News
April 2002
UK set to maintain position as leading FDI destination
The US, the UK and Germany are set to maintain their positions as the top three destinations for foreign direct investment (FDI) over the next five years, according to forecasts by the Economist Intelligence Unit (EIU). The overall volume of FDI flows fell sharply last year, from $1,318 billion in 2000 to $781 billion in 2001, and the EIU expects recovery to be slow, with the figure not rising over the $1,000 billion mark until 2005. However, it also expects the relative positions of the leading three countries to remain unchanged. On China, tipped by some to rise to second place behind the US following its accession to the World Trade Organisation, the EIU is cautious, predicting steady growth rather than a sudden surge in FDI.
The attacks on 11 September do not seem to have had a great impact on FDI flows, says the EIU. A steep decline was already under way by September 2001, driven by falling share prices and the global economic downturn. Business surveys suggest that investment intentions have not been radically altered as a result of 11 September.
The US is expected to continue to receive around a quarter of all FDI globally. Many countries in Europe, however, receive greater inflows of FDI relative to their size. In the UK last year FDI inflows were worth 4.8 per cent of GDP, and those into France and Spain 3.4 per cent, compared with 1.8 per cent in the US. The UK’s attractions include the English language, a favourable tax and regulatory environment for business and a strong skills base in industries such as financial services. The EIU believes these advantages will help to sustain the UK’s high levels of FDI, even if the country stays out of the euro: access to European markets appears to be a more important factor in attracting FDI than membership of the single currency.
UK leads the way in high-tech sector
The UK leads the Group of Seven (G7) countries in the high-tech manufacturing sector, according to the latest UK Competitiveness Indicators from the Department of Trade and Industry. Its knowledge-based industries - such as aerospace, pharmaceuticals and telecoms - are responsible for 54 per cent of output, higher than in Italy, Canada and the US and similar to Japan and France. Foreign firms are increasingly seeking access to its high-quality science base, with the share of UK R&D accounted for by foreign affiliates one of the highest in the OECD. The UK’s growth in GDP per head is currently second only to that of the US and the country has the highest level of venture capital investment in the EU as a percentage of GDP. It has also overtaken the US and Canada to record the largest percentage of businesses connected to digital networks.
"The UK pharmaceuticals sector alone contributes over $3.5 billion annually to British GDP and directly employs around 60,000 people, over half of them in research," said trade secretary Patricia Hewitt. "We lead the world in key areas such as electronics design, photonics, mobile network and broadcast technologies and the creative industries."
There are still weaknesses, however. The indicators show that UK workers are relatively less skilled than their European counterparts and that the culture as a whole is less entrepreneurial and risk-taking. To address these shortcomings, the government plans to introduce regional venture capital funds, regional selective assistance grants for manufacturers, more extensive training schemes and an R&D tax credit scheme for smaller firms.
Nissan chooses London as design base
London’s reputation as an international hub for manufacturing design is attracting an ever-increasing number of companies to set up operations in the city. Recent arrivals include Korean corporation Samsung, which set up a base in December 2000 to provide intelligence on the European market to Korean designers, and Ford, which has opened its Ingeni design centre in Soho, in the heart of the West End.
Now Japanese car manufacturer Nissan has announced plans to establish a new design centre in Paddington, an up-and-coming area on the west side of central London. Nissan Design Europe will begin operations in January 2003 and will be one of six studios in the company’s worldwide design network. It will be based in the Rotunda, a former British Rail maintenance building constructed in the 1960s which has Grade II* listed building status. Nissan has taken a 30-year lease on the 30,000 sq ft building.
The company plans to employ around 40 international designers, modellers and support staff in the new studio, working on concepts and designs for the next generation of Nissan cars. The studio will concentrate mainly on vehicles for the European market but will also work on other projects worldwide. "The decision to establish this new European design centre shows how committed we are to design, which is now taking a leading role within Nissan," said Shiro Nakamura, senior vice president of Nissan Motor Company and the new president of Nissan Design Europe. "We wanted to give our designers a creative environment in which to work, and we feel that the location we have chosen is perfect. We chose London for its vibrancy and multi-culturalism, as well as its strength in all art mediums including fashion, art, architecture and car design."
Port of London ties up with Thailand
The Port of London Authority (PLA) has signed a joint marketing initiative with the Port Authority of Thailand (PAT) - its third such tie-up after agreements with the Algeciras Bay Port Authority (ABPA) in Spain and the Port of Hamburg in Germany. With the continued growth worldwide of seaborne trade, there is much potential for increased movements between the two countries. PAT sees this as an opportunity for its container terminal at Laem Chabang to become a major regional port for the South East Asian region, while the PLA hopes the relationship will help boost trade through the second berth recently completed by Tilbury Container Services.
The two ports are of a similar size: the Port of London broke the 50 million tonnes per annum mark in 2001, while the Port of Bangkok and the Laem Chabang container terminal together handled 35 million tonnes. Both have riverside terminal operations and container facilities which directly serve their respective capital cities. Both also have plans to develop additional major container facilities: in London, the planned London Gateway development is slated to become the UK’s largest container facility, serving not only markets in London and South East England but other major regional markets in the UK and in north west Europe. The expansion is expected to create thousands of jobs.
The agreement will see a cross-flow of maritime business between the two ports. Co-operation will be largely in the pooling of market intelligence and the sharing of new business leads. Other areas of co-operation will include all aspects of marketing, including attendance and speaking opportunities at international conferences and exhibitions.
The agreement comes at a time when growth in container traffic is starting to put a squeeze on capacity in the UK. Factors such as rising world trade, global production processes and the increasing use of containerisation have seen the number of 20-foot equivalent teu boxes increase on average by 5.4 per cent each year between 1990 and 2001. This growth is forecast to continue at a rate of 4.5-5.5 per cent until 2015. The biggest ships can currently carry 8,000 teu, though there are plans for ships with a capacity of 12,500 teu. However, the bigger ships get, the fewer ports can accommodate them.
Operators agree that at present port capacity is sufficient but, unless ports expand, the UK will start running out of container space soon. To alleviate the problem, three new ports have been proposed: at Dibden Bay, opposite the existing port at Southampton on the south coast; at Bathside Bay, next to Harwich in Eastern England; and at Shell Haven in the Thames estuary, near London.
Another possibility would be to use existing hubs on mainland Europe and trans-ship cargo to the UK in smaller ships. According to Colin Beaumont, director-general of the British International Freight Association, shipping operators are split on the subject. "It doesn’t make a great deal of difference these days where cargo is loaded or discharged because the connection links are very good," he said.
New link for City Airport as ‘shard of glass’ gets go-ahead
London City Airport is to get its own rail link, after the government granted planning permission for an extension of the Docklands Light Railway. The $161 million link, due for completion in 2005, will offer a 21-minute journey to Bank Underground station in the City of London and a 14-minute connection to the financial district at Canary Wharf.
The airport, six miles east of the city and three from Canary Wharf, has grown rapidly, with passenger numbers tripling in the past six years. The new connection is vital to its expansion plans, which will see passenger numbers grow from 1.6 million in 2001 to 4 million by 2010. The airport already has approval to increase scheduled aircraft movements from 55,000 to 73,000 a year, and it is investing nearly $35 million to increase runway capacity and to raise the number of aircraft parking stands from 10 to 15.
Meanwhile at London Bridge, on the edge of the City, Southwark Council has given the go-ahead for London Bridge Tower, a 66-story ‘shard of glass’ which, if built, will be Europe’s tallest skyscraper. The 1,000 ft structure, designed by Renzo Piano, has attracted a degree of public support as a dramatic new landmark on the London skyline (see picture). "There is considerable excitement about having such a landmark for the borough," said council leader Stephanie Elsy.
However, planning consent is conditional on the tower forming part of a major redevelopment scheme for the London Bridge rail and underground interchange, and at present station operator Railtrack is $280 million short of the sum it needs to fund the scheme. Additionally, conservation body English Heritage is concerned at the impact the building may have and is likely to oppose the scheme at a public inquiry.
Artist's impression of London Bridge Tower (NewsCast )
Government backs broadband initiatives
E-commerce minister Douglas Alexander has revealed details of a $42 million government plan to accelerate the roll-out of broadband, ‘always on’ internet access throughout the UK. Initiatives, to be managed by Regional Development Agencies, include wired-up business parks, broadband links to schools, health centres and libraries, trials of satellite and wireless technologies and an entire broadband town.
Business parks in Yorkshire and Humberside will be wired up with broadband links, while small and medium-sized enterprises in the South East will be provided with broadband connections at free or reduced rates. New technologies such as wireless and satellite broadband will be trialled in rural areas of East Midlands, and ‘connecting communities’ will be set up in a number of villages and market towns in the East of England. The town of Buckfastleigh in Devon, South West England will be a showcase for the new technology, with its school, library, health centre and town hall all wired up and a new community access centre made available.
Other initiatives are to be taken elsewhere, all with the aim of introducing small businesses and consumers to the advantages of broadband. "Broadband makes a real difference, not only to successful e-commerce, but to a successful economy, opening up brand-new opportunities for business, leisure and lifestyle initiatives," said Mr Alexander.
English Partnerships refocuses priorities
The government’s regeneration agency English Partnerships is to refocus its activities, concentrating henceforward on the regeneration of brownfield sites. It will continue to manage a national portfolio of strategic sites and demonstration projects, but will transfer its non-strategic Commission for the New Towns (CNT) landholdings to appropriate bodies such as local authorities and will progressively relinquish its CNT planning powers. A new Chair has also been appointed: Margaret Ford, who has considerable experience in economic development and of working with government agencies.
Meanwhile Priority Sites, the joint venture company set up in 1997 by English Partnerships and the Royal Bank of Scotland, has notched up its millionth square foot of development space. A commemorative stone has been laid to commemorate the milestone at Wansbeck Business Park in Northumberland, where work has begun on the third phase of a $5.2 million development. The public-private company is building three new industrial units at Wansbeck, in an investment that is expected to create 60 new jobs. The initial $3.5 million investment, undertaken in partnership with local RDA One NorthEast, has already created more than 100 jobs, with US-based manufacturer Thermacore Europe and local firm Sugarfayre occupying new industrial premises on the site.
West Midlands puts faith in high-tech and auto industries
PSA Peugeot Citroën, the French motor group, is to build the estate version of its 206 car at its plant in Coventry in the West Midlands. The company plans to invest about $16 million in the plant and to change working practices to allow continuous production of the vehicle, to be known as the SW. It will also recruit 700 temporary staff to cover workers on leave, avoiding the annual two-week holiday shutdown in the summer.
Jaguar Cars meanwhile, part of the Ford group, is considering up to 1 million sq ft of development at the site in Whitley, Coventry which it jointly owns with Coventry City Council. Whitley is already the home of Jaguar’s prestigious engineering centre, and there is potential for the site to become a centre of excellence for automotive design and prototyping. It also has an excellent location, with immediate access to the A45 highway and three major motorways just 10 minutes away. Jaguar recently broke through the annual sales barrier of 100,000 units worldwide for the first time, marking its fourth successive annual sales record. Visteon, the company’s biggest supplier, plans to increase its workforce at its Coventry customer service centre from 60 to 100.
The West Midlands is a major centre for the automotive industry and its three biggest car manufacturers - Peugeot, Jaguar and Land Rover - have all expanded over the past year, bucking the general trend for the manufacturing industries. Specialist companies involved in activities such as vehicle research and design, engine production and other value-added activities are also doing well. Land Rover recently announced that it is to base the $3.5 billion development of its new Discovery model at its plant in Solihull.
The electronics industry is another important revenue generator for the region. Again battling against a global downturn, local knowledge-sector companies, including research and design houses and specialist and games software developers, have been doing well, registering growth of 3.7 per cent over the past year. Local RDA Advantage West Midlands has identified a high-technology ‘triangle’ around the towns of Solihull, Coventry and Warwick, with more than 1,300 ICT and software companies concentrated in the area. Three-quarters of these companies are local but many of the world’s leading global players also have a presence. Between them, ICT firms in the West Midlands employ more than 40,000 people.
A major new development just to the north of Coventry city centre is designed to attract new and small businesses in the ICT and creative sectors. Electric Wharf is a 12-acre canalside development based on the Victorian buildings of Coventry’s first power station. Two massive turbine halls and a five-story boiler house will be converted into a mix of studios and offices with apartments above. Fitted out to the latest environmental standards, the development will also offer ISDN and ADSL cabling. In total, there will be 65 live/work units, 18 eco-friendly ‘workhomes’, six flats and 20 office units. The development will be phased over two years, with completion set for October 2003. Work has already begun and the first units will be ready for occupation by the autumn.
Teesside wins major new biotechnology investment
Avecia, Europe’s largest privately owned specialty chemical company, is to build one of the world’s most advanced drug manufacturing facilities at Billingham, Teesside in North East England. The $98 million biological medicines plant is expected to create up to 300 science-based jobs, as well as many others in construction and support services. Backed by a $9.1 million regional assistance grant from the Department of Trade and Industry, Teesside was chosen despite strong competition from a site in Canada where Avecia already has operations. Neil Etherington, chief executive of inward investment body the Tees Valley Development Company, hailed the announcement as "conceivably the most important inward investment into our area in the last decade". The North East has undergone dramatic restructuring in recent years as its once-dominant steel industry has declined.
The Avecia plant will have a capacity of 40,000 litres of biotech drugs, known as biologics, when it is completed in 2005. Biologics are based on natural proteins or DNA, large and complex molecules that are produced in living cells in fermentors; they are used to treat cancer, diabetes and heart conditions. The UK is a world leader in biotechnology: its industry is second in size only to that of the US but until now has been constrained by a lack of manufacturing capacity. The new plant will be the largest purpose-built pharmaceutical microbial fermentation facility in the world, accounting for about 10 per cent of global capacity.
Meanwhile another biotechnology company, Upstate of Charlottesville, Virginia, has announced plans to establish a European R&D base at the Bioscience Innovation Centre in Cambridge, Eastern England. The company’s speciality is assay kits used in drug development in the pharmaceutical industry, in academia and by international research organisations. It expects to create 15 new jobs over the next three years.
South West sets out to woo investors
The South West of England Regional Development Agency has been particularly active in recent months in promoting the region. So far in 2002 it has attended the Milia multimedia show in Cannes, France and Nasscom in India, both of which produced good contacts with high-tech companies. In March it had a presence at the world’s biggest technology trade fair, CeBIT 2002, in Hanover, Germany, and at MIPIM, Europe’s leading trade fair for the property industry. Information and computer technology is an important sector in the South West, employing around 60,000 people or 1 in 35 of the entire workforce.
Also in March the RDA exhibited at the Oceanology 2002 show in London. The South West is the UK’s most important region in terms of marine science and coastal development, with 700 miles of coastline and nowhere more than 40 miles from the sea. Some 70 per cent of the UK’s marine biologists and 50 per cent of its oceanographers are concentrated in the region, and it is an international centre of excellence in marine research.
A key plank in the region’s development strategy is the new International Business Park that is taking shape at Plymouth. Regeneration agency Priority Sites is building a technology park comprising four speculative units with a total 53,000 sq ft of space. The units, ranging in size from 4,844 sq ft to 30,667 sq ft will offer space for high-tech manufacturing together with office use, and will be ready for sale or letting by late summer this year. The development is part of a strategy to establish the 82-acre business park as a key investment destination for R&D, technology and innovation.
North West sets sights on development
The Halton Partnership, a development body with responsibility for the area around the towns of Runcorn and Widnes in North West England, has secured $11 million in European Union funding to help regenerate a 200-acre site at Southern Widnes. The New Widnes Waterfront Vision project is expected to involve a major development of commercial and industrial premises, together with new leisure and tourism facilities.
The area is already attracting top-quality companies, with international insurance group Aegon recently signing up for a 25-year lease on a 55,600 sq ft building at Daresbury Park. The business park is already home to companies such as Vistorm, ABB Eutech and the De Vere Group; it has secured planning permission for a new phase of development, which should see two new buildings with a total space of 70,000 sq ft reaching completion in the summer.
A 13-acre science park is also to be created at the nearby Daresbury Laboratory. The first phase of construction will involve 30,000 sq ft of incubator units to accommodate spin-out businesses from the laboratories; the second phase will include 20,000 sq ft of shell offices for commercial rent. Both phases should be complete by autumn this year, and the development is expected ultimately to create around 750 jobs.
Around the regions
NCR Corporation has opened its new $28 million research and development facility - the Discovery Centre - in Dundee, Scotland. NCR has had a presence in Dundee for 50 years and currently employs 1,800 people at a number of sites. The new centre brings together most of its R&D team in a single building and provides purpose-built laboratory space for engineering development. Projects currently under way at the centre include automated deposit and cheque cashing machines, ATMs that dispense cash by connecting with a mobile phone or PDA and biometric technology, including iris and voice recognition.
R-Quest Technologies of Placerville, California has opened an engineering sales and support centre in York, Yorkshire and Humber, to serve the European market. R-Quest, an industry leader in the design, manufacture and programming of CD-R/RW and DVD-R duplication equipment, hopes to begin manufacturing in York in the near future.
The board of Telford Development Agency (TDA), in the West Midlands, has appointed Tony Jemmett as its new Chair. Mr Jemmett, managing director of the Midlands Business Unit of property assets consultancy BK, succeeds Dr Malcolm Hall. Professor Gerald Bennett, pro vice chancellor of the Telford University Campus, becomes Vice Chair. In 2001 TDA handled more than 500 enquiries, helping 59 companies to set up in the area, creating 1,000 new jobs and safeguarding a further 400.
The East Midlands Development Agency (emda) has launched a Business Champions scheme under which local business leaders have pledged to share their commercial expertise with young, up-and-coming companies. Around 470 Champions have signed up across the region to date, creating a valuable bank of expertise on which young entrepreneurs can draw; they also work with enterprise-based organisations and generally act as ambassadors for the region.
Ferry operator Ferryways has signed a five-year agreement to run services from the Humber Sea Terminal at Killingholme, Yorkshire and Humber to Ostend in Belgium. The service will run six times a week. In the meantime DFDS Tor Line has launched a direct passenger and freight ro-ro service between Harwich in the East of England and Cuxhaven in Germany. The journey time is about three hours shorter than the existing Harwich-Hamburg service, which it replaces. DFDS will offer six to seven sailings a week.
Ritek of Taiwan is to set up a high-tech company, Rixell, and build a $39 million manufacturing plant at Omagh, Northern Ireland to produce rewritable optical storage discs (CD-Rs). The plant will have 27 production lines capable of producing 17 million units a month at full capacity. It is expected to create 150 new jobs over the next three years.
South Korean company Advanced Digital Technology (ADT) is to invest $4 million in a facility in Downpatrick, Northern Ireland, where it will manufacture set-top boxes (STBs) for the European satellite television and radio market. The investment is expected to create 70 new jobs over the next three years. ADT has a strong track record in STB development, including the first box to combine STB and DVD technologies. It currently supplies boxes to a number of major European companies, both under its own brand-name and others.
Auto retailer United Auto Group (UAG) of Detroit is to acquire the Sytner Group of Leicester, in the East Midlands, for $135 million. It will also take on the company’s bank debts of around $20 million. Sytner has been retailing and servicing cars for more than 30 years and operates 48 franchise outlets. UAG is the third largest car retailer in the US, with 127 franchise dealerships in 19 states, together with Puerto Rica and Brazil.
Wireless infrastructure solutions company Cyneta Networks Inc, of Richardson, Texas, is to open a new office in London, with the aim of building a European presence.
Computer giant ICL has become the first occupier at the 400-acre North Manchester business park, set in the east Manchester regeneration area, in North West England. The company has taken 150,000 sq ft of prelet space, with an option to take a further 50,000 sq ft due for completion by late 2003.
Solus Micro Technologies of Westlake Village, California, a developer of dense wavelength division multiplexing (DWDM) equipment, has opened a development facility at Bracknell, South East England. The new facility will initially have a staff of five engineers and will focus on electronics integration of the company’s tunable optical components.
TeleCommunication Systems (TCS) of Annapolis, Maryland, has opened a European headquarters in London. The company designs software and solutions for carriers such as Vodafone, Telefonica and Qwest and the London office will provide support for existing customers across Europe.
TOWARD (Tour Operators and Wholesalers Achieving Real-time Distribution) a global distribution standards body for the travel industry, has opened a European office in London. The Norcross, Georgia-based organisation, formed in November 2000, aims to create global distribution standards for the leisure travel industry by bringing together key players in the worlds of travel and technology.
US corporation Curtiss-Wright of New Jersey has paid $60 million for the non-core aerospace component businesses of network technology company Spirent, based in Crawley, South East England. Curtiss-Wright manufactures products for motion control and flow applications; the companies it is acquiring are involved in the design and manufacture of aerospace position sensors and control hardware.
French company SMIE, based in Noisy-le-Grand, has bought its former UK agent Cranesafe, located in Guildford, South East England. SMIE specialises in anti-collision systems for cranes and also offers consultancy and training services. It has recently introduced a radio/web communications service to improve maintenance operations.