News

 

December 1998

London still top for business in Europe

The European Cities Monitor 1998 survey, published by international property consultants Healey & Baker, has voted London the best business city in Europe - for the ninth year running. The survey, which polled senior executives from more than 500 leading European firms, ranked London first in six key criteria: access to markets, external transport links, telecommunications, languages spoken, availability of office space and internal transport, making it the winner by a considerable margin. Paris was in second place overall, and Frankfurt third.

Lest anyone doubt the verdict, Fortune magazine's annual Best Cities for Business Survey has also ranked the UK capital top for business. This survey rated 35 European cities against 37 key criteria under the headings of business environment, executive opinions, quality of labour and quality of life, and showed London to be the only city scoring consistently well across all four categories. More than 60 per cent of the Fortune Global 500 companies have operations based in London. Like Healey & Baker, Fortune ranked Paris second, but third place in its survey was won by Glasgow, Scotland.

According to investment agency London First Centre, the capital is maintaining its share of inward investment despite economic turmoil in Asia and fears of a global slowdown in growth. By the end of October the agency had completed negotiations on 61 projects involving 2,071 jobs, against its target of 100 projects and 3,680 jobs for the year to the end of March 1999. Successes include a new headquarters for Swedish telecoms giant Ericsson, which will create 300 jobs, and an expansion by WorldCom International of the US, creating 100 jobs over three years. "The US market is holding up very well, and we have almost completed our quota from Europe," said LFC deputy chief executive Robert Gordon Clark.

Availability of office space in Central London has declined, down around 25 per cent to 10.1 million sq ft year-on-year to the end of June, according to property consultants DTZ Debenham Thorpe. At the same time there has been a marked increase in pre-letting activity.

 

UK leads the way in FDI

The UK maintained its strong lead among European countries in attracting foreign direct investment in 1997 and substantially increased revenue flows, according to the United Nations Conference on Trade and Development (UNCTAD). In its recent World Investment Report 1998, Trends and Determinants, UNCTAD reported that the UK had increased its share of FDI within the European Union from 28 per cent in 1996 to 34 per cent in 1997.

The report ranked the UK ahead of all other EU countries, pointing out that it performed better than the EU as a whole in GDP growth during 1997, recording growth of 3.5 per cent compared with an average 2.6 per cent. The UK also remained the EU's most important outward investor, with a 70 per cent rise over the year.

 

IT sector continues to grow

The UK is a prime destination for companies in the IT industries, and recent announcements keep up the pace of the sector's growth. US computer giant Oracle, for example, has begun work on a new $32 million UK office that will house its support, sales,

education and consulting operations, and swell its existing 3,500 British workforce by a further 1,000 people. The new base, at Blythe Valley Business Park at Solihull in the West Midlands, will complement Oracle's UK headquarters at Thames Valley Park, near Reading in the South East.

PC maker Mitac of Taiwan intends to double the size of its factory at Telford, West Midlands, to 180,000 sq ft to mark its tenth anniversary in the UK. The company will concentrate on value-added workstation products for the corporate market.

SCM Microsystems of the US meanwhile has bought British plug-and-play hardware specialist Shuttle Technology for $33 million. Shuttle, based at Wokingham in the South East of the country but with operations in Taiwan and California, designs and produces hardware-enabling electronic devices, and has recently diversified into the security market with a digital fingerprint recognition device. In another acquisition, PC-OP of Switzerland has bought IT firm Midland Technical Consortium of Kidderminster, in the West Midlands. PC-OP specialises in technology support for small to medium-size businesses.

On the educational front, Cisco Systems of the US is to extend its American Networking Academy programme, which prepares students for careers in computer networking, to high schools and community colleges in the UK. More than 2,000 schools already use Cisco technology, and the company says it will invest more than $1.6 million over two years via the programme, which will major on curriculum development, training and the provision of kit. Its intention is to establish five regional centres, based at technology colleges, to complement five academies already in existence. The company also has plans to build a major R&D centre.

 

Mobile telecoms on-line for massive growth

Telecommunications, another key sector, also continues to show rapid growth. In late October, for instance, Motorola's new $130 million production centre at Groundwell, Swindon, in South West England, was formally opened by Her Majesty Queen Elizabeth II. The new plant, which employs 1,300 staff and features 24-hour, 365-days-a-year operation, will produce infrastructure for GSM cellular communications networks. GSM is the European standard for digital mobile telephony. Motorola has six other facilities in the UK, and has operated in the country for more than 30 years.

Lucent Technologies, another key US player in telecommunications, has opened a new European headquarters at Ascot in South East England, which will serve as its worldwide base for GSM research and development. The company, which has 13 facilities and more than 2,600 staff in the UK, also has a GSM manufacturing headquarters at Swindon. Its 600-strong workforce there is expected to double by 2000, largely due to increased R&D demand for third generation systems. Another company expanding its mobile telephone operation is NEC of Japan. NEC is adding an extra 200 staff, or a third of the total, to the workforce at its Telford, West Midland factory.

 

Scotland consolidates hi-tech reputation

Scotland's established reputation in the hi-tech electronics and telecommunications industries continues to attract overseas investors. Companies from Taiwan led the way in November, with one company expanding its existing operation and a second choosing Scotland for its European debut.

Electronics firm Inventec is expanding its service and repair facility for laptop computers at Inchinnan Business Park, adjacent to Glasgow airport in Renfrewshire. The company only established itself in Scotland in February 1997; now it is adding 70,000 sq ft of space to its existing premises and taking on a further 150 workers in a $2 million expansion scheme. The company has a similar plant in Houston, Texas.

Newcomer Universal Scientific Industrial Company (USI) is to set up its first European manufacturing operation at Irvine in Ayrshire, in a $24 million investment. The firm's 32,000 sq ft factory will produce products for the computer, telecommunications and automotive industries, and will incorporate a design, marketing and customer support centre to pursue new business opportunities across Europe. The site, which has another 26 acres for potential expansion, will see a workforce of 700 built up over two to three years.

A French company, Ion Beam Services, has also chosen Scotland as its new location. The company, which provides specialised services to the semiconductor industry, has opened its first plant outside France at Bathgate, at the heart of Scotland's 'Silicon Glen'. The plant, which will have a staff of 40, will concentrate on ion implantation, a key process in the manufacture of microchips.

And in the same field, a Scottish initiative has seen leading electronics companies from around the world join forces to create the world's first exchange for trading intellectual property. Located at the Alba Centre, in Livingston, Scotland, the initiative aims to shorten design cycles for new generations of electronic products such as mobile phones, digital cameras and personal digital assistants. The companies involved include Siemens, Motorola, Toshiba, Mentor Graphics, ISS, ARM, Phoenix, Cadence Design Systems and Taiwan Semiconductor Manufacturing Corporation.

 

Wales motors on

Not to be outdone, Wales has also welcomed a number of new investments, this time mostly in the automotive sector. Tokai Rika of Japan has made its first manufacturing investment in Europe with a new company, TRB Limited, and a $10 million, 24,000 sq ft factory at St Asaph Business Park. The workforce of 154 will produce multi-function switches and cluster modules for Toyota and other motor manufacturers in Europe. St Asaph was chosen after careful evaluation of other locations, including sites in Belgium and the Republic of Ireland.

A joint venture between Toyoda Machine Works of Japan and TRW Inc of the US is to create 200 new jobs at a new purpose-built plant at Neath Vale Supplier Park, in the Neath Valley in South Wales. The $22 million venture will produce power steering hoses and pumps for the European market, with Toyota's plant in Derby, East Midlands being a major customer. And meanwhile French car seating manufacturer Bertrand Faure has opened a new 37,000 sq ft factory at nearby Tredegar. The factory, which will employ 300 people when fully operational, will produce a new type of advanced seat frame for the Rover 75 luxury saloon car, the prestigious new model that BMW is to produce at its Oxford, South East England, plant.

Another French company, though one in a completely different line of business, has recently celebrated its 25th year in Wales. L'Oréal, the producer of hair and beauty products, presented its 400 staff members with gifts of chocolate and champagne to mark the anniversary. Its plant, at Llantrisant, currently produces 150 million units a year from a 500,000 sq ft plant on a 39- acre site.

 

Investors in pole position

Elsewhere, too, there is plenty of activity in the automotive industry. Volkswagen, for example, is to invest $800 million over five years in its recently acquired Rolls-Royce car plant at Crewe, North West England. The plant, whose 2,500-strong workforce is likely to expand, will produce new-model luxury cars, including a medium-size Bentley. Under a deal concluded in the summer, BMW will take over production of the Rolls-Royce marque at a new location, while Volkswagen will concentrate on manufacturing Bentleys at Crewe, aiming for an annual production target of 9,000 cars.

German components maker Sidler is setting up a new operation in the UK to supply Jaguar, Rover, Honda, Nissan and other customers. Based at a 40,000 sq ft factory at Telford, in the West Midlands, the company will produce interior trim parts such as ashtrays, coin trays and lighting systems.

In the truck market, General Motors has taken over IBC Vehicles, a British maker of panel trucks and four-wheel drives. The company, based in Luton, Eastern England and formerly owned as a joint venture with Isuzu of Japan, gives GM's UK subsidiary Vauxhall a higher profile in the European truck market. It plans to build a new range of panel trucks in partnership with Renault of France, and expects to take on an additional 700 staff by 2002.

And in a prestige move, US equity group Warburg Pincus has paid $60 million for a 40 per cent stake in the British Formula One motor racing team Jordan Grand Prix. Based in Northamptonshire in the East Midlands, Jordan has 180 staff and is valued at around $130 million. This is the first instance of direct investment in Formula One by a financial institution.

 

Around the regions

• Government approval has been given for a project to deepen the main approach channel through Harwich Haven to the port of Felixstowe, in the East of England. The project will have a channel depth of 47.5 ft, thus improving access for deep draught container vessels.
• At Fulham in London meanwhile, Ready Mixed Concrete Ltd has begun operation of a new waterside crane on the River Thames. The project was given a government freight transport grant, as it encourages freight transport movement by water rather than by road.
• North Nottinghamshire Training and Enterprise Council, in the East Midlands, has launched a call centre training network that will support businesses recruiting and training call centre workers in the area. The initiative has been supported by funds from the European Union.
• Newcastle International Airport, which serves businesses throughout the North East of England, is undergoing an expansion project that will double the size of its existing terminal. The $43 million extension, due for completion in 2000, will increase the terminal's capacity to 4.8 million passengers a year.
• In the same region, Caterpillar has opened a new UK plant at Skinningrove in Teesside. The $14 million factory, which is sited near the company's main supplier, British Steel, will produce grouser shoes for the European market.
• Machine tool maker Toyoda of Japan is to set up a new European HQ at Leofric Business Park at Coventry, in the East Midlands. The 12,000 sq ft complex replaces Toyoda's existing facility at nearby Rugby, and could double in size over the next few years.
• Norwegian-owned Virginia KMP is to build a 57,000 sq ft factory at Cortonwood Business Park in the Dearne Valley in South Yorkshire, to manufacture and distribute commercial refrigeration products.
• Deutsche Post, one of Europe's largest mail companies, is to join forces with UK security firm Securicor in a deal said to be worth some $800 million. The pair aim to take a dominant role in the delivery of business parcels throughout Europe.
• Drinks company Canandaigua, of Fairport, New York, has taken over cider maker Matthew Clark, based in Bristol, Western England, in a $350 million. It is Canandaigua's biggest ever acquisition and its first outside the US. The company is keen to expand into the European drinks market.
• Kelon, China's largest maker of refrigerators, is planning to establish a manufacturing base in Manchester, North West England. The company, which is expanding its operations globally, has recently signed an agreement with a UK retailer to distribute its products.
• Metsa-Serla of Finland has acquired UK Paper, the UK's biggest manufacturer of coated paper, from the New Zealand-based Fletcher Challenge Group for around $150 million. UK Paper, located in Sittingbourne, Kent, South East England, has a 1,000-strong workforce and a turnover of more than $430 million.
• US pharmaceuticals giant Pfizer plans to manufacture the anti-impotence drug Viagra at its UK site at Sandwich in Kent, South East England. The move is expected to see a significant expansion of the UK's workforce. Meanwhile, British drugs company Phytopharm, of Cambridge, Eastern England, which is working with Pfizer on plant-based treatments for human obesity, has signed an agreement with another US pharmaceuticals company, Heska. The agreement gives Heska an option to develop and market Phytopharm's drugs for pet animals.