March 2009

NEWS

UK companies outstrip global rivals in R&D spending
Spending on research and development by leading UK companies (the 850 firms making the largest investment in R&D) rose by 6 per cent in 2007, reaching a total of $31.3 billion, according to the annual R&D Scoreboard published by the Department for Innovation, Universities and Skills (DIUS), in collaboration with the Department for Business, Enterprise and Regulatory Reform (BERR).

The Scoreboard also showed that the 88 biggest R&D investors in the UK (accounting for two-thirds of all UK R&D) increased their spend by 10.3 per cent over the year, while their peers globally averaged an increase of 9.5 per cent. R&D spending by smaller UK investors amongst the 850 most active UK companies grew by 1.2 per cent. For the UK850 firms as a whole, sales growth outstripped R&D growth, but R&D increased as a proportion of their sales.

The headline 6 per cent rise in R&D was due largely to increased spending by UK firms in the pharmaceuticals, oil and gas production, software and computer services, and banking sectors. The pharmaceuticals and biotechnology sector remained the largest R&D investor overall, showed the research, with spending up 7 per cent in 2007 compared with 2006. The forest and paper sector showed the fastest growth in R&D spending, with an increase of 871 per cent over the year. It was followed by oil and gas production and the banking sector, with growth of 36 per cent and 19 per cent respectively.

R&D is a key expenditure in many UK sectors. In 2007, aerospace, automobile, pharmaceuticals and software and technology firms invested substantially more in R&D than they earned as profits. Some 81 per cent of UK R&D is conducted by the 100 most active companies, and more than a fifth of the R&D activity by the 88 UK companies represented amongst the 1,400 largest global investors (G1400) takes place in the pharmaceuticals and aerospace sectors. The top-ranking UK companies for R&D in 2007 were GlaxoSmithKline, AstraZeneca (both pharmaceuticals/biotechnology), BT (telecoms), Unilever (food), Royal Dutch Shell (oil and gas), Royal Bank of Scotland (banking), Rolls-Royce, Airbus (both aerospace and defence), Ford Motor (automobiles) and HSBC (banking).

Companies in the UK automotive and pharmaceutical sectors invest substantially in R&D. L: Morgan, R: GlaxoSmithKline.
 

Globally, R&D spending by the G1400 rose by 9.5 per cent to $397.3 billion in 2007. Spending continued to be dominated by companies registered in five countries – the UK, the USA, Japan, Germany and France – and these contributed 79 per cent of R&D by the G1400. Average R&D intensity (R&D expenditure as a proportion of sales) remained broadly similar as the year before, at 3.3 per cent. R&D investment in pharmaceuticals grew by 12 per cent over the year, and it remained the largest R&D sector globally. Other rapidly growing sectors were software and technology and hardware, which both grew at more than 12 per cent.

Science and Innovation Minister Lord Drayson said: “The pleasing growth in R&D investment by UK firms for 2007 was achieved in largely benign economic conditions before the impact of the global economic downturn. The future commercial success of UK companies and the wider UK economy requires continued investment in research and development.”

The 2008 R&D Scoreboard was compiled by PricewaterhouseCoopers LLP, one of the UK’s largest professional services firms, drawing on data from the annual reports of UK-based and global companies. It used the latest accounts as of 28 July 2008, referring to business activity largely in 2007. The survey is endorsed by 16 leading business and technical organisations, including the CBI, EEF, IoD and Royal Society. In January, the 2008 Research Assessment Exercise report claimed that 87 per cent of R&D carried out at British universities and colleges was of internationally-recognised quality, with 17 per cent classed as being of ‘world-leading’ standard.


Venture capital funding grows, but tougher times lie ahead
Venture capital investment in UK and Irish technology companies reached its highest level in 2008 since the end of the dotcom boom in 2001. Ascendant, a company which advises smaller firms looking to raise money, estimated that just over $1.45 billion was invested in the sector last year, up 15 per cent from 2007. This involved 253 separate deals, compared with 242 a year earlier. The year’s biggest VC fundraisers included Icera, a mobile phone chip-maker, which raised $97.1 million in two rounds; SpinVox, a voicemail-to-text software group, which raised $72.5 million; and Arts Alliance Media, which raised $56.6 million. The internet, wireless services and software sectors recorded the greatest growth, raising $404.6 million, up 66 per cent year-on-year, while software investments rose by 41 per cent to $323.4 million. Investment in clean technology, on the other hand, dropped by 37 per cent.

Despite the apparent good news, however, the increase in VC funding does not seem likely to last into 2009. Many of 2008’s investments involved follow-on financing for companies in which venture capital firms had already invested. Fred Destin, a partner at Atlas Ventures, a prominent technology VC, explained: “Because it is a terrible environment for exits, a lot of VCs have reallocated more money to portfolio companies to protect them.” Prospects have deteriorated since the start of this year, and Destin warned that data for the first quarter of 2009 would be bad. “There is no doubt in my mind that we have seen a sharp and brutal slowdown in the number of deals done since the beginning of the fourth quarter,” he said.

Cambridge celebrates the entrepreneurial spirit
The University of Cambridge, located in Eastern England, and Infosys Technologies Ltd have signed a memorandum of understanding establishing collaborative research ventures in the areas of engineering, management and business, architecture and pharmaceuticals. Over the next three years the University will explore the collaboration through its Department of Engineering, Judge Business School Centre for Indian Business, Department of Architecture and School of Biological Sciences respectively. Narayana Murthy, chairman of Infosys Technologies, said: “This collaboration will create an opportunity for some of the best minds engaged in academia and at Infosys to come together to identify and create relevant solutions in the areas of engineering, business, architecture and pharma. We look forward to exploring this relationship and the promise it holds for both parties.”

Narayana Murthy, chairman of Infosys Technologies, which is collaborating with the University of Cambridge.

Meanwhile Cambridge Enterprise, the commercialisation office of the University of Cambridge, saw 11 of its portfolio companies pick up more than 20 awards during 2008. The office currently has 68 companies on its books, reflecting the university’s success in transforming research into commercial products. Award winners in 2008 included Astex Therapeutics, a company which develops targeted therapies for patients with advanced cancer. Two of the company’s directors, Dr Harren Jhoti and Dr David Rees, were recognised by the Royal Society of Chemistry for their individual achievements.

Other award winners included Horizon Discovery, which develops tools to search for ‘targeted’ or ‘personalised’ drugs, and UroSens, which specialises in point-of-care tests for cancers of the urinogenitary tract. Both companies were category winners at the Medical Futures Awards. Dr Andrew Lynn, chief executive of Orthomimetics, which develops biological solutions for joint mobility, won the European Award for University Entrepreneurs in Chemistry and Materials at the European Academic Enterprise Awards ceremony. Sentinel Oncology, which develops technologies targeting human tumours, took the ERBI Biotech Regional Award in the Discovery and Development Category.

Outside the medical sector, Cambridge companies to win recognition included CamSemi, an expert in energy-efficient power conversion; Plastic Logic, creator of a revolutionary electronic reader (the company was named ‘Hottest UK Technology Prospect of the Year’, among other accolades); E-Stack, a provider of low-energy ventilation systems; GreenPB, which has invented a system to recycle lead batteries; and Cedar Audio Limited, honoured for its contribution to the advancement of audio technology.

Currently celebrating its 800th anniversary, the University of Cambridge is one of the top-ranking academic institutions in the world – and having a Cambridge connection seems to be a good indicator of success, according to Management Today’s annual listing of the UK’s top 100 entrepreneurs. Dr Mike Lynch OBE, Cambridge graduate and founder and CEO of software company Autonomy, which is based in the city, was awarded this year’s accolade of Entrepreneur of the Year. In second place were Richard Reed, Adam Balon and Jon Wright – all Cambridge graduates – the founders of Innocent Drinks and its popular range of smoothies. In joint third place on the Management Today list were Andrew and Paul Glower of Jagex, a developer and publisher of online computer games headquartered in the Fenland city. The company’s RuneScape multi-player game, which today has a million subscribers, was begun by Andrew Glower when he was a Cambridge undergraduate.


Universities to launch new science-based initiatives
In university research projects elsewhere, a new centre for cutting-edge environmental science will be established at the University of Birmingham in the West Midlands. The university has gained funding from the Natural Environment Research Council (NERC) to open the UK’s first facility specialising in metabolomics, which examines the interaction between organisms and their environment. This is a new area of science that promises to improve understanding of how pollutants can affect individuals and their health.

Dr Mark Viant, NERC Advanced Fellow at the university, said: “The UK has led the development of metabolomics and it is important we remain at the forefront of developing this technology in the future.” The laboratory will be the latest addition to the NERC Molecular Genetics Facility, which currently has nodes in Edinburgh, Liverpool, Oxford and Sheffield. The University of Birmingham has also won funding to establish a new facility to examine the effect of nano-particles on health and the environment.

Meanwhile a research collaboration project between the UK and China will attempt to tackle technological and engineering challenges by examining the natural world. Biomimetics scientists from the University of Nottingham, in the East Midlands, and Jilin University in China will work together to identity examples of ‘best design’ in plants and animals and will then use them as inspiration to develop sustainable engineering surfaces. A facility supporting the project, the UK-China Joint Laboratory on Biomimetics of Functional Surfaces & Fluids Interactions, has been established at Jilin University.

The new research initiative could lead to functional materials being created for industries such as construction, textiles and car manufacturing. It has received funding of almost $435,000 from the Royal Society, the Engineering and Physical Sciences Research Council and from industry, in addition to $1.9 million from the Chinese Science and Technology Ministry and the Ministry of Education. Earlier in January, a UK-India collaboration was formed to look into the development of next-generation telecommunications networks, with a number of British universities working with institutes and businesses spread across India.


Loan support package announced for automotive industry
The Government has announced a package of measures aimed at freeing up lending of more than $2.9 billion for the UK’s automotive industry. This includes guarantees to unlock loans of up to $1.9 billion from the European Investment Bank (EIB) for investment in lower-carbon initiatives; loans or loan guarantees to support up to $1.45 billion of lending for lower-carbon initiatives for non-EIB backed projects; and increased funding for the training of employees under the Government’s ‘Train to Gain’ service. Mervyn Davis, the new Trade and Investment Minister, has also been tasked with drawing up a plan for improving access to finance for manufacturers.

The Government has already taken a series of measures to unblock bank lending to SMEs and mid-sized companies. The new assistance will apply to projects worth over $7.25 million from UK-based vehicle manufacturers and automotive parts suppliers with an annual turnover of $36.25 million or more. According to the Government, the scheme will help to ensure that major new low-carbon investment projects are not abandoned or located outside of the UK because companies are temporarily unable to access funding. Applications will be assessed on a case-by-case basis and, before being approved, must be judged to offer value for money to the taxpayer; help contribute to a ‘green’ economic recovery in the UK; deliver innovation in processes or technologies; and support jobs or skills.

Business Secretary Peter Mandelson said: “Britain needs an economy with less financial engineering and more real engineering. … The steps we are taking will help companies speed their way to becoming greener, more innovative and more productive. This is the route to securing jobs for the long term as we build a more balanced economy.” The automotive sector employs nearly 1 million people in the UK, from manufacturing to retailing, and contributes $1.5 billion of added value to the economy.

In a bright bit of news for the auto industry, the McLaren Group is to invest up to $362.5 million in the production of luxury cars in Surrey, South East England. The company currently produces some 100 sports cars annually at its automotive division, but this figure will be boosted to 1,000 by 2011, according to reports, and could eventually rise to 4,000 units annually as McLaren turns to volume production in order to produce more affordable cars. Currently most of its models cost in excess of $435,000. The plan will also result in the creation of 400 jobs in the region. Ron Dennis, the group’s chairman and chief executive, said of the plan: “It is a very prudent and realistic target, taking into consideration the fact that we will be out of recession come 2011.” The facility’s technology centre is also used by the Vodafone McLaren Mercedes Formula One team to prepare its vehicles for competition.

Government unveils plans for UK’s digital future
The Government has published an interim plan aimed at securing the UK’s place as a leader in the global digital economy. The report contains more than 20 recommendations, including specific proposals on next-generation networks; universal access to broadband; the creation of a second public service provider; the modernisation of wireless radio spectrum holdings; a digital future for radio; a new deal for digital content rights; and enhancing the digital delivery of public services. The interim Digital Britain Report underlines the importance of the communications sector, its major contribution to the economy and its role in building Britain’s industrial future.

Culture Secretary Andy Burnham said: “Britain has always led the world in content creation – with the best music, films and TV – and it is vital that we carry forward this strength into the digital age. This is a significant report for the creative industries, taking steps to establish workable systems of copyright in an online age and to preserve choice of public service content. But it is only the beginning of the process and we need to work hard in the coming months to secure workable solutions.”

The 22-point action plan outlines commitments to upgrade and modernise wired, wireless and broadcast infrastructure; secure a dynamic investment climate for UK digital content and services; provide a range of high-quality UK-made public service content; ensure fairness and access, with universal availability and promotion of skills and media literacy; and develop infrastructure, skills and take-up to enable widespread online delivery of public services. In addition to specific commitments, the report outlines the UK’s progress in building a digital marketplace, while also setting priorities for industry engagement ahead of the publication of the final report, due before the summer.

Among specific actions recommended in the report, the Government will establish a strategy group to assess how to maximise market-led coverage of next-generation broadband. This group will assess the case for how far market-led investment by Virgin Media, BT Group and new network enterprises will take the UK in terms of roll-out and likely take-up, and whether any contingency measures are necessary. The Government will also work with the main operators to remove barriers to the development of a wider wholesale market in access to primary infrastructure.

In mobile communications, it will specify a Wireless Radio Spectrum Modernisation Programme consisting of five elements. This will aim to resolve the future of existing 2G radio spectrum through a structured framework allowing operators to re-use spectrum and start the move to next-generation mobile services; make available more radio spectrum suitable for next-generation mobile services; and ensure greater investment certainty for existing 3G operators, which should encourage commercial investment in network capacity and coverage. It will also encourage greater network sharing and commitments by mobile operators to push out the coverage of mobile broadband to replicate 2G coverage.

In relation to network universal connectivity, the Government intends to develop a digital Universal Service Commitment to be effective by 2012, delivered by a mixture of fixed and mobile, wired and wireless means. In the area of digital content, it will aim to legislate on peer-to-peer file sharing, requiring ISPs to notify alleged infringers of rights that their conduct is unlawful. It will also require ISPs to collect information on serious repeat infringers, to be made available to rights-holders.

In the final Digital Britain Report, the Government aims to establish whether a long-term and sustainable second public service organisation providing competition for quality to the BBC can be defined and designed, drawing in part on broadcaster Channel 4’s assets. This is envisaged as a public service body, but one able to develop flexible and innovative partnerships with the wider private and public sector.

Japanese company snaps up leading British games developer
A Japanese firm is buying UK-based Tomb Raider game publisher Eidos, one of the UK digital sector’s most successful companies, in a deal worth $120 million. Square Enix, responsible for games titles such as Final Fantasy and Dragon Quest, is using the current strength of the yen against the pound to bolster its position in the market. Tim Ryan, chairman of Eidos, based in Wimbledon, southwest London, said that the offer provided shareholders with “an attractive price and certainty” amid a challenging market backdrop.

The takeover deal followed a profits warning from Eidos after its latest Lara Croft game, ‘Tomb Raider: Underworld’, suffered amid the economic gloom in the US. Eidos shares soared by 127 per cent after news of the offer. US media giant Time Warner owns 20 per cent of the company and had been tipped as a potential bidder. Yoichi Wada, president of Square Enix (formerly SCi Entertainment Group), said: “Eidos’s products are highly complementary to our business and will accelerate our aggressive expansion into Western markets.”

London has recently been named by fDi’s Creative Industries Competitiveness Index as the world’s most appealing city for creative industries investment, beating its rival New York into second place. The US, however, was ranked as the country of choice for ICT sector investors. India came second, followed by China, while the Chinese cities of Shanghai and Shenzhen ranked numbers one and two in the top 10 ICT cities index. The rankings were produced by fDi Benchmark, an online subscription database which assesses the cost and quality competitiveness of more than 300 countries and cities worldwide across more than 30 sectors. The Creative Industries Competitiveness Index is based on an assessment of 120 quality competitiveness indicators, including the size of the location’s leisure and entertainment sector, its specialisation and track record, IT infrastructure, quality of life and skills availability.

French trader appointed chief executive of LSE

The London Stock Exchange (LSE) has announced the appointment of 49-year-old Frenchman Xavier Rolet, a trading veteran with experience at Dresdner Kleinwort, Goldman Sachs and Lehman Brothers, as its new chief executive. He will take over from Dame Clara Furse, who has led the 208-year-old institution for the past eight years, joining the LSE board on 16 March and becoming chief executive on 20 May. Dame Clara will remain a director until the group’s annual meeting in July. Rolet has had close ties with the LSE during a nine-year career at Lehman, most recently as head of the former investment bank’s French operations. Lehman acted as the exchange’s corporate broker and was the largest provider of trading orders to the exchange. Rolet also sat on a strategic advisory committee set up some years ago at the LSE. He takes over at a time when the LSE is facing serious business challenges, with a collapse in the value of stocks traded, competition from new equities trading platforms and threats to its lucrative market data services. However, news of his appointment immediately saw shares in the LSE rise by 5.7 per cent in London trading.

The UK remains one of the world’s top centres for Islamic finance, according to new research from International Financial Services London (IFSL). In its Islamic Finance report, the organisation points out that London has been providing Islamic financial services for 30 years and has recently increased its efforts to support the industry, with the licensing of Gatehouse Bank and European Finance House last year taking the number of banks offering the service to 22, with five being fully shariah-compliant.

In addition, the LSE has seen 18 sukuk issues, which are the equivalent of bonds, raising a total of $9.8 billion – placing the UK second in the sector globally only to Dubai. Duncan McKenzie, IFSL’s director of economics, commented: “Evidence of London’s growing role in Islamic finance is shown in the UK being the only Western country to feature prominently – eighth with assets of $18 billion – in a global ranking of sharia-compliant assets by country.” In December, a joint Treasury/Financial Services Authority project was launched to examine ways to increase the UK’s standing as a global centre for this form of finance.

London builds on its appeal to overseas investors

The UK and China have signed a new intellectual property agreement that will allow their respective companies to better exploit their ideas, the first agreement of its kind between the two countries. The initiative was ratified by Prime Minister Gordon Brown and Chinese Premier Wen Jiabao at a summit meeting held in London in early February. Covering patents and trademarks, the deal aims to increase the understanding and use of UK and Chinese intellectual property systems in businesses from both countries. It will also allow officials to collaborate when examining patent applications, thus reducing the amount of work that needs to be duplicated and delayed. David Lammy, Minister of State for Intellectual Property, claimed that the agreement would improve the international patent system, making it more efficient and accessible to innovative firms.

In the meantime Chinese companies are continuing to invest in the UK capital. A trade mission to last year’s Beijing Olympics, led by Mayor of London Boris Johnson, resulted in almost 100 Chinese companies expressing interest in opening offices, and overseas investment agency Think London is already in talks with nine firms planning to do so within the next year. They include IT outsourcing services providers VanceInfo Technologies and Insigma, as well as China Merchants Bank and Alibaba.com, the world’s biggest online business-to-business market place, which in January relocated its European headquarters from Geneva to London.

All these companies are keen to cash in on business opportunities ahead of the London 2012 Olympics. In February the Chinese Embassy in London hosted a meeting between the Mayor and Chinese business delegates, including the country’s construction minister, Chen Gang. Ideas discussed included London utilising Beijing’s Olympic experience for the 2012 Games, and potential Chinese investment in a university campus at the 500-acre Olympic Park to help secure its future after the Games.

In total, Think London reports that more than 140 overseas companies set up business in London between April and December last year. As well as Alibaba and other Chinese firms, they included Gorilla Nation, a US online advertising company, Kingfisher Airlines, a leading Indian airline, Google and Swedish hardware retailer Clas Ohlson, which opened a UK flagship store in Croydon, south London in November. Microsoft also signalled its growing commitment to the market by establishing a centre of excellence in London as part of its European Search Technology Centre. Another recent arrival was Irish-owned Combined Energy Solutions (CESenergy), which designs and builds energy-efficient combined heat and power (CHP) solutions in Ireland, Europe and Australia.


Companies seek to retain best talent despite the downturn
Retaining talented employees is still a priority for companies, despite the pressures of the economic downturn, according to a survey by the Chartered Institute of Personnel and Development (CIPD). Of 705 employers responding to the poll, 75 per cent said that they had not changed their strategy for retaining talented people, even though the recession was starting to bite. In fact, almost one in five (18 per cent) reported they were placing more emphasis on identifying, developing and retaining talent.

A quarter of employers said that they had been forced to let some staff go, but they had also decided to retain employees with key talents. Just 3 per cent of companies that were downsizing had decided to release key talent, while 11 per cent were taking the opportunity to recruit talent discarded by competitors. Many employers said that they were now looking at ways to develop more talent in-house (55 per cent) and focusing on essential development (45 per cent).

Claire McCartney, the CIPD’s organisation and resourcing adviser, said: “It is essential that organisations avoid knee-jerk reactions and cost-cutting in the very areas that will make the biggest difference. Managing, developing and motivating talented employees is even more important because it is the one thing that can differentiate organisations and ensure that they not only survive the short term but thrive in the long term.”

The Government meanwhile has launched a new Bill aimed at improving education and skills levels among young people. The Apprenticeships, Skills, Children and Learning (ASCL) Bill is the first major overhaul of apprenticeships legislation for nearly 200 years and gives all suitably qualified young people the legal right to on-the-job training. It also contains new measures to expand adult skills training and to strengthen standards in schools. The new legislation will put apprenticeships on a statutory basis, establish the entitlement to an apprenticeship place for every suitably qualified young person who wants one and will ensure a good-quality apprenticeship for apprentices and employers alike. It will help to meet ministers’ ambitions that one in five young people will undertake an apprenticeship by 2020.

The Bill also gives all employees the right to request training during their working lives and puts in place a stronger, more accountable infrastructure to oversee further education and training. It includes measures aimed at improving school standards, including stronger powers to intervene where schools need support and strengthening the school workforce via a new School Support Staff Negotiating Body. Other measures in the Bill include requiring schools to provide advice and guidance on apprenticeships where they consider this to be in the best interests of pupils.

Children, Schools and Families Secretary Ed Balls said: “We have invested in and transformed skills training and on-the-job training in the last decade – but giving every young person who wants one the right to an apprenticeship will allow young people to fulfil their working potential and allow us to meet the challenges of the 21st century.”

In another Government initiative, leading UK employers have pledged their support to get people back in work at the first meeting of the National Employment Partnership (NEP), hosted by the Prime Minister Gordon Brown and Secretary of State for Work and Pensions James Purnell. The latest labour market figures from the UK Statistics Authority show that unemployment in the UK rose by 146,000 in the last quarter of 2008 to 1.97 million, and that the number of people claiming Jobseeker’s Allowance increased in January by 73,800. However, statistics also show that there are just over half a million vacancies across the country and employment levels, at 29.36 million, remain high. The figures can be found at: http://www.statistics.gov.uk


A.P. Moller-Maersk relocates its UK HQ to Liverpool
Liverpool in North West England is to become the headquarters for international shipping business Maersk Line UK & Ireland, part of the Global Fortune 500 A.P. Moller-Maersk Group, which employs more than 117,000 people in 130 countries across the globe. The company will relocate its UK headquarters from London, expanding its existing operation in Liverpool. Other A.P. Moller-Maersk Group entities are not affected by the move.

The company’s decision to expand in Liverpool was partly based on the competitive costs associated with locating and operating in the city and its connectivity. Lorraine Rogers, chief executive of The Mersey Partnership (TMP), which worked with other regional development bodies to secure the investment, said: “This is a very significant win for Liverpool City Region. In the prevailing economic conditions, operating costs are critical to every firm and, as Maersk has seen, there is a distinct business advantage to be gained by locating in Liverpool. We are delighted that they have chosen to make Liverpool their UK headquarters, and will continue to work with them to further facilitate their move.” Maersk and TMP previously worked together on a project that saw the company create new jobs at its Liverpool base in June 2006.

Doug Bannister, managing director of Maersk Line UK & Ireland, commented: “The welcome we have received from Liverpool and its City Region partners has been inspiring. It is an exciting opportunity for our business as well as the local community and we are looking forward to establishing our head office in Liverpool, particularly given the city’s long maritime history.”

A new report commissioned by the Port of Dover in South East England shows that the European freight market has undergone rapid changes over the past two years. The proportion of Eastern European HGVs travelling through ports in Kent has risen by 65 per cent since 2006, with traffic share from the Balkans alone increasing by over three-quarters. A survey of more than 2,000 lorries using the port showed that, in 2006, 31 per cent of HGVs were registered in Poland and the Balkans. By 2008, this figure had risen to 51 per cent. The Balkans accounted for just 9 per cent of vehicles travelling though the ports in 2006 but for 16 per cent last year, while the percentage of vehicles from Poland grew from 16 per cent to 23 per cent. The market share for UK- and Irish-registered lorries rose modestly from 11 per cent to 14 per cent from 2006 to 2008, while countries in northwest Europe – France, Germany and the Netherlands – saw their share of the market drop from 45 per cent to just 22 per cent.

“This dramatic increase in the presence of Eastern European operators in the UK is a powerful reflection of market forces and shifting trade routes,” said Bob Goldfield, chief executive of the Port of Dover. “Short-sea crossings on ro-ro ferries represent a desirable option for hauliers: reduced handling of freight and a choice of ferry sailings every 10 minutes means that goods reach their destination more quickly.”

The Port of Dover also reports that pressure to keep consumer costs down is driving freight operators to switch to ferries from the Channel Tunnel. Interviews with executives from more than 40 haulage organisations across Europe showed that some companies are changing their delivery routes for a modest saving of less than $10 if they can, simply to compete on price. “Freight operators tell us that speed and price are the only determining factors in choosing their transport routes,” said Goldfield. “Time-sensitive goods – for instance, perishable, high-value foods or deliveries that are already overdue – tend to be sent via the tunnel. But the lower cost of ferry freight attracts those delivering high-volume, commodity goods.”

In 2008, more than 2.3 million HGVs passed through the Port of Dover, carrying goods with an estimated value of between $66 billion and $80 billion. The port authority is currently building a new link road to take freight directly onto the main exit roads out of Dover. It is also pressing ahead with plans for a second ferry terminal within the existing harbour, which is set to double capacity. On 12 February, ferry operator LD Lines began new Channel crossings from Dover, re-opening a route serving Boulogne in northern France and for the first time serving Dieppe. UK government figures predict growth of 85 per cent in ro-ro freight between South East England and Continental Europe over the next 25 years, and these two new routes offer further choice to haulage companies.

In another development Ryanair, Europe’s biggest budget airline, is to add two new Boeing 737-800 aircraft to its fleet and open 12 new routes (33 in total) at its base at Bristol. This will bring the company’s investment at BIA to four aircraft worth $280 million. New routes to/from Alicante, Barcelona, Cagliari, Eindhoven, Limoges, Malta, Montpellier, Perpignan, Rimini, Seville, Toulon and Trieste will increase Ryanair’s traffic at Bristol to almost 1.6 million passengers per year.


Firms eye nuclear opportunities as recyclers launch new facilities
French energy group GDF Suez and Iberdrola of Spain have established a new partnership to build nuclear power stations in the UK. The two companies will form a joint venture and will buy sites suitable for nuclear plants together with Scottish and Southern Energy (SSE), following Iberdrola’s creation of another joint venture with SSE in January. The Spanish group already owns Scottish Power and part-owns nuclear plants in Spain, while GDF Suez is Europe’s largest utilities firm. According to industry sources, Iberdrola and GDF Suez will each hold a 40 per cent stake in the new three-way partnership, with SSE owning the remaining 20 per cent.

A US-owned power firm, New Jersey-based Covanta Energy, is planning a $580 million investment in renewable energy in Wales. Following discussions with the Welsh Assembly Government and inward investment organisation International Business Wales, the company has proposed an energy-from-waste plant at Merthyr Tydfil, which could generate electricity for up to 180,000 homes. The Brig y Cwm power plant will use around 750,000 tonnes of waste to generate 70MW of electricity annually, and the site is expected to be operational by 2014, subject to approval. Malcolm Chilton, Covanta Energy’s UK managing director, said that the station would help to reduce Wales’s greenhouse gas emissions both by cutting the use of fossil fuels and reducing the amount of methane generated by landfill sites. He added that the company was investigating the possibility of supplying electricity at below market cost to neighbouring communities and businesses.

Also in Wales, Sims Recycling Solutions’ new $17.4 million flagship recycling facility at Newport, Gwent has been officially opened by First Minister for Wales, Rhodri Morgan. The new facility will enable the company – part of the US-based Sims Metal Management, the world’s largest electrical and electronics recovery and recycling company – to carry out a range of recycling activities unparalleled anywhere else in the world. It will recover and recycle all types of domestic and commercial waste electrical and electronic equipment (WEEE), at a rate of 100,000 tonnes per year.

The facility will benefit from Sims Recycling Solutions’ European experience in electronics recycling and will offer services complying with the European WEEE directive on electronic waste. These include the re-use and refurbishment of computers, secure B2B asset management services, TV dismantling and processing, general WEEE recycling and downstream plastics separation. The Newport plant complements the company’s existing WEEE operations in Scotland, England, Scandinavia, Benelux and Germany.

The purpose-built, 64,500 sq ft building houses the latest in electronics shredding technology, along with a designated area where computer and IT equipment can be refurbished for re-use and re-sale. It also houses a plastics line which uses a mixture of specialist technology to separate polymers from residual plastic that would otherwise go to landfill. Combined with an existing facility in Newport, the plant increases the company’s total footprint in Newport Docks to 36 acres, making the Welsh town one of the world’s largest recycling operations. Newport also houses the world’s largest metals shredder and the world’s biggest fridge recycling plant.

MBA Polymers, based in Richmond, California, is collaborating with European Metal Recycling Limited (EMR) to establish a new plastics recycling site in Worksop, Nottinghamshire in the East Midlands. EMR, which has its international headquarters in Warrington in North West England, is one of the largest metal recyclers in the world, handling over 10 million tonnes of materials a year.

The new venture, MBA Polymers UK, will utilise the combined technologies and resources of MBA and EMR to provide sustainable plastics to the UK and European automotive and durable goods markets. The company will process shredder residue upgraded by EMR from its UK operations, using MBA’s proprietary process to recover, separate and purify high-value plastics. The site, which was formerly used for glass production, has a processing capacity of 80,000 tonnes of plastic per year.

The venture was established with the help of a $1.45 million Grant for Business Investment (GBI) from the East Midlands Development Agency (emda). “MBA Polymers UK is a very innovative business in the sustainable technology sector. Through the development of this plant, MBA will be creating almost 100 new jobs in North Nottinghamshire and will be a massive boost for the economy in the current economic climate,” said Mike Carr, executive director of business services at emda. The discretionary GBI grants scheme was formerly known as Selective Finance for Investment in England (SFIE).


Regional news
US engineering giant CCE has chosen Reading in South East England as the location for its first overseas base, from which it will expand into cities across mainland Europe. Its new office will offer mechanical design and engineering services to a broad range of UK companies. CCE was established in Michigan in 1989 and operates throughout the US. From its Chennai base in India it has increased its engineering capacity four-fold in four years. Reading was named by a recent inward investment report as the top investment location in the Thames Valley region. More than 300 foreign-owned firms have established themselves in the region in the past five years, almost half them in the Berkshire town. Besides CCE, high-profile arrivals include Visa Europe, Chinese electronics firm Bytech and US pharmaceutical giant Wyeth.

Another new investor in Reading is US company Vocera Communications, headquartered in San Jose, California. Vocera is setting up a UK base for its voice-activated, wireless communications service, which is primarily aimed at hospitals. The system enables mobile personnel to have instant communications via a programmed hub that can be ‘dialled’ via voice commands based on name, job, function or group. With existing operations in Canada, Australia and New Zealand, Vocera is now expanding into the UK public sector market. Its new Reading centre is hotlined to the US to give UK customers round-the-clock IT technical support and systems back-up. Reading, known as the UK’s ‘Silicon Valley’, is home to leading computer companies with close links to the IT and communications research departments at Reading University, making it an attractive location for foreign companies in this field.

Another international software company, open-source data integration specialist Talend, a Californian enterprise with bases in France, Germany, Belgium and China, is to establish a new UK office in nearby Maidenhead, Berkshire. Francois Mero, vice president and general manager for Europe, Middle East and Africa at the firm, predicted that open-source software would continue to grow, moving from being used predominantly by IT developers to a wider audience. He added: “As UK businesses continue to face the economic meltdown, companies are looking for aggressive ways to optimise their IT investments.”

Israel-based telecommunications equipment provider ECtel Ltd is expanding its operations to strengthen its UK presence and enhance local support for its growing customer base in Europe. The company, whose UK office is in Pinner, Middlesex, is also investing in its Singapore concerns to better serve the Asia-Pacific region. The group, which has operations in more than 50 countries worldwide, is a leading global provider of IRM (integrated revenue management) solutions for providers of communications services. Benny Yehezkel, the company’s executive vice-president of worldwide marketing and sales, commented: “The growth in our customer base, coupled with the business potential these two regions hold, makes this move a natural progression for ECtel.”

Bristol in South West England has been named as one of the world’s ‘Top 10 Cities for 2009’ by DK Eyewitness, the world’s best-selling guidebook publisher. As the only UK city to be named in the list, it will feature in the DK Top 10 guidebook series. The other nine cities selected were Buenos Aires, Gdansk, Washington DC, Vienna, Cape Town, Copenhagen, Fes, Seattle and Vilnius. Bristol was commended for its strong shopping amenities, following the opening of the Cabot Circus development, and for its growing status as a ‘green’ destination. It was recently named the ‘most sustainable city in Britain’ and selected as the only UK nominee for the title of ‘European Green Capital’.

Swedish healthcare company Vita Clinics UK, a subsidiary of Global Health Partner AB, has established its new headquarters in Edgbaston, Birmingham in the West Midlands. The firm specialises in bariatrics, or weight management, and has spent $725,000 converting a former school into a clinic. More clinics are planned in Manchester, London and Belfast. “Obesity is an increasing problem, particularly in the UK, and Vita Clinics is undertaking a rapid expansion programme to meet the needs of this growing market,” said company boss David Allison. The clinic, which opened in December, employs multi-disciplinary specialist teams including surgeons, physicians, psychologists, dieticians and nurses. It has a core staff of ten with an additional team of eight consultants, and can treat several hundred patients per year.

More than 5,600 businesses in the East of England are taking advantage of favourable exchange rate conditions to boost their export business, despite the current economic climate, reports East of England International (EEI). New figures from HM Revenue & Customs (HMRC) show that the total number of companies exporting from the UK in the third quarter of 2008 rose by 2.5 per cent year-on-year, with 51,091 UK companies exporting across the globe. The East of England saw the largest rise of any region, with an increase of 5.7 per cent and 5,664 companies now exporting. To encourage this trend, EEI has launched its ‘Why Now is the Time to Export’ campaign, in conjunction with UK Trade & Investment (UKTI). Companies can receive tailored advice from a dedicated International Trade Adviser at UKTI, along with access to commercial officers at British embassies, consulates and high commissions around the world. David Riches, EEI chief executive, said: “With exchange rates remaining favourable, we believe there has never been a better time to export.”

Supermarket chain Asda, based in Leeds, Yorkshire and Humber, plans to create 7,000 jobs and open 14 new stores in 2009. The company, which is owned by US giant Wal-Mart, has also pledged to recruit 3,000 long-term unemployed workers for existing vacancies within the group. The announcement followed plans revealed earlier in February by Morrisons, another supermarket company based in nearby Bradford, to create 5,000 positions and proposals by Tesco, Britain’s biggest retailer, to create 10,000 jobs. Asda is set to create 580,000 sq ft of new store space this year, beginning with the opening of an Asda superstore in Bury St Edmunds, Eastern England in March. Andy Bond, president and chief executive of the company, said: “This year we will create 7,000 new jobs at a time when many companies are laying people off.”

Another Leeds-based company in the food sector, Arla Foods of Denmark, has begun construction of a $101.5 million extension of its flagship production site in the city. The expansion will allow Arla to produce cottage cheese for the first time in the UK, as well as extending the site’s production of fresh cream, crème fraiche and other dairy products. The company’s dairy brands include Anchor, Cravendale and Lurpak, and the investment will improve business efficiencies across its network of dairies, which stretches from London to Lockerbie in Scotland. One hundred new jobs will be created when production moves from its Northallerton site in North Yorkshire to the new Leeds plant at Stourton, which is expected to be operational in 2010.

Lighting equipment company Thorn is to invest $40.6 million in a new factory at its Spennymoor site in North East England. The expansion includes $1.9 million towards a new Lighting Academy for training and $4.35 million in research and development into lighting technologies. The company, owned by Austria’s Zumtobel Group, has been based in the town since it was founded in 1952 and employs hundreds of workers making low-energy fluorescent fittings. The Zumtobel Group is a major player globally in the lighting industry, with a workforce of over 7,700. In 2007/08 it posted revenues of $1.86 billion. According to conditions attached to the planning application, the firm is committed to the region for at least another 21 years. Thorn spokesman Hugh King said: “This probably represents the largest investment in lighting equipment and training in the UK since the 1940s.”

A $5.2 million scheme to improve road access to Hadrian Business Park in Haltwhistle in Northumberland, North East England, has been completed, boosting the town’s regeneration and business prospects. The finished development has direct vehicle access into the business park and surrounding development land on both sides of the A69 highway. The Hadrian Business Park is made up of 245,000 sq ft of existing industrial and office space, which was formerly occupied by the Akzo Nobel paintworks. There are also 5 hectares of developable, largely brownfield land each side of the A69. The overall site has the capacity to create up to 800 new jobs. The scheme was made possible by the gifting of land from Akzo Nobel which, prior to its closure, was a major employer in the town.

The new Biomedical Research Centre in Liverpool, North West England, was officially opened in February by Health Protection Agency chairman Sir William Stewart. The institution, which has received funding from the Northwest Regional Development Agency and the National Institute for Health Research, will investigate chest infections, sexual health, antimicrobial drugs and hospital infections. Among other research areas, it will look into HIV treatment and how patients build up resistance to certain drugs.

Over 200 jobs will be created in Greater Manchester, North West England following an investment by sports company Umbro, part of the US-owned Nike group. Umbro will move to larger premises on Cheadle Royal Business Park in Stockport, creating 220 jobs and safeguarding over 200 more positions. Umbro was founded in 1924 and supplies the official England football strip, as well as those for Everton and Rangers football clubs. Its products are sold in more than 90 countries around the world.

US pharmaceuticals giant Schering-Plough is investing more than $29 million in a research centre in Scotland, providing a huge boost to the country’s bioscience sector. The investment forms part of a wider R&D initiative under which the company will invest around $58 million in its three facilities: half of it at the former Organon Biosciences plant in Newhouse, Lanarkshire, with the rest being shared between two other bases in the Netherlands and the US. The Newhouse investment, which is supported by a $5.95 million grant from the Scottish Government, will secure the long-term future of the company in Scotland. It is intended for use in early drug discovery technologies and will underpin the company’s global R&D activities. The Schering-Plough Research Institute’s senior vice-president for discovery research, Ismail Kola, commented: “With the Organon Biosciences acquisition in November 2007, Schering-Plough is creating a stronger combined company with increased R&D capabilities. The company has a long-term commitment to its research activities in Scotland and recognises the important contribution our colleagues make. Our Newhouse facility is now our core site for research in the central nervous system with a focus on analgesia and psychiatry. At Newhouse we also do research in cardiovascular and metabolic diseases.”

The Schering-Plough announcement was made at the Scottish Enterprise Life Sciences annual dinner, held in February, which was attended by more than 700 representatives from the life sciences community in Scotland and worldwide. The winners of this year’s Scottish Enterprise Life Sciences Awards were also announced at the event. Glasgow-based firm Bio Outsource picked up the award for Most Promising New Life Sciences company, while Edinburgh-based Charles River was honoured for the Leading Contribution to Life Sciences in Scotland by a company. Professor Sir Philip Cohen picked up the award for Leading Contribution to Life Sciences in Scotland by an individual for his role as director of the Medical Research Council Protein Phosphorylation Unit and Royal Society Research Professor at the University of Dundee. Dr Alastair Cozens of NHS Grampian won the Scottish Health Innovations Ltd (SHIL) Award for Best Innovation originating from NHS Scotland.

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