News
December 2001
Heathrow Terminal Five is cleared for take-off
Transport secretary Stephen Byers has given planning approval for the long-proposed Terminal Five at Heathrow Airport. Heathrow, just west of London, is the world’s busiest international passenger airport. Last year its existing four terminals handled 460,000 aircraft movements and just under 65 million passengers. The British Airports Authority (BAA), which operates the airport, together with Gatwick, Stansted and four other UK facilities, first applied for permission to build a fifth terminal back in 1993. The subsequent public inquiry became the longest in British history, stretching over nearly four years.
Mr Byers believed his decision to give the go-ahead struck a balance between environmental and economic concerns. "Such a development is in the national interest," he said. "It will enable Heathrow to remain a world-class airport. It will bring benefits to the British economy both locally and nationally. At the same time … I have imposed conditions in order to protect the interests of those living in the vicinity of Heathrow."
The conditions include a limit of a total 480,000 flights per year and a tightening of restrictions on noise. Fewer flights will be permitted to cross the built-up area of west London at night. Consultation will take place by 2003 at the latest on possible changes to the night noise regime of BAA’s London airports, and a major study of attitudes to aircraft noise will be carried out.
Public transport links - including extensions of the Heathrow Express rail link and the Piccadilly Line on the Underground - will need to be in place before the new terminal opens. The total number of car parking spaces at the airport will be restricted to 42,000, rather than the 46,000 requested by the BAA. In addition, the BAA must gain separate planning permission for a scheme to divert two rivers that run across the site. Even with these restrictions, the construction of Terminal Five will increase Heathrow’s potential capacity to some 90 million passengers per annum.
Ferry operators expand European links
Stephen Byers has also agreed to provide government funding of $16.8 million to help set up a new daily ferry service between Rosyth in Scotland and Zeebrugge in Belgium. The money will be awarded in the form of a Freight Facilities Grant to Forth Ports Plc and Greek-owned Superfast Ferries SA, and will be used to build a new ro-ro terminal and to convert two passenger ferries to carry freight. The new service will allow freight to be transported directly between the two ports, and is expected to begin in summer 2002. It will operate daily, with sailing times of 16-18 hours.
Stena Line Freight’s service between the Humber Sea Terminal in North Lincolnshire, on the east coast of England, and the Hook of Holland meanwhile has been expanded with two new weekend sailings. The service will allow freight to be transported to and from the Continent at the start of the working week.
The number of road goods vehicles travelling to mainland Europe fell slightly in the second quarter of 2001, from 592,700 to 585,000, according to the Department for Transport, Local Government and the Regions. There was a 1 per cent rise in the number of powered vehicles but the number of unaccompanied trailers fell by 7 per cent. Of all vehicles travelling to Europe, foreign-registered powered vehicles accounted for 49 per cent, up 2 per cent from the previous quarter.
Within the UK, traffic levels in the third quarter of 2001 rose by about 2 per cent over the same quarter of 2000. Goods vehicle traffic fell by about one per cent. Car traffic rose by 3 per cent but, with adjustments to take into account the fuel protests in late 2000, the DTLR estimates the underlying rise to be one per cent. The volume of motorway traffic grew, with an underlying increase of about three per cent.
UK remains top European investment destination
The UK continues to be the most favoured destination in Europe for inward investment, says a new report from the International Location Advisory Services (ILAS) division of consultants Ernst & Young. In the first six months of 2001, it attracted 197 inward investment projects, or 21 per cent of the European total. The nearest competitor was France, with 111 projects or 12 per cent. The UK’s overall share, compared with those of its European neighbours, has fallen in recent years. However, ILAS consultant Mark Hughes commented: "The UK’s share of inward investment has consistently dominated announced project figures for many years. Britain punches above its weight in Europe in per capita terms."
Overall, there has been a sharp drop in inward investment into European countries, due largely to the worldwide fall-off in investment by the telecommunications, software and internet-based business sectors, and particularly by US companies. Ernst & Young’s European Investment Monitor survey estimated that in the first six months of the year investment in Europe was down by 32 per cent on the previous six months, falling from 1,815 projects to 1,370. The number of US-invested projects fell by almost 200 to 575.
The UK saw its total of project announcements fall below 200 for the first time since 1997. In the second half of 1998, for example, it attracted a peak of 387 new projects and the total for 2000 was 575. Most other European companies also saw their inward investment decline, although three - Spain, Sweden and the Czech Republic - bucked the trend to increase their market share, to 11 per cent, 5 per cent and 5 per cent respectively. Though between them they have only 13 per cent of the European population, each country has particular attractions for inward investors: Spain its large market size and high-growth economy; the Czech Republic its low cost base and system of grants for inward investors; and Sweden its leading position in the knowledge economy.
ICT firms maintain investment interest
Telecoms research in the UK reached a peak in 2000 with 1,110 patents granted, more than in any other sector, according to the Department of Trade and Industry. This compared with 865 in 1999. Samsung of South Korea was the single most successful company, winning 227 UK patents. It was closely followed by Motorola of the US with 214 and NEC of Japan with 208.
Despite the global economic downturn, companies in the information and communications technology (ICT) sector continue to regard the UK as a good place to do business. Hutchison 3G, for example, a 65 per cent-owned subsidiary of Hutchison Whampoa of Hong Kong, is to set up a new headquarters in Glasgow, Scotland, where it will create 600 jobs over the next three years. The new facility will provide customer care services as Hutchison 3G rolls out third-generation (3G) communications services via mobile handsets next year. The company holds licence A for 3G services, which was the largest block of spectrum allocated by the government in its auction held last year, and the one reserved for new entrants to the market.
Intelsat, the commercial communications satellite provider headquartered in Bermuda, has opened its global sales and marketing headquarters in Chiswick, west London. The privately-owned company provides voice, data, internet and video services for telecommunications companies and broadcasters in more than 200 countries and territories worldwide through its fleet of 21 communications satellites. German telecommunications company SAG-Abel, based near Munich, has chosen the South East England Development Agency’s Enterprise Hub at New Greenham Park in Newbury, Berkshire as the headquarters for its UK operations. The company was attracted to the Thames Valley by its established cluster of ICT companies and its highly skilled workforce, and expects to expand rapidly.
Infonet Services Corporation of El Segundo, California has also chosen Newbury as its base for a new business unit, Infonet Consulting, which will serve clients in Europe, the Middle East and Africa. Infonet provides value-added communications services to more than 2,600 multinationals worldwide. Actiontec Electronics of Sunnyvale, California, which made its name with analogue modems but is now targeting the broadband market, is locating in nearby Reading. Authoria, of Waltham, Massachusetts, a leader in web-based communications software, has opened its European headquarters in Cambridge, Eastern England. Skanska of the Netherlands has acquired MG Telecommunications (MGT), based in Leeds, Yorkshire and Humber, for around $6.7 million. MGT specialises in the installation and maintenance of telecoms infrastructure, mainly copper cable, and employs around 400 people.
In the software sector, Formation Systems of Southborough, Massachusetts has opened an office in Covent Garden in central London. The company has developed a suite of product development software for the process industries and counts several Fortune 500 companies among its customers. Atinera of San Francisco, a provider of travel software and technology solutions for tour operators, has opened a European headquarters in Maidenhead, South East England.
Aurega Integrated Manufacturing, part of German multinational Siemens, has expanded its operations in York, Yorkshire and Humber, by opening a new 6,000 sq ft office. The company produces management software for a range of manufacturing systems. Another Siemens subsidiary, Siemens Orsi Automation of Italy, has relocated to York. Irish data storage solution provider Xnet, of County Wicklow, is setting up a new Integration and Support Centre in Belfast, Northern Ireland. The project involves an investment of some $930,000 and will create 30 new jobs over the next three years. French firm Viventures Partners, based in Paris, has opened a UK office in Reading, South East England. The company is an early-stage venture capital firm specialising in the ICT arena, and also has offices in Stockholm, Singapore and San Francisco.
Innovative systems offer fast broadband access
The city of Manchester in North West England has launched an innovative urban wireless network that allows high-speed internet access and video-conferencing via Bluetooth technology. Bluetooth uses short-range radio waves to link personal computers, digital assistants and laptops with devices such as mobile phones, printers and fax machines. It allows high-speed data and video transmission in small-scale urban networks, using microprocessors mounted or embedded in walls.
The system, named Speedwave, has been developed by Manchester-based company Netario in collaboration with Blue2Space of Sweden. Processors are placed at a distance of 10 metres of each other and of transmission equipment, and the network operates at ranges of up to 100 metres. Pilot networks have been installed in hotels and restaurants and in university buildings. In time the developers plan to extend the system to 70 sites across the city, including the city council and other services.
British Telecommunications (BT) meanwhile is testing mesh radio, a radically new wireless technology, which could help in the battle to control the new market for digital entertainment and high-speed internet services. The technology does not require base stations and is therefore able to deliver broadband services at lower cost. This would give BT an important advantage over rival cable TV operators and satellite broadcasters.
The technology has been developed by Radiant Networks of Cambridge, Eastern England. It operates in the microwave region of the spectrum in 28GHz band, and homes and businesses receive signals through a ‘node’, a small cylinder attached to the outside of buildings. Signals are transferred from node to node and cannot be blocked by trees or tall buildings. It is expected to be especially effective in suburban and semi-rural areas.
BT’s trial, in Cardiff, south Wales, will offer interactive TV services such as video-on-demand and high-speed internet access in partnership with an as yet unnamed service provider. This is the first deployment of the technology in the UK, though Radiant has already installed commercial systems in North America.
Rent rises slow to a standstill
Growth in the rentals market for commercial premises has eased off and, although it remains high in certain sectors, is likely to ease off further in the short term, says Healey & Baker’s Prime report on the UK property markets for November. Some sectors, such as the Thames Valley office market, are likely to be affected by the world economic slowdown, and in particular a fall in the number of high-tech US firms looking to locate overseas. Although it was still too early to predict the long-term effects of September’s terrorist attacks on the US, Healey & Baker concluded that the property market, like other sectors, would be affected by a period of economic uncertainty. "It is clear that the economic climate has impacted on occupiers as some relocation decisions have been put on hold and space now in excess of requirements is returned to the market," said the report.
Central London office rents grew the strongest in the year to June, rising by 16.7 per cent. However, this slowed to 4.6 per cent in the first half of 2001 and looked likely to weaken further. Demand remains high in the City and the West End though more space has been returned to the market. In the City rents are now for the most part static, though Healey & Baker predicts that growth may resume later next year as confidence returns. Fringe areas, such as Paddington, Southwark, Victoria and north of Oxford Street, have been particularly in demand on account of their relatively lower costs.
In the Thames Valley the record rent levels seen in 2000 have not been sustained. Prime rents for out-of-town locations increased by an average 9.9 per cent for the year to June, and are now static. Interest from communications and high-technology companies has diminished, but this is balanced by healthy demand from pharmaceuticals and professional services companies. In Scotland, rental growth was just 2.9 per cent for the year although Edinburgh, which is now Europe’s sixth largest financial centre, saw strong demand from banking and financial companies. Countrywide, industrial rents increased by just 1.6 per cent over the year to June 2001 and in most locations were static in the second six-month period.
The city council of Bristol, South West England, has given approval for a major new city centre development. Developer Crest Nicholson’s Harbourside project, on a 20-acre site at Canon’s Marsh, will provide 300,000 sq ft of offices, 150,000 sq ft of leisure space and 450 new homes, and will create some 3,000 jobs. Work is expected to begin in autumn 2002. In Leeds, Yorkshire and Humber, developers have won approval for a $98 million redevelopment of a former Royal Mail building in the heart of the city centre. The landmark building will be transformed into a mixed-use development known as West Point. It will comprise 250 luxury residential and serviced apartments, a 40-bedroom hotel, offices and conference and leisure facilities.
Car output rises as Ford invests
One sector unaffected by the current economic gloom is the automobile industry. Car output for the domestic market rose in October by 32 per cent year on year, to 51,081 vehicles, according to the Office for National Statistics. Consumer demand has risen strongly after a stagnant start to the year, with buyers tempted by lower prices and incentives. Car production for export was almost unchanged from last year, down 0.3 per cent at 92,538 vehicles. Two out of every three cars built in the UK are exported, despite the relative strength of the pound against the euro.
Production of commercial vehicles rose particularly sharply, as the panel van joint venture at Luton, Eastern England, between Renault and General Motors came fully on stream. The surge was almost entirely export-driven, with October’s figure of 10,815 vehicles being more than double that of last year. Output for the domestic market was 8,894, up 3.8 per cent year on year.
Jaguar, the luxury car arm of Ford of the US, is planning to assemble its new F-Type sports car at its Castle Bromwich plant in the West Midlands, where it will invest a further $150-$200 million. It will produce around 20,000 of the high-performance roadsters each year, hoping to capture 20 per cent of the world market. Seen as the successor to the legendary E-Type, the F-type will sell for around $49,000-$56,000.
Another Ford subsidiary, Land Rover, has unveiled the heaviest and most costly mass-production vehicle ever launched in the UK. The new Range Rover, replacing the off-road model first launched in 1970, is 16 feet long and weighs in at nearly 2.5 tons. It will go on sale in February at an expected price of $70,000-$91,000. Production volumes are expected to reach 35,000 vehicles a year at Ford’s Solihull plant, where the new line will safeguard 660 jobs. It is the first all-new vehicle from Land Rover since Ford acquired the company from BMW in 2000. The German company bore a substantial part of the $1.4 billion development costs. Ford sees the new model as a significant plank in its restructuring programme and in recent months has overhauled production techniques at Solihull and retrained most of the workforce.
Meanwhile Ford’s Premier Automotive Group, which includes Jaguar, Land Rover and Volvo, has announced a collaboration with Warwick University that is claimed to be a model for future tie-ins between businesses and universities. The West Midlands institution has recently been praised by prime minister Tony Blair for its strong links with business. Its Warwick Manufacturing Group, headed by government adviser Professor Kumar Battacharya, will help Ford to develop new models, drawing on its expertise in areas such as lightweight materials, remote sensors, hydrogen fuel cells and computer-aided design. It will also provide management training, tailored to the needs of executives in the automotive industry.
Regions lead the way with regeneration initiatives
Four UK regions - South Yorkshire, Wales, Cornwall and Merseyside - have formed an alliance to help foster growth among small and medium-sized enterprises (SMEs). They will set up investment funds that will provide loans and equity investment to small business start-ups and expanding SMEs. The regions are among the least wealthy in Europe and all qualify for European Union Objective One funding. The EU is contributing $132 million of the $280 million cost of the initiative, with Barclays Bank contributing $118 million and the remainder coming from UK regional pension funds. The regions hope that the four funds will attract a further $400 million in private sector investment over the next decade. This would help to create or safeguard nearly 30,000 jobs and foster regional regeneration.
In south-east London, US office supplies company Office Depot UK Ltd has become the first occupant of Isis Reach, a 60-acre industrial park that was once the site of a power station and is now at the heart of a regeneration initiative by the London borough of Bexley. The company has moved into a 321,000 sq ft building that is claimed to be the largest speculative distribution facility ever built in the UK, bringing with it 150 employees from a former site and promising to create a further 500 jobs over the next three years [see picture].
Isis Reach, Belvedere, Bexley
In Lancashire, North West England, a new $4.9 million business park is set to create up to 90 new jobs in the area. Developer RB Business Park Ltd is transforming brownfield land at Colne into a facility offering five office blocks, together with parking and landscaped grounds.
In the West Midlands, the Rover Task Force initiative is in the process of creating three high-technology corridors where new businesses will be encouraged to locate, with the aim of linking up with existing research and manufacturing facilities and local universities. The initiative focuses in particular on the automotive industry and the corridors will cover areas where there are already many companies involved in the supply chain. One runs from the centre of Birmingham, past the Longbridge car works, along the A38 to the science park at Malvern in Worcestershire. A second links the towns of Wolverhampton and Telford while the third covers the triangle formed by the towns of Coventry, Warwick and Solihull.
Regional Development Agency Yorkshire Forward has retained a panel of 20 international architects and urban designers to revitalise town and city centres across its region. The body sees attractive urban centres as a vital ingredient in drawing inward investors and recruiting skilled staff, and is the first RDA to take such an approach. It has chosen ten towns in an initial pilot phase and will draw up detailed urban design strategies for the next 25 years. The towns include Scarborough, Doncaster, Huddersfield, Halifax, Grimsby, Rotherham and Barnsley.
In the meantime, Yorkshire Forward reports interest from more than 250 organisations, both in the UK and overseas, in its disposal of a diversified portfolio of land and property. A final shortlist of potential buyers is being drawn up and the RDA hopes to complete the sale by March 2002.
Northern universities focus on high-tech sector
Yorkshire Forward has launched a major international marketing campaign to attract investors to the UK’s first and biggest high-tech e-campus, at the University of Sheffield in South Yorkshire. The site, in the Sheaf Street area of the city, is a custom-built hub for digital, ICT, wireless multimedia and software companies, and is claimed to one of the most technologically advanced business sites in Europe. It has 600,000 sq ft of space available, with all the latest facilities. Yorkshire Forward representatives have targeted ICT investors in south-east Asia and in the US, with visits to Bangalore in India and November’s Comdex show in Las Vegas.
Sheffield is one of three northern universities - the others are Manchester University and the Materials Science Centre at the University of Manchester Institute of Science and Technology (UMIST) - that are joining forces with suppliers in the aerospace industry to create a regional research centre. The Northern Technology and Knowledge Exploitation Centre, supported by a $5.6 million grant from the government’s higher education innovation fund, will aim to establish spin-out companies in the aerospace sector. The North of England is home to around 200 companies in the aerospace sector, with Airbus, Boeing, BAE Systems and Rolls-Royce all having manufacturing centres in the region.
The University of Central Lancashire in Preston, North West England, is pressing ahead with plans to develop its Harris Knowledge Park campus as a business incubation centre. An $840,000 grant from the Northwest Development Agency will enable it to complete the second phase of the $2.1 million project. The park has 18 buildings, ten of which are Grade II listed. Six of these will be developed into flexible office space and the site’s infrastructure will be improved.
The University of York is one of the partners in a new $10 million Bioincubator project at York Science Park. Construction work has begun on the 32,000 sq ft facility which, when it opens in 2002, is expected to create 200 new jobs in 20 companies, at least ten of which will be laboratory-based. The Bioincubator incorporates 12,000 sq ft of biosafety containment level 2 lab space and provision for 3,500 sq ft of containment level 3 space, plus 7,500 sq ft of offices. Applications are invited from research organisations and start-up and spin-out companies.
Wales looks to innovation
The Welsh Development Agency (WDA) and the University of Wales, Bangor have put forward a joint planning submission for a Centre for Advanced Software Technology (CAST) at Parc Menai business park in north Wales. The 70,000 sq ft facility would function as a showcase innovation centre, offering R&D, incubation and training units under a single roof and is intended help drive the development of a global software cluster in the region.
It would also complement Parc Menai’s successful InTec innovation centre. Already under construction are seven high-tech business units aimed at companies in the IT, high-tech and service sectors and, in particular, at those graduating from the InTec centre. The new units are incorporated in two buildings, providing a total 22,000 sq ft of floorspace.
In south Wales, Swansea Technium, the flagship project of a Welsh initiative to foster an innovation-based economy, has been accepted as a member of the International Association of Science Parks (IASP), even though it is yet to reach its first birthday. Acceptance by the IASP, which has members in 47 countries, is judged on strict criteria and just six other UK science parks are currently members.
Following the letting of its first phase to a major government department, the developers of Waterside Business Park in Swansea have embarked on a second phase of construction. The Pensions Service has taken 40,000 sq ft of new office space on two floors at the lakeside office complex. The second $7 million phase will involve a further 28,000 sq ft on two floors, available in flexible suite sizes from 5,000 sq ft upwards. Completion is scheduled for April 2002.
Around the regions
The Taurus-Poseidon Group of Canada, a management consulting and corporate training firm, has set up a new office in Telford in the West Midlands. The company will initially employ six staff, rising to around 25 by 2004. The town’s inward investment body, the Telford Development Agency, is currently celebrating its tenth anniversary. In its first decade it has handled some 4,000 inward investment enquiries and has helped to create 21,000 new jobs and safeguard 8,000 existing ones.
Spanish automotive component manufacturer Grupo Antolin is to expand its new facility at EuroKent Business Park in Thanet, South East England. The 65,000 sq ft factory, which opened in August, will be extended by a further 38,000 sq ft, taking the company’s total investment to $16.8 million. Grupo Antolin, which employs 120 people in Kent, produces headliners for leading car manufacturers based in the UK, including Ford, Honda and BMW.
National Australia Group has opened a new call centre in Kilmarnock, Scotland that is expected to create up to 500 new jobs over the next five years. The new facility will serve as the company’s European customer contact centre, providing services to customers of the Clydesdale Bank, Yorkshire Bank, Northern Bank and National Irish Bank. National Australia Group is ranked as one of the 50 biggest banks in the world by revenue. It has over 12 million customers worldwide and more than 5,000 employees in Scotland alone.
A new online database containing research information on the East Lancashire region of North West England has been launched at: www.elp.org.uk. The Databank, devised by the East Lancashire Research and Intelligence Network, will function as a signposting tool to existing and planned research and information.
Tyco Capital Aerospace of New York has opened its first European office in London. The company is a unit of Tyco Capital, which in turn is the financial services subsidiary of diversified service and manufacturing company Tyco International. Tyco Capital Aerospace offers customised leasing and financial packages for new and used aircraft, and has more than 90 airline customers worldwide and a portfolio of over 250 commercial aircraft, from all of the major manufacturers.
The Completion Systems Division of Weatherford International Inc of Houston, Texas has bought BD Kendle Engineering, based in Great Yarmouth in Eastern England. Weatherford will distribute BD Kendle’s well servicing tools and associated equipment through its worldwide network.
GE Power Systems, part of Atlanta-based General Electric Company, has acquired Bals Electrical Engineering, a provider of sub-station engineering solutions and services, based in Normanton in Yorkshire, northern England.
Ethan Allan Interiors of Danbury, Connecticut has set up a joint venture with London-based MFI Furniture Group to open a series of retail stores in the UK. Each partner will invest $2.85 million in the venture, the first phase of which will involve the opening of five stores of approximately 10,000 sq ft each. The first will be in the Greater London area and will open by May 2002. Ethan Allan has 300 stores in the US, Canada and Mexico and 18 outside North America. MFI is the UK’s leading retailer of kitchen and bathrooms, with 204 outlets in the UK and 116 in France.
Danish company Coloplast of Copenhagen has acquired the continence care business of SSL International of the UK for around $116 million. SSL, based in Knutsford, North West England, supplies continence care products to the hospital and community sectors and includes the homecare group ThackrayCare Nursing Services.
Merchant bank Veronis Suhler of the US has acquired a majority stake in London-based Xtreme Information, through its New York equity affiliate VS&A Communications Partners III. Xtreme is a provider of advertising and editorial monitoring services across various media and is one of the world’s leading database companies for TV commercials. Veronis Suhler specialises in the media, communication and information industries, and this year is celebrating its 20th anniversary.
Hitachi Credit (UK), majority-owned by Hitachi Capital Corporation, has acquired Trowbridge Vehicle Rentals (TVC), based in Wiltshire, South West England, through Fleetlease, its contract hire and fleet management arm. Based in Hounslow, west London, Hitachi Credit was in 1997 the first UK-based Japanese subsidiary to gain a listing on the London Stock Exchange.
Winterthur Insurance of Switzerland has acquired the personal lines general insurance business of London-based Prudential Insurance. The deal includes a strategic alliance whereby Prudential-branded products will be sold through Winterthur’s UK subsidiary, Churchill.
The government is considering new legislation that will allow employees who are parents with children under the age of six have their company "seriously consider" requests for flexible working, so as to accommodate childcare arrangements. Trade and industry secretary Patricia Hewitt has indicated that, in most cases, companies will be expected to agree to such requests, having set a target consent rate of 82 per cent. The new legislation, which could apply to some 3.8 million parents, will come into force in April 2003, at the same time as new maternity and paternity rights.