November, 2004

News

UK remains top of European league for investment
The UK remains the top destination in Europe for inward investment, according to the World Investment Report 2004 from the United Nations Conference on Trade and Development (UNCTAD). In 2003, the UK increased its inward investment stock by $104 billion to a total of $672 billion, accounting for more than 20 per cent of total investment stock in Europe. Germany was in second place with $545 billion, France in third with $433 and the Netherlands fourth with $335 billion. After the UK, the biggest gainer during the year was Belgium/Luxembourg, which saw an increase of $97 billion, followed by France and Italy with increases of $47 billion apiece. Trade Minister Douglas Alexander said of the UK’s continuing success: “It is clear evidence that our stable economy, skilled workforce and strong IT and telecoms infrastructure provide the right conditions to attract international companies and create jobs in an increasingly competitive global market place.”

However, the amount of foreign direct investment coming into the UK in 2003 fell by 48 per cent compared with 2002, from $27.8 billion to $14.5 billion, as global FDI levels declined for the third successive year. Inflows to developing countries rose by 9 per cent in 2003 but inflows to rich countries fell by 25 per cent, reflecting a 20 per cent drop in cross-border mergers and acquisitions. Two-thirds of FDI went to the Asia-Pacific region, with China alone accounting for $54 billion. Flows to the US, however, halved to $30 billion, the lowest level since 1992. Global FDI stood at $560 billion in 2003, less than half the peak level seen in 2000. Nonetheless, UNCTAD predicted that global investment flows would rebound from this low point, driven by offshoring and the expansion of economies such as China’s.
 

… and ranks as most attractive FDI destination in Europe
In another survey, by management consultancy firm AT Kearney, the UK is ranked as the most attractive destination for FDI in Europe. Worldwide, the FDI Confidence Index 2004 sees the UK jump from seventh position in 2003 to fourth, behind China, the US and India. According to the report, investors in the US find the UK their second most attractive world market and put more cumulative investment into the country than into any other. The UK accounts for 15 per cent of total US outward FDI stock and has a larger US corporate asset base than Asia, Latin America, Africa and the Middle East combined. Confidence levels in the UK are also high among Asian investors.

The UK is expected to have one of the strongest growth rates in Western Europe again this year, well above the average growth rate for the eurozone, says the report. Its innovation and technology-driven economy make its companies attractive M&A targets; one of the biggest deals worldwide in 2003, for example, was General Electric’s $9.5 billion acquisition of British medical imaging and biotechnology firm Amersham. For the second year in a row, the UK, the US and Ireland emerged as the most favoured offshore locations for corporate investors. All three were expected to benefit from IT, knowledge management and business process offshore investment, with UK cities such as Glasgow and Belfast cited as favourite locations for call and contact centres.

Germany was ranked the fifth most attractive FDI destination in the world, France was sixth and Italy ninth. For the first time since 2000, AT Kearney found that a sizeable majority (69 per cent) of senior executives were more optimistic about the global economy than before, with only 10 per cent expressing greater pessimism.


Global competitiveness ranking improves
The UK has moved up four places to 11th overall in the World Economic Forum’s annual Global Competitiveness Report, putting it comfortably ahead of European competitors such as Germany (in 13th place), France (27th) and Italy (47th). The Nordic nations lead the world in competitiveness, according to the survey, with Finland topping the poll for the third time in four years. The US was in second position, followed by Sweden, Taiwan, Denmark, Norway, Singapore, Switzerland, Japan and Iceland. Canada was 15th. Estonia, at 20th, was the best performer among the ten countries that joined the EU earlier this year. Chile, at 22nd, was the most competitive economy in South America, while South Africa (41st) was the best performer in Africa. China, at 46th, had a mixed performance, with a stable macroeconomic environment but poor accounting standards and too much red tape.

The Swiss-based WEF compiled its rankings from a poll of 8,700 business leaders worldwide. The survey aims to reflect a broad range of factors affecting the status of a country’s economy, including a stable macroeconomic environment, the quality of public institutions and levels of technological development. Countries do not compete in the same way that businesses do but the survey, now in its 25th year of publication, is a good indicator of how supportive the environment for growth is in individual countries.

The WEF praised Finland for the quality of its public institutions and the high levels of innovation in its private sector, and the Nordic countries in general for their sound macroeconomic management, innovation, low levels of corruption and transparent legal environments. All are running budget surpluses, partly to prepare for the pensions and healthcare needs of ageing populations – unlike the US and most of the rest of Europe.

The UK scored well for promoting a good business environment, but fell down on its infrastructure and the education levels of its workforce. The US took second place largely on the strength of its technological supremacy, but its performance was weaker in the area of public institutions. It ranked 78th in the management of public finances.

UK is a good place to do business, especially for R&D
In another major international survey, the UK ranked seventh in terms of ease of doing business. The report Doing Business in 2005; Removing Obstacles to Growth, by the World Bank and the International Finance Corporation, ranked 145 countries on seven business environment indicators: starting a business, hiring and firing workers, enforcing contracts, getting credit, closing a business, registering property and protecting investors. The top ten countries were New Zealand, the US, Singapore, Hong Kong/China, Australia, Norway, the UK, Canada, Sweden and Japan.

The report found that new entrants to the European Union had done most to reform their investment climates over the past year, with Slovakia outstanding amongst them. Slovakia has cut in half the amount of time it takes to set up a business and has seen a 12 per cent jump in new business registrations after simplifying its entry procedures. Some Europe and Central Asia (ECA) countries, such as Belarus and Azerbaijan, however, were among the world’s least friendly environments for business. Generally, administrative procedures in poor countries made it twice as hard for entrepreneurs to set up a business than in more developed countries.

The UK is particularly attractive to companies planning to carry out research and development activities. A report by the Economist Intelligence Unit (Scattering the seeds of invention: The globalisation of research and development) ranks it the fourth most attractive in the world for R&D spending over the next three years. Some 24 per cent of senior executives identified the UK as their top R&D destination, ranking it behind China (39 per cent), the US (29 per cent) and India (28 per cent), but ahead of Germany (19 per cent), Brazil (11 per cent) and Japan (10 per cent). France and Italy both attracted 9 per cent of respondents and the Czech Republic 8 per cent.

In total, 52 per cent of companies surveyed intended to increase their overseas R&D spending over the next three years, while a further 38 per cent will maintain it at current levels. Factors encouraging companies to invest overseas include local research talent, skilled labour forces and the size of markets. Countries such as the UK are attractive to companies doing innovative research, as they offer a sophisticated research structure, strong links to leading universities and robust legal protection for intellectual property. Most R&D in emerging markets, by contrast, is focused on product development.

London is Europe’s top business city – again
For the fifteenth consecutive year, London has been voted Europe’s best city for business in Cushman & Wakefield Healey & Baker’s annual European Cities Monitor report. It beat off opposition from 29 other European cities, including Paris, Frankfurt, Brussels, Amsterdam and Barcelona, in a survey of 500 of Europe’s largest companies. In fact, it has even improved on last year’s performance, coming top in seven different categories, compared with five in 2003. It was rated number one for easy access to markets, availability of qualified staff, external transport links, quality of telecommunications, languages spoken, availability of office space and internal transport.

London has maintained its lead over Frankfurt as the perceived financial capital of Europe, with 63 per cent of respondents saying it would be the most important financial centre in five years’ time, compared with 18 per cent for Frankfurt. Together with Barcelona, it was also seen as the most effective city for self-promotion. New investors in the UK capital cite its large pool of skilled workers, its concentration of multinationals and its multiculturalism as reasons influencing their decision to locate there.

London is also a global financial leader, handling more currency trades than any other city in the world, according to the latest survey of the foreign exchange markets by the Bank of International Settlements (BIS). The UK capital captures 31 per cent of daily global currency trading, compared with 19 per cent for the US, 8 per cent for Japan and 5 per cent apiece for Germany and Singapore. London has been at the forefront of currency trading since the early 20th century, and all five of the biggest currency trading banks have their heads of foreign exchange based there. According to bank data collected by BIS in April this year, London’s average daily currency trading amounted to $753 billion, up 49 per cent since 2001. Spot trading accounted for $222 billion of turnover and forward instruments $531 billion.

New funding for groundbreaking science projects
New funding of $266 million has been announced for two particle accelerators to help UK scientists in areas such as medical research, super-fast computers and clean energy. The huge and complex machines – ISIS and Diamond Light Source – produce light beams and particles of exceptional energy that allow researchers to probe the internal structures of materials. The bulk of the investment – $216 million – will be used for phase two of the Diamond Light Source facility, with $30 million coming from the Wellcome Trust and the remainder from the government. This is the largest science facility to be built in the UK for 30 years, and will cover an area the size of five football fields. Due to open in 2007, it will provide infra-red, ultra-violet and X-ray beams of exceptional brightness. The rest of the money will be used to provide new high-tech instruments and increase capacity at the ISIS facility. This is the world’s brightest pulsed ‘spallation’ neutron source, and works by firing protons at a target that in turn releases neutron beams.

Nowgen, the North West Knowledge Park based in Manchester, has completed the construction phase of its landmark building, the Nowgen Centre. The centre, built at a cost of $6.3 million, will be ready for occupation in December, and an official opening ceremony is planned for March 2005. It is located in one of Manchester’s busiest scientific and healthcare hubs, and will provide a range of research and teaching facilities. Nowgen is a partnership project of the universities of Manchester, Lancaster and Liverpool and the Central Manchester and Manchester Children’s University Hospitals NHS Trust. It is one of six government-backed Genetic Knowledge Parks across the UK dedicated to applying the outcomes of genetic research.

The Engineering Department at the University of Lancaster, meanwhile, is spearheading a new Europe-wide initiative in micro- and nanotechnology. The department’s Centre for Microsystems Engineering is leading a programme that involves 24 research centres combining their resources to help develop methods for building micro- and nano-scale components into commercial products. The four-year project, supported by funding from the European Commission, will also launch support services across Europe for manufacturers of such products.

Three UK products were among the 20 winners of the European Information Technologies (IST) Prize announced in September. The IST Prize, organised by the European Commission, is Europe’s most prestigious award for IST products. Now in its tenth year, it recognises entrepreneurial teams that generate novel ideas and R&D and convert them into marketable products. Winners receive cash prizes and are invited to exhibit their products at the annual IST event. The British winners in 2004 were Filmlight, alert technology company Skinkers and Babboo.com, a company that specialises in the automatic cloning of databases and applications.

The Clothier Laboratory in Hebburn, South Tyneside in North East England is due for a renaissance after being acquired by the New and Renewable Energy Centre (NaREC). The lab, housed in a landmark building, is the UK’s only commercial high-voltage testing laboratory and one of few facilities worldwide with the ability to test the performance of electrical equipment under extreme conditions. It provides internationally recognised standards certification. The transfer to NaREC will safeguard 12 jobs at the site and will provide the basis for an expansion of the lab’s activities in the electrical energy sector.

Funding has been secured for an ambitious new phase of development at the Malvern Hills Science Park in Malvern, West Midlands. The new project will provide accommodation for technology-based companies alongside the existing science park and will include one of the UK’s most environmentally friendly buildings. The park opened in 1999 as a partnership between defence researcher QinetiQ, the area’s largest employer, and a number of local authorities. It lies at the southern end of the region’s Central Technology Belt, which runs from Birmingham to Malvern, and its first two phases are already full to capacity. The new phase will feature environmentally friendly technologies such as thermodeck flooring and a groundwater heat exchange.

Nissan commits to building new model at Sunderland
Japanese car-maker Nissan is to manufacture a new people carrier at its plant in Sunderland, North East England. The Tone, a small people carrier unveiled at the Paris motor show, will be produced at Sunderland from 2006, helping to preserve 1,000 jobs. Nissan will invest between $179 million and $359 million in upgrading the plant, which is regularly rated as the most efficient car factory in Europe. Nissan has been a critic of the UK’s decision to remain outside the European single currency, but will source some 75-80 per cent of the components for the new car in euros to offset currency risks. It is hoping to sell 50,000-130,000 a year of the new model, which shares much of its structure with the popular Micra model. The company will continue to make the larger Almera and Primera models at Sunderland. Despite declining in popularity in Europe, these cars continue to sell well in Russia.

Ford-owned Jaguar, meanwhile, reported encouraging sales in September, following a radical restructuring package that will see it close its historic Browns Lane factory near Coventry in the West Midlands and withdraw from Formula One racing. The company sold 6,220 cars for the month, 200 more than in the same month of 2003, despite the total new car market shrinking by 2 per cent year-on-year, to 430,763. Jaguar’s introduction of diesel versions of its S-Type saloon and X-Type small car range has seen sales for the first three quarters of the year rise to 27,376, up nearly 17 per cent on 2003.

The news is less good for British-owned MG Rover. It saw September sales of its Rover brand fall by 35 per cent year-on-year, leaving sales for the first three quarters down by 23 per cent at 37,640. Its MG brand saw September sales plummet by 33 per cent although, at 26,000 units, sales for the first nine months were down only 14 per cent year-on-year. The company is hoping to revive its fortunes through a strategic alliance with Chinese car giant Shanghai Automotive Industry. Overall, new car sales in September brought the total for the first nine months of 2004 to 2,079,956 vehicles, just 0.3 per cent higher than in the same period of 2003.

New regulations introduced for business
A variety of new business regulations came into effect on 1 October, covering issues such as the minimum wage, disciplinary procedures, disability discrimination and employment tribunals. This is in accordance with the government’s decision to introduce changes to employment law on just two days of the year, 6 April and 1 October.

The minimum wage has increased to $8.70 an hour for adults, and to $7.40 for those aged between 18 and 21. A new minimum hourly rate of $5.40 has been introduced for school leavers aged 16 and 17. Employers of homeworkers must pay the minimum wage for all hours worked. The changes are expected to benefit between 1.6 and 1.9 million low-paid workers. The Disability Discrimination Act 1995 has been amended, requiring all employers to treat disabled workers fairly and all service providers to make ‘reasonable adjustments’ to their premises to ensure physical access.

With reference to dismissal, disciplinary action and grievances in the workplace, all employers must have in place a minimum three-step procedure for handling disputes. This should include setting the grievance down in writing, inviting the employee to attend a meeting to discuss the issue, and offering an appeal if the employee is not satisfied with the outcome. The regulations are intended to encourage settlement of disputes in the workplace itself and to cut the number of cases going to employment tribunals. A revised version of the widely used Acas Code of Practice on grievance procedures has come into effect to reflect the changes.

Technium establishes international connections
Numerical Control Computer Sciences, a California-based supplier of advanced design and manufacturing software to the aerospace, automotive and heavy machinery industries, has opened a customer service subsidiary at the Digital Technium business incubator centre on the campus of Swansea University. The university’s computer sciences department is ranked one of the best in Europe and was an important factor in NCCS choosing Swansea. It hopes to work with scientists from the university on research projects and to offer intern and full-time positions to students and graduates. The new operation will initially employ seven people and will service NCCS’s European customer base, which includes companies such as Airbus, EADS and GKN.

The pan-Wales Technium business incubator network will be the base for a new initiative aimed at attracting high-tech Chinese companies to use Wales as a gateway to the European market. The China UK Business Incubation programme, an initiative by the Welsh Development Agency, has been made possible by the signing of a strategic alliance between Technium and Shanghai Fudan Science Park, one of the most successful in China. As part of the deal, Welsh companies wishing to assess the Chinese market will have use of facilities at Fudan.

BT hosts global interoperability event
More than five million people, or 20 per cent of households, in the UK now have broadband internet connections, according to the Telecom Markets’ Broadband Subscriber Database. This is expected to grow to eight million, or 32 per cent of households, by the end of 2005. There was a 6.4 per cent increase in the number of active subscriptions to the internet between August 2003 and August 2004, with the share of permanent connections increasing from 17.8 per cent to 32.8 per cent.

BT’s Adastral Park site in Ipswich, Suffolk has been chosen by the Multiservice Switching Forum (MSF) as the European test site for the Global MSF Interoperability (GMI) 2004 event. The site is the headquarters of BT Exact, BT’s technology and IT operations division. GMI is being hosted by major carriers in the UK, North America, Japan and Korea. The test centre labs will be connected by live network facilities, creating a realistic global environment to test interoperability and the deployment readiness of vendors planning to deliver multi-service next-generation telecoms networks. The event will test basic point-to-point voice over internet protocol (VoIP) over a single provider’s network and then increase in complexity, adding value-added services and connections between networks. The event is intended to demonstrate that the MSF solution for VoIP, based on approved standards from bodies such as the IETF and ITU, is ready for network deployment.

Around the Regions
Spanish-owned renewable energy company Gemesa Energy UK has based its UK headquarters at Cedar Court office village at Newport, South Wales. It will employ seven people initially to manage its wind farm portfolio in the UK. Cedar Court’s location, near junction 28 of the M4, gives it fast access to the UK motorway network and Cardiff and Bristol airports. In the same area, a new phase of development has begun at Celtic Springs business park. A 65,000 sq ft business village will house 10 buildings grouped around a communal parking area.

ING Direct, owned by Netherlands-based financial products and services company ING Group, is to open a call centre in Cardiff, South Wales by March 2005, creating 300 new jobs. The ING group operates in more than 50 countries and claims to have 10 million customers worldwide. It began operations in the UK in 2003.

Call centres in Wales have the lowest rates of staff turnover in the UK, while staff salaries have overtaken the UK average, according to a survey by Mitial Research International. Swansea in South Wales has the best retention rate of all, followed by Cardiff and Newport. The supervisory ratio in Welsh call centres is one supervisor to every 16 agents, a low ratio for the industry as a whole and thought to be a factor in staff satisfaction. The average salary of a call centre agent handling incoming calls is $23,580, slightly higher than the UK average, while team leaders and supervisors earn on average $1,800 more a year than their counterparts in other regions. There are 140 call centres in Wales in 29 towns and cities, and the industry employs 24,000 people.

Online retailer Amazon.co.uk has officially opened its new distribution centre at Gourock, near Glasgow in Scotland. The 300,000 sq ft facility is the company’s second distribution centre in the UK, along with its existing facility at Marston Gate near Milton Keynes, in South East England. As well as books and DVDs, it handles a range of products including electronic, kitchen and home, gardening and DIY goods. Amazon has already recruited 200 staff and the workforce is expected to reach 300 within the year. Investment agency Scotland Enterprise gave $2.9 million in Regional Selective Assistance (RSA) to support the new facility.

Microsoft has opened an office in Belfast, Northern Ireland to provide e-business and other support to clients in the province and across the border in the Irish Republic. The company is investing around $1.3 million in the new operation, based at the Northern Ireland Science Park, while investment agency Invest NI has contributed some $300,000 in grant assistance. It is initially employing 12 people, though this number will increase as the operation expands. This is Microsoft’s first office in Northern Ireland, though it has been operating there for the past four years. It has been involved with projects such as the C2K schools project and Causeway, the Northern Ireland Office’s Criminal Justice Integration Project, which was rolled out in partnership with Fujitsu and Hewlett-Packard.

Also in Belfast, HCL BPO, one of India’s leading global IT companies, is expanding its call centre with a $3.4 million investment. The expansion, which will add 250 jobs to the workforce of 1,100 people, has been supported by $1.1 million in selective financial assistance from Invest NI, with a further $530,000 for training under the Company Development Programme. HCL, based in New Delhi, was the first Indian company to invest in Northern Ireland, and the move consolidates the 50,000 sq ft facility’s status as its key base in Europe. The company provides a range of contact services to major clients in the retail, banking and commercial sectors.

Software company Northbrook Technology is to create more than 660 new jobs in Belfast and the northwest region of Northern Ireland. The company is investing in its operation in Belfast and opening new facilities in Strabane and Londonderry, supported by $9.9 million in funding from Invest NI. The investment is an important development under Invest NI’s North West Action Plan, which aims to attract IT and other knowledge-based investment to the region. The company said it expected total employment in its Northern Ireland operations to exceed 1,400 by 2006.

US-based network security company Q1 Labs has opened a European office in London. The company, based in Waltham, Massachusetts, provides organisations with surveillance, analysis and control technology, including its flagship product, QRadar. Also setting up a London offices are DiskSites, a New Jersey-based provider of IT network infrastructure optimisation solutions, and ITM Software, a provider of IT business management solutions based in Mountain View, California.

Other new arrivals in the capital include Falk eSolutions, a German provider of interactive marketing tools, and South Korean developer and manufacturer of MP3 music devices, iRiver. Falk’s new office will support the company’s online advertising agency, marketer and web publication clients in the UK and Europe. Its services help advertising agencies and other clients plan, manage and report on their campaigns. iRiver’s office will cover the UK and northern Europe. The company plans to open more offices in Europe in 2005, as well as one in China.

Software company Vintela, based in Lindon, Utah, has opened a European office in Oxford, South East England. The company provides a family of platform integration systems, built around its Vintela Integrator Architecture, that allow Windows and non-Windows operating systems to integrate with one another. Elsewhere in the region, Ellacoya Networks, based in Merrimack, New Hampshire, has opened an office in Weybridge to support the European market. The company is a provider of intelligent bandwidth management solutions for broadband service provider networks.

German-based GETRAG Ford Transmissions, a 50-50 joint venture between GETRAG GmbH and Ford Motor Company, is to build a new six-speed transmission system at its Halewood plant in Merseyside, North West England. The $200 million investment will safeguard 736 jobs, and has been supported by a government grant of $9 million under the Selective Finance for Investment in England (SFIE) programme. The company is a specialist manufacturer of gearboxes and employs 3,700 people in Europe. In 2003 it had revenues of more than $1 billion.

Procter & Gamble, the consumer products group headquartered in Cincinnati, Ohio, is to invest a further $27 million at its distribution centre in Skelmersdale in Lancashire, North West England. The facility, which employs 130 people, is one of only two centres in the UK and Ireland used to distribute the full range of P&G products. The company’s well-known brands include Pampers, Ariel, Flash, Herbal Essences, Max Factor and Pringles.

US consumer finance data company TSYS, based in Columbus, Georgia, has opened a 53,000 sq ft data centre in Knaresborough, Yorkshire and Humber, to aid its expansion into Europe. The company offers a range of electronic payment processing and related services, including credit, debit and retail cards and loyalty and debt management services. It serves clients on three continents and in 2003 processed 7.4 billion transactions globally. In addition to offices, the new facility contains a machine room, plant block, generator and back-up systems. TSYS has invested around $32.6 million in the centre, creating 50 jobs. Yorkshire and Humber employs almost 80,000 people in the digital industries, generating $5.4 billion annually for the region’s economy.

Yorkshire and Humber is set to become the centre of Europe’s electronic tagging industry, with a coordinating centre for a new network of specialist Radio Frequency Identification (RFID) technology centres to be established in Halifax, West Yorkshire. The initiative is being led by industry association AIM UK, and the new centre will be housed at its headquarters. It will offer advice to companies on new technologies for real-time data tracking, including RFID and barcoding. The main applications for RFID include supply chain logistics, ticketing and access control, and airline baggage handling. The global market for RFID systems was around $1 billion in 2002, with Europe accounting for 40 per cent, and the UK for 25 per cent within Europe.

Walsh Western International, an Irish-based logistics company, has completed a $3.2 million investment in new premises at Coventry, in the West Midlands. Earlier this year, WWI built a 52,000 sq ft facility to service reverse logistics operations for a range of clients in the healthcare and high-technology sectors. It has now added a 10,000 sq ft extension to this. The new centre, which complements two existing WWI facilities in Coventry, will recruit 50 employees in logistics and administration jobs, bring the company’s total workforce in the area to 200.

ADI Treatments Ltd, an engineering company owned by German foundry Hulvershorn, is installing new high-tech furnaces at its plant in West Bromwich in the West Midlands. The company will install thermal processing equipment for the production of large diameter gearboxes for the wind turbine industry, expanding its production capacity by 50 per cent.. It employs 15 people at the site, and is part of an international network of specialists that supplies components to the wind turbine, automotive, earth-moving and machinery industries.

German company Nanopoint UK Ltd has opened a new distribution base in Telford in the West Midlands. The computer component distribution firm, whose parent company is Maxpoint GmbH, has taken on a 6,000 sq ft building at Stafford Park. Meanwhile PTL (www.ptlonline.org), the Telford-based polymer training organisation, has refurbished its facilities and invested in computer-aided design workstations. Its new equipment provides links to the Innovative Products Development Centre at Wolverhampton University’s Telford campus, giving access to rapid tooling and prototyping facilities.

Del Monte Fresh Produce has expanded its fresh cut fruit factory in Wisbech, near Peterborough in Eastern England. The expansion aims to increase efficiency and has doubled the operating space for the company’s packing operations. It includes a new loading dock and a new raw material chiller. The facility handles fruit from South America, Europe, New Zealand, the US and South Africa.

To find out about business exhibitions and events happening around the United Kingdom click on the EVENTS button.