May 2008

NEWS

Business growth slows but economy remains steady
The latest quarterly survey of UK business performance by the Royal Bank of Scotland showed that the rate of growth in business activity was slowing in many parts of the country, but that the economy as a whole appeared to be heading for a ‘soft landing’, despite the continuing credit squeeze and uncertainty in financial markets. The bank found that, in 11 out of 12 UK regions, business expanded during the first three months of the year, but that in ten of the 12 the rate of growth slowed, with businesses saying that the credit crunch was harming confidence. Input prices were rising, as firms were faced with higher energy and labour costs. Nationally, employment rose at a moderate rate in March, although the picture was patchy across the regions.

Andrew McLaughlin, chief economist at RBS, said: “Input prices recorded a series high, with business pointing the finger at the usual suspects of higher energy prices and a strong euro. More worrying is that rising labour costs were also cited. … Orders for new business are holding up, rising in seven of the 12 regions, although the powerhouses of London and the South East recorded their weakest increases in nearly five years.”

In early April the Bank of England made another cut in its main interest rate, shaving off another quarter-point to bring it down to 5 per cent. The Bank’s Monetary Policy Committee (MPC) expressed concern about inflation, with the consumer price index rate nudging up to 2.5 per cent in February, but said that the medium-term outlook justified a rate cut. “Credit conditions have tightened and the availability of credit appears to be worsening,” it observed. However, the Bank made no sign that it planned to aggressively cut rates to stave off fears of a recession, and economists believe that employment, output and consumption measures are still too strong to justify such action.

The cut in the headline rate was widely expected. It was the third announced by the Bank since December, when rates stood at 5.75 per cent, but its intervention has been modest in comparison with the 3 per cent cut made by the US Federal Reserve. However, a growing number of economists are pointing to similarities between the US and UK economies, citing factors such as an ailing housing market, heavily indebted consumers and a large current account deficit. Nevertheless, hard data from the retail and manufacturing sector have so far been stronger than expected and there are few signs of stress in labour markets.

The Bank has offered few clues about its long-term policy, but analysts believe that it is aiming to balance the risks of disruption to financial markets, which could trigger a slowdown, with the prospect of high oil and import prices driving inflation further above target in the months ahead. Many economists expect rates to fall further, to 4.75 per cent by June. The European Central Bank meanwhile has announced that its rate would remain unchanged at 4 per cent, pushing sterling to a record low against the euro.

The latest figures from the manufacturing sector suggest that UK industry is holding up against the credit squeeze. Factory output grew more quickly than expected in February, rising at its strongest annual rate in more than a year, according to the Office for National Statistics (ONS). Output rose by 0.4%, better than the expected 0.1%, and the annual rate for the year to the end of February climbed to 1.9%, the best figure since December 2006. The wider industrial output figure, which also includes oil and gas production, grew by 0.3% month-on-month in February, and by 1.3% for the year, again better than forecast. According to the ONS, the increase was led by the food, drink, tobacco, chemical and metal sectors.

Employment figures from the ONS for March show the largest annual increase in employment since 1997. The number of people in employment was the highest on record, at 29.5 million. A rise in the number of older workers represented almost half of the annual increase in employment, with 7.89 million people over 50 now continuing to work. The number of vacancies was also at a record high, rising 12,000 over the first quarter of 2008 to 687,600, while the number of redundancies was down 17,000 to a record low of 106,000. Unemployment continued to fall, down 90,000 year-on-year. Stephen Timms, Minister for Employment and Welfare Reform, said: “More people now than ever are in work … The economy is benefiting from the skill and expertise that people aged over 50 are bringing to the workforce, and we are continuing to ensure that our welfare reforms provide greater opportunities for people across all walks of life to get into work if they want to.”

Tata pledges to build on Jaguar and Land Rover brands
Tata Motors, the automotive arm of Tata, India’s largest multinational company, has acquired the UK-based Jaguar and Land Rover automotive businesses. The company paid former owner Ford Motors of the US $2.3 billion for two iconic brands, and now plans a five-year investment package that will benefit the UK automotive sector as a whole. In recognition of the UK’s manufacturing strengths, Tata will continue production of both brands in the UK, and will manage them at arm’s length.

“We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact,” said Ratan N. Tata, chairman of the Indian industrial group. Tata has had its European technical centre in the West Midlands for several years and has already made several large acquisitions in the UK, including its $12.4 billion takeover of Anglo-Dutch steel firm Corus in January 2007.

Between them, Jaguar and Land Rover produce around 300,000 cars a year at three plants in the UK. Both brands have had problems in recent years, but Jaguar is reducing its financial losses and has recently launched the well-reviewed XF sports saloon. Land Rover is now profitable and is selling record numbers of vehicles worldwide. Engineers and designers at the two firms are considered to be among the best in Europe.

Challenges include the fact that both companies’ ranges consist of vehicles with large engines and high levels of emissions, at a time when stricter environmental laws are encouraging consumers to opt for smaller cars. The UK is also a relatively high-wage production centre. Ford has said it will continue to supply the two brands with engines, transmissions, components and environmental and other technologies. Fiat, a European leader in small cars which already produces cars and engines with Tata in India, has also expressed interest in working on Jaguar and Land Rover.

Jaguar made a loss of $550m in 2007 on worldwide sales of 60,000 vehicles. Land Rover earned about $1.2bn on sales of 226,000 units, giving the two brands a combined profit of $650m. Land Rover’s current five-year business plan includes $1.4 million of investment in CO2 reduction. In January in Detroit, the company unveiled the LRX, its smallest concept car to date.

Meanwhile, new car registrations in the UK remained robust in March, according to the Society for Motor Manufacturers and Traders (SMMT). Year-on-year, registrations for the month were 0.5 per cent higher at 451,642. Registrations of super-mini vehicles grew by 4.3 per cent, and now account for 35.3 per cent of the market. Registrations of diesel and alternatively-fuelled vehicles also grew, by 7.7 per cent and 14.7 per cent respectively.

“March continues to be the biggest month for new car registrations and this year has proved to be better than anticipated,” said Paul Everitt, SMMT chief executive. “We expect 2008 to be a challenging year, but registrations to date are in line with industry forecasts. The latest figures demonstrate the progress made by industry in delivering lower-carbon cars and the wide range of opportunities for consumers to save money and reduce their carbon footprint.”

Investors underline London’s position as global financial centre
Leading Japanese bank Nomura has chosen London as the centre of its international operations. Kenichi Watanabe, the company’s new president and chief executive, said that the City of London is attractive to foreign companies because it operates on a more international level than its rival, New York. New York institutions focus mainly on the dollar but in London the bank can work with 38 different currencies, he said, describing the city as the ideal location to develop financial products for export into other markets. Nomura has increased the number of staff at its UK office by 12 per cent over the past year to 1,400, making it the mainstay for its global operations. Another banking giant, Citigroup, also plans to add senior members of staff to its London branch, citing as advantages the city’s location at the centre of time zones and its large share of trading in foreign exchange and precious metals.

The London Stock Exchange (LSE) has underlined the UK’s reputation as the leading western centre for Islamic finance with its first listing of a sovereign Islamic bond. The Government of Bahrain chose the LSE to list its second sukuk bond in April, following the launch of its first such bond in Luxembourg in 2004. More than 50 per cent of the bond issue was purchased by European investors, with the rest going mainly to Middle Eastern banks. The $350m bond increases the amount of sukuk on the LSE to $11bn. It is structured to avoid paying interest, in line with religious laws: instead of interest, investors receive rent from underlying assets, in this case dry docks in Bahrain.

The UK government has introduced reforms designed to support Islamic finance and to encourage Muslim home-owners to buy sharia-compliant mortgages. Ministers are also considering launching a UK government sukuk, which would be the first western sovereign Islamic bond. Rizwan Kanji, head of Middle Eastern capital markets at law firm Norton Rose, which worked on the Bahrain transaction, said: “You can attract more investors, particularly in Europe, if you list in London. London gives investors the reassurance that the bond is worth buying as it is a mature, highly regulated market that gives credibility to a deal.”

In another development, the first Russian railway company is expected to float on the LSE within the next few months. Globaltrans is seeking a market capitalisation of between $1.34 billion and $1.75 billion, and hopes to raise between $390m and $509m. It is the largest of the many private rail freight companies that have appeared in Russia over the past five years following liberalisation, and in 2007 made operating profits of $128m. It is the latest of several Russian companies to seek a listing in London, where markets are more liquid than those in Russia and have fewer regulatory requirements than US exchanges.


London targets South Korean and Indian investors
Think London, the foreign direct investment agency for London, is targeting investors from South Korea ahead of the Olympic Games in 2012. The city’s economy is forecast to grow by $80 billion by 2012 and will offer huge opportunities for Korean companies looking to invest in the capital, according to the agency. Its chief executive, Michael Charlton, visited Korea in April, on a mission hosted by KOTRA, the Korean Trade Investment Promotion Agency. “Think London is ready to support Korean companies looking to take advantage of these opportunities and globalise their business by using London as a springboard into Europe and beyond,” he said.

Outward foreign direct investment from South Korea increased from $4.3 billion to $7.1 billion in 2006, with London attracting 25 percent of all Korean projects into Europe. Think London has helped more than 1,000 companies from 43 countries to establish themselves in the UK capital since 1994. Over the past seven years, these have included 30 Korean firms, among them Hyundai Logistics, Hanjin, Industrial Bank of Korea and Samsung Design Europe, the design group for the world’s second largest electronics company.

Samsung Design Europe, for example, has established a base in the Clerkenwell area of central London. Think London originally helped it to set up a studio in 2001 and has continued working with it since then, including supporting its expansion into bigger premises. Samsung aims to make its London office the pre-eminent design studio in its global network. “London’s skillset and talent pool have a direct link to Samsung’s needs in terms of the creative sector. London’s creative industries are obviously the best in so many ways – in terms of size, in terms of variety and in terms of the human resources available. Think London has provided us with unlimited help and support,” commented Sung Han Kim, head of Samsung Design Europe’s London office.

Think London was also instrumental recently in attracting India Infrastructure Finance Company Limited (IIFC) to the city. IIFC has chosen London as the location for its new overseas subsidiary, IIFC UK, which will provide finance for infrastructure projects in India, such as power, airports, ports and roads. Indian Finance Minister Palaniappan Chidambaram said: “The UK is India’s second largest trading partner and investment into London by Indian business continues to grow significantly each year. London’s broad range of world-class services makes it an ideal destination for Indian businesses.”

Think London estimates that Indian investment accounted for 14 per cent of all FDI projects into London during 2006/2007, up from 6 per cent in 2000/2001, and says that India is now the second largest contributor of FDI projects in the city. Over the past four years, the agency has assisted 67 Indian companies to set up or expand, generating 1,867 jobs. Among them have been companies such as Punjab National Bank International Limited, Orchid Chemicals, HDFC, Wipro and Exilant Technologies.

In a separate development, ICICI Bank UK, a wholly owned subsidiary of ICICI Bank, India’s largest private sector bank, has opened a trio of new bank branches in the UK. In January it opened new branches in Coventry in the West Midlands and East Ham in east London, followed in March by its ninth UK branch in Leeds in Yorkshire and Humber. ICICI has three existing branches in London and two more in the Midlands, and is also opening a branch in Manchester in the North West.

Suvek Nambiar, managing director and CEO of ICICI Bank UK, said, “Having a physical presence through a branch network in ethnic areas is central to our growth strategy in Britain. Our research tells us that a large segment of the ethnically diverse population prefers to access financial services by speaking to representatives of our Bank in person. Our investment in Britain is underlined by the fact that the UK market rewards innovation, and our innovative products, such as our remittances solution, have been well appreciated by our customers.”

The bank’s opening in Leeds was welcomed by local inward investment officials. Simon Hill, executive director of business at RDA Yorkshire Forward, which worked with ICICI Bank for 12 months to bring it to the region, commented: “ICICI Bank played a major role in Indian overseas mergers and acquisitions in 2007. Bringing it to Yorkshire and Humber will help to further develop our relationships with India – which we know is one of the fastest-growing global economies.”

ICICI Bank is India’s largest private sector bank and the second largest bank in the country, with consolidated total assets of about $115 billion as of 31 December 2007 and a market capitalisation in excess of $30 billion. Its subsidiaries include India’s leading private sector insurance companies and some of its largest securities brokerage firms, mutual funds and private equity firms, and it currently has a presence in 19 countries around the world.

Meanwhile, a UK firm of financial advisers is hoping once again to attract Indian entrepreneurs to Britain, following concessions on higher taxes for non-domiciled foreign residents made by Chancellor Alistair Darling in last month’s Budget. Grant Thornton had shelved its proposals last October, but says that the UK’s appeal to wealthy foreigners has been partially restored by concessions on ‘non-dom’ residents. Anuj Chande, head of Grant Thornton’s South Asia Group, said that the firm was hoping to relaunch the initiative “to market the UK as a tax haven” for Indians wanting a European base.

The government’s plan for an annual $60,000 tax charge for wealthy foreign nationals living in the UK for more than seven years has been watered down, to allay fears that companies would disinvest in the UK. Anecdotal evidence from advisory firms suggests that some investors have left, mostly for Switzerland, but that the tax rethink has reduced the number of non-doms planning to do so.

New investment strengthens capacity in biotech research
The Department of Health (DoH) has announced the launch of 12 new Biomedical Research Units to help the UK’s drive in innovative research into illnesses such as heart disease, asthma and obesity. According to Public Health Minister Dawn Primarolo, the new units at the National Institute for Health Research (NIHR) will specialise in translational research, which will develop academic advances into techniques and products for clinical use. A total investment of $90 million will be split between the new units, which will work alongside existing NIHR Biomedical Research Centres. New research will be encouraged in illnesses that currently receive limited funding, such as liver disease, musculoskeletal disease and hearing problems.

Ms Primarolo said: “The new funding will enable high-quality research to flourish in smaller centres across the country. This will strengthen our drive to put the UK at the forefront of vital health research and contribute to the nation’s international reputation as a centre for excellence.”

A new National Health Service biomedical research centre has been launched in Manchester, North West England. The Manchester Biomedical Research Centre (BRC) – a partnership between the Central Manchester & Manchester Children’s University Hospitals NHS Trust and the University of Manchester – will concentrate its efforts on transitional research. Total investment of $70 million will allow the centre to launch and run for the first four years. Funding has come from the Department of Health and the Northwest Regional Development Agency (NWDA), with other partners including AstraZeneca, Renovo, GlaxoSmithKline, the Wellcome Trust Clinical Research Facility and Manchester City Council.

The BRC will be part of an influential group of hospital and university research centres across the UK developing innovative treatments and medicines, joining similar facilities in London, Cambridge, Oxford, Newcastle and Liverpool, which have helped to build the UK’s reputation as a leader in the biomedical field. One of the first NHS biomedical research centres, University College London Hospitals NHS Foundation Trust, is currently undertaking groundbreaking research into the treatment of cancer, stroke and epilepsy.

Austrian company f-star, a specialist in engineering novel antibodies and antibody fragments, has opened a research facility at the Babraham Research Campus in Cambridge, Eastern England. The company, which has 18 employees at its headquarters in Vienna, will use its new Cambridge site for lead generation based on its Modular Antibody Technology and, in future, for research related to collaborative studies with pharmaceutical and biotech partners. The Babraham campus is home to a number of biotech companies and is located close to the Medical Research Council’s Laboratory of Molecular Biology (LMB), Europe’s leading centre for antibody engineering. “We are excited to open up a lab at the epicentre of Europe’s antibody research and development community, and to utilise the large pool of talent and experience concentrated in the Cambridge area,” said Gottfried Himmler, CEO of f-star.

Swiss pharmaceutical giant Roche is to purchase Piramed, a privately-owned UK biotechnology company, for $160 million. The deal will expand Roche’s presence in the areas of cancer and immune inflammatory diseases such as arthritis, and will give it access to Piramed’s PI 3-kinase inhibitor programme, an emerging target for the treatment of cancers and autoimmune diseases. Roche will pay Piramed $15 million on commencement of mid-stage trials for its oncology programme.

Based in Slough, South East England, Piramed was founded in 2003 and is backed by JPMorgan Partners and financial services firm Excalibur, which specialises in biotech investments. The deal is the latest in a series of acquisitions of UK biotech companies, many of whom have opted to sell, given the difficulties involved in raising finance in the current financial environment. Also in April, German biotech company Paion announced that it was buying its UK counterpart CeNeS in a deal worth $21.8 million.

 

Energy initiatives explore variety of renewable options

Gordon Thomson, operations director for Scotland and Ireland at IT giant Cisco, has claimed that Scotland’s climate, allied with its strong track record renewables, makes it an attractive proposition for companies involved in super data centres, which he describes as the next wave of technology development. Data centres tend to run extremely hot due to the volume of data they handle and require cooler temperatures to operate efficiently. Building them in a naturally cool climate saves millions of dollars in air-conditioning and, if a centre could be powered by wind turbines, it would make such a location extremely tempting. Thomson is convinced that Scotland is in a unique position, with its climate and commitment to wind power, to grab a significant slice of this market, which he estimates could be worth up to $36 billion to its economy. Two centres are already planned for Scotland and Thomson plans to lobby the Scottish Government to see that these are accelerated and expanded upon.

In the marine renewables sector, planning permission has been granted for a prototype tidal stream generator to be tested in the Humber Estuary near Grimsby, in Yorkshire and Humber. The pulse generator has been developed by Pulse Tidal Ltd, with financial backing from the government. It will be capable of generating up to 0.15MW and will be one of the first tidal power machines to supply the national grid. If successful, it will be used to develop larger 1MW units, which could be deployed in arrays each generating up to 100MW, enough to power the equivalent of 70,000 homes. It works by extracting energy from underwater currents in a manner similar to wind turbines. Energy from tidal flows will power a pair of horizontal hydrofoils, 11 metres in length, which will move up and down like a dolphin’s tail.

Further south, the London Development Agency (LDA) and the Mayor of London have announced a new $48 million funding package to develop waste recycling infrastructure in the capital and help the city to reach its recycling targets. Mayor Ken Livingstone said: “There are real opportunities in London to develop technologies that treat waste as a resource, rather than relying on outdated waste disposal methods which contribute to climate change.” Use of cleaner waste disposal alternatives such as gasification, anaerobic digestion and pyrolysis will be encouraged over less environmentally friendly options such as incineration and landfill. The Mayor’s target is to reduce London’s carbon emission by 60 per cent by 2025.

In Dagenham in Essex, on the eastern outskirts of the capital, motor manufacturer Ford is adding a third wind turbine at its Dagenham Diesel Centre diesel engine manufacturing site. An extra turbine, supplied by Ecotricity, will enable the plant to remain 100 per cent wind-powered, as it expands following the installation of a new production line for 1.4-/1.6-litre Duratorq TDCi engines. Ford offers 28 models of Fiesta, Fusion and Focus cars powered by these diesel engines, which from October will be exempt from the London congestion charge. To meet demand for more eco-friendly engines, Ford Dagenham is on track to produce more than 1,000,000 engines this year, using one of the greenest power sources to do so. The existing two Ecotricity wind turbines at the plant have saved over 6,500 tonnes of CO2 emissions a year since 2004. A number of other green initiatives, such as the recycling of lubricants and metal filings, are in operation at the plant, which has won Ford a Business Commitment to the Environment award.

Ford’s Dagenham Diesel Centre powered by wind turbines

New business regulations come into force
A range of new business regulations was introduced on 6 April, one of two common commencement days each year (along with 1 October) for new government legislation. A number of the new measures affect employment law. Maternity leave rights, for example, have been extended to include benefits packages, and any female employee who gives birth after 5 October will be able to keep employment benefits such as company cars for the whole of her maternity leave period. Sexual harassment rules have also been changed, with employers now having a duty to protect staff from sexual harassment by customers and suppliers.

The rules on informing and consulting employees have been extended to include firms with between 50 and 99 workers. Although there is no mandatory obligation to have an information and consultation policy in place, if 15 or more staff ask for a council to be set up to keep them informed of decisions that will affect them, the business must do so. Occupational pension schemes will also be extended to firms with 50 or more employees.

There are new rules on agency workers. Employers will no longer be allowed to employ such workers conditional on them paying for services such as accommodation and transport. Also newly in force is the Corporate Manslaughter Act, which means that, in the case of a work-related fatality, the employer must demonstrate that appropriate health and safety measures were in place and that there was no “gross breach” of duty of care. Firms found guilty could be fined up to 10 per cent of their annual turnover.

A new set of measures aimed at simplifying company law has come into force under the Companies Act 2006, which is being phased in over a three-year period. These will affect solicitors and accountants in particular. For example, accounting and reporting requirements for small companies are being brought together in a single set of regulations, and private companies will no longer be required to have a company secretary. In addition, the time in which private companies can file their accounts with the Registrar of Companies has been reduced from ten to nine months. Previous amendments to company law allow companies to make greater use of electronic communications for contact with shareholders and remove the obligation to hold an annual general meeting. Further changes are due to be introduced on 1 October 2008 and 1 October 2009.

In another change, the regulations around UK Government-funded support for businesses are to be streamlined. More than 3,000 publicly-funded support schemes will be cut to around 100 over the next two years through the Business Support Simplification Programme (BSSP), a body headed by Martin Temple, chair of the manufacturers’ organisation EEF. According to the Government, this will allow its annual $5 billion spend in business support to be targeted where it will have the most impact, reducing costs and confusion. The changes mean that the main access route for businesses seeking support will now be Business Link (www.businesslink.gov.uk). New products will be introduced to support business creation, innovation finance and risk capital and to maximise the potential of FDI.


Office rents show signs of downward pressure
Office take-up in the City of London fell by 40 per cent in the six months to March, compared with the six months previously, and by 60 per cent in the Docklands financial area, as the effects of the credit crisis hit financial occupiers, according to property consultant Jones Lang LaSalle. Banks and other financial institutions have been deferring relocation decisions, and there have been predictions of large-scale losses as the credit crisis bites.

For the first time since 2004, there is downward pressure on rents, with Jones Lang forecasting a 2 per cent fall in prime rents this year and a bigger decline for larger office lettings, compared with previous forecasts of growth. The proportion of office space in the City let to banking and finance occupiers fell from an average of 32 per cent in 2007 to 11 per cent in the first quarter of 2008. “There is evidence of rent-free periods extending in the City, with net effective rents on smaller units showing a fall of 4 per cent in the last quarter,” said a Jones Lang spokesman. Falling demand in the City could pose problems for developers, as some 7.3 million sq ft of new office space is due for completion in 2008 and 2009. In the West End, however, demand is more robust, with office take-up and rents broadly unchanged.

The Government has changed the rules on business rate reliefs for empty commercial property aiming to encourage owners to bring empty properties back into productive use. Previously, empty commercial property, such as office and retail properties, received 100 per cent relief from business rates for the first three months, and were only liable to a 50 per cent rate thereafter. Empty industrial properties, such as warehouses and factories, received a permanent exemption from rates. Now, however, empty properties will be liable for the full business rate after an initial period of three months, or six months for factories and warehouses. The Government believes that the new rules will increase the availability of properties and help to drive down rents.


New developments boost stock of business premises
Numerous new developments around the country are bringing new, high-quality business space onto the market. In the North West, for instance, a major new development, Liverpool Innovation Park (LIP) is being marketed to companies in the high-tech and innovative sectors. LIP has been created by bringing together three adjoining business sites: a former Marconi research centre now known as Liverpool Digital, a former Mersey Transport depot site ready for development, and the established Wavertree Technology Park. Together, these sites have the potential to offer more than 1 million sq ft of floorspace; they also have good links with local science parks and universities via what is being branded as the Liverpool Knowledge Quarter. Development land at LIP has the capacity to house six new buildings totalling up to 400,000 sq ft of space. Currently 230,000 sq ft of available accommodation is being marketed out of a total of 410,000 sq ft at Liverpool Digital. Existing occupiers include Liverpool John Moores University’s International Centre for Digital Content and Aimes Grid Services, along with Sony, ICDC, DigitalInc, Selex Communications and Baxters Healthcare.

In the West Midlands, a former copper works is set to be transformed into a multimillion-dollar business park. The 28-acre site, situated off the M6 near Walsall, forms part of the Darlaston Strategic Development Area (SDA), which has the potential to create up to 4,500 jobs over the next decade. Regional development agency Advantage West Midlands (AWM) has acquired the land and will co-ordinate a two-year programme of site remediation. Infrastructure and development work at Darlaston SDA will see the creation of up to 875,000 sq ft of floorspace that will support a variety of uses, from logistics and distribution hubs to workspace and industrial units suitable for smaller start-up and growing businesses.

A new development in Rotherham, Yorkshire and Humber, has 29 offices and 18 workshops available for businesses in sectors ranging from creative and financial services to small-scale manufacturing operations. The 27,000 sq ft Fusion@Magna centre is part of a major redevelopment on the site of a former steel rolling mill. Rotherham is becoming a regional hub for entrepreneurial activity, with two other start-up centres, Century and Moorgate, already in operation. Companies moving into Fusion@Magna can take advantage of a range of services, including on-site business advisers, access to training and marketing expertise and links to partner organisations.

A new $240 million science park is planned to open on the outskirts of Exeter in South West England by 2010. The South West of England Regional Development Agency (RDA) has invested $38 million to enable Devon County Council to purchase the 57-acre site off the M5 motorway, near Junction 29 at Redhayes. The Science Park will be part of a regional network including Bristol and Plymouth and will also have strong links with the University of Exeter Innovation Centre, which provides start-up units for knowledge-based businesses. It will offer extensive new facilities and high-quality space for businesses ranging from start-ups to major corporate headquarters. The development will also include improvements to Junction 29, which will unlock the potential of the East of Exeter Growth Area. The Science Park is one of five key developments planned for this area over the next 20 years, along with a new community at Cranbrook, the Skypark business site, an intermodal freight terminal and expansion of Exeter airport.

International recognition for UK’s scientific innovation
Professor Alec Jeffreys from the department of genetics at the University of Leicester, the creator of DNA fingerprinting, is the latest UK inventor to be recognised for his scientific breakthrough. He has been nominated for the 2008 Millennium Technology Prize thanks to his pioneering method of identifying individuals from their DNA. The prize citation notes that Professor Jeffreys’ invention has had a “profound impact worldwide” on millions of people through its use in criminal, immigration and paternity cases. Professor David N Payne, director of the Optoelectronics Research Centre at the University of Southampton, is also on the shortlist for his invention of the erbium-doped fibre amplifier, which acts as a ‘backbone’ of the internet. The Millennium Technology Prize, awarded by the Finnish Millennium Prize Foundation, offers a total prize pool of $1.84 million to the finalists, with around $1.3 million going to the overall winner, who will be announced on 11 June. In 2004, the first Millennium Technology Prize was awarded to UK developer Tim Berners-Lee, who invented the World Wide Web.

Europe’s leading space company, EADS Astrium, has announced plans to acquire a UK firm that specialises in the design and manufacture of satellites. Astrium will provide Surrey Satellite Technology Limited (SSTL), a spin-off company from the University of Surrey, with the financial backing and industrial resources needed for its expansion in the small and micro satellite field. Colin Paynter, CEO of Astrium’s UK operations, said: “SSTL is one of the great success stories of the UK space industry and will be a substantial complement to what we can offer customers around the world, with its expertise in small and micro satellites and its innovative approach to developing new markets for space.”

SSTL will remain an independent UK company with access to Astrium’s manufacturing and test facilities, while Astrium will benefit from the University of Surrey’s expertise in the sector. SSTL was formed in 1985 as a way for the University of Surrey to commercialise its groundbreaking research in satellite engineering. Since its launch, the company has undertaken 27 small satellite missions, and claims to be the world’s most experienced small satellite supplier.
 

US company Linden Lab, creator of the 3D virtual world Second Life, has set up a new office in Brighton, on the UK’s south coast. The company began looking for a base for its European operations in 2006, initially focusing on London, Amsterdam and Berlin. “Quality of life is crucial to us,” said Ginsu Yoon, VP business affairs at Linden Lab. “We want our developers to engage with the world around them. So we considered locations that would be interesting and inspiring, where they could go out and explore.” The company decided that the openness and creativity of Brighton, coupled with a strong talent pool, made it the perfect place to establish itself and grow. With the help of UK Trade & Investment, it has chosen a new office site to house its existing six employees, and is looking to grow its UK presence to around 30 employees over the next two years. Second Life, which allows users to create a 3D representation of themselves online, has a large user base in the UK and is already being used by several public sector organisations and communities, such as the National Physical Laboratory and the Department for Innovation, Universities and Skills.



Regional news
LAs part of its expansion strategy, Maporama International, a global player in the location-based services market, has opened a new sales office in Reading in South East England. The company offers cartographic geolocation services via a range of mobile devices for applications such as inventory location, fleet management and GPS navigation, as well as integration and development APIs. “The opening of this office demonstrates our strategy of developing our international market through our mapping and mobile solutions,” said Dominique Grillet, CEO of Maporama International.

Overseas investment in the West Midlands has reached record levels, according to RDA Advantage West Midlands, which reports that 2,300 foreign firms now operate in the region and employ around 250,000 people, 10 per cent of its workforce. In 2007-08 the agency was involved in 44 overseas investment projects – an increase of 15 per cent year-on-year – which created 2,792 jobs and safeguarded a further 469. Successful investments included Ericsson of Sweden’s new R&D facility at Ansty Park, Coventry, and Shanghai Automotive Industry Company’s SAIC Motor Technical Centre in Warwickshire. Among smaller companies, Dutch mail order firm IGO Post opened a new UK headquarters in Burntwood in Staffordshire, while Indian electrical component manufacturer Victory Electricals acquired Craig and Derricott in Walsall. Nearly half of the agency’s projects were attributed to its Bridge to Growth campaign, a ‘one-stop shop’ package of tax, legal and business advice tailored to the needs of foreign investors in innovative sectors. Sixteen companies from Denmark, Norway, Sweden, Finland, the Netherlands, Germany, New Zealand and Australia took advantage of the scheme in 2007-08.

A $3.4 million centre of excellence for diesel engine development has been set up in Birmingham in the West Midlands. The Heavy Diesel Emissions Centre of Excellence at Birmingham City University’s Technology Innovation Centre (TIC) will allow engineers to develop vital skills and help to reduce carbon emissions. It is also available for open-access use by businesses as an independent research facility for heavy diesel powertrain development. At its hub is a high-powered dynamometer, which incorporates particulates emission analysis capability, enhanced by gas emissions and pollution analysis systems. The centre can also cater for the growing demand for hybrid-engine research, as well as exploration of different fuel types, from diesel and biofuels to petrol and aviation spirit.

The Perkins Learning Centre, a world-class manufacturing learning centre in Peterborough owned by Caterpillar Inc of the US, has received $1.5 million in funding from the East of England Development Agency (EEDA). The grant will be used to create an expanded high-tech training facility in R&D, design and production, which will be available to local people, businesses, educational establishments and other organisations. It will include a virtual reality modelling suite to simulate shop floor conditions. Over the next three years, the centre aims to train 6,500 people from the region in cutting-edge production techniques and help to increase the productivity of local businesses.

Also in Peterborough, a new Eco Innovation Centre has opened that will offer support to new companies with eco-friendly aims. The $600,000 centre will be a focal point for environmental activities, while providing all the usual features of a managed office, according its backers. Guy Eames, manager of the centre, said: “Our philosophy is simple: through Eco Innovation we can create the technological solutions required for a low-carbon economy, whilst creating jobs and wealth in the process.” The UK Centre for Economic and Environmental Development (UK CEED) and the Centre for Sustainable Engineering have already moved into the premises, along with other companies. According to UK CEED, which aims to promote UK sustainable business development, Peterborough has a thriving environmental business community, with more than 350 firms employing over 4,000 people in the sector.

The Centre for Process Innovation (CPI) and the Centre of Excellence for Nano, Micro and Photonic Systems (Cenamps), both based in North East England, have merged in a move that reinforces the region’s status as the lead driver for innovation in the UK’s processing sector. The newly merged CPI aims to become a national centre of international importance, with over 70 high-calibre scientists, engineers and support staff. It will collaborate with industry and will work with leading research universities to address industrial needs, offering the facilities to scale up innovation from the lab to industrial application. In particular, it will champion four key technology areas that offer sustainable growth potential: advanced processes, low-carbon energy, functional materials and printable electronics. Processing has been the UK’s fastest-growing sector over the past ten years, growing at an average rate of 2.6 per cent annually, and is now worth $140 billion to the national economy. North East England’s contribution is around 25 per cent of this total, and the sector accounts for 30 per cent of the region’s industrial base.

The Northwest Regional Development Agency (NWDA) has been given approval by the European Commission (EC) to make a $17.4 million training award to the Vauxhall car plant at Ellesmere Port, Merseyside, having ensured that it will be used for additional staff training and does not breach EC Treaty state aid rules. Vauxhall Motors, part of the General Motors group of the US, will use the grant to enhance training at the plant, which employs 2,200 staff. Significantly, the award also supports the future of the plant, following its successful bid last year to secure the next-generation Astra model. The automotive sector is vital to the economy of the North West, with 450 automotive companies employing 43,000 people. The sector generates an annual turnover of $18 billion, while the region’s automotive supply base exports 60 per cent of its products, twice the UK national average.

A new research centre has opened in Liverpool, North West England, which will take the UK into the next generation of materials science. The $19.2 million Centre for Materials Discovery at Liverpool University will give R&D support to firms in the region. The centre specialises in high-throughput discovery, which uses automated materials synthesis and IT facilities to create new materials more quickly than traditional methods. Its state-of-the-art facilities and specialist staff will help businesses to create new materials for use in a range of industries, including the energy, medical and consumer sectors. Professor Andy Cooper, a director of the Centre, said: “This is groundbreaking science and will enhance Merseyside’s reputation as a centre of scientific research. Dedicated to knowledge transfer, it will create fantastic opportunities for local businesses as well as career opportunities for graduates.”

A new business support website has been launched to promote Lancashire in North West England as a business investment location. The site, at www.makeitlancashire.com, offers directories of accessible funding, access to a searchable database of over 3,000 commercial sites and properties, and contact details for business support services across local authorities. It also provides information about Lancashire’s business and economy, skills pool and communications infrastructure, and illustrates key sectors within the sub-region.

Meanwhile an innovative e-business portal has been launched to support food and drink companies across the North West of England. Food Northwest, a regional industry organisation, has unveiled FoodPort, which it describes as an ‘e-business marketplace’ that links food and drink companies in the region and allows them to make savings through joint procurement. The portal also provides access to industry information from Leatherhead Food International, an online networking tool that will promote links between companies, and a managed computing service. The North West has one of the UK’s largest food and drink sectors, generating $19 billion for the local economy and employing more than 103,000 people. It has more food manufacturing businesses than any other UK region and is home to big industry players such as Heinz, Kellogg’s and Patak Foods.

Online retailer Amazon has officially opened its new distribution centre in Swansea, South Wales. The site at Jersey Marine in Swansea Bay, which covers an area the size of 10 football pitches, is expected to create 1,200 full-time jobs over five years and 1,500 seasonal jobs. The warehouse is the company’s fourth distribution centre in the UK and its largest to date. Its decision to locate to Swansea has been seen as a coup for Wales, which has a growing distribution industry presence, with more than 200,000 people employed in the sector. First Minister Rhodri Morgan called it a “powerful shot in the arm” for the Welsh economy and described the project as “an absolutely textbook example of how to do regional economic development”. The whole project was planned and completed in just 16 months, from initial discussions to the opening of the facility.

Healthcare company Mentholatum is to create a new life sciences research and development centre in East Kilbride in Scotland. The company designs and manufactures a range of non-prescription pharmaceutical, healthcare and cosmetic products that are sold to consumers worldwide. The company already employs 43 people at the site, and the new R&D centre will create a further 25. Andrew Tasker, managing director and vice president, said that, with the new facility, the firm was aiming to increase its production capacity and “consolidate our position as a leading global healthcare specialist”. It intends to increase exports from its Scottish operations by 15 per cent by 2010. The Scottish Government is supporting the investment with a Regional Selective Assistance grant of $2 million.

The Glasgow Urban Learning Space (ULS) in Scotland has been selected as one of six European partners in the $4.8 million ‘Maximus’ design project. The Scottish Enterprise-backed ‘learning lab’ group will test and evaluate 3D technology for the automotive industry over a three-year period. A special 3-D headset will, for the first time, allow designers to project drawings into life-size animated models, offering the chance to see what the finished product will look like. ULS will work alongside Italian company Ital Design, which is responsible for styling products for household names such as Samsung, Maserati, Indesit and Ferrari. Don McIntyre, technical director at the ULS, said that the link-up with one of the world’s top design houses was “a great endorsement for the standard of innovation going on in the city at the moment”.

US computer giant Dell has opened a new customer briefing centre at its City Park site in Glasgow, Scotland. The company already employs over 800 people at its corporate and public sector sales and technical support centre on the site, and is considering doubling its staff levels there by 2011. The new centre will aim to showcase the company’s hardware and technology, helping to cement its move towards a more retail-oriented presence. Staff will provide support for numerous teams across Europe in HR, purchasing and taxation. The firm has also announced the move of its ACS business to a new site in Edinburgh. Glasgow-based ACS was Dell’s first major acquisition in Europe and the move will help the firm to build a bigger platform.

Tyre manufacturer Michelin of France has made a further investment of $28 million at its Ballymena plant in Northern Ireland. The investment will be channelled into staff training and innovative manufacturing techniques, and will see new machinery and equipment added to create a cutting-edge production line at the plant, which manufactures heavy bus and truck tyres for export. Invest Northern Ireland has offered more than $5.2 million to Michelin to support its training programme for the new equipment. “Michelin has been established in Ballymena for almost 40 years and this latest investment, coupled with a culture of innovation and embracing change, demonstrates the company’s continuing commitment to the area,” said Nigel Dodds, Northern Ireland’s economy minister. Michelin has been operating in the UK since 1905 and has a factory and headquarters in Stoke-on-Trent in the West Midlands, as well as a facility in Dundee in Scotland.

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