February 2010

NEWS

Positive indications for 2010 as UK emerges from recession
The UK officially emerged from recession in January, recording a growth rate of 0.1 per cent for the final quarter of 2009, according to the Office for National Statistics (ONS). Both the production and service sectors grew by 0.1 per cent during the quarter, following a record fall in GDP of 4.8 per cent for the whole of 2009. Although weaker than expected, the upturn marked the end of the longest recession since quarterly figures were first recorded in 1955. The economy had previously contracted for six consecutive quarters, and the UK was the last major economy to remain in recession. There have been several signs of recovery recently, including a fall in unemployment in December for the first time in 18 months. Observers also believed that recovery was boosted by the Government’s car scrappage scheme, although the reversion of the VAT rate from 15 per cent to 17.5 per cent on 1 January was likely to have a dampening effect.

Bank of England statistics show that lending to homebuyers and businesses also picked up in late 2009. The number of mortgage loans rose to 60,518 in November, continuing a trend evident in the latter half of the year. Lending to private, non-financial companies rose by $3.2 billion, or 0.4 per cent, after falling in each of the two previous months. The Bank’s monetary policy committee had previously expressed concern about the availability of credit to businesses, particularly to small to medium-sized enterprises (SMEs), fearing that this could stall recovery. In another positive sign, a key survey of the manufacturing sector registered its strongest reading in more than two years. The CIPS survey of purchasing managers in the manufacturing sector reached a 25-month high of 54.1 in December, up sharply from the 51.8 reading in November. The fourth quarter of 2009 was the highest since the final quarter of 2007. The data added to a picture of a recovery taking hold towards the end of last year, which many economists expect to continue into 2010.

Investment bank Goldman Sachs has predicted that the UK will experience stronger growth than any other major economy in 2010, with a significantly stronger than expected recovery in the coming years. The rebound will be due largely to the sharp fall in sterling, which over the course of the financial crisis has depreciated by 25 per cent. This will increase demand for British exports and boost inward foreign investment, according to Goldman. The bank’s forecast is also based on hopes that the financial sector will recover sufficiently to finance an increase in companies’ investment spending, which last year fell to its lowest level since the 1930s.

Jim O’Neill, chief economist at Goldman Sachs, said at the bank’s annual investment conference that he expected the UK economy to expand by 3.4 per cent in the coming year, compared with growth of 2.4 per cent in the US and just 1.9 per cent in the eurozone. The forecast will increase expectations that the Bank of England will soon increase interest rates from their current low of 0.5 per cent. In further evidence of the potential strength of Britain’s recovery, the Organisation for Economic Co-operation and Development (OECD)’s leading indicator – a key bellwether for economic growth – is currently at a level of 105.7, its highest point since 1972.


Government builds on UK’s strengths to drive future growth
Anticipating a rapid economic recovery, the Government has outlined a new strategy that aims to capitalise on the UK’s existing economic strengths. Going for Growth: Our Future Prosperity builds on the strategic approach set out by ministers in 2009 in the New Industry, New Jobs blueprint. This strategy envisaged government operating intelligently alongside business and markets to strengthen the policies and foundations of the UK’s industrial competitiveness. To prosper, believes the Government, the UK needs to ensure that policies and investment in skills, infrastructure, innovation and finance for business reinforce the fundamentals of the country’s competitiveness. Government must use its role and influence as both regulator and customer to much better effect, and government action must be targeted on those sectors and markets where it can make the most difference.

Seven core capabilities underpin the Government’s drive to restore strong, sustainable, long-term growth, based on a modern approach to industrial policy and public investment in business support, infrastructure, workforce skills and science and research. These include supporting enterprise and entrepreneurial activity, including access to finance for starting and growing firms, and fostering knowledge creation and its application. Equally important are helping people to develop the skills and capabilities needed to find work and to build businesses and industries. Alongside this are investing in infrastructure to support a modern low-carbon economy, and ensuring open and competitive markets to drive innovation and productivity. The Government intends to build on industrial strengths where the UK has a particular expertise or might gain a comparative advantage, and where its action can have an impact. Finally, it points to the importance of employing a strategic role for Government in markets that will allow the nation to capitalise on new opportunities.

In another Government initiative, the first three Engineering and Physical Sciences Research Council (EPSRC) centres to be funded under a new $112 million investment will be based at Southampton, Loughborough and Brunel (London) universities. The manufacturing research centres will aim to help UK businesses develop new technology products and underpin manufacturing growth, with universities and businesses working together to commercialise academic research. Efforts will be focused on the fields of photonics at Southampton, regenerative medicine at Loughborough and liquid metals at Brunel. Professor David Delpy, chief executive of the EPSRC, the UK’s largest government funding agency for engineering and physical sciences research and postgraduate skills, said: “EPSRC’s new manufacturing centres will focus on areas of pioneering research that have the potential to create new industries and new jobs for the UK.”

New research centres will focus on the fields of photonics at Southampton, regenerative medicine at Loughborough and liquid metals at Brunel. Pictures courtesy of Sandia National Laboratories, Zephyr, Mehau Kulyk / Science Photo Library.

The EPSRC Centre for Innovative Manufacturing in Photonics at the University of Southampton will work with industry to develop the next generation of optical fibre materials and technology platforms, train engineers and fuel growth in photonics-related manufacturing. The Regenerative Medicine Centre at Loughborough will carry out world-leading research, test and implement ideas in clinical and industrial settings, create next-generation platforms for manufacturing regenerative medicines and inform business models, policy and public debate. Nottingham and Keele will be partner universities. The Liquid Metal Engineering Centre at Brunel will work with industrial partners to develop innovative technologies for the re-use and recycling of metal, with Oxford and Birmingham as partner universities. Each centre will receive five years funding to retain staff, develop collaborations, carry out feasibility studies and support up to two research projects.

In a separate initiative, the Government is to invest $1.6 billion to upgrade the UK’s digital infrastructure to bring super-fast broadband to 90 per cent of the country, including rural communities and currently hard-to-reach areas. According to Business Secretary Lord Mandelson, the investment is essential if the UK is to remain globally competitive, as estimates suggest that private investment will only reach up to 70 per cent of the population by 2017. The money will be provided via the ‘Next Generation Fund’, which is intended to provide the UK with a world-class communications network to bolster innovation and services in digital content. Among the fund’s objectives are to support economic growth by incentivising market investment in communications infrastructure and to maximise links with the Government’s Universal Service Commitment – a parallel broadband investment programme to ensure that every community has access to a 2Mbps broadband connection by 2012.

Launching a consultation on the process, Lord Mandelson said: “This investment is about bringing the future of broadband to areas of the country that would otherwise miss out. We cannot underestimate the opportunities this will bring for homes and businesses.” Among these benefits, the consultation paper lists teleworking, which can use two-way video conferencing to facilitate working from home; telemedicine, which can provide real-time interaction between doctors and patients so that consultations can be carried out online; and cloud computing, which enables businesses to use the internet to store and access software and data and share resources. Faster upload and download speeds and greater reliability and consistency will lead to higher productivity and increased innovation, said Lord Mandelson. As announced in December’s Pre-Budget Report and the Digital Britain White Paper, the Next Generation Fund will be raised through a monthly duty of 50p (80c) on all fixed telephone lines.
 

Another record year for the LSE despite economic downturn

A record $132 billion was raised through equity issues on the London Stock Exchange (LSE) in 2009, an increase of 16 per cent on the total for 2008, itself a record year. Despite difficult market conditions, the LSE saw a total of 69 new issues, including 18 IPOs, and a significant number of further issues, totalling $129 billion. Highlights included Tata Steel’s $500 million issue in July, the largest ever Indian offering in London, while in the same month RusHydro, the world’s largest publicly traded hydro generation company, joined the main market. Over $80 billion was raised through rights issues from a broad range of companies, among them Royal Bank of Scotland, HSBC and Lloyds Banking Group, which raised $21.6 billion in November, in the world’s largest ever rights issue.

Centamin Egypt moved from the LSE’s second board, the Alternative Investment Market (AIM) to the main market in November, having grown from a market capitalisation of $34.4 million on admission to AIM in 2001 to over $1.6 billion. The largest AIM IPO of the year was Max Property Group, which floated in May, raising $352 million. Tracey Pierce, head of equity primary markets at the LSE, said: “Although there can be no certainty regarding the timing of new issues, our pipeline of new companies looking to float in 2010 is promising, with firms from a broad range of countries and sectors keen to benefit from the liquidity and profile that a listing in London offers.”

Among those reportedly keen for a London listing are a group of Russian oligarchs who are preparing for multi-billion dollar flotations. Sergey Popov and Andrey Melnichenko, the owners of Suek, Russia’s biggest coal producer, are reported to have appointed banking advisers for a stock market listing in London and Moscow that could see the business valued at up to $9 billion. ProfMedia, one of Russia’s biggest media groups, controlled by the magnate Vladimir Potanin, is seeking a London listing that could achieve a market value of up to $2 billion. Both listings are expected to take place in the second half of the year. Bankers see the return of large Russian companies to the London as an indication that the City remains attractive as an international financial centre for Russia’s business people, after it recently missed out to Hong Kong on the flotation of Oleg Deripaska’s aluminium company Rusal.

In another sign of confidence, Earth Capital Partners (ECP), a London-based green investment firm that is aiming to create a $1 billion renewable energy fund, has reached its first round fund-raising target and is hoping to achieve its total goal by November. ECP plans to invest in solar, biogas and biomass projects in Europe, the Middle East and North Africa. Another company, New Jersey-based Hudson Clean Energy Partners (HCEP), which also has an office in London, has recently reached its own goal of raising $1 billion for a clean energy investment fund. Like ECP, HCEP has a focus on solar technology, but is also looking to invest in wind energy. The clean technology sector is currently looking a good investment bet, having recently overtaken biotechnology and IT as the number one venture capital investment category worldwide. Solar technology was the leading sector within the category.


City of London tipped for further expansion over next decade
One of London’s leading hedge funds is confident that the City will thrive over the next decade by becoming the natural Western hub for emerging market growth. Toscafund is convinced that the growth of Brazil, Russia, India and China – the so-called BRIC nations – can only work to London’s advantage. “There are too many aspirational economies that don’t have infrastructures of their own. We have an affinity with India, with the Gulf, even with China, via Hong Kong. These markets will want a western hub,” said Savvas Savouri, chief economist at Tosca. Savouri predicted that London will attract at least 100,000 new financial services jobs over the next ten years, and continued “For those concerned that tax and regulation will deflect new arrivals from London, we say this: taxes are rising and regulation is being tightened elsewhere too.”

London is also establishing itself as the leading western hub for Islamic finance. It is now the third biggest market behind the Middle East and Malaysia. Outside the Muslim world it is comfortably ahead of rivals, with the most expert bankers, the most advanced regulation and a government that remains committed to the sector. The UK is the only country in the European Union to have Islamic banks. It has five in total, despite a much smaller Muslim population than other European counties – two million compared with seven million in France and four million in Germany.

The Islamic market is seen in the UK as a good business opportunity that adds diversity to a mature financial sector. More money flows through London via commodity murabaha – one of the most widely used Islamic financial instruments, comparable to interbank short-term lending and syndicated loans – than any other centre. The City has established the first secondary market in sukuk outside the Islamic world, and an increasing number of Islamic investors are seeking to buy property and assets in the UK in a sharia-compliant way.

As well as the expertise of the five Islamic banks, all the leading conventional banks in the City have so-called Islamic windows, offering a range of products, including commodity- and equity-linked securities, and expertise on syndicating sukuk. London is also by far the most advanced western market for retail services, with a range of Islamic banking products from mortgages to car loans already on offer. The UK has the only Islamic mortgage market in Europe which, although still small, is growing strongly.

Closer to home, the first start-up retail bank has been launched in the UK for more than 100 years. British businessman Anthony Thomson and US banker Vernon Hill are the main architects of Metro Bank, which is aiming to challenge the industry’s big financial institutions. Metro planned to open two branches in London in January, at Holborn and Kensington, while awaiting approval from the Financial Services Authority (FSA). It plans to open 10 more branches – or “stores” – within two years and 220 within the next ten years.

The new bank is based on a US-style ethos that prioritises customer service over pricing; branches will be open seven days a week for longer hours than most rivals. Metro will offer a range of products for individuals and business customers, but will adopt a cautious approach to lending, with an emphasis on retail deposits. Its loan-to-deposit ratio is likely to be around 50 per cent, far below that of other banks. The FSA is currently considering a number of applications from prospective banks, including Virgin and financial analyst Panmure Gordon, which wants to set up a bank targeting business customers and rich individuals.


Touchdown scheme supports SME investment in London
London is still a top attraction for overseas investors, especially small and medium-sized enterprises (SMEs). According to Think London, the capital’s foreign direct investment agency, SMEs accounted for 70 per cent of all new inward investment in 2009. The number of overseas SMEs expanding their operations in the city was in part facilitated by the agency’s ‘Touchdown London’ service, offered in conjunction with serviced office provider Avanta. Touchdown London provides overseas companies with free office space and facilities for up to 12 months, along with the use of a dedicated advisor to support them through the process of establishing a presence in the UK capital.

More than 35 new overseas businesses benefited from Touchdown London in 2009. In a sample survey, firms indicated ‘cutting the time to market’ and ‘reducing the cost of initial market entry’ as being two of the most important factors in their decision to try the Touchdown London initiative. The survey also showed that eight out of ten companies were fully operational in London less than two weeks after signing up. Many claimed that as a result of the scheme they had saved between one and three months of executive time that otherwise would have been spent looking for suitable office accommodation.

Companies moving to London recently with the help of Touchdown include Aspire Systems, an India-headquartered software company and USB Models, a marketing company based in Spain. Aspire Systems opened its London base in one of Touchdown London’s Avanta offices in summer 2009. By the end of the year, it had acquired two major clients. “We expect our London office to grow into our European HQ over time. We also project that 30-50 per cent of the company’s overall revenue will come from Europe,” said Prem Sundaravadanam, the company’s regional director (UK).

USB Models was trading from Touchdown London offices in the City of London just five months after it began discussions to set up in the UK. Plans to use London as a global hub were quickly realised: international trade fairs garnered major interest across Europe, the Middle East, Pakistan and India. The company is now on track to meet its target of 80 new clients by the end of 2010. “We wanted to expand internationally and London was the first city that we looked at. It’s the capital of business in Europe so we just had to be here,” said Óscar Calzado, the company’s export manager. “We plan to become an international company from London. Spain will run national operations and London will run everything else. From here it’s easy to attend important trade fairs across Europe and the Middle East, for example. London is a huge market for us. We want to approach companies with substantial marketing budgets and every big company in the world is set up here. It’s also easier to set up in London than in the US.”

London also remains the most popular destination for jobseekers worldwide, ahead of New York and Sydney, but will face growing competition as competition for the most talented staff intensifies, according to a survey of 66,000 employees from 40 countries commissioned by recruitment website totaljobs.com. Twenty-two per cent opted for London, compared with 16 per cent for New York and 12 per cent for Sydney. The most popular country was the US, cited by 52 per cent, followed by the UK with 47 per cent and Canada with 43 per cent. According to the survey, the top ten destinations for jobseekers worldwide were London, New York, Sydney, Paris, Dubai, Singapore, Los Angeles, Melbourne, Mexico City and Miami. After London, Manchester was the UK’s second most popular city for global jobseekers, with Aberdeen, Birmingham, Bristol, Edinburgh, Glasgow, Oxford and Liverpool also mentioned. The UK was one of only four countries to have nine or more cities mentioned, along with the US, which had 16, and Canada and Germany, also with nine.
 

UK a world leader in scientific research and innovation
The fifth annual Science and Innovation Investment Framework 2004-2014 report for 2009, published by the Department for Business, Innovations and Skills (BIS) paints a picture of sustained growth and achievements that have helped the UK to remain a research world leader and emerge as a powerhouse for innovation. The UK remains second only to the US in worldwide scientific excellence, despite increasing competition from other countries, according to the report. It is also the most efficient and productive nation for research in the G8. In particular, knowledge transfer and commercialisation activities from the science base have been firmly established across the university sector and within Research Councils, and the numbers of spin-out companies remain high. Also, the UK’s strengths in the services and creative industries – where innovation is less likely to be picked up in indicators such as R&D – mean that overall the country’s innovation performance is actually under-stated.

UK researchers remain amongst the most efficient and productive in the world, said the report, with the UK being second only to the USA in terms of citations and highly cited papers. China has overtaken the UK in terms of total publication output but has a 6 per cent world share of citations, compared with the UK’s 12 per cent. The 2008 Research Assessment Exercise (RAE) showed that 17 per cent of the research carried out by the UK was classed as being of world quality and 37 per cent internationally excellent. The Government will be spending nearly $9.6 billion per annum on science and research by the end of the current Spending Review period in 2010/11. Nearly $6.4 billion is provided by the Science and Research Budget and nearly $3.2 billion will reach Higher Education Institutions (HEIs) through the Higher Education Funding Council’s quality-related funding streams.

Business expenditure on R&D grew in real terms from $24 billion in 2006 to $25.8 billion in 2007 (the latest year for which figures are available). However, it continues to remain relatively static as a percentage of GDP at 1.1 per cent. Increasing this remains one of the most difficult challenges of the ten-year framework, the report stated.

Another report, by investment-led think tank the Legatum Institute, ranks the UK second only to the USA for entrepreneurship and innovation. Legatum, which ranks 104 nations on a Prosperity Index of business and social measures, put the UK ahead of rivals such as Canada, Sweden and the Netherlands and noted that year-on-year the country is attracting millions of dollars in foreign investment, with scores of would-be entrepreneurs aiming to take advantage of UK expertise and business potential. For example, around 100 media firms have chose the UK as a base in the past five years. Other experts agreed that the UK has a world-class reputation for attracting brains and entrepreneurship. Jean-Christophe Dumont, a migration expert at the Organization for Economic Cooperation and Development (OECD), noted that the UK is now well placed in Europe on a number of indexes measuring factors such as taxes, bureaucracy, the dynamics of internal markets and how they are connected on the world stage, and the ability to access a qualified work force.


Technology initiatives lead to sector breakthroughs
Britain’s status as a leader in space technology is to be reinforced by the creation of a dedicated space agency. The new agency (as yet unnamed) will bring together the British National Space Centre (BNSC), six Government departments, two research councils, the Technology Strategy Board and the Meteorological Office. According to Science and Innovation Minister Lord Drayson, the UK is second only to the US in terms of global space science. The sector has grown by 9 per cent a year in real terms since 1999/2000, three times faster than the economy as a whole. It now contributes $10.4 billion a year to the UK economy and supports 68,000 jobs. The minister commented: “The new agency will ensure that the UK fully exploits its competitive advantage in satellites, robotics and related technologies.”

In other news, companies in Italy, France, Germany and the UK are to share over $1.4 billion from the European Commission to develop a European competitor to the Global Positioning System (GPS), the satellite navigation system developed by the US military. Contracts for the European Global Navigation Satellite System – known as Galileo – include nearly $339.2 million for UK satellite manufacturer SSTL, based in Surrey, South East England. SSTL will be part of a consortium working in partnership with OHB System AG of Germany to build 14 satellites. The Galileo satellite network project, which aims to provide a European civilian rival to GPS, was started in the mid-1990s and is due to be completed by 2013.

Lord Drayson said: “This is great news for SSTL and the British space industry. The UK is fast becoming a worldwide destination for high-tech, high-skilled advanced manufacturing. … It is these high-tech sectors which are bucking the trend during the recession, creating jobs and stimulating economic growth. Looking ahead, our space industry is forecast to grow on average by about 5 per cent a year until 2020.” Meanwhile, the BNSC’s Space Exploration Review has highlighted opportunities provided by future Moon and Mars missions, including the development of advanced robots and launch vehicles.

A robot created by scientists in Wales has been named by Time magazine as one of 2009’s most significant discoveries. The magazine listed Adam, the first robot in the world to make a scientific discovery without human intervention, as the fourth most important development of last year, ahead of the discovery of water on the moon and the progress made at the large hadron collider in Switzerland. Adam, developed by Professor Ross King of the Department of Computer Science at Aberystwyth University, independently discovered how yeast converts sugar into the amino acid lysine to produce the protein in bread. His team of 11 researchers chose yeast because it replicates many of the reactions within human cells. Time said of Adam: “By any standard, it was an elementary discovery: the identification of the role of about a dozen genes in a yeast cell. But what made this finding a major breakthrough was the unlikely form of the scientist: a robot.”

Adam is a prototype but Professor King believes that his next robot, Eve, could help scientists find a drug to combat malaria, and that eventually future models could lead to breakthroughs in treatment for cancer and heart disease. He said: “Because biological organisms are so complex it is important that the details of biological experiments are recorded in great detail. This is difficult and irksome for human scientists, but easy for robot scientists. Ultimately, we hope to have teams of human and robot scientists working together in laboratories.” The university’s work was funded by the Biotechnology and Biological Sciences Research Council (BBSRC) and the Higher Education Funding Council for Wales, among others.

In another technological breakthrough, UK researchers have developed a revolutionary traffic system that allows cars to ‘drive themselves’. The Sartre (Safe Road Trains for the Environment) pilot scheme, co-ordinated by automotive engineering company Ricardo UK, based in Shoreham-by-Sea in Sussex, South East England, uses innovative navigation systems to form ‘road train’ convoys that are guided by a lead vehicle, such as a bus or taxi. The system, which offers similar benefits to cruise control functions already available in most cars, has been designed to increase road safety while reducing the environmental impact of motorway driving by ‘pooling’ groups of cars together. A large group of vehicles travelling at similar speeds creates a slipstream of ‘clean’ air that reduces the impact of drag on each car, saving fuel over long distances.

Tom Robinson of Ricardo UK said: “The Sartre project brings together a unique mix of technologies, skills and expertise from UK and European industry and academia. [It] aims to realise the potentially very significant safety and environmental benefits of road trains without the need to invest in changes to road infrastructure.” If the initial pilot scheme proves successful, the system could be rolled out across Europe within 10 years.

Welsh company LOMOX Ltd is working on a new organic light emitting diode (LED) technology which, it claims, could revolutionise lighting for homes, businesses and roads. The company has received $726,000 from the Carbon Trust to develop the technology, which uses an electrical current to stimulate chemicals to produce light. Organic LED (OLED) technology can be coated into a thin flexible film to cover walls like wallpaper, but can also be used for flatscreen televisions, computers and mobile phones. Other uses for OLED, which has an operating voltage of just 3-5 volts; include outdoor applications such as lighting road signs. It can be powered by solar or battery power. The technology is expected to be around 2.5 times more efficient than current energy-saving light bulbs, and may be rolled out as soon as 2012. The chief executive of LOMOX, Ken Lacey, said of the technology: “You can put it anywhere. You can paint it on a wall or wallpaper. The light is a very natural, sunlight-type of lighting with the full colour range.”

UK remains at the forefront of bioscience innovation
A new Government report produced from the Bioscience and Health Technology Database highlights the unprecedented investment opportunities offered by the UK in the biotechnology industry, with over 777 registered medical biotechnology companies accounting for 30 per cent of the sector’s annual European turnover of $6.7 billion. The government database, launched in December by Science and Innovation Minister Lord Drayson, showcases the talents of the UK life science industry to overseas investors. The head of the BioIndustry Association, Clive Dix, praised the development of the database but urged further research into the role that SMEs currently play in the sector.

Meanwhile a team from the University of Cambridge has won the Grand Prize at the iGEM2009 Synthetic Biology competition finals, held at the Massachusetts Institute of Technology (MIT) in the US. iGEM is the International Genetically Engineered Machines competition, the central event in the field of synthetic biology, and is held annually in Cambridge, Massachusetts. Synthetic biology brings together biology and engineering, applying engineering principles to biology. The Cambridge, UK team emerged victorious from among 112 teams from top universities all over the world competing to show off their summer projects. The team, which included two engineering students, provided a description of its work engineering DNA devices for transcriptional tuning and pigment production in environmental biosensors. As well as winning the overall prize for best project, the Cambridge team was awarded a gold medal and a trophy for the best project in the Environment Track.

Also in Eastern England, a new programme will allow UK researchers to engage with the sequencing and bioinformatics facilities at the Genome Analysis Centre (TGAC) in Norwich. The early-access programme, launched through the Centre’s Capacity and Capability Challenge (CCC), will run for 12-18 months from January 2010. It will offer a series of pilot studies that address not only biological research problems but also technical challenges to sequencing and associated informatics. Collaborative proposals involving academic and industrial partners are welcome under the CCC, as are links to established sequencing and bioinformatics centres worldwide. TGAC is a UK resource for the large-scale sequencing of plants, animals and microbes, established in Norwich by the Biotechnology and Biological Sciences Research Council (BBSRC) and a number of regional economic development partners and representing an investment in capital infrastructure of $21.6 million.

The Government has also announced $4.8 million of grants to support the offshore wind supply chain. The Department of Energy and Climate Change and the Department of Business, Innovation and Skills will split the funding between two companies: Burntisland Fabrications Ltd (BiFab) and Tees Alliance Group Ltd (TAG). BiFab aims to set up a manufacturing facility at the Energy Park in Fife, Scotland to make parts for offshore turbines, creating an additional 300 jobs. It will manufacture jacket sub-structures for the offshore wind sector, aiming to become a key European provider for such structures for water depths from 12 to 80 metres. TAG will develop a production facility at its Haverton Hill Facility in Teesside, North East England, creating up to 200 jobs. The company is developing a world-class automated tubular production facility for the rolling and welding of large diameter tubulars and the construction of foundations, such as monopiles, tripods, jackets and transition pieces.

It is anticipated that the Crown Estate’s licensing decision will spark a development programme comparable to the opening up of the North Sea to oil and gas production in the 1970s and 1980s, and it was welcomed by both Prime Minister Gordon Brown and Environment Secretary Ed Miliband. However, the Carbon Trust, an independent company set up by the government to promote cuts in greenhouse gas emissions, has warned that there are still big challenges to be overcome in terms of technology and financing. Offshore wind is still a new technology, and the new areas allocated will be more challenging than any previously developed on a commercial scale, it said. Seventy per cent of the wind farms built under the Round Three licences will be in water depths of 30 metres or more, whereas most of the UK’s existing turbines are in water 20 metres deep or less. The new turbines will be positioned up to 205km off the coast, compared with 25km currently, and are likely to be much bigger. Onshore turbines have a typical maximum capacity of 2MW, but the new offshore models will generate 5MW. The distance from the shore will also make them more difficult to install and service.

However, such difficulties did not deter energy suppliers such as Centrica of the UK, Eon and RWE of Germany and Iberdrola of Spain from bidding for licences in Round Three, alongside companies such as Vattenfall of Sweden, Dong of Denmark and EDP of Portugal. A consortium including Npower and Statkraft of Norway won the licence for the biggest zone, in Dogger Bank, located in the North Sea off the east coast of England, which has the potential to produce 9GW of energy. The second largest zone, with a potential energy yield of 7.2GW, is at Norfolk Bank, also off the east coast. This licence was awarded to a consortium consisting of Scottish Power Renewables and Sweden’s Vattenfall Vindkraft. Proposals for the wind farms will now go through planning and consent stages, with construction beginning in 2014 at the earliest.

 

Scotland’s leading reputation in the offshore energy sector has also attracted new investment from a German industrial company. The EEW Group, which is based in Erndtebruck and which began to expand into offshore wind a few years ago, plans to create a site worth between $28 and $42 million to produce steel pipes for monopile and jacket foundations for wind farms in inshore waters. The new centre will open within 12 months, creating about 150 jobs. Although the company has not released details about the site’s location, it has been reported that the 54-hectare Fife Energy Park at Methil is a strong contender. Oil, gas, offshore wind and marine renewables fabricator BiFab is already operating there, and companies locating in the region are eligible for support from Scottish Enterprise and through Regional Selective Assistance (RSA) grants.

Also in Scotland, the Scottish Parliament has given the go-ahead for a controversial power line through the Highlands, which will support the development of onshore and offshore renewable energy. Power group Scottish and Southern Energy will upgrade the existing 137-mile electricity transmission line from Beauly, near Inverness, to Denny, near Falkirk. The upgraded line will require 600 pylons, 200 fewer than now, although the tallest will stand 65 metres high – 24 metres taller than the existing largest structure. The $512 million scheme had been opposed by conservationists and environmental groups.

Scottish energy minister Jim Mather said that the upgrade would be the most significant grid infrastructure project in a generation. “Scotland’s electricity network needs significant reinforcement to allow our vast renewables potential to be harnessed, transmitted and exported – currently we simply do not have the transmission capacity to carry the green energy which Scotland will generate over the coming years,” he said. He added that there were more than 50 potential projects totalling about 4.2GW in the north of Scotland, representing two-thirds of peak Scottish demand. “The Beauly-Denny upgrade will help unlock Scotland’s onshore and offshore energy potential and this consent recognises the wider context, benefits and challenges of a development of this scale and opportunity,” remarked the minister.
 

UK expertise fuels range of green innovations
Elsewhere in the UK’s low-carbon sector, a new generation of environmentally friendly trains developed by German multinational Siemens promises to drastically reduce emissions. UK-based Siemens Mobility took two years to develop the Desiro City train, at a cost of $70 million. According to the manufacturer, the new locomotive weighs up to 25 per cent less than standard trains and emits 10 times less C02 per passenger per kilometre than the current average rail journey. It promises to put the UK at the forefront of low-carbon travel and keeps it in line with the 2008 Climate Change Act, which stipulated cuts in the country’s greenhouse gas emissions of 34 per cent by 2020 and at least 89 per cent by 2050. “Trains are already one of the most environmentally-friendly ways to travel and we believe that this train represents the future of UK rail,” said Steve Scrimshaw, managing director of Siemens Mobility Rolling Stock.

In Wales, an innovative organic waste recycling facility is set to boost production of renewable energy fuels. The plant will produce ‘biochar’, a porous, charcoal-like substance created by burning organic waste with minimal oxygen, in a process known as pyrolysis. It uses a ‘closed-loop’ system to ensure that hydrocarbons produced as a by-product are captured and recycled. According to the Sustainable Development Commission (SDC), the technology will put Wales at the forefront of climate change innovation. The plant is being funded by Aberystwyth University’s Institute of Biological, Environmental and Rural Sciences (IBERS) through the Welsh Assembly’s Academic Expertise for Business (A4B) programme. IBERS spokesman Dr Edward Hodgson said: “Knowledge transfer between the university and business is a key part of this project, and we will be working with small- and medium-sized enterprises in Wales to improve their operations.”

The company, which employs over 100 staff, produces a range of clean power platforms based on its proprietary fuel cell technology for four key markets: aerospace and defence; distributed generation and portable power; oil and gas; and motive. The grant will help the firm to equip its new premises. The total cost of the project is over $13.6 million and it is expected to create 130 full-time equivalent jobs over time, more than 90 per cent of them at graduate level. Originally a spin-out from Loughborough University, Intelligent Energy has received widespread recognition for its work, including being nominated for a 2006 Technology Pioneer by the World Economic Forum, being named by the Guardian as a member of the 2008 Clean Tech 100 and receiving a 2009 Ruban D’Honneur at the European Business Awards.

Regional development agency (RDA) One North East and car manufacturer Nissan of Japan have entered the next phase of their partnership on the development of electric vehicles and infrastructure in the region. Under the zero emission mobility agreement, One North East will install at least 619 publicly available electric charging points by 1 January 2011, which will support 3kW and 7kW charges and will include twelve 50kW ‘rapid-charging’ stations. Electricity at the points will be provided free of charge until 31 March 2012, or until an itemised billing system becomes available. The charging points will be installed in partnership with companies such as Tesco, British Gas, CE Electric UK, the AA and Capital Shopping Centres, and with Northumberland National Park. One North East has already installed two points for public use at its head office car park in Newcastle.

Nissan, whose UK car plant is located in Sunderland, has agreed to work in partnership with the RDA to supply Nissan Leaf electric vehicles to the region in early 2011. Batteries for the car – and perhaps also the car itself – will be made at Sunderland. The Leaf is said to be the world’s first affordable electric vehicle for the global mass market and will go on sale in Japan, the US and Europe in late 2010. In 2009 the Government designated Sunderland the UK’s first Low Carbon Economic Area, focused on ultra-low carbon vehicles. The North East is also at the forefront of programmes to trial electric vehicles on the roads.


Work starts on London Gateway as developer seeks UK listing
Prime Minister Gordon Brown and Business Secretary Lord Mandelson visited the construction site of London Gateway port in early January to mark the start of work on one of the UK’s largest infrastructure projects. The scheme had previously been put on hold due to the economic downturn. DP World of Dubai is behind the $2.4 billion development, which will be Europe’s largest combined deep-sea port and logistics park and the UK’s first new deep-sea container port for over 25 years. Located on the north bank of the River Thames near Thurrock in Essex, 25 miles east of central London, the 1,500-acre site will give unrivalled deep-sea shipping access and transform the movement of freight around the UK, reducing road haulage and cutting CO2 emissions.

According to an independent survey commissioned by DP World, the development will generate 36,000 jobs in total, including 12,000 jobs in logistics and construction in the short term. It is one of the main economic drivers in the planned regeneration of a large part of the Thames Gateway, the UK’s largest regeneration area, which covers a 40-mile stretch of East London, South Essex and North Kent. Gordon Brown said: “The London Gateway … is a massive vote of confidence in the UK’s economic recovery and in this region. … It will help bring the largest deep-sea vessels here and improve the efficiency of the UK’s freight distribution, creating thousands of jobs, future growth and economic prosperity.”

Meanwhile DP World plans to list on the London Stock Exchange in the second quarter of this year, in addition to its current listing on the Nasdaq Dubai. The company is one of the largest marine terminal operators in the world, with 49 terminals and 12 new developments across 31 countries, and its holdings include the formerly British-owned shipping firm P&O. In a statement it said: “After an extensive period of review with advisers, and discussions with shareholders, the board of DP World has decided to seek a premium listing on the London Stock Exchange whilst maintaining the existing primary listing on Nasdaq Dubai.”


Specialist facilities offer investors business and technical support
Rotherham in Yorkshire and Humber has won international recognition as an elite business location, becoming the first place in England to be awarded ‘Soft Landing Zone’ status by the US-based National Business Incubation Association (NBIA). The borough, recently chosen by Rolls-Royce as the location for its Nuclear Advanced Manufacturing Research Centre, has joined 15 others worldwide recognised internationally as excellent for supporting businesses. The NBIA gave it an “excellent” rating for helping overseas investor companies set up. Rotherham already has more than 90 overseas companies, employing about 7,000 people, and it hopes the NBIA’s recognition will help it to attract more.

A specialist innovation and business support facility is to be built at MediaCityUK in Salford, North West England. The Media Enterprise Centre (MEC) – backed by a joint partnership of local development organisations – will provide training, R&D services and support to established and emerging businesses and individuals. It will act as a hub for local and international businesses to develop new media content and will offer business support via agencies such as Business Link and Northwest Vision and Media. It will also house the recently announced games industry centre of excellence, along with an international hub for research into digital media markets and technologies, plus an industry-led ‘hothouse’ for the development of new digital content and prototypes. The MEC will be built with funding from the European Regional Development Fund, Northwest Regional Development Agency (NWDA) and Salford City Council and is due for completion in summer 2011.

Further investment of $4.8 million has been announced by the East Midlands Development Agency (emda) to support the new School of Engineering at the University of Lincoln. This is in addition to a $6.9 million grant from the Higher Education Funding Council for England (HEFCE) announced in July and major investment by German multinational Siemens. The School will be the first purpose-built engineering school to be created in the UK for more than 20 years and will consist of two components: the Lincoln Engineering Hub, which will offer non-HEFCE funded consultancy, research and design, training and development and technology transfer services and inputs to businesses, and the Academic School, which will offer undergraduate and postgraduate taught courses, funded by HEFCE.

The additional funding will allow the Engineering Hub to be set up. It will work closely with engineering businesses in the region – particularly SMEs – to enhance competitiveness and will have a special focus on technology transfer, R&D and knowledge exchange. The Hub will bring together academic expertise from the University of Lincoln and the industrial know-how of Siemens Industrial Turbomachinery Limited, one of the world’s leading industrial power and energy providers, and a portfolio of leading national and international industrial partners. Construction of the new School of Engineering is planned to start this year, with the facility opening in 2011.
 

Regional news
London is becoming the city of choice for Brazilian firms seeking to establish European headquarters, according to investment agency Think London. The latest company attracted to the UK capital is development bank BNDES, which joins a wide range of other Brazilian businesses in the city. Think London has helped companies such as Arpargatas (Havaianas), Banco Bradesco, BWI Development and Dabi Alante to expand their presence or set up for the first time in the UK during the past few years. According to Michael Charlton, the agency’s chief executive, there are now three times more Brazilian companies investing in the city than two years ago. He added: “The enormous momentum of Brazilian companies going global is a great chance for Think London to tap into this growing economy, which has all the potential of China and India.”

Strengthened delivery arrangements and more local planning responsibility will drive regeneration in London and Thurrock Thames Gateways and West Northamptonshire, according to ministers, following a five-year review of these areas’ Urban Development Corporations (UDCs). New arrangements (including the Government’s Operational Efficiency Programme for IT and procurement) will provide stronger partnerships between Government and local authorities. Thurrock Thames Gateway Development Corporation (TTGDC), which is dealing with several large regeneration projects in Essex, to the east of London – including important redevelopment projects in Purfleet and the London Gateway port in Shellhaven – will be incorporated into the Homes and Community Agency (HCA). The London Thames Gateway Development Corporation (LTGDC) will continue in its current form until after the Olympic Games, working with partners on regeneration at London Riverside but concentrating increasingly on the regeneration of the Lower Lea Valley. The West Northamptonshire Development Corporation (WNDC), which supports regeneration in Northampton, Daventry and Towcester in the East Midlands, will concentrate on strategic delivery of key projects, in particular from April 2011 planning applications for large housing and major commercial schemes.

Autonomy, a digital content company based in Cambridge, Eastern England, has been celebrating a clutch of recent awards. The company – whose work centres on enabling computers to detect patterns in information in the way that humans do – won Management Today’s award for Britain’s Most Admired Companies (BMAC), while its iManage division was named Technology Provider of the Year at the British Legal Awards. Autonomy was also listed in Econtent Magazine’s 100 ‘Companies that matter most’ for the seventh consecutive year. The BMAC awards, which canvass the opinions of 200 of the UK’s largest companies, recognise outstanding corporate reputation. The accolade at the British Legal Awards, hosted by Legal Week, celebrated the business success and high levels of customer satisfaction of the company’s iManage division. A global panel of judges selected the ‘EContent 100’ award nominees based on their recent business performance, activities over the past year and impact on the digital content industry. In selecting Autonomy, the judges noted that the company had demonstrated leading market share, thought leadership and technology innovation.

East of England International (EEI) has assisted Danish technology company Zonith to establish a UK subsidiary in Cambridge. In its first venture outside of Denmark, the company has set up an office on the city’s Castle Park in order to strengthen its relationships with UK-based manufacturers, distributors and customers. Zonith specialises in delivering software that links management information systems and digital radios to improve process efficiency and employee safety. It has already supplied its system monitoring and automatic alarm solutions to a wide range of market sectors and industries, including public safety organisations in the UK, heavy industry, pharmaceuticals, oil and gas, power and utilities, financial organisations and large hotel and entertainment facilities. Eoin Foy, international channel sales manager at the company, said: “The East of England was the perfect place for us to set up. This region has excellent access to Stansted, London, Cambridge and the Midlands, is at the forefront of R&D in technology and offers an employment base of highly skilled people.”

US food group Kraft has finally agreed terms for a takeover of UK confectionery company Cadbury, five months after first launching a hostile takeover bid. The $19 billion deal valued Cadbury – based in Bournville in Birmingham in the west Midlands – at 850p ($13.60) a share, and was thought likely to win the support of investors. It also blocked a potential bid from rival US confectioner Hershey, which had been considering a counter-offer. Cadbury’s share price rose by 3.3 per cent in London trading immediately following the announcement, which ended a saga that began in late August 2009. Kraft said the deal represented “a strong and complementary strategic fit, creating a global confectionery leader with a portfolio of more than 40 confectionery brands each with annual sales in excess of $100m” and with a leading position in developing markets such as Brazil, Russia, India, China and Mexico. Cadbury owns many leading brands, including Dairy Milk and Flake chocolate bars and Trident chewing gum. A combined Kraft/Cadbury ranks alongside Mars, which last year acquired Wrigley, among the world’s biggest confectionery companies. Kraft decided to bid for Cadbury after the UK firm spun off its US soft drinks business in 2008, making it a standalone confectionery company.

The Nanofactory project is inviting partnerships from Yorkshire firms seeking expertise in nanotechnology in a bid to help them develop new products or processes. The project, which is partly funded by the European Regional Development Fund (ERDF), brings together nanotechnology experts from Leeds, Bradford, Huddersfield, Sheffield and York universities to support nanotechnology innovation in the region. Under the project, which is targeted at SMEs, a number of sector-specific workshops will be conducted in the region, outlining the benefits of nanotechnology development. The ideas generated may form the basis of grant applications to appropriate funding bodies.

Researchers at Leeds University in Yorkshire and Humber have found a way to recover large quantities of raw materials used in new green technologies. The method involves recovering rare-earth oxides found in titanium dioxide minerals and could provide a solution to the fierce competition over the materials required for the large-scale manufacture of green technologies. Rare-earth oxides, used to make wind turbines, energy-efficient lighting and hybrid and electric cars, are extracted or reclaimed simply and cheaply from the waste materials of another industrial process. Currently around 95 per cent of the world’s reserves of rare earth metals are found in China, which has a near monopoly in a market that is growing steadily. Lead researcher Professor Animesh Jha said: “There is a serious risk that technologies that can make a major environmental impact could be held back through lack of the necessary raw materials – but hopefully our new process, which is itself much ‘greener’ than current techniques, could make this less likely.”

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