News
November 1999
UK leads the way in e-business
The UK has the most Internet users in Europe and higher penetration rates than in major competitors such as Italy, Germany and France, according to new research from two US publications. Overall the UK is shown to offer the best environment in Europe for e-commerce and the Internet. Separate research shows that the UK is the fourth largest and fastest-growing market in the world for international telecommunications, and that Internet growth rates in the UK are comparable to those in the US.
The US surveys, by the Computer Industry Almanac and business magazine Forbes, show that 13.9 per cent of the UK population (8.1 million people) are on-line. The UK has the strongest transatlantic Internet capability - at 1,514 megabits per second almost as much as the next three European countries combined - and carries a large proportion of the backbone Internet traffic between Europe and the US. The UK also has a highly competitive telecoms market, in which more than 30 per cent of households have a real choice of telecoms operator - a situation unique in Europe.
London emerges as a major hub for US-Europe traffic, and as Europe's e-commerce capital. The capital has the UK's largest skills base for Internet and e-commerce activities, with an estimated 324,000 IT professionals supported by 280,000 workers in knowledge-based industries. London also has the highest concentration of Internet-related firms, covering all specialities: Internet service providers (for example, AOL, BT, Virgin), hosting (Exodus, Globix), portals (Yahoo!, Excite, Lycos) and e-commerce (Fogdog International, QXL, Boo.com, Lastminute.com).
This concentration of telecoms expertise continues to attract the attention of overseas investors, particularly from the US. For example, Global Crossing, the Los Angeles-based provider of telecoms and Internet services, recently bought the telecoms business of UK defence group Racal for $1.65 billion, giving it a strategic position in the UK and European markets. Headquartered in Reading, South East England, Racal Telecom has an existing network that reaches more than 2,000 cities and towns across the UK and which by 2001 will be within 5km of almost 70 per cent of all UK business customers. The purchase extends Global Crossing's European network to 17,000km, enabling it to target a huge number of businesses with its data, voice and Internet products and services.
Microsoft and British Telecom meanwhile have agreed a tie-up that will commit "substantial resources" to developing hand-held mobile multimedia communications devices for the consumer market. The devices will allow users to retrieve information such as share prices or weather bulletins from the Internet and buy services on-line, all whilst on the move. BT will take responsibility for the design of the new devices, and manufacturing will be outsourced.
And Motorola, another US giant, is to increase its production of mobile phones at its personal communications sector plant in Scotland by 50 per cent, to meet increasing demand worldwide. New manufacturing lines will be built at the plant at Easter Inch, Bathgate and the workforce will be increased by 1,000 to more than 4,000, making the company one of the biggest employers in Scotland.
UK tops European FDI league
Inward investment into the UK increased last year by 18 per cent over the previous year, from $276.3 billion to $326.8 billion, according to the latest annual world investment report from the United Nations Conference on Trade and Development (UNCTAD). The UK was the second highest recipient in the world of foreign direct investment (FDI) in 1998, after the US, and top in Europe. The increase in inflows, particularly from the Far East, appeared to allay fears that investors would be deterred by the UK remaining outside the Euro zone.
Worldwide, FDI could rise 25 per cent on 1998 to exceed $800 billion this year, on the back of a continuing boom in cross-border mergers and acquisitions in the industrialised nations, UNCTAD predicts. It is already clear that global inflows will be substantially above the $644 billion recorded in 1998, with cross-border mergers and acquisitions to mid-September 1.3 times higher than during the whole of the previous year. M&As have been the driving force behind the increase in FDI in recent years, says UNCTAD, and the 1999 increase is expected to be due largely to flows between the US and Western Europe.
London marks decade as best for business
London has been voted Europe's leading location for business - for the tenth year running. The European Cities Monitor 1999 survey, conducted by international property consultants Healey & Baker, canvassed more than 500 senior executives from companies across Europe.
Of respondents, 58 per cent confirmed that London was the most important financial centre in Europe, well ahead of Frankfurt on 35 per cent. On a wider range of factors affecting choice of business location, London achieved an overall score 47 per cent higher than Paris in second place and 106 per cent higher than Frankfurt in third. Just as it did in 1998, the UK capital came first in six key criteria for determining where companies locate: easy access to markets; external transport links; quality of telecommunications; availability of office space; languages spoken; and internal transport.
London has rated first for external transport links and telecommunications every year since 1990. This year it improved its rating in other key categories, rising three places to third for quality of life for employees (behind Barcelona and Paris) and from 12th to 8th for value for money of office space.
EU funding to boost development in poorest areas
The UK has received an allocation of $4 billion in European Objective 2 funding, $3.2 billion of which will go to help economic and social regeneration schemes in the country's poorest areas. Together with Objectives 1 and 3, each worth $4.8 billion, the UK will receive total European funding of $16 billion for the period 2000-2006.
A map has been drawn up for the distribution of the money, singling out areas across the country suffering from industrial decline, rural under-development, urban deprivation and the decline in the fishing industry. If the EU agrees to these proposals, the North East, the North West and the West Midlands could each receive $640 million over the next seven years. Yorkshire and Humber could receive more than $400 million, London $240 million, the East Midlands $320 million, the East of England $128 million, the South West $160 million and the South East around $24 million.
Patent Office registers record year
The last year has been a record one for patent applications, says the UK Patent Office in its annual report, with inventors making the highest number of applications in ten years and the number of patents granted the highest since 1990. Altogether, 28,619 patent applications were made in 1998-1999, with the number granted rising 16 per cent to 9,249. In addition, the number of national and international applications for trademarks increased by five per cent, with the government agency examining 34,806 national applications.
The major growth area in patents remains the telecommunications sector, with 1,346 patent applications published and 888 granted, up 41 per cent compared with the previous year. Other important areas for patent activity were machine elements, civil engineering and building. Science was the busiest area for trademarks, with 4,856 classes published. Other significant areas were paper and stationery supplies, clothing, education and entertainment. The greatest activity in designs applications remained in packaging, with 916 applications. Significant numbers of registrations were also seen in recording, communication and information retrieval, furnishing and games, and toys and sports goods.
"This annual report further emphasises Britain's transition into a knowledge economy and confirms the world-class service offered by the Patent Office," commented Dr Kim Howells, minister for consumers and corporate affairs.
Snapshot of transport statistics
The newly published Transport Statistics Great Britain 1999 - the 25th edition of the government-funded transport review - contains a wealth of data about transportation in the UK. The latest issue relates to 1998.
For instance, against a background of a 64 per cent rise in real GDP over the past 25 years, the proportion of UK households with at least one car has increased from 54 per cent to 72 per cent, while those with more than one car have increased from 10 per cent to 28 per cent. Over the same period the number of vehicles on Britain's roads has increased by 79 per cent, though in compensation the length of motorways has increased by 88 per cent, to a total of 3,303 km. The amount of domestic freight moved by all modes has risen by 65 per cent, although the proportion moved by road has remained relatively constant, nudging up from 60 per cent in 1976 to 65 per cent in 1998.
Coming up to date, in 1998 road freight accounted for four-fifths of goods lifted (tonnes) and two-thirds of goods moved (tonne-kilometres). The volume of goods moved by road in 1998 stood at record levels, at 151.9 billion tonne kilometres, up two per cent from 1997. The average length of each road haul rose from 91 km in 1997 to 93 km in 1998, and motorways carried 34 per cent of goods traffic, although they accounted for less than one per cent of total road length. The number of powered goods vehicles travelling to mainland Europe, on ro-ro ferry services or through the Channel Tunnel, more than doubled over the ten years from 1988 to 1998. In 1998, 80 per cent of such vehicles travelling to Europe disembarked in France.
Rail freight tonne-kilometres increased from 16.9 billion in 1997-98 to 17.4 billion in 1998-99, a rise of three per cent. Air cargo handled at airports reached 2 million tonnes in 1998, an increase of seven per cent over the previous year. British ports handled a record 548 million tonnes of cargo in 1998, up 9 million tonnes or two per cent against 1997, and 15 per cent higher than a decade earlier.
A separate report, Maritime Statistics 1998, shows that bulk fuels accounted for 55 per cent of all major ports traffic, with crude oil accounting for 184 million tonnes, petroleum products 82 million tonnes and coal 25 million tonnes. The leading ports were London (handling 57.3 million tonnes), Tees & Hartlepool (51.5 million), Grimsby & Immingham (48.4 million), Forth (44.4 million) and Southampton (34.3 million). Felixstowe was the biggest container port, handling 1.7 million containers (up seven per cent from 1997) plus 400,000 road goods vehicles.
UK's newest airport gets clearance for take-off
London Manston Airport in Kent, South East England has been awarded a Civil Aviation Authority (CAA) licence to operate as the UK's newest civilian airport, following conversion from its former use as a military base. The licence confirms that it meets both UK and international safety standards for both passenger and cargo flights.
Improvements include the construction of a new air traffic control tower, installation of an instrument landing system, the purchase of new fire-fighting equipment, complete resurfacing of the runway, erection of a new security fence and the establishment of an accident control centre. 300-acre Manston, backed by owner the Wiggins Group plc which has invested over $22 million in the new facilities, already operates freight services, such as MK Airlines' import-export business to South and East Africa. It will now enter negotiations with several airlines that have already expressed an interest in transferring freight business to Manston or in establishing charter or scheduled passenger services. Possible passenger destinations, which could be available by the spring, include Scotland and the North, mainland Europe and Florida.
Meanwhile Eastern Airways, which operates three return flights a day between Humberside in north east England and Aberdeen in Scotland, has invested $8 million in aircraft as it begins a daily service to Norwich in Eastern England. From November, KLM UK is to increase the number of its flights from Humberside to Amsterdam in the Netherlands from three to six a day.
Teesside Airport, in North East England, has gained government approval to develop a 250-acre freight and logistics centre, which is expected to give a boost to just-in-time manufacturing industries in the surrounding region. A new 3.5 million sq ft terminal will provide facilities for freight handling, distribution, manufacture, assembly, aircraft servicing and air-related industries.
Rents expected to rise slowly
With the economy picking up, rents for prime property in all sectors are expected to rise by about 5 per cent both this year and next, say property consultants Healey & Baker in their recent Prime 1999 report. Despite this upward trend, however, rents in many areas (particularly Central London) remain lower than they were at the beginning of the 1990s.
Rental growth in the office market was 3.7 per cent in the 12 months to June, lower than in the previous year. The largest increases were seen in the South East and in particular Central London. With low availability and strong take-up, competition continues to push up rents - although fall-out from the financial market crises of late 1998 saw a slowdown of growth in the City of London. London's Docklands remains popular with large financial institutions due to the availability of large units. Prime rents here have risen 33.9 per cent over the past 12 months, but remain significantly lower than in the City.
Elsewhere in the country demand was strongest in Edinburgh, Cardiff and the North East, where rents are above the national average. The highest rental growth was recorded by towns in the South East near major motorway junctions, such as Luton and Watford, highlighting the premiums attached to road access and parking.
Growth in the industrial market was 4.2 per cent in the year to June, considerably down on the 13 per cent recorded the year before. The market is geographically divided, with growth of 5.5 per cent in the South East but negligible increases in Yorkshire, the North and the West Midlands. The biggest increase, of 7.6 per cent, was in the South East, where demand for industrial units is linked to distribution and the service sector.
Heathrow Airport remains the UK's most expensive industrial location, with rents increasing over the period to £11.00 ($17.60) per square foot. The average in Manchester in the North West was £5.50 ($8.80) psf, Birmingham in the West Midlands £5.63 ($9.00) psf and Edinburgh in Scotland £5.25 ($8.40) psf.
Northern Ireland at the cutting edge
Northern Ireland is leading the way in telecommunications and wireless Internet technology, according to Bruce Robinson, chief executive of the province's inward investment agency, the IDB. He was speaking after Phone.com, the California-based provider of enabling software for the delivery of Internet services to mass-market wireless phones, acquired the wireless application protocol (WAP) products of local telecoms software company APiON for $239 million. APiON's facilities will form the basis of Phone.com's first product development centre outside Silicon Valley and will act as a support centre for its GSM carrier developments in Europe.
High-tech investment continues to pour into Northern Ireland. ICL, Fujitsu's London-based IT services subsidiary, has opened a software development centre in Belfast as part of its global alliance with Microsoft. The $3.2 million facility will create a workforce of 225 over the next three years, and will develop Microsoft products for customers in retail, government, education and financial services.
Korean-owned Humax Electronics, which began production of satellite tuners at its European headquarters at Newtownards in early 1998 and has since become a major player in the European digital television industry, has opened a 16,000 sq ft extension to its factory. The new facility will expand R&D and production facilities for set-top boxes and other products for markets in Europe, Africa and Russia.
In aviation, Florida-based B/E Aerospace Inc is to expand its aircraft seat manufacturing facility at Kilkeel. The $3.5 million expansion to the 19,600 sq ft factory will allow the company to pursue further growth, after a 260 per cent increase in its exports over the past two years. Similarly, Shorts Missile Systems is to invest $2.6 million in developing its final assembly and testing facility at Castlereagh, creating 34 new jobs over three years. The company is a joint venture between Shorts and Thomson-CSF of France, and supplies armed forces around the world.
Finally, Meridian Medical Technologies of Columbia, Maryland, has officially opened its new multi-million dollar European headquarters in Belfast. The company produces coronary care products, including the innovative Cardio Beeper, a heart monitor in a pocket-sized wallet, and PRIME EGG, a heart mapping system. Said Meridian CEO James Miller: "We've been favourably impressed by the quality and commitment of people here and by the enthusiasm for our work shown by university experts and leading doctors. We've been able to draw upon a vast resource of expertise and goodwill in the development of our products."
Around the regions
- Nissan is to invest $320 million in a new generation of Primera cars at its Sunderland plant in north-east England. Although the car is unlikely to go into production before 2003, the announcement has been seen as a vote of confidence in the Sunderland plant, after its Japanese parent announcement a swingeing $9 billion restructuring package that will cut its global workforce by 21,000. Sunderland is widely expected to escape the cuts because of its impressive productivity record.
- Ford has invested $130 million in new environmental testing facilities at its engineering centre at Dunton, Essex, in Eastern England. Half the investment is for 14 new cells for the environmental testing of engines, transmissions and whole vehicles. The rest will be used to build Europe's most advanced environmental test laboratory and to expand facilities to ensure that Ford vehicles are built to specifications well within current and proposed environmental legislation.
- Caterpillar Logistics Services Inc, based in Illinois, has signed a ten-year contract with German car-maker BMW which will see it build a 242,000 sq ft extension to BMW's existing warehouse facilities at Desford in the East Midlands. The extension will store and distribute automotive parts for BMW's UK subsidiary Rover and, when finished, will cover an area the size of 20 soccer pitches.
- LG Electronics of South Korea has placed major orders with two South Wales injection moulding firms to keep pace with production at its Newport, Gwent facility. Rosti of Treforest and TransTec Plastics of Newport will supply computer monitor cabinets as LG aims to double its production of computer monitors from 500,000 last year to over a million in 1999. LG will also recruit extra staff to boost its workforce to more than 2,200. Growth has been driven in part by the success of the iMac personal computer, which LG Electronics Wales manufactures for the European market.
- A new multi-million pound office park which could create up to 3,000 jobs is to be developed at Carlton Park in Leicestershire, East Midlands with the backing of bank Alliance & Leicester, which has a base employing 2,000 people on an adjacent site. In the same area, the East Midlands Development Agency has recently commissioned a study of investment growth opportunities around East Midlands Airport and Junction 24 of the M1 motorway.
- Peterborough in Eastern England is to host a major international business event on February 24-25, 2000 aimed at developing contacts between the region and companies throughout the European Union. Euroconnect, organised under the auspices of the EU's Interprise programme, will focus on three major sectors: agri-business, environmental management and new town planning and expansion. Up to 100 small and medium-sized companies will act as hosts, and companies from France, Germany, Belgium, Holland, Denmark, Sweden and Iceland have already signed up for the event. For more information, e-mail: euroconnect@peterborough.net. Since being set up in June 1998, the Greater Peterborough Investment Agency has handled enquiries from more than 450 firms, assisting 50 to relocate to the area and creating 550 jobs.
- North Lincolnshire Council has produced its 1999-2000 business directory on CD-ROM. The disk contains details of local companies in this corner of north east England - such as Spring Ram Kitchens of Scunthorpe, which was recently taken over by US Industries Inc. For a free copy, call Ann-Marie Burnley on +44 1724 297334.
- FlightSafety Boeing Training International of Seattle has entered into a strategic alliance with Quadrant Systems Ltd of Burgess Hill, Sussex, South East England. Boeing will purchase Quadrant's three existing full flight simulators and will install a fourth at the same facility. Quadrant will provide maintenance and technical support for all four simulators.
- The Docklands Light Railway, serving the business district to the east of London, is to receive additional funding of $32 million to fund improvements including new trains, deputy prime minister John Prescott has announced. An extension of the line to Lewisham, in south east London, was due to open in November, two months ahead of schedule.
- The largest government Freight Facilities Grant to date has been awarded to Brunner Mond (UK) Ltd, and will go towards the cost of upgrading rail handling facilities at the company's Lostock and Winnington plants near Northwich, Cheshire, North West England. The improved facilities will allow the company to receive by rail, rather than road, almost one million tonnes of limestone annually from a quarry in Derbyshire.
- US mail order and retail company Northern Tool and Equipment of Burnsville, Minnesota is to set up its first UK headquarters at Portsmouth, South East England. The company markets light industrial products to contractors, industrial customers and consumers.
- Fast-growing US company Thermatrix Inc, a world leader in air pollution control technology, has acquired two West Wales companies which it plans to merge and expand. Teddington Bellows of Pontarddulais, which employs 85 people, and Brockington & Scott of Llandeilo, with a workforce of 70, both manufacture specialist expansion joints and bellows assemblies. Thermatrix supplies pollution control technology to a number of industries and last year made a significant breakthrough in reducing emissions from diesel engines.
- C-MAC Industries Inc, a leading provider of integrated component and systems manufacturing solutions based in Montreal, Canada, has acquired Blue Star Engineering of the UK, a manufacturer of metal enclosures and accessories, for an undisclosed sum. Blue Star has manufacturing facilities in Eastern England and Northern Ireland.