December 2008

NEWS

Darling takes dramatic action to stimulate UK economy

Chancellor Alistair Darling delivered a dramatic Pre-Budget Report on 24 November against a background of continuing global financial uncertainty. His far-reaching package of measures was described by many commentators as “a gamble”, but is one that the Government hopes will refloat the UK economy and help to stave off the worst effects of an impending recession. Among measures affecting businesses, Mr Darling deferred for one year a proposed increase in corporation tax for small companies from 21 per cent to 22 per cent. Companies will also be allowed to spread tax payments over longer periods of time, and there will be a rise in the threshold on duty payable on empty business premises. A sum of $1.5 billion will be set aside to help small businesses borrow via a temporary small business lending scheme, with a similar sum earmarked to help exporters through the export credit guarantee department. A three-year carry-back for trading losses will be introduced, capped at $75,000, while a new watchdog will monitor bank business lending. Chancellor Alistair Darling delivered a dramatic Pre-Budget Report on 24 November against a background of continuing global financial uncertainty. His far-reaching package of measures was described by many commentators as “a gamble”, but is one that the Government hopes will refloat the UK economy and help to stave off the worst effects of an impending recession.

Among measures affecting businesses, Mr Darling deferred for one year a proposed increase in corporation tax for small companies from 21 per cent to 22 per cent. Companies will also be allowed to spread tax payments over longer periods of time, and there will be a rise in the threshold on duty payable on empty business premises. A sum of $1.5 billion will be set aside to help small businesses borrow via a temporary small business lending scheme, with a similar sum earmarked to help exporters through the export credit guarantee department. A three-year carry-back for trading losses will be introduced, capped at $75,000, while a new watchdog will monitor bank business lending.

The Chancellor sought to discourage businesses from leaving the UK by bowing to demands for an exemption of their foreign profits from UK taxation. In a dramatic change to the corporate tax system, the Government will allow multinationals to repatriate foreign dividends tax-free from April 2009, while postponing controversial anti-avoidance measures for further consultation. Mr Darling remarked that the Government did not intend to tax profits genuinely earned in Britain.

He also brought forward $4.5 billion of capital expenditure scheduled for 2010/11 to this year, with the funds to be spent on roads, schools, social housing and new energy measures. However, public borrowing was set to climb to $117 billion this year and $177 billion in 2009, he said, before falling back to $81 billion by 2014. Debt as a proportion of GDP will reach 57 per cent by 2013/14, and the Government’s policy of borrowing only to invest over the economic cycle will not be re-introduced until 2015/16.

The Chancellor revised his forecast for UK economic growth this year to 0.75 per cent, from the 2.5 per cent he predicted in March, after GDP contracted by 0.5 per cent in the three months to September. He slashed economic growth forecasts for 2009 from 2.75 per cent to between -0.75 per cent and -1.25 per cent. However, inflation is also forecast to fall sharply, reaching 0.5 per cent by the end of next year. For 2010, he predicted UK economic growth of between 1.5 and 2 per cent.

In other measures, VAT will be cut from 1 December to 15 per cent (from 17.5 per cent) until the end of 2009 in an attempt to stimulate consumption, though duties on petrol, alcohol and tobacco will rise to offset this. An increase in personal tax allowances will be made permanent, with the allowance for next year set at $9,712. However, the rate of national insurance will rise by 0.5 per cent from 2011, and the top rate of income tax will rise from 40 to 45 per cent on earnings above $225,000. Air passenger duty will increase for longer flights, while controversial new car tax fuel efficiency bands will still be introduced, though more gradually. Finally, in January consultation will begin on the wording of a new taxpayers’ charter.

Despite the prevailing economic gloom, there were some encouraging signs even before Mr Darling’s announcement. Earlier in the month, the Bank of England cut interest rates by 1.5 per cent to 3 per cent, the lowest level in 53 years, with clear indications of more cuts to come. This came as the International Monetary Fund forecast that the UK economy would suffer a downturn next year comparable with the recession of the early 1990s.

The Bank’s Monetary Policy Committee explained its surprise decision by saying that there was evidence of a “severe contraction” in the economy during the coming months. Its announcement led investors to expect at least another percentage point cut in rates to 2 per cent by April 2009. In October, UK inflation fell for the first time in 15 months. The official measure of consumer prices dropped by 0.7 percentage points year-on-year to an annual rate of 4.5 per cent, down from 5.2 per cent in September. Prices are still rising faster than the Bank’s 2 per cent medium-term target but, according to analysts, the fall suggests that inflation has now peaked.

Solutions for Business package to simplify investor support
The UK Government has launched ‘Solutions for Business’, a new national package of publicly-funded business support products. The 30 advice, loan and grant products and services are the result of a streamlining exercise under which the Government has committed to reduce over 3,000 products to fewer than 100. The products making up the simplified portfolio will be in place by March 2009 and will be accessed via Business Link. The aim is to make it easier for companies to find the right products to help them with common business issues such as getting started, growing, finance, export, skills, innovation and the environment.

Five products have been introduced with immediate effect, among them the Grant for Business Investment, which replaces the Selective Finance for Investment in England (SFIE) grant system. The others are Maximising Foreign Direct Investment, Accessing International Markets, Developing Your International Trade Potential and Train to Gain. The Maximising Foreign Direct Investment product offers information, advice and tailored help for inward investors to help them with the decision to invest in the UK and, once invested, to develop their UK-based business.

Grant for Business Investment (GBI) is designed for businesses that are looking at the possibility of investing in a deprived area, but need financial help. Typically, a grant will be offered to support the acquisition of key assets, such as buildings, plant and machinery. Financial support is also available in some cases to meet the costs of running a small enterprise in its early years.

In order to obtain GBI support, projects must deliver a positive contribution to the regional and national economies, must deliver an improvement in the productivity of the business and create or safeguard good-quality jobs. The business undertaking the investment project must be viable and the project must have a good chance of being self-sustaining by the completion of the investment. Successful applicants will typically receive around 10-15 per cent of a project’s total eligible capital expenditure. GBI is open to most types of company, of all sizes, operating within the Assisted Areas, and to SMEs operating in areas designated as Tier 3 regions by the Regional Development Agencies (RDAs).

CBI deputy director-general John Cridland said: “Once fully implemented, the simplified portfolio should mean small and growing businesses will find it much easier to understand the support on offer from government. Together with improvements to Business Link, the delivery of the portfolio comes at a time of tough trading conditions when, more than ever, businesses need access to high-quality, independent advice and support.”

Power companies progress towards a sustainable future

Wind turbines at Blyth, North East England

The UK has teamed up with two oil-rich Gulf states to secure a mix of reliable and green energy supplies and to encourage the development of ‘green’ energy. During a visit to the Gulf, Prime Minister Gordon Brown and Energy and Climate Change Secretary Ed Miliband signed a Memorandum of Understanding between the UK and Abu Dhabi’s Masdar Initiative to work on technologies such as on- and offshore wind, carbon capture and storage, as well as solar and marine energy. The deal could see millions of dollars being invested in the UK in renewable energy technology. It follows the announcement in October that Masdar is to invest in the London Array offshore wind farm project, which will be biggest wind farm of its kind in the world. The second announcement was of a new $375 million partnership with Qatar to develop renewable energy and low-carbon technology. The Qatar-UK Clean Technology Investment Fund will seek to make venture capital investments in clean energy businesses primarily located in the UK. It will begin investing with up to $225 million committed by the Qatar Investment Authority, and will look for funding from further investors. The fund will be managed by Carbon Trust Investments of the UK. Tom Delay, chief executive of the Carbon Trust, said: “Mitigating climate change will bring a wealth of new business opportunities as low-carbon technologies are developed and commercialised. This new clean technology fund will put the UK at the heart of low-carbon innovation. By investing in home-grown companies developing cutting-edge low-carbon technologies, it will enable the UK to benefit commercially from the move to a low-carbon economy.”

The visit to the Gulf came ahead of a meeting in December of oil-producing and consuming nations, to be chaired by Mr Miliband. The London Energy Meeting will provide an enhanced dialogue between producers and consumers on oil and its impacts on the world economy. In the meantime Centrica, the owner of British Gas, is to import its first shipment of liquid natural gas (LNG) into the UK. The cargo was purchased from Rasgas Company Ltd, the Qatari LNG producer, and was due to be delivered in November on one of the world’s largest LNG carriers.

In more good news for the renewables sector, the UK has overtaken Denmark to become the world leader in offshore wind farms built, with 597MW fully constructed, following completion of Centrica’s Lynn and Inner Dowsing wind farms near Skegness in Eastern England. The completion of the farms means that 20 per cent of the UK’s wind power is now offshore, and more farms are being planned to meet the UK’s 2020 targets for renewable energy.

“Overtaking Denmark is just the start. There are already five more offshore wind farms under construction that will add a further 938MW to our total by the end of next year,” said Mike O’Brien, Minister of State at the Department of Energy and Climate Change (DECC). Offshore wind farms now have the potential to power the equivalent of around 300,000 UK homes. Sam Laidlaw, CEO of Centrica, commented: “Not only is Lynn and Inner Dowsing the biggest wind development in the world, it represents a major milestone on the journey to secure the UK’s future energy needs.”

Swedish power generator Vattenfall has acquired Thanet offshore, currently the world’s largest offshore wind farm project, for $52.5 million. The deal makes the company one of the biggest wind power operators in the UK. On completion, Thanet, off the coast of Margate, Kent, is expected to have a capacity of around 300MW. According to Anders Dahl, head of Vattenfall’s wind power division, it should be operating in two years’ time. “Great Britain is ideal for wind power, with good wind conditions and a long coastline. We are now looking forward to realising the project and have a wind farm in place by 2010,” he said. Vattenfall, which has teamed up with ScottishPower Renewables in a bid to expand the UK’s installed wind power capacity to 6,000MW, also owns the Kentish Flats wind farm off Whitstable in the Thames estuary.

Wave Hub will create the world’s largest wave energy farm off Cornwall, South West England.

The South West Regional Development Agency (RDA) has selected J P Kenny, part of international energy services company John Wood Group PLC and one of the world’s leading sub-sea engineering companies, to manage the design, procurement and construction of the Wave Hub renewable energy project, located 10 miles off the north coast of Cornwall at Hayle. Wave Hub, which will create the world’s largest wave energy farm, will consist of an electrical ‘socket’ on the seabed connected to the National Grid via a sub-sea cable. With a capacity of up to 20MW, it will allow the pre-commercial testing of wave energy devices on a scale not seen before. Four wave device developers are working with the RDA on the project, and it is anticipated that eventually up to 30 devices could be deployed, providing enough power for 7,500 homes. J P Kenny will spend the next few months working on concept designs, progressing to detailed designs by May of next year. Wave Hub is expected to be installed and operational by 2010. Thelma Sorensen, chairman of the Cornwall Business Partnership, said: “This is excellent news and further evidence of the RDA’s commitment to develop a world-class renewable energy sector that will bring huge economic benefits to Cornwall and the wider region.”

Electricity generating company Drax Group, which runs the Drax power station near Selby, Yorkshire and Humber, is planning to build three large bio-mass power stations in Yorkshire and North Lincolnshire, at a cost of $3 billion. The three ‘green’ power plants will be located at Hull, Immingham and one other site, probably close to the existing Drax plant. According to the company, the plants will generate 900MW of power for the National Grid.

Biomass power plants generate electricity by burning fuels such as energy crops, wood chips and other material from renewable sources. Drax said that construction of the first of the three plants is expected for late 2010, with the as yet unspecified site coming online by 2014. The company’s chief executive, Dorothy Thompson, said that, based on current estimates, once all three plants were operational, Drax would be supplying at least 15 per cent of the UK’s renewable power and up to 10 per cent of its total electricity.

Research initiatives keep high-tech industries at cutting edge
The annual survey of the Society of British Aerospace Companies (SBAC) shows that the industry’s orders increased by 65 per cent in 2007, to a total of $65.7 billion. Sales saw a 1 per cent increase to $29.8 billion. In addition, R&D investment in the sector grew from $3.7 billion in 2006 to $4.4 billion last year. Ian Godden, SBAC chief executive, described the aerospace and defence sector as a “success story for the UK”. He added: “Strong investment by the industry in research and development is also building a solid, competitive future to continue the excellent recent performance of the sector.” Earlier this year, the SBAC welcomed the Government’s new manufacturing strategy, saying it highlighted the value of innovation and recognised aerospace as a low-carbon industry.

The AMRC will work with local SMEs in sectors such as the medical, gas and tooling industries, and will be key to developing the region’s Advanced Materials and Metals cluster strategy. “The Composite Centre is an excellent resource for increasing technology transfer to companies of all sizes and types,” said Professor Keith Ridgway, research director of the AMRC. “Our experience of collaborating with over 40 industrial leaders means that our technical support, technology development and supply chain guidance is extremely relevant for anyone looking to enter this expanding market.”

Southampton University in South East England has become the new home of the Airbus Noise Technology Centre (ANTC), as part of a collaboration with the European aviation manufacturer. The institution is tasked with devising ways to halve perceived noise and eliminate all noise nuisance outside airport boundaries by 2020. “This requires a doubling of the previous rate of progress, and requires advanced research and development across a range of new technologies,” said a spokesperson. This is the first university-based centre for Airbus, which has been working with Southampton on a range of noise R&D projects. According to Pierre Lempereur of Airbus France, the centre will provide the company with “enhanced access to technology innovation and support from world-class skills, experience and tools”. Academic staff, research fellows and PhD students as well as undergraduate students will benefit from the new facility, which will boast state-of-the-art computer simulations and wind tunnel testing equipment.

Durham University in North East England has been named as the leading educational institution in Europe for space science research in a new league table. The ranking, produced by Thomson Reuters Essential Science Indicators and published in Times Higher Education, praised the university’s performance in the astrophysics sector. Listed as fourth in the world for the science, the establishment beat rivals such as the Harvard-Smithsonian Center for Astrophysics, the California Institute of Technology and Cambridge University. Durham has carried out investigations into areas such as dark energy and dark matter and the link between small and super-massive black holes, and has carried out large-scale computer simulations of the evolution of the universe. Professor Martin Ward, head of the Astronomy Group at the university, said: “Durham’s ranking as Europe’s number one institution for space science and astrophysics is recognition of the high impact of our research.”

Plans announced for ‘green motoring revolution’
New initiatives to put Britain at the forefront of a green motoring revolution by encouraging a mass market in electric and hybrid cars have been announced by the Government. With the potential to create up to 10,000 new jobs and help preserve many thousands more, the initiative is part of wider Government plans to develop a low-carbon economy.

Speaking at an International Experts Meeting in London at the end of October, Transport Secretary Geoff Hoon set out a $150 million commitment to accelerate the emergence of greener vehicles. He said: “Electric cars and other low-carbon vehicles, like plug-in hybrids, cut fuel costs and reduce harmful emissions. If we can inspire more people to use them, it will help us to make a positive impact on climate change. Alongside this, their research and manufacture is an emerging industry with the potential to create new jobs and safeguard existing employment in the UK.”

Motor manufacturers will be invited to bid for the opportunity to participate in a $15 million project to run electric car and ultra-low-carbon vehicle demonstration projects, overseen by the Technology Strategy Board. This will see around 100 electric cars provided for trials by families and other motorists. At the same time, up to $30 million has been dedicated to research into improving technology that could make electric and other green cars more practical and affordable. The Secretary of State for Business, Lord Mandelson, said: “We know our automotive sector has a global reputation for taking forward new technology and we want the UK to be at the heart of new developments in electric vehicles.”

To encourage the mass production of green vans for the first time, the Department for Transport has also shortlisted ten companies to bid to provide electric and low-carbon vans to councils and other public sector bodies, such as the Royal Mail, as part of a $30 million programme aimed at reducing road transport emissions. Liverpool, Newcastle, Gateshead, Coventry, Glasgow and Leeds will be among the first councils to trial green vans on their streets. The ten companies are Ford; Mercedes Benz; Citroen; Ashwoods; Land Rover, Modec; Smiths; Electric Vehicles; LDV; Nissan and Allied Vehicles. Geoff Hoon commented: “Vans make up around 15 per cent of road transport emissions in the UK, and their emissions are rising more than any other mode of road transport.”

Dr Richard Hutchins, corporate director of economic development at Advantage West Midlands, said: “The base of specialist technology organisations is a distinct regional asset, actively generating new automotive technology. Making this accessible to independent niche manufacturers in collaborative groups will promote growth in the cluster.” The ANVP will provide new product development capability for niche vehicle manufacturers, expand the local skills base and promote the region as an area of high innovation. Research will focus in particular on improved fuel efficiency, weight reduction and vehicle safety.

 

Ford and BMW embrace low-carbon auto technology
Ford has announced a new investment programme at its high-tech Bridgend engine plant in South Wales to produce a next generation of low-carbon dioxide, 1.6-litre, four-cylinder petrol engines. The company’s latest investment totals $105 million, including support of $201 million from the Welsh Assembly Government, and increases the plant’s production capacity to almost 1 million units per year. Investment at the Bridgend plant has totalled $472.5 million in the past five years alone, and this year employment at the plant rose to over 2,000 for the first time in its 28-year history.

Ford’s high-tech petrol engine plant in Bridgend, Wales will produce new low CO2 engines for the Ford ECOnetic range.

The new engines will go into production within two years and will be among the first of a new generation of petrol powertrains, known as EcoBoost, featuring turbocharging and direct injection technology. EcoBoost petrol engines will deliver improved fuel economy and emissions without compromising driving performance and will provide an alternative to hybrid or diesel technology, according to Ford. Compared with current larger displacement petrol engines of similar power, they are expected to provide up to 20 per cent better fuel economy, 15 per cent lower CO2 emissions and superior driving performance. The EcoBoost engines will join the existing Ford ECOnetic range of ultra-low-CO2 diesel-engine vehicles launched earlier this year.

The Bridgend factory is Wales’ third largest manufacturing plant, behind Airbus and Corus at Port Talbot, and First Minister Rhodri Morgan said that the decision would secure its future “well into the medium term”. He said it was particularly pleasing that Bridgend would be the sole source of the EcoBoost, and that this was a “real feather in the cap” for Wales. He added: “The factory was opened 28 years ago amid the doom and gloom of the early 1980s. This investment probably means Ford will be making engines here for another 28 years.”

The BMW Group meanwhile showcased a lithium ion battery-powered version of its popular MINI small car at November’s Los Angeles Auto Show, ahead of a pilot project that will see 500 of the cars evaluated on US roads in 2009. Based on the current MINI Hatch, the MINI E will initially appear in two-seater form with rear seats dropped to make way for the battery pack. To conserve energy and to help achieve a greater range (specified at 150 miles), the MINI E uses a regenerative braking system directly linked to the accelerator. The electric motor acts as a generator, feeding kinetic energy back into the system. Recharging is via a standard power outlet, but a high-amperage wallbox will be supplied that can be installed in customers’ garages, allowing the car to be fully recharged in just two-and-a-half hours.

In terms of design, the MINI E is similar to a standard MINI, though all the cars made for the pilot project will have dark silver paintwork on the panels and a silver roof incorporating a large yellow power plug logo. The 500 MINI Es slated for the US trial will be produced at the company’s sites in Oxford, South East England and Munich, Germany, before being shipped to California, New York and New Jersey for testing.

 

Full speed ahead for motor sports sector
BA national motorsport academy, aimed at ensuring that Britain remains the industry world leader, is being set up in Leicestershire, in the East Midlands. Pera business and innovation centre, in Melton, has been awarded a government contract to run the institution, which will receive around $600,000 in funding. The new academy replaces a previous centre near Melton that closed earlier this year. Colin Moody, director of Pera, said that the organisation – one of Europe’s leading innovation and business support organisations, and also the headquarters of the regional Manufacturing Advice Service – would provide a greater business focus than before. “Motorsport represents a strategic British industry with the potential to grow significantly in an increasingly competitive and expanding global market, by developing world-leading technologies, innovation and creativity,” he added.

In July it was announced that the Donington Park race circuit, also in Leicestershire, would host the British Grand Prix for ten years from 2010, after more than 20 years at Silverstone. Donington’s owners are planning to invest $150 million in the circuit, and this has already attracted motorsport firms to the site such as motorcycle company Norton. Leicestershire is also home to a number of firms that make components for the motorsport industry, which employs 100,000 people in the UK.

Meanwhile Lotus Engineering, the group’s world-renowned automotive consultancy division, has triumphed at The Engineer Technology + Innovation Awards 2008 with another environmentally focused project. Project HOTFIRE, which has developed a gasoline direct injection (GDI) engine concept that reduces fuel consumption by 15 per cent, was named the leading academic collaborative project in the automotive sector. Project HOTFIRE is made up of a collaboration of engine specialists from Lotus Engineering, Continental Powertrain, University College London and Loughborough University, with funding from the EPSRC.

Mike Kimberley, CEO of Group Lotus, said: “Our global high-technology Lotus engineering division is continually being recognised for leading the industry across a number of advanced technologies, which are contributing to the reduction of CO2 emissions. The most important part of the project is that the technologies developed are available and affordable, and can be easily implemented into next-generation models to produce lower emissions.”

A UK team which developed a car that broke the sound barrier is designing a vehicle that will go even faster. Hoping to break the 763mph record they set in 1997 with the Thrust SSC jet-powered car, RAF pilot Andy Green and his team now intend to travel at 1,000mph. The project, known as Bloodhound, will be powered by a Eurofighter Typhoon jet engine and will reach speeds faster than a bullet fired from a handgun. Project leader Richard Noble stressed the importance of the UK retaining the land speed record that it has held for the past 25 years, and suggested that the latest attempt could encourage more young people to study science, engineering and technology. The innovative car is expected to be completed during 2009, with the team hoping to break the 1,000mph record by 2011. The Minister of State for Science and Innovation, Lord Drayson, said that the Bloodhound project could lead to advances in fields such as sensor technology, fuel efficiency and automotive safety.

Innovative partnership established to advance medical research
A new organisation involving five of the UK’s top medical research centres and hospitals is being set up in London to create Europe’s leading health research powerhouse and to produce world-class research into cancer and heart disease. The intention is to deliver real improvements in health for patients in London and across the world. The academic health science partnership – known as UCL Partners – will support more than 3,500 scientists, senior researchers and consultants, and will have a combined annual turnover of $3 billion.

The institutions involved are UCL (University College London), Great Ormond Street Hospital for Children, Moorfields Eye Hospital, the Royal Free Hampstead and University College London Hospitals. Between them, they treat more than 1.5 million patients each year. UCL Partners became operational during September 2008, and will focus initially on ten areas of research. Malcolm Grant, president and provost of UCL, said: “The creation of this partnership is a landmark in the history of medical research in the UK, and particularly relevant in the 60th anniversary year of the National Health Service. The combined skill, expertise and knowledge of our five organisations promise to deliver to patients the benefits of cutting-edge research at its best as quickly as possible.”

University College London

The bill follows hot on the heels of the signing of a memorandum of understanding between the California Institute for Regenerative Medicine (CIRM) and the UK’s Medical Research Council (MRC). The deal between the two industry bodies will make it easier in future for UK and Californian businesses to obtain joint funding for stem cell research. Meanwhile, another new Government initiative has introduced simpler regulations to speed up the trial process for new medical technologies. The model Clinical Investigation Agreement between the Department of Health and the Association of British Healthcare Industries will cover all medical technology trials using patients that are funded by industry in NHS hospitals. Supporting the development of products such as pacemakers, stents and hip replacements, it will reduce bureaucracy related to the testing of new equipment.

Healthcare companies embark on wide range of new initiatives
In another boost for the UK’s international status as a base for stem cell science, Pfizer, the world’s largest drug company, has announced plans to spend up to $60 million to set up a research centre in Cambridge, Eastern England. The US-based company, which is establishing a similar facility in Massachusetts, aims to “develop a new generation of regenerative medicines ... that may prevent disability, repair failing organs and treat degenerative diseases”.

Under the Pfizer Regenerative Medicine programme, about 40 researchers will focus on brain and sensory disorders at the UK centre on Granta Science Park. Its US counterpart will employ 30 scientists. US stem cell research is expected to expand rapidly following Barack Obama’s recent victory in the US presidential election. “This is a huge vote of confidence for UK stem cell science,” said Chris Mason, professor of regenerative medicine at University College London. Previously in the sector, UK-based GlaxoSmithKline, along with AstraZeneca and Roche, last year joined forces with the UK Government in the $2 million Stem Cells for Safer Medicines initiative, which is designed to use human embryonic stem cells to screen new drugs for liver toxicity.

In a separate development, Pfizer’s British unit is collaborating with Belgian drug-maker UCB, based in Brussels, to set up a UK company to speed up the drug development process. The two will establish a new ‘breakthrough technology company’ – Cyclofluidic – which will receive a grant of $1.7 million from the UK’s Technology Strategy Board. The new company is initially expected to employ ten people and to work in both the pharmaceutical and biotech industries. It is currently looking for a base in the UK and should be up and running by the end of this year, according to Pfizer.

Sensys Medical of the US, which has designed a non-invasive blood glucose monitoring device for self-use by diabetics, is to relocate its world headquarters to the UK. Sensys Medical Ltd (Sensys UK), which was aided by UK Trade and Investment’s Global Entrepreneur Programme (GEP) in making the move, plans to hire 20-30 UK staff. The company said its decision to set up in the UK was prompted by its more open regulatory environment and its potential as a gateway to markets in Europe and Asia. Its CEO, Robert Curry, said: “Moving to the UK … represents the best hub to build a world-class medical device company [and] provides us with crucial access to markets such as China.” Sensys has also engaged with the UK Diabetes Research Network (DRN) Coordinating Centre at Imperial College in London, which will provide a clinical trial site. There are nearly 2.5 million people with diabetes in the UK.

Collaborative research carried out by UK and US scientists has developed engineered cells that may help in the fight against HIV. A study in the Nature Medicine journal conducted by the universities of Cardiff and Pennsylvania investigated methods to overcome the way in which the virus mutates to avoid the ‘killer T-cells’ of the body’s immune system. Working with Oxford-based biotech company Adaptimmune, the project created modified T-cells, pre-set to recognise the various mutations of HIV and capable of clearing the infection in laboratory tests.

Landmark developments buck property market gloom
Construction of new office space in London is slowing dramatically as the financial downturn hits corporate demand. The number of developments under way has fallen by more than half in a year, from 46 in the third quarter of 2007 to just 17 in the corresponding quarter this year, according to property consultant Drivers Jonas. Nevertheless, more than 12 million sq ft of office space is still under construction – equivalent to 25 new blocks the size of the Gherkin tower in the City of London. This is likely to contribute to a huge oversupply of empty office space in the capital over the next few years. There is already 15 million sq ft of empty office space in central London, and vacancy rates in areas such as the City look certain to rise as banks and other financial institutions reduce staff and suspend relocation plans.

The City alone has 5.6 million sq ft of speculative office space under construction without a tenant, most of which will be completed in 2009. Big schemes include the Walbrook development, the Heron tower in Bishopsgate and Ropemaker Place. The fall-out from the global credit crisis has seen City rents fall to around $85.50 per sq ft from a peak of $97.50 per sq ft last summer, and some agents predict that they could fall as low as $60 per sq ft.

Drivers Jonas warned that other markets across London would also be affected by the downturn over the next 12-18 months. Demand in the West End has been relatively robust so far, but some areas such as Mayfair are overly reliant on hedge funds. Canary Wharf has many tenants from the US financial sector, and has already been affected by the demise of two key tenants, Bear Stearns and Lehmans. However, most observers in the property industry still expect conditions to be better than the last deep recession in the early 1990s, when rentals in the City fell to $52.50 per sq ft in 1992, with a vacancy rate of 19 per cent.

Despite the gloom, some high-profile projects are still coming to fruition. Kings Place is a $185 million development near King’s Cross St. Pancras station that combines Grade A office space with a new arts complex, including a 420-seat concert hall – London’s first new concert venue since the Barbican opened in 1982. It has been built by UK property developer Parabola Land Ltd and designed by architects Dixon Jones, who describe it as an “experiment” in city design, with environmental sustainability built in from the beginning.

The lobby and basement of the building are public spaces for music, art and catering, with separate entrances from the offices. There is an art gallery at one end and a restaurant at the other, looking out onto a canal waterfront. Rent money from tenants housed in a circular, seven-storey office tower – including the Guardian newspaper and Network Rail – allows space to be devoted to the auditorium, together with a second, 200-seat space for concerts or conferences and rehearsal rooms. The London Sinfonietta and the Orchestra of the Age of Enlightenment will be based at Kings Place, which opened with a five-day festival in early October. For more information and listings, visit www.kingsplace.co.uk

In another landmark development, Europe’s largest urban shopping mall has opened in Shepherd’s Bush in west London. The 43-acre Westfield Centre boasts stores from international brands such as Prada, Chanel and Valentino, major US firms including Apple, Nike and Gap, and ‘anchor’ stores by UK retailers Marks & Spencer, Waitrose and Next. There are 265 shops in the $2.6 billion development, 85 per cent of which are already open, together with 50 restaurants, a 14-screen cinema, a gym, a spa and a library, all contained under an undulating, energy-efficient roof. The centre, developed by Westfield Group of Australia, is expected to attract 25 million shoppers every year despite the financial downturn. A new overland train station has been constructed to serve the centre, which also has 4,500 car parking spaces and 570 cycle spaces.

In Scotland, US property tycoon Donald Trump has won approval from the Scottish government for a $1.5 billion golf resort on the coast at Balmedie, 12 miles north of Aberdeen. Work will start “early to mid-next year” on the development, which will include two 18-hole golf courses, a 450-bedroom hotel with a conference centre and spa, and 950 holiday apartments. The scheme has provoked opposition from environmentalists concerned about sand dunes that are home to rare birds and plants. Local business leaders, however, are keen to see the area develop tourism to reduce its dependence on North Sea oil and gas. Last year the resort scheme was rejected by Aberdeenshire council’s infrastructure committee, but that decision has been reversed after a report from a public inquiry recommended that outline planning permission should be granted.

Donald Trump said: “Because of the quality of the land we are given to work with, we will build the greatest golf course in the world. It will be a tremendous asset and source of pride for both Aberdeenshire and Scotland for many generations.” The decision was also welcomed by Alex Salmond, Scotland’s first minister, in whose constituency the development is located. He commented: “I believe that the economic and social benefits for the north-east of Scotland substantially outweigh any environmental impact. In tough economic times, substantial investment of this kind is at a premium. Six thousand jobs, including 1,400 which will be local and permanent, is a powerful argument."

UK woos investors from Japan and China

London has experienced a steady increase in FDI from Japan over recent years, with investment agency Think London reporting a doubling of Japanese FDI projects from 2004 to 2007. Japan is the biggest source of Asian direct investment in London, with FDI stock amounting to more than $2.7 billion. Think London has assisted 100 Japanese inward investors to establish their operations in the capital over the past 14 years, including Nissan Motors, Ricoh, Takeda, UNIQLO and, more recently, furniture company Okamura. 2008 marks the 150th anniversary of diplomatic relations between the UK and Japan, following the Anglo-Japanese Treaty of Amity and Commerce in 1858. At an event held to mark the relationship, Boris Johnson, Mayor of London, said: “Our capital has a relationship with Japan that goes back over 150 years and it is of the utmost importance that we continue to build upon this by engaging with the Japanese business community in London and in Japan.” Shin Ebihara, the Japanese Ambassador, observed: “Many Japanese companies have chosen London as the location for their European headquarters. Moreover, many Japanese companies have benefited from placing their R&D and design centres in this most attractive capital city. In addition, Japanese financial institutions will naturally place growing importance on their presence in this most sophisticated of financial markets.”

A new incubation unit for Chinese companies has opened at the Gateshead International Business Centre in Tyne and Wear, North East England. The Shanghai International Business Incubator will act as a stepping-stone for fledgling high-tech Chinese firms, and will encourage Chinese investment and research in the North East. It has been developed as part of an ongoing memorandum of understanding (MoU) between RDA One North East and the Science & Technology Commission of Shanghai Municipality to develop links in business, education, government, research and culture.

The scheme has so far helped five Shanghai-based companies set up in the North East, with a further four to six expected by the end of March 2009. Over the following months the incubator will welcome four new technology and design firms, with a further 11 projected to take up residency within three years. They will join 35 Chinese companies operating throughout the region. Over the past three months, two North East companies have set up a business at the Shanghai Technology Innovation Centre (STIC) facility in Shanghai, with a further three companies expected to do so by the end of March 2009.

Mobile phone operator Orange is to relocate all its offshore call centres from India back to the UK, in a bid to improve services for its 15 million customers. The company, which employs 12,000 people in the UK, already has centres in North Tyneside, Darlington and Plymouth. The call centres in India employ roughly the same number of people. Monthly contract pay services will be brought back to Britain first, according to Tom Alexander, Orange UK chief executive. He commented: “My aim is for Orange to be renowned for offering the best customer service – not just in mobile but across any industry. To do that we need in-house teams who can react quickly to the market and understand the changing needs of our customers. That’s why we are bringing back services from overseas.” Orange currently has 345 retail shops in the UK, of which 100 are being revamped. The company plans to open 60 new stores, creating 400 new jobs, as sales remain steady despite the economic downturn.


Regional news
Mitsubishi Rayon of Japan, a leading acrylics manufacturer, is to purchase UK-based chemicals producer Lucite International in a $1.5 billion deal, which is expected to be completed by the end of January 2009. The British company, globally recognised for its Lucite and Perspex brands, is based in Southampton in South East England. According to Lucite chief executive Ian Lambert, Mitsubishi Rayon’s acquisition will unleash the full potential of the two companies. “We believe the new combined enterprise will create an opportunity for significant cross learning, productivity and efficiency gains that will benefit our customers and stakeholders,” he said. Masanao Kambara, president of Mitsubishi Rayon, observed that the acquisition gave the Japanese company an “unprecedented range of production technologies in the industry”. Mitsubishi Rayon plans to look for a partner but will keep a majority stake in Lucite, which has an annual turnover of nearly $1.5 billion.

Cormon, a manufacturer of sub-sea and surface sand and corrosion sensors, based in Lancing, West Sussex in South East England, has been acquired by Teledyne Technologies Inc of the US. Robert Mehrabian, chairman, president and CEO of Teledyne Technologies, commented that the acquisition would add unique sensor technology to his company’s growing marine instrumentation businesses and would create an opportunity to provide integrated flow quality assurance systems. Cormon, which will now operate as Teledyne Cormon Limited, had a turnover of $10.2 million for the fiscal year to March 2008. The company, which also produces flow integrity monitoring systems used in oil and gas production systems, joins Teledyne’s other operations, based primarily in the US, UK and Mexico.

Avnet of the US, one of the world’s largest distributors of electronic components, has acquired electronic components distributor Abacus, based in Newbury, South East England, for $63.3 million. Roy Vallee, chairman and CEO of Avnet, said that the acquisition represented “an excellent addition” to the firm’s Electronics Marketing group in Europe. Abacus was founded in 1972 and is one of Europe’s leading distributors of electronic components. It has bases in ten European countries, an Asian office and a warehouse in Hong Kong, and employs 1,000 people. The Avnet Group also provides technology services and solutions and has more than 300 locations serving more than 70 countries worldwide.

US company Shopatron, headquartered in San Luis Obispo, California, is to establish a service centre in Swindon, South West England. Shopatron claims to be a unique solution that is somewhere between an affiliate network and an e-commerce package. Orders placed through manufacturers’ websites are directed to retailers local to the consumer, and the retailer then fulfils the order through shipment or in-store pick-up. Shopatron currently has more than 450 manufacturers signed up, including Panasonic, and over 7,000 retailers. Sean Collier, the company’s CIO, said, “Once we isolated the UK, it was very quickly obvious that Swindon was the best option for placing our service centre. Its location on the M4 and major rail hub makes it easy and inexpensive to access. In addition to this, Swindon is so close to major international airports, making this the perfect location for us.”

An enterprise hub scheme based at the University of East Anglia has received $3 million in funding from the East of England Development Agency (EEDA) and the European Union to develop new uses for crops, in order to cut reliance on man-made products. The Innovation in Crops (InCrops) centre will look at commercial uses for innovative plant-based products such as bio-plastics and packaging, biomass fuel and environmentally-friendly car parts made from hemp. The initiative will involve partners from organisations such as Cambridge University’s School of Plant Science, the Building Research Establishment and the regional agency for alternative energy, Renewables East. Earlier in November, the Department for Environment, Food and Rural Affairs established the Cambridgeshire Fresh Start Academy in the region to increase business and enterprise skills in the farming sector.

Belgian firm Recticel, a global leader in the manufacturing of polyurethane foam and insulation materials, is expanding its UK operations by opening a $21 million manufacturing, sales and marketing facility in North Staffordshire in the West Midlands. The company now employs 38 people at its new premises in Stoke-on-Trent, manufacturing insulation boards for the construction industry. Headquartered in Brussels, Recticel is a public listed company with revenues in excess of $1.9 billion and more than 11,500 employees worldwide. Luc Vansteenkiste, its chief executive, said: “Our production facilities in Stoke-on-Trent are at the top range of the market. The three different production technologies give the company the opportunity to manufacture a wide range of high-quality products.”

The University of Leicester in the East Midlands has been named University of the Year in the Times Higher Education Awards, the most prestigious awards in the higher education sector. In recognising Leicester’s achievements, the Times Higher judges cited the view that Leicester was “elite without being elitist”. They said: “Its continued commitment to, and real success in, widening access to students from non-traditional groups made it the stand-out choice in a very tough competition.” They also highlighted the leadership of Vice-Chancellor Professor Bob Burgess, who commented: “We now stand at the highest point in league table rankings in all national media and are placed second only to Cambridge for student satisfaction amongst full-time students taught at mainstream universities in England. We have also achieved our highest rankings in the Times Higher and Shanghai Jiao Tong University world ranking of universities.”

Leicester has also been singled out, along with Loughborough and De Montfort universities, as a leading example of a higher education provider successfully collaborating with commercial organisations, in a new report from CBI-Universities UK. The report, Stepping Higher, was sponsored by the Higher Education Funding Council. It highlighted examples such as the collaboration between the University of Leicester’s geology department and the Diamond Trading Company (DTC), the rough diamond sales and marketing arm of the De Beers Group, and its work with airline operator EasyJet to provide risk management training. Loughborough has formed a partnership with US car giant Ford, creating the world’s first BSc degree in car dealership. Earlier this year, the universities formed the Three Universities for Business alliance to provide a coordinated approach, making it easier for companies to benefit from their range of expertise. Professor Ian Postlethwaite, pro-vice-chancellor for research at the University of Leicester, said: “The skills that are in greatest demand are at degree level and above and it is for higher education to work with employers to determine what they want and provide the necessary courses.”

Transport and logistics company Eddie Stobart is to invest $420 million in a 24-acre transport and warehousing site on Merseyside, North West England. As part of a five-year plan, the company is developing an inland container port at Widnes and a new shipping facility over the River Mersey at Runcorn. The scheme will include the development of warehousing and transport centres on a former industrial site, with the first warehouse ready by October 2009. Stobart’s existing rail hub at Widnes currently handles five trains a day for a number of high-profile retail clients, but has capacity for 12 daily deliveries by rail through its link with the nearby West Coast mainline. The company is investing a further $45 million to develop a shipping hub on 44 acres of land across the river at Weston Port, which could handle containers from Felixstowe, Southampton and other international ports. The Northwest Regional Development Agency (NWDA) is spending $6.5 million on land remediation works at the 200-acre Halton site, which has been dubbed 3MG (Mersey Multimodal Gateway).

US software company AttentionIT, a specialist in environmental waste management systems, has opened its international headquarters in Warrington, North West England, in order to take advantage of the opportunities offered by the UK’s multibillion-dollar nuclear decommissioning programme. Dan Smith, co-owner of the company, said that in addition to being close to important nuclear sites, the location was ideal for an international office because of its proximity to Manchester International Airport. He added that he anticipated the new location becoming bigger than the company’s Tennessee HQ within three years, aided by a wealth of local talent in areas such as engineering, project management and IT. Foreign engineering companies are also exploring the opportunities offered by the next generation of nuclear power stations in the UK. Toshiba-owned Westinghouse, which already has a base in Preston, has signed a memorandum of understanding with Barrow-based BAE Systems relating to the project.

International Beverage Holdings (InterBev), the international arm of Thai Beverage Public Company Limited (ThaiBev), is to establish a new commercial centre at the Inver House Distillers site in Airdrie, Scotland. The new base, part of a $22.5 million investment over three years, will serve as the company’s global marketing hub for North America, Europe, south-east Asia and north Asia. InterBev, established in 2005, has a strong portfolio of brands in spirits, beer and other categories, and exports to over 80 countries worldwide. Its global operations are managed out of four regional headquarters located in the UK, Singapore, China and North America. Barrie Jackson, president of InterBev, commented: “This announcement is a great boost for our Scottish team, bringing the opportunity for them to diversify and build their skills. It is extremely important to the business that we invest in the highly-skilled team that we have in Scotland.” In February this year, Inver House Distillers was named International Distiller of the Year at the Icons of Whisky dinner.

Glasgow’s new Digital Media Quarter (DMQ) was officially opened in October. Located along the Scottish city’s riverfront, the quarter has been created to bring together companies working at all levels of digital media, including broadcasters, publishers, communication technology companies and R&D institutions. Phase one of development is nearing completion, with two buildings providing a total of 97,000 sq ft of flexible space for digital media businesses. Plans for phase two include mixed-use leisure and further office developments. Television group Shed MEDIA is to open its first Scottish office within the DMQ in 2009, and will be joined by the Glasgow School of Arts Digital Design Studio, which works at the cutting edge of digital media technologies. The site forms part of the wider Pacific Quay area, where tenants include BBC Scotland (which features the most advanced broadcasting centre in Europe), Scottish Television, Glasgow Science Centre, radio station XFM Scotland and Film City Glasgow.

Computer giant IBM has been awarded a $1.5 million grant by the Scottish government to carry out new software research at its facility in Greenock. Jack Perry, chief executive of Scottish Enterprise, said that the firm’s decision to carry out research in Scotland showed how highly the country’s workforce and business infrastructure was regarded. IBM has a strong presence in the Scottish economy, and a 57-year history at the Greenock site. Meanwhile Sun Microsystems has opened a new executive briefing centre in Linlithgow. Sun will use the state-of-the-art centre to demonstrate its latest network computing products to corporate customers. It will also provide a forum for high-level briefing sessions and conferences. Crawford Beveridge, Sun executive vice-president and chairman for EMEA, Asia-Pacific and the Americas, said that when customers visited the company’s equivalent centre in the US sales increased by 30 per cent, and he expected a “real increase” in the number of international companies coming to Scotland. To date, California-based Sun has invested around $240 million in Scotland.

Bombardier Aerospace is to create 200 new jobs at its east Belfast base in Northern Ireland, with more set to follow. The Canadian-headquartered company is currently looking for workers in engineering, supply chain, information technology, human resources and finance roles. In addition, it hopes to create more than 800 jobs when its new CSeries aircraft project reaches peak production. A spokesman commented: “Bombardier’s commercial and business aircraft programmes, in which we in Belfast play a major role, have witnessed a growth in demand over the last year and we have a strong order backlog.” He added that the company is also looking at plans for a new 500,000 sq ft factory to house production of the wings for the CSeries, which is due to be launched in 2013. Bombardier is the world’s third largest civil aircraft manufacturer and builds the Learjet, Challenger and Global business plane families.

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