government has announced that it will increase their funding from a total of $3.2 billion to $4.1 billion by 2007/08, and has already granted them greater autonomy in running their budgets and in allocating grants to local businesses.


Pharmaceuticals companies announce expansion plans
Transkaryotic Therapies, Inc, a biopharmaceutical company based in Cambridge, Massachusetts, has chosen the UK as the sole manufacturing location for Dynepo, its gene-activated erythroprotein product, which is used for the treatment of anaemia associated with kidney disease. It will produce the hormone-based drug at the manufacturing facility of Swiss life sciences company Lonza Biologics, in Slough, South East England, and expects to complete the manufacturing and regulatory requirements for a European launch in late 2005 or early 2006.

Pharmaceuticals company Rhodia Pharma Solutions, of France, has completed an $8 million upgrade of one of its four independent production facilities at its manufacturing site in Annan, Scotland. The facility will support the manufacture of a new drug to treat bone cancer, which is currently in clinical trials in the US. The upgrade is part of a three-year site development programme, which is scheduled for completion in 2006 and which is expected to total more than $17.8 million.

Molecular Profiles Ltd, a pharmaceutical consulting company based in Nottingham in the East Midlands, is to relocate to new purpose-built premises, after receiving a Selective Finance for Investment (SFI) grant of $315,000 from RDA East Midlands Development Agency (emda). The company is moving from Nottingham Science Park to Nottingham Business Park, investing $3.6 million in the process and creating 14 new jobs. Molecular Profiles provides research, consultancy and patent support services to pharmaceutical and healthcare companies.

The Research Triangle Institute (RTI), a not-for-profit organisation which provides research for the health industry, has doubled the size of its space at Manchester Science Park in North West England, where it set up its European headquarters four years ago. The company is one of the world’s premier research institutes, employing 2,300 people in 30 countries, and works alongside companies such as GlaxoSmithKline, Astra Zeneca and Pfizer. It plans to double in size again over the next few years, taking advantage of the park’s flexible lease terms, which allow it to take on more accommodation as it grows.

Scientists at the Newcastle Human Embryonic Stem Cell Group, based at the Life Knowledge Park in Newcastle, North East England, have been awarded the first UK licence to carry out stem cell research. The licence promises to help scientists understand how diseases develop and may lead to new treatments for diseases such as diabetes, Alzheimer’s and Parkinson’s. It also confirms North East England’s status as one of the world’s emerging centres for biomedical research. In early 2003 the group become one of the first in the UK to derive human embryonic stem cells from spare IVF embryos. It is now launching a funding appeal to accelerate its research, and is looking for private sector partners to help the UK maintain its lead in this promising field.


Software companies set up shop
In the software sector, Integrity Interactive, a provider of corporate ethics and compliance services based in Waltham, Massachusetts, has opened a European office in London. The company’s web-based compliance programs cover more than 215 topics, including EU competition law, corporate codes of conduct, data protection and records management. It will target financial services companies operating in the UK capital.

A number of other software companies have opened European offices in the capital. They include Pacific Edge Software, based in Bellevue, Washington, a provider of enterprise portfolio management solutions; Contract Management Solutions Inc of Orlando, Florida, which provides contract management solutions to industrial companies worldwide; and Australian security software company The Distillery, whose products are used for national security and law enforcement and to counter terrorism. Pavilion Technologies, a supplier of process control and environmental compliance solutions, has opened an office in Aberdeen, Scotland.

Hewlett-Packard Global Investments BV, a subsidiary of Hewlett-Packard Company of Palo Alto, California, is to acquire IT services company Synstar for around $300 million. Synstar, based in Bracknell, South East England, offers a wide range of IT services, including desktop management, IT risk management strategies and disaster recovery.

Amazon.com, the Seattle-based online retailer, plans to establish a software development centre in Edinburgh, the Scottish capital. The centre is due to open later this year and will recruit up to 40 staff, mainly computer scientists and software engineers. Their task will be to develop new website features to help Amazon customers find anything they wish to buy online, across a variety of technologies and architectures. They will be involved in all aspects of the process, and will own the business and technology side of features developed. Earlier this year, Amazon opened a second UK distribution centre, also in Scotland, creating 300 new jobs.

Allianse, a software integration specialist based in Stavanger, Norway, is setting up a base at the Norwegian Collaboration Centre at the Fabriam Centre in North Tyneside, North East England. The company, which has an annual turnover of $63 million, will use the centre to market its software packages, which are aimed at creating a paperless office. It follows hot on the heels of another Norwegian company, Fronter, which set up an office at the centre earlier in the year to supply virtual learning environment software to schools across England. The Norwegian Collaboration Centre, set up by RDA One NorthEast and the Tyne and Wear Development Company, provides Norwegian technology companies with high-quality office space, broadband infrastructure and business support services. The North East traditionally has strong trading links with Norway, and the centre is located close to both Newcastle Airport and the local ferry terminal to Norway.

A software development company that has captured the UK market with an interactive CD for learner drivers is one of the first ‘graduates’ of Technium Swansea in South Wales. Imagitech Ltd has outgrown its incubator space at the flagship Technium centre, one of a network of centres of excellence for high-tech industries across Wales, and is moving to a larger unit in the adjacent Technium 2. Its interactive product has been the UK market leader for the past three years, averaging more than 95 per cent of the retail market share. Another Technium graduate is new media company S8080, which provides website development, interactive designs for websites and graphic designs for print. It has a diverse client base, ranging from the government cabinet office to Tesco and 20th Century Fox. It too is moving to a larger Technium unit; between them, the two companies employ 16 people, though this is expected to rise over the coming year.

Doncaster, in Yorkshire and Humber, has recently seen the opening of the Digital Knowledge Exchange (DKE), a facility that will provide industry research and training for companies working locally in the digital and creative industries. Live projects will promote best practice in work-based learning, and there will be managed workspace available for business hatcheries and incubators.

Funding support extended for innovation
Secretary of State for Trade and Industry Patricia Hewitt has announced a new $90 million fund to enable research into harnessing wave and tidal stream power as a source of renewable energy. The Marine Research Development Fund will support businesses engaged in innovative research and help them bring their ideas to market. “The UK’s wave and tidal flows are the greatest in Europe and I want to ensure we harness these immense natural resources to generate power,” said Hewitt. “Today’s announcement puts us firmly on the path to becoming the world leader in renewable energy.”

In Scotland, the Proof of Concept scheme, which helps to transfer ideas and inventions from the lab to the market place, has been extended with $13 million of additional funding from the European Regional Development Fund. Proof of Concept Plus will aim to improve the commercialisation potential of projects. The scheme, which is administered by Scottish Enterprise, supports leading-edge technologies in universities, research institutes and NHS trusts.

A new online database for European grants funding launches this month. The GUIDE, or Grant Unification for Information and Dissemination in Europe, site can be found at www.grant.guide.com. It allows users to access European grant information in six countries through a single multilingual source.

Blue-chip engineering companies renew commitment to UK
Tyre manufacturer Michelin is to spend nearly $27 million to develop its plant in Ballymena, Co Antrim in Northern Ireland. Job creation agency Invest NI has provided an SFI grant of $4.9 million towards the development, which will help to protect 1,200 jobs. Michelin has had a presence in Northern Ireland for 35 years, and currently operates the largest truck and bus tyre plant in the UK. It will channel the investment towards 12 different projects, introducing new technology with an emphasis on increasing capability, productivity and efficiency.

Another company deciding to reinvest in its UK facilities rather than switch production to cheaper countries in eastern Europe is Rolls-Royce. The aerospace company plans to invest $81 million to replace its engine repair plant at East Kilbride, in Lanarkshire in Scotland, safeguarding more than 1,000 skilled jobs. The plant was first opened in 1953, to service the RAF during the Korean War. This is the second time Rolls-Royce has made a major decision to remain in Scotland: two years ago it decided to replace its Hillington components factory, built in the 1940s, with a $153 million greenfield plant at Inchinnan, next to Glasgow Airport, securing 900 engineering jobs. Rolls-Royce acknowledged that a $14.4 million regional selective assistance grant from the Scottish Executive had played an important part in its decision to rebuild the East Kilbride facility, which services both military and civil aircraft engines.

The total production of cars in the three months to June, compared with the previous three months rose by 1.5 per cent, according to National Statistics, the government’s statistics service. The seasonally adjusted figures show that production for domestic sales rose by 4.7 per cent over the period, though production allocated for export fell by 1.4 per cent. Compared with the same period a year ago, production fell by 1.1 per cent, again seasonally adjusted. Total commercial vehicle production fell by 6.6 per cent compared with the previous three months, but rose by 12.2 per cent compared with a year ago.

Tentative signs of upturn in office market
The healthy state of the UK economy is starting to make itself felt in a tentative recovery in the office rentals market in central London, according to the latest CORe (Central Offices Research) survey by DTZ Research. Although prime headline rents and inducements have remained unchanged in the City for the past six months (at $81 per sq ft and 36 months), in the West End incentives have fallen while rents have risen to $108 per sq ft, says the company. The amount of space marketed in London increased in the second quarter, from 28.5 million sq ft to 29.9 million sq ft, raising the availability rate from 13.1 per cent to 13.7 per cent. Take-up rose from 2.6 million sq ft in the first quarter to 3.1 million sq ft in the second, while the volume of space under offer increased by almost 200 per cent, a strong indicator of market recovery. Known requirements fell from 7.1 million sq ft to 6.4 million sq ft., and office space under construction in central London totalled 8 million sq ft, 40 per cent of which was speculative.

Outside the capital, says DTZ, availability in the ten major regional office markets rose by 5 per cent in the six-month period to the end of March, to a total of 18.3 million sq ft. Availability declined in four of the featured cities (Belfast, Birmingham, Bristol and Newcastle) while in Edinburgh it remained static. Take-up rose 63 per cent to stand at 4.7 million sq ft, though prime rents stayed generally static during the period and development activity slowed.

Meanwhile, the 2005 revaluation of business rates is forecast to cut bills for up to 60 per cent of companies, although the cuts will be phased in over four years to help the remaining 40 per cent who face a rise. The overall rateable value is to rise by 17.9 per cent, though the total tax take from businesses will remain constant. Retail outlets and businesses in the South and South East are most at risk of a larger bill, but local government minister Nick Raynsford has announced a sliding scale of business rate relief for small businesses that is likely to apply to 360,000 small firms. Figures for individual business rates will be available from 1 October.

Regeneration projects continue apace
Business park development continues at a healthy rate all around the country. In Doncaster, South Yorkshire, for example, a number of schemes are under way. These include the 120-acre Firstpoint Business Park, which has already attracted companies such as B&Q and Harley-Davidson, and has 30,000 sq ft of speculative office space available; and Phase Two of West Moor Park, with an additional 56,000 sq ft that takes the park’s total capacity up to 2 million sq ft. Doncaster’s central location and proximity to main motorways makes it a popular site for distribution companies, and planning permission has recently been secured for a 655,000 sq ft distribution building at the 200-acre Redhouse Interchange site off the A1(M).

Lidget Lane, Barnsley, Yorkshire

At nearby Barnsley, a major new development offering 35,000 sq ft of industrial space is under way. Park Springs will feature two units of 10,000 sq ft, one of which can be split into units of 5,000 sq ft, and a third unit of 15,000 sq ft. Also in Barnsley, local company Lidget Concrete is to build two industrial units of 6,000 sq ft at Lidget Lane Industrial Estate. In Rotherham, ambitious plans have been put forward for a $180 million development in the Manvers regeneration area. The 280-acre development includes an 11-acre business park, together with housing, shops and leisure facilities, and could create up to 1,500 new jobs.

The Northwest RDA has awarded a $9 million grant to the Unity Project, a key part of the regeneration of Liverpool’s central business district. The project consists of two elements: a 16-story tower providing 150,000 sq ft of office space with 9,000 sq ft of ground-floor retail space, and a 27-storey residential apartment tower. Also in Liverpool, a new industrial and office scheme is to be built at Stonebridge Park. Work will begin on the 52-acre site in the autumn, with completion set for 2006. At Chorley in Lancashire, a 100-acre development site is planned at Buckshaw Village, on derelict former industrial land. The development promises to create more than 1 million sq ft of new factory and office space, as well as housing, and could generate up to 2,500 new jobs.

In the North East, Prime Minister Tony Blair has opened the first building on NetPark, a new technology park designed to act as a hub for the growth of the region’s knowledge economy. The 24,000 sq ft NetPark Research Institute has been leased to Durham University, which will use it for two major research projects – one seeking to improve the quality of astronomical observation and the other using e-science to boost innovation in manufacturing and business. In the South West, Swindon’s 2.5-acre former bus depot has been acquired to serve as the site of a major new development. The Exchange will form a new town centre commercial district, including offices, shops, housing and leisure facilities.

National policy envisaged for ports planning
The Department for Transport looks set to break with its current policy and introduce a national government-led strategy for planning decisions on new port developments, which are currently handled on a case-by-case basis. This comes at a time when container traffic across Europe is forecast to grow by 8 per cent this year, but volumes at key ports in the UK have been falling due to capacity constraints. It is generally agreed that the UK requires more port capacity, but the question of where to build has often been hampered by environmental issues. No new national strategy is likely to be introduced before autumn next year, however, and decisions on proposed new container ports at London Gateway on the Thames, Bathside Bay near Harwich in Essex, and Felixstowe in Suffolk will be made under the existing system.

The operator of Britain’s first toll motorway, the M6 Toll, which runs for 27 miles in the West Midlands, has given into pressure from hauliers and business organisations and cut its toll charge for trucks from $18 to $11 until the end of the year. Midland Expressway, a subsidiary of Macquarie Infrastructure of Australia, made the move after haulage companies boycotted the road in protest at what they claimed were unreasonably high tolls. However, the company has gone ahead with plans to raise the toll for passenger cars from $3.60 to $5.40.

Ryanair, the low-cost airline headquartered in Dublin in the Republic of Ireland, is to invest $240 million to expand its UK base at Luton Airport, in eastern England. The company plans to purchase four new aircraft and to serve nine new European destinations from Luton. It says the expansion will create up to 1,000 new jobs in the Luton area.

Britons are mostly happy in their work
Most people in the UK are happy in their jobs, according to a new report from independent research organisation The Work Foundation. Its survey of 1,000 people of working age found that two-thirds were either satisfied or very satisfied with their jobs and felt they had achieved their goals, and more than three-quarters said they were happy with their lives. However, the report, Joy of Work?, also found that 15 per cent of the working population, or 4 million people, were dissatisfied, and estimated that there are 400,000 ‘wage slaves’ who work the longest hours for less than $29,000 a year.

Half of those surveyed said they were happy with their pay and 60 per cent with the hours they worked. Pay was generally less important to people than the nature of the job and fulfilling personal ambitions. More than 42 per cent of people believed their most important relationships were at work. More than two million people are thought to be ‘workophiles’ , preferring work to home, although more than a third of the UK workforce are looking around for a new job, particularly those in the younger age groups. Despite the relatively high satisfaction levels, 61 per cent of people wanted to work fewer hours. One in five of those earning $108,000 a year works more than 60 hours a week. About a fifth of respondents were working flexible hours, but nearly a quarter plan to in the future. “On the whole, work works,” said Nick Isles, author of the report.

Around the Regions
Clarity Visual Systems Inc, a provider of digital visual messaging solutions based in Wilsonville, Oregon, has opened a European sales office in London. The company creates high-resolution display systems, working with customers to address issues such as hardware and software integration, content development, system installation and support and service. It was founded in 1995 and its products are already in use of thousands of locations worldwide, including restaurants, financial services companies, arena and conference facilities, transport centres, events and large corporate facilities. Customers to date include the Australian Stock Exchange, Beijing International Airport, General Motors and the US Postal Service.

MarketResearch.com, an online aggregator of global business intelligence based in Rockville, Maryland, has opened its first European office in London. The office will be managed by European business development and marketing agency PowerInfo Ltd, and will support MarketResearch.com’s European customers with answers to report questions, customer service enquiries and unbiased report recommendations. MarketResearch.com continuously updates research from more than 350 of the leading research firms and consultancies worldwide.

Taral Networks, based in Lexington, Massachusetts, has acquired Schlumberger Messaging Solutions (MSG), a UK-based supplier of messaging infrastructure for mobile telecoms operators. The two companies will be integrated into a new entity called airwide solutions, which will combine Taral’s content delivery products with MSG’s SMS products, and will provide messaging solutions globally. The new company will be headquartered in Reading, South East England and will have 200 employees worldwide.

The National Metals Technology Centre (NAMTEC), in North Lincolnshire, Yorkshire and Humber, has added a powerful new search tool to its website (www.namtec.co.uk) that enables users to search over 10,000 pages of metals-related pages in a single search. Bringing together databases from the British Stainless Steel Association, the Copper Development Association and the National Physical Laboratory, among others, the search engine provides immediate access to information on metals properties, good practice guides, research papers, journal articles and legal and commercial information.

Also in North Lincolnshire, Anglo-Dutch steel giant Corus has announced a $25 million investment aimed at making Scunthorpe Rod Mill the best in the world. The money will be spent over the next 18 months to develop a world-class finishing and distribution facility, the only one of its kind in Europe. The Scunthorpe facility, which employs 265 people, last year broke a series of production records.

Computer Sciences Corporation, an IT services company based in El Segundo, California, has opened at office at Kings Business Park in Knowsley, Merseyside in North West England. CSC has won a ten-year contract with the UK National Health Service to help improve patient care in the North West and West Midlands regions of England. It will lead an alliance of organisations to design and operate an integrated electronic patient care record system, which will provide individual lifelong records to promote seamless care through physicians, hospitals and community services. The office will initially create 100 new jobs.

Freight forwarder SEKO Worldwide of the US has opened its third office in the UK in three months. The new facility, in Bristol, South West England, will provide a range of freight forwarding services across the South West and South Wales. Founded in 1976, SEKO currently has more than 50 offices on North America, Puerto Rico and the UK, and a network of more than 350 agents worldwide.

Arla Foods of Denmark is to open a new dairy early in 2005 in Lockerbie, Dumfriesshire in Scotland. The facility will be a joint venture with its strategic alliance partner Milk Link, and will be an expansion of Milk Link’s existing cheese factory. It will employ around 100 people and will be capable of processing around 150 million litres of fresh milk a year.

Ritchie Engineering, a Bloomington, Minnesota-based manufacturer of hoses and service tools for the heating, ventilation, air-conditioning and refrigeration industries, has opened a European distribution centre in Perth, Scotland. The centre will handle stocks, order processing, shipping and the return and repair of items for UK and European customers in more than 30 countries.

The Manchester, North West England call centre of car rental group Avis has been named the Best Overall Call Centre Workplace in the UK and Best North West Call Centre Workplace, in the annual Mitial International awards. The centre, based at Salford Quays, was launched in 2000 and now employs more than 230 people. It handles car rental reservations and support services for the UK, Germany, Switzerland and Austria. Avis Group, affiliated with Cendant Corporation of the US, owns the Avis and Budget brands and operates via a global network of 3,100 locations in 107 countries.

Danish telecoms operator TDC has signed an agreement with London-based easyGroup, the holding company of the UK budget airline easyJet, to launch a low-cost mobile phone service in the UK. The agreement will also cover 11 other European countries, and TDC will consider launching into these markets on the basis of its experience in the UK.

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