July 2005

News

The importance of the link was celebrated in June with an Indian Business Reception held at the Wallace Collection in central London. Over 300 senior Indian business leaders, together with Mr Livingstone, attended the event, which was held to highlight the strong cultural and business links that draw Indian companies to London and the contribution they make to the city. Indian-owned businesses now account for 5 per cent of London’s economy, and the country is the second most important source of FDI for the city. The UK is home to more Indian people than any other European country, with 40 per cent of them living in London.

Meanwhile, more than 120 companies based in California have opened offices in London over the past few years, according to Think London, representing as many as one in eight of all international investments into the city. Fifty per cent of these have chosen London as their base in Europe, and the capital hosts Europe’s largest base of leading-edge companies, including household names such as Google, Yahoo! and Apple. One in five Californian companies investing in London establishes a European headquarters operation there, and more than half choose the city for their sales and marketing hub.

Seventy-five per cent of all investments of Californian origin are in the software and IT sectors, reflecting London’s status as the largest and fastest-growing IT market in Europe (it has grown by 50 per cent over the past five years). Among the factors drawing them to London are the city’s advanced telecommunications infrastructure, its skilled talent pool and flexible business environment.

It is not just Californian companies that are attracted to London. L-3 Communications, a US technology firm based in New York, has just opened an operations office there, which will play a key role in its strategic development plans for the UK and Europe. The company is a provider of intelligence, surveillance and reconnaissance systems, aircraft modernisation, training and government services. It also acts as a merchant supplier of a broad range of high-tech products. PrimeQ Solutions, a US-based provider of online advertising technology and services, has opened a subsidiary in the capital. The company will provide lead generation services and localised sales and account management to companies across the UK, using proprietary ad serving technology. The London office will house sales, administration and client services, as well as design and technology developers.
 

UK mid-sized firms top European super-growth league
The UK has the highest proportion of ‘super-growth’ medium-sized companies in Europe and the fourth highest in the world, according to a study by accountants Grant Thornton. The survey focused on businesses with above-average growth in turnover and headcount among 6,300 medium-sized companies – defined as those with a workforce of between 50 and 249 – in 24 countries across Europe. A quarter of the UK companies in this category were classed as ‘super-growth’: an improvement of 5 percentage points on the previous year and significantly higher than the global average of 17 per cent. The UK overtook Sweden to top the league, after the Scandinavian country’s proportion of super-growth companies declined from 24 per cent to 13 per cent.

Medium-sized enterprises account for just 2.3 per cent of all enterprises in the UK (the vast majority are small businesses), but they provide 13.6 per cent of employment and 16.2 per cent of output, according to the Department of Trade and Industry (DTI). They also produce more revenue per employee than either small or large enterprises. Part of their improved performance in comparison with similar-sized firms in other European countries is the relatively poor performance of eurozone economies in recent months.

UK-based tax companies scored well in the annual awards organised by Euromoney’s International Tax Review magazine, presented at a ceremony at Claridge’s Hotel in London, held in May. Baker & McKenzie won the coveted European tax firm of the year award, while PricewaterhouseCoopers took the prize for European transfer pricing firm of the year. Linklaters was crowned European tax litigation firm of the year, and Dewey Ballantine won the award for best US tax firm in Europe.

 

British ‘national brand’ outperforms US
	The UK has done better than the US in maintaining its international reputation since the start of hostilities in Iraq, according to a survey of “nation brands” by Anholt-GMI.

The survey asked 10,000 consumers in 10 countries (Canada, China, Denmark, France, Germany, India, Japan, South Korea, UK, US) to rate 10 countries in six different areas: tourism, exports, governance, people, culture and heritage, and investment and immigration. Overall, Sweden emerged with the strongest national brand, followed by the UK, Italy, the US and Germany, Japan, China, India, South Korea, Russia and Turkey.

The report’s authors say that the strength of a country’s brand is a strong indicator of its economic performance. They expressed “shock” that the US only managed to tie for fourth place, and said that it had spent the past four years “trashing” a reputation it had taken 350 years to build up. However, they also said that, although the US government was unpopular in many countries, US brands remained highly regarded. The US ranked only fifth in terms of governance, but topped the table in terms of brands, products and investment climate.

The UK ranked third overall for “upholding international peace and security”, despite its role in Iraq. The country’s overall score was also boosted by high respect for its people: Britons ranked higher than any other nationality, and were the preferred nationality for hiring. British people scored exceptionally well on qualities such as “educated”, “polite”, “honest”, “trustworthy” and “intelligent” – though they were also thought by many to be “boring”.


Brown declares war on red tape
Chancellor Gordon Brown has launched a drive to cut regulation and red tape across government departments, and has challenged business to identify “outmoded and unnecessary” regulations that are ripe for culling. Among his proposals is a bill early next year to streamline the UK’s 29 industry regulatory bodies to just seven, followed by another bill in the next parliamentary session to remove redundant regulations. Mr Brown wants to switch to a new, limited, ‘risk-based’ inspection regime, but also wants industry to back up its complaints about over-regulation with concrete proposals for change.

In another move aimed at creating a more flexible business environment, Mr Brown wants the 611 local authority watchdogs, which between them account for 73 per cent of business inspections, to work together more closely. These agencies include trading standards and environmental inspectors operating at the county level. A new body – the Better Regulation Executive – will also be set up to ensure that Whitehall departments set and meet clear targets for regulation. Business leaders have welcomed the reforms in principle, though many are reserving judgement on whether the new system will work better than the old.


UK retains opt-out from working week directive
The UK has seen off attempts by other European Union countries to end by 2012 its opt-out clause from the EU working time directive, which limits the numbers of hours an individual can work in a single week to 48. The UK argues that people should have the flexibility to choose how long they work, in order to promote economic competitiveness. At the latest meeting of the European Commission in Luxembourg, UK ministers won the backing of enough member states (including Germany, Poland and Slovakia) to block the proposal. However, it seems likely that the issue will be revived in future debates.

One new piece of legislation that will be a reality from next year is a law banning discrimination on the basis of age in relation to employment and vocational training. The website of the Age Partnership Group (www.agepositive.gov.uk) contains details of the new legal requirements, together with best practice advice and sources of further information. Employment advisory group Acas has launched a booklet to help employers make the most of skills offered by older workers. The guide, Employing Older Workers, can be viewed at: www.acas.org.uk/publications/AL09.html.

The number of labour disputes resulting in strikes fell to 130 in 2004, the lowest on record, according the Office for National Statistics. This compares with 133 stoppages in 2003 and 146 in 2002. However, the number of working days lost totalled 904,900, almost twice the 499,100 lost in 2003, although this was lower than the 1.3 million lost in 2002. The figure was above the average of 560,200 for the period 1994-2003, but considerably lower than the averages of 7.2 million in the 1980s and 12.9 million in the 1970s.

In 2004, 292,700 workers were involved in labour disputes, compared with 150,600 the year before. Almost half (48 per cent) of the working days lost were in public administration, while 42 per cent were in education. Five per cent were in transport, storage and communication. The regions with the highest number of working days lost (per thousand employee jobs) were Scotland (160) and Northern Ireland (99). The lowest were Eastern England (11) and the South East (13), while the average was 34 days. The main reason for strikes was disputes over wages (762,000 days), followed by redundancies (107,400). Relatively few disputes were to do with working conditions or disciplinary measures.

The Manufacturing Advisory Service (MAS) has exceeded its original targets by 50 per cent, generating $279 million of added value for British manufacturing in its first three years of existence, according to the DTI. The service, operating through ten regional centres of excellence across England and Wales, smashed its original target of $167 million, set in 2002. In its first three years, the MAS responded to almost 56,000 initial enquiries from businesses seeking advice, visited over 11,000 companies to carry out diagnostic health checks, completed 3,050 in-depth consultations and staged over 1,300 events designed to educate and train local businesses.

The Learning and Skills Council has announced an increased budget for the funding of further education colleges, up to $9 billion in 2005/06, compared with $7 billion in 2002/03. The government claims to have injected an extra $1.8 billion into the sector over the past three years. In individual regional initiatives, the first of three training centres of excellence to serve the marine industry in the South West has been officially opened at Poole in Dorset. The Poole Marine Skills Centre, funded by local investment agencies and private companies, will provide training for young people seeking work in the cluster of 300 marine-related businesses in the area. It will be followed by similar establishments in Plymouth and Falmouth. In Yorkshire and Humber, Business Link West Yorkshire has launched a Target Training Project to help SMEs in the travel, tourism, transport and distribution sectors to meet their training needs. The scheme offers assistance with funding for specialist training; companies can check their eligibility at: www.blwy.co.uk.


An inspiring year for science parks
The UK Science Park Association (UKSPA) had an “inspiring” year in 2004, according to the organisation’s annual report. It continued to attract new members, launched an award programme, delivered significant international projects, improved its membership services and marketed its membership widely. Initiatives included a new online system that allows members to share statistical data through the association’s website (www.ukspa.org.uk) and a national education programme to promote science to young people in schools and universities. UKSPA also delivered a training programme for the Chinese National Association of Science Parks in Beijing and is preparing further collaborations with China for 2005/06.

Now in its 21st year, UKSPA has around 60 operating parks (including full-scale science and research parks, technology centres and innovation-based incubator units) around the country. It has more than 1.2 million sq ft of property either built or under construction, housing 2,000 tenant companies, which between them provide nearly 50,000 jobs across the whole spectrum of knowledge-based activities.

Among the UK’s leading science facilities are the three Scottish Life Science Centres of Dundee, Edinburgh and Glasgow, where scientists have recently won an $18.6 million government grant to help study the proteins that make up part of human cells and tissues. The Interdisciplinary Research Collaboration in Proteomic Technology award will be used for a number of research projects, including studying how cells in the immune system communicate with one another, and the dynamic movements of proteins within cells. Such research will have applications in combating diseases such as arthritis, diabetes and cancer.

Dundee is a leader in bio-sciences and in many other areas of high technology. The University of Dundee is currently in the midst of a $360 million campus redevelopment, which will see a number of new buildings added to its city centre facilities. The $32.4 million Centre for Interdisciplinary Research, for example, will form a significant extension to the Wellcome Trust Biocentre on the university’s main campus, and will house 250 scientists and support staff. A Clinical Research Centre is being built at Ninewells Hospital, aimed at attracting international researchers in disease prevention, nutrition and neuroscience. Also in the city centre, a new creative media district, Seabraes Yards, is taking shape. Occupying the 20-acre site of a former railway goods yard, this $90 million mixed-use project is one of Scotland’s most high-profile investment schemes. The first facility to be completed is a new creative media centre, vision@seabraes, in the former Seabraes Mill.

Another transformation is taking place across the sea in Northern Ireland, where Belfast’s famous Harland & Wolff shipyard is being reinvented as a science park. The shipyard was once a symbol of Belfast’s engineering skills, and is the place where the Titanic was built. Now the city’s Institute for Electronics, Communications and Information Technology (ECIT) has opened in a new building in Titanic Quarter, the new name for the area. An offshoot of Queen’s University, Belfast, the $72 million research centre is headed by electrical engineer and entrepreneur John McCanny, one of whose companies was behind the video technology used in Steven Spielberg’s Jurassic Park films. ECIT describes itself as a “germinator” for new businesses rather than an incubator. Its facilities include one of Europe’s largest anechoic chambers, used to measure electromagnetic radiation.


Energy prices remain low as green revolution gathers pace
Although costs have risen over the past year, the UK still has some of the lowest electricity prices in Europe, according to research by management consultant company Accenture. British industry pays the lowest prices of any of the 15 established member states of the European Union, while household customers pay less than anywhere in Europe except for Finland. Prices are highest in Germany, Italy and Ireland and this, says the report, harms the competitiveness of these countries.

Prices varied widely across Europe, influenced by factors such as the degree of openness and competition in a country’s energy sector and the types of fuel used. Ireland, for example, uses a lot of peat to generate power, while Italy uses fuel oil. In the UK, many power stations use natural gas. The cost of this has risen recently, but the high degree of competition among utility companies has helped to keep costs down. Since the UK power sector was liberalised in the mid-1980s, many overseas firms have invested in it. Across Europe the picture is less rosy, and the EC is planning to set up an investigation into the electricity and gas markets.

The UK’s most powerful onshore wind farm to date has opened at Cefn Croes, near Aberystwyth in Mid Wales. The $90 million facility includes 39 turbines up to 328ft high, and will produce 20 per cent of all onshore wind energy in Wales, enough to power 42,000 homes. Falck Renewables, the Italian firm that built the 58MW-capacity wind farm, said it would save the equivalent of 4 million tonnes of carbon dioxide emissions over its 25-year lifetime. The principality currently has 20 onshore wind farms and 395 turbines.

German hydropower company Voith Siemens Hydro has acquired wave energy systems company Wavegen, based in Inverness, Scotland. Wavegen was founded in 1990 and builds and researches wave energy systems. Voith Siemens Hydro, a division of the Voith group, says the acquisition will help it take a leading development role in this innovative field.

Energy Minister Malcolm Wicks has announced that 14 new solar photovoltaic (PV) energy projects across the UK will be awarded $2.4 million in funding, bringing the amount the government has put into the sector since 2002 to $33.8 million. The government has a target of 10 per cent of all electricity generated in the UK to come from renewable sources by 2010. Some 180 medium- and large-scale projects have been assisted since the PV project was set up. Recipients under the latest round of funding include the London Transport Museum, housing projects in Yorkshire and the North East and a church in Norfolk in Eastern England.

Applications are being invited under the second round of the Low Carbon Technology Research, Development and Demonstration Grant. The scheme is administered by the Carbon Trust and is aimed at research projects that could help with the move towards a low-carbon economy. Awards have a maximum value of $450,000 and the scheme is open to any UK business, university, public sector or voluntary organisation, with collaborative projects being particularly encouraged. The closing date for applications is 22 July.


Around the regions
JP Morgan Invest, a new arm of JP Morgan Asset Management and part of the US-based JP Morgan Chase & Co, is to open a new headquarters in Liverpool in North West England. The company plans to provide financial education to workers via the workplace and to provide resources for individuals to assess how their assets might meet the needs of retirement. This comes as new pensions legislation creates a more flexible environment but also one in which employers need to make provisions to ensure their staff fully understand their options for retirement planning. The investment will create 150 jobs over five years.

Komatsu Reman, based in Birtley in North East England and one of seven re-manufacturing facilities operated internationally by construction equipment company Komatsu of Japan, is to expand its premises. The Birtley plant supplies Komatsu engines, pumps and drives, rebuilt and tested with the latest technological upgrades, to mining and construction companies worldwide. The expansion will create 28 new jobs.

Genesis Genomics (GGUK), a biotech research corporation based in Canada, is to establish a base in Newcastle, North East England. The company specialises in skin cancer and sun-damaged skin testing and is currently developing an early warning system to aid in the treatment of such conditions and alert patients to their individual risk. It plans to use its new base at Newcastle University to push the commercial development of its word-first ‘skin physical’ test, which applies new advances in DNA research to sun-damaged cells. Regional Development Agency One NorthEast provided an R&D grant of $360,000 to help set up the project, which is expected to create an initial 15 jobs.

A new business centre has been set up to help German companies looking to establish a presence in North East England. The European Business Centre is based at the Fabriam Centre, within Atmel’s headquarters in North Tyneside. The office will offer telephone, broadband and administrative services to companies looking for a permanent base, as well as assistance with business contacts and accommodation for staff.

The success of a Danish-owned company in building a thriving business in the North East was recognised recently by a royal visit by HRH the Duke of Kent. E.J. Badekabiner (UK) Ltd, Europe’s leading manufacturer of pod bathrooms, set up a base in Cramlington, Northumberland two years ago and since then has invested $6 million and created 180 jobs. It supplies pod bathrooms to a wide range of clients, including leading hotel chains, university halls of residence and the Ministry of Defence.

Bekaert, a Belgian supplier to the textile machinery manufacturing industry, is negotiating to buy the ECC card clothing division of Carclo, including its UK facilities at Osset in Yorkshire and Humber. Carclo is a global supplier of technical plastic components and specialist wire products. Carding is a preparatory step in textile manufacturing; the cylinders of carding machines are finished with card clothing, a consumable product made from serrated carding wire.

Yorkshire Forward is launching a digital TV channel for the Yorkshire and Humber region, with the aim of helping local media businesses promote themselves in the UK and abroad. The RDA has invested $5.2 million in the project, which will create up to 30 new jobs at the East Coast Media Centre at Immingham. The channel, named Propellor, will start broadcasting in the autumn and will showcase the region’s talents in all aspects of film and TV production. SMEs from the media and digital industries are being invited to work on the channel to promote their skills and develop staff. Yorkshire and Humber has more than 110,000 people working in the media and digital industries and last year produced more hours of programming for major TV networks than any other region.

CAM-I, a US-based not-for-profit R&D group set up to serve needs in manufacturing, service and public sector industries, has chosen a pioneering Yorkshire Forward project to be its first affiliated European member. The Virtual Enterprise Network (VEN), part-funded by the European Union, is a programme that enables smaller companies to pool their expertise to meet the needs of major public and private sector contracts. The new alliance, announced at the recent Paris Air Show, means that members will have access to some of the biggest and most innovative companies in the aerospace sector. CAM-I members currently include Boeing, IBM, Rockwell Collins, SAP and the US armed forces and Department of Defense.

Advantage West Midlands has unveiled a three-year plan to support a group of business clusters in strategic sectors, with $91.8 million to encourage business collaboration and increase the region’s competitive advantage. The ten clusters it has identified are transport (including automotive, motorsport, rail and aerospace), building technologies, food and drink, tourism and leisure, high value-added consumer products, business and professional services, environmental technologies, screen image and sound, and medical technologies. Each cluster has a manager and a cluster opportunity group (COG) comprised of business people from the private sector, which will advise the RDA on funding for specific products to help the growth of each sector.

SAI Global Ltd, an Australian-based business publishing, training and assurance organisation, has acquired Easy i Holdings Ltd, of Kenilworth in the West Midlands. Easy i provides training and internal communications solutions, using a range of media and advanced electronic techniques.

Anixter International, a distributor of communications products, wire and cable, fasteners and other small parts to original equipment manufacturers (OEMs), based in Illinois, is to acquire Infast Group plc for $72 million. Infast, based in the West Midlands, is a distributor of fasteners and other components to OEMs, and employs about 900 people at 25 distribution centres in the UK and six in the US.

Freefoam, an Irish manufacturer of cellular foam PVC-UE building products, is to set up a manufacturing centre alongside its existing distribution centre in Northampton in the East Midlands. The Cork-based firm is investing around $5.3 million in the expansion, which will see four extrusion lines installed in the initial phase, and possibly a fifth later in the year. The facilities in Northampton will occupy a total of 86,000 sq ft, and there will be enough floor space to house 18 lines in total.

Jefferies Group Inc, a US-based global investment bank and institutional securities firm, has acquired private fund equity placement company Helix Associates, based in London. Helix is a global placement agent, serving private equity general partners; it also acts for the hedge funds of funds and related product providers.

Halcyon Asset Management, a New York-based hedge fund manager that controls $3 billion in assets, has opened a European research office in London. The firm has been an investor in European securities for a considerable time, but the new office will be its first physical presence in the market.

Global Trader, an online derivatives broker based in South Africa, has been approved by the UK regulator the Financial Services Authority to sell products in Britain, and has moved its head office to London. The company said that last year it made 300,000 trades, worth $5 billion, in contracts for difference (CFDs) and spread betting products. It estimates “conservatively” that by gaining FSA approval and moving to London, it can expect to double its annual turnover to $10 billion.

Unilever, the Anglo-Dutch conglomerate based in London, is to sell its global fragrance business Unilever Cosmetics International (UCI) to US-based beauty products company Coty Inc for about $800 million. The purchase, subject to the necessary regulatory approvals, includes perfume licences for Calvin Klein, Cerruti, Vera Wang, Chloé and Lagerfeld fragrances.

French power and control group Schneider Electric is to acquire the Advanced Building Systems (ABS) operations in the EMEA region of Invensys, the London-based automation, controls and process solution group. ABS EMEA is a major provider of business management systems in the UK under the Satchwell brand name, and has a strong presence across Europe and the Middle East. The $150 million cash deal is subject to regulatory approval, but is expected to be completed by the end of July.

COMSYS Information Technology Services Inc, a provider of technology staffing services and solutions based in Houston, Texas, has opened a new sales and recruiting office in Crawley, near Gatwick Airport in South East England. The company has already been providing vendor management services in the UK from an administrative office for more than a year. The addition of full sales and recruiting capabilities comes in response to growing IT staffing demand from US companies with operations in the UK.

Bureau Veritas UK, a subsidiary of French health and safety, environment and social accountability management specialist Bureau Veritas, has acquired the consulting division of Casella Consulting, based in Worcester Park in Surrey, South East England. Casella Consulting provides environmental and health and safety solutions, and employs 490 people in 17 offices across the UK. The division includes environmental consultancy Casella Stanger; Casella Hazmat, an asbestos consultancy; Casella Winton, a building health, safety and occupational hygiene consultancy; and Casella Analytic, which offers laboratory testing services.

Walt Disney Internet Group, part of the US-based Walt Disney group, has acquired Minds Eye Productions, an interactive television games developer based in Milton Keynes, South East England. Minds Eye is the UK’s leading developer in the growing interactive TV market. It has been at the forefront of game development for the Sky Active platform, developing game titles such as ‘Monopoly’ and ‘Who Wants To Be A Millionaire’.

Cape Technologies, a provider of revenue assurance solutions for mobile phone operators based in the Irish Republic, has opened an office in Reading, South East England. The new office will provide on-site service and support for local customers. Cape’s flagship product is RevenueOffice, an enterprise-wide revenue assurance program that analyses call-data records and billing information in real time.

Dainippon Screen Manufacturing Co, a Japanese manufacturer of system components for the pre-press and printing industries, has acquired Inca Digital Printers, based in Cambridge, Eastern England, for around $52.6 million. Inca Digital is a specialist manufacturer of wide-format digital inkjet printers and has built a global distribution network with Fujifilm Sericol for its Eagle, Columbia and Spyder printers. In April this year, the company won prestigious Queen’s Awards for Enterprise in the Innovation and International Trade categories.

Cardtronics Inc, a Houston-base owner/operator of a network of 26,000 automatic teller machines around the US, has acquired Bank Machine, an independent ATM operator with headquarters in Hatfield in Eastern England. Bank Machine has over 1,000 ATMs in the UK, at locations such as shopping centres, cinemas, convenience stores, pubs, clubs and post offices.

Xilinx, a global leader in the semiconductor industry, is to relocate its European Intellectual Property Development Centre, currently based at Mortonhall in Edinburgh, Scotland, to the Edinburgh Technopole. The move will also see a major expansion of the operation, with a further 25 staff being recruited to join the existing workforce of 32. The new jobs will be in the fields of digital signal processing, connectivity and software engineering. Xilinx, based in San Jose, California, is a world leader in programmable semiconductor chips and employs over 3,000 people worldwide.

French IT service provider Sopra Group has acquired Scottish IT consultancy Newell & Budge for an estimated $81 million. Over the past 20 years Newell & Budge has built up a wide client base that includes Royal Bank of Scotland, easyJet, Standard Life and ScottishPower. The combined firm will operate in the UK as Sopra Newell & Budge, and will mainly target businesses in the financial services, public sector and telecommunications markets.

Adler Manufacturing, a US-based producer of corporate business gifts, has opened a new sales office in the Welsh capital Cardiff. It has recruited a core sales team of 15 people, but anticipates that this will increase significantly over the coming year. The family-owned firm opened its European headquarters in Slough in South East England 15 years ago, and now operates in 12 countries on four continents. It specialises in high-quality gifts – such as diaries, pens, clocks and calculators – targeting the mid to higher end of the market, and is the European market leader in this sector.

The mayor of Tucson, Arizona has officially opened a new business incubation suite at Technium OpTIC in North Wales. Mayor Bob Walkup visited the Technium at St Asaph Business Park in Denbighshire as part of a continuing relationship between the State of Arizona, the Welsh Opto-electronics Forum and OpTIC and collaborations between opto-electronics companies in the North Wales cluster and in Arizona. The new facility, christened the Arizona Suite, will be available to users ranging from individuals generating a business plan through to companies new to the European market and seeking to gain a foothold.

US medical technology and healthcare company Gambro BCT, which acquired Ivex Pharmaceuticals in 2004, is to invest nearly $13 million over the next three years in its plant in Larne, Northern Ireland. The investment by the Lakewood, Colorado-based company, which will create 86 new jobs, is intended to enhance R&D activities and position Gambro Northern Ireland to exploit new market opportunities, trading under the Ivex name. Investment agency Invest NI has contributed $1.5 million to the project.

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