October 2009

NEWS

Return of business confidence hints at end to recession
New signs of confidence in the economy suggest that the UK may be about to emerge from the worst recession in post-war history. The latest UK Business Confidence Monitor (BCM) survey, carried out by the Inst itute of Chartered Accountants in England and Wales (ICAEW), showed that in the third quarter of the year optimism among business professionals reached its highest level since the economic crisis began. Confidence rose from -28.2 to 4.8, taking the monitor into positive territory for the first time since the third quarter of 2007, and marking the biggest single improvement in its six-year history. Based on this, the ICAEW has forecast growth of 0.5 per cent for the third quarter, bucking the trend of five consecutive quarters of decline.

According to the survey, 41 per cent of senior business professionals were more confident about the economic prospects facing their business in the next year, although only 6 per cent were much more confident, indicating a prevailing sense of caution. IT emerged as the most optimistic sector, followed by banking and insurance. Michael Izza, chief executive of the ICAEW, said: “This quarter’s BCM suggests that the UK recession is at an end. While there is no doubt that the UK economy is on its way to recovery, we shouldn’t underestimate the challenges ahead for businesses. … Confidence is up, but those in manufacturing and engineering, as well as large businesses, remain cynical about their prospects for the future. Both are crucial to the UK economy, and the signs are that the next 12 months are very much about building for the recovery.”

Another business confidence survey by Clydesdale Bank, one of Scotland’s biggest banks and part of the National Australia Group, revealed that nine out of 10 (89 per cent) of business managers were confident that their company would survive the recession – with almost a third 100 per cent certain they would make it through. The research also showed that, despite the downturn, less than a third (32 per cent) of companies have seen a reduction in business during the recession. The research was carried out online by Opinion Matters/Tickbox.net between 24 July 2009 and 12 August 2009 amongst a representative sample of 766 self-employed people and managers. Mike Williams of Clydesdale Bank commented: “It has clearly been a challenging time for businesses but these figures show there are signs of stability creeping into the market – but it is still important to retain a grounded and cautious perspective as the market changes.”


Economic activity picks up, but Bank counsels caution
The latest figures on industrial production have fuelled beliefs that Britain may have already emerged from recession. According to the Office for National Statistics (ONS), industrial production rose by 0.5 per cent in July, including a 0.9 per cent rise in manufacturing output. Although the ONS warned that monthly growth rates were volatile, economists said that the rise was the strongest for any month since the beginning of 2008. Adding to the sense of optimism was a forecast from the National Institute of Economic and Social Research (NIESR), which estimated that gross domestic product rose in the three months to the end of August by 0.2 per cent, after falling by 0.3 per cent in the three months to the end of July. If correct, this would be the first time that GDP had risen over a quarterly period since May 2008. However, the NIESR warned that this did not mean that business conditions would return to normal. “There may well be a period of stagnation now, with output rising in some months and falling in others; the end of the recession should not be confused with a return to normal economic conditions,” it said.

The UK’s car scrappage scheme, under which older cars can be part-exchanged for new ones, appears to have given a boost to the automotive manufacturing sector. In the three months to the end of July, production of motor vehicles was 14.2 per cent higher than in the three months to June, according to the ONS. Analysts calculated that this translated into a 10.4 per cent increase in car output in July after a rise of 11 per cent in June, suggesting that there is momentum behind the industry’s recovery. Individual manufacturers confirmed the improvement in sales, with Ford, for example, ramping up its UK engine production to meet demand triggered by European scrappage programmes. Strong sales have led to the company’s engine plants at Dagenham, Essex and Bridgend, South Wales introducing extra weekend working. The factories’ August production volumes were up by 36.5 and 18.3 per cent respectively year-on-year.

Meanwhile the service sector, which accounts for some 40 per cent of the UK economy, grew at its fastest pace in almost two years in August. The purchasing managers’ index for business activity at services companies rose to 54.1 from 53.2 in July (where the level of 50 is consistent with trend growth) – the highest level since September 2007. Together with lessening contraction in the construction sector, this suggested that the economy had bottomed out, although it would be a further two months before official data could confirm it, according to Markit, which compiled the report. New orders rose for the third time in four months, though slightly less quickly than in July. Companies cut jobs for the sixteenth month in a row, but at the slowest pace in nearly a year. Business confidence in the sector was at its highest level for two years, with improved sentiment attributed to hopes that a strengthening economic climate would translate into increased sales and activity.

In the City of London, the number of new job vacancies rose in August to their highest level this year, reinforcing tentative signs of improved confidence among financial services companies. Financial recruitment specialist Morgan McKinley reported that vacancies were up by 18 per cent in August (normally a quiet month because of summer holidays) compared with the previous month. The rise provided evidence of continuing improvement in City employers’ desire to hire, which has been building up over the past few months, the consultancy said. However, despite the increase, there were still 39 per cent fewer new job opportunities coming onto the market compared with a year ago. In the wider economy, the ONS reported that consumer price inflation (CPI) rose by 1.6 per cent in the year through to August. This was lower than the 1.8 per cent rate in the 12 months through to July and below the 2 per cent medium target set by the Bank of England’s Monetary Policy Committee. Falling prices for a wide range of goods from electricity to fruit, bread and cereals pushed consumer prices downward from July to August, although by a smaller amount than most economists had predicted.

Meanwhile, the Retail Price Index, a broader measure which includes housing costs, fell by 1.3 per cent in the year to August, a slightly smaller decline than the 1.4 per cent fall in the 12 months through July. However, if mortgage payments were removed from the RPI, it showed a rise over the year to 1.4 per cent, up from 1.2 per cent year-on-year through July.

Despite these encouraging signs, the Governor of the Bank of England, Mervyn King, played down hopes of a swift economic rebound and warned households and businesses of a “slow and protracted” recovery. He added that the fall in economic output during the recession had been so great that inflation was more likely than not to sink below the official target of 2 per cent. He also signalled that the Bank was unlikely to rein in soon its “quantitative easing” programme to pump hundreds of billions of pounds into the banking system. “The depth of the recession is great and it will continue even if we get a small positive growth rate over the next few quarters,” said Mr King. “For most businesses and households, the recession will continue for some while, in the sense that they will be experiencing levels of demand and output, including employment, well below the levels people were used to.”

UNCTAD predicts slow recovery for global FDI flows
Prospects for global foreign direct investment (FDI) remain gloomy due to the economic and financial crisis, according to the World Investment Report 2009, the annual study of worldwide investment trends by the United Nations Conference on Trade and Development (UNCTAD). The organisation, the single most comprehensive source of FDI data, estimated that global FDI inflows would fall from about US$1.7 trillion in 2008 to below $1.2 trillion in 2009. Recovery is expected to be slow in 2010, reaching no more than $1.4 trillion, but gathering momentum in 2011 to approach $1.8 trillion.

“Global FDI flows have been severely affected worldwide by the economic and financial crisis. The crisis has changed the FDI landscape,” said the report. This new landscape has seen a surge in the share of developing and transition economies in global FDI flows, to 43 per cent in 2008. The change in the pattern of inflows was partly due to the large decline in FDI inflows to developed countries, which in 2008 shrank by 29 per cent, to $962 billion, compared with the previous year.

The United States remained the world’s largest recipient country, followed by France, China, the UK and the Russian Federation. FDI inflows into the UK fell from $177.6 billion in 2007 to $94.4 billion in 2008, the biggest fall in absolute terms among the leading countries. This saw the UK overtaken by France and China as the world’s second largest recipient of FDI. Brian Shaw of UK Trade & Investment (UKTI) described this as “disappointing” but pointed out that foreign exchange movements had unfavourably distorted the UK’s performance. While the value of investment flows fell, however, the number of foreign projects in Britain actually rose by 30 per cent in 2008 to 1,298. UK companies meanwhile dramatically curtailed their overseas spending, with outflows more than halving to $107.2 billion.

Overall, FDI outflows from developed countries in 2008 fell less sharply (-17 per cent) than inflows. The US retained its position as the largest single source country of FDI, followed by France, while Japan, with a 74 per cent increase in outward FDI, entered the list of top five investing countries. FDI inflows to developing economies (including China and Russia) rose by 17 per cent, to US$621 billion, with South, East, South-East Asia and Oceania accounting for roughly half. Africa recorded the largest percentage increase (27 per cent), while inflows to Latin America and the Caribbean continued to grow (up 13 per cent), as did those to West Asia (up 16 per cent). Between 1999 and 2001 only 21 per cent of FDI was captured by developing nations, but that figure rose to 31 per cent in 2007-08. China’s inflows soared by 30 per cent to $99 billion, while Chinese companies invested $51.2 billion abroad, mostly in mines, oil fields and infrastructure.

A major contributing factor to the decline in global FDI flows was growing divestments by transnational corporations (TNCs) worldwide. Since mid-2008 these divestments, in the form of repatriated investments, reverse intra-company loans, or repayments of debt to parent firms, have exceeded gross FDI flows in a number of countries. During 2008 and the first half of 2009, roughly one-third of cross-border mergers and acquisitions (M&As) involved the sale of foreign affiliates to other companies.

Cross-border M&As – a major source of growth of FDI in previous years – declined considerably as financial markets seized up in the second half of 2008, falling by 35 per cent to US$673 billion and continuing to fall in 2009. Bucking the trend, sovereign wealth funds (SWFs) recorded a rise in the value of their cross-border M&As in 2008, up 16 per cent to $20 billion. Despite massive government intervention in economies in response to the financial turmoil, however, 2008 and early 2009 saw no general trend in public policies towards greater investment protectionism, according to UNCTAD. During 2008, 110 new FDI-related measures were introduced, of which 85 were more favourable to FDI.


World economic crisis dents UK’s global competitiveness
Switzerland has overtaken the US to top the rankings in The Global Competitiveness Report 2009-2010, published by the World Economic Forum (WEF). The US fell one place to second position, with weaker financial markets and macroeconomic stability. Singapore moved up to third place, followed by Sweden and Finland, with Denmark, Germany, Japan, Canada and the Netherlands completing the top ten. The UK, having fallen three places last year, moved down one more place this year to 13th, mainly due to continuing weakening of its financial markets. The UK does, however, remain very competitive, according to the WEF. Clear strengths include the efficiency of its labour market (8th), in contrast to the rigidity of many other European Union (EU) countries, said the organisation. The UK is also ranked 8th on the technological readiness pillar.

The report stated: “The [UK] continues to have sophisticated and innovative businesses, characteristics that are important for spurring productivity enhancements. The drop in rank is largely attributable to a weakening of the assessment of the country’s financial market, which has slipped from 5th to 24th place since last year, based on rising concerns in the business sector about the soundness of banks (126th) on the back of several banking-sector bankruptcies and bailouts. In this context it is not surprising that a significant and growing weakness remains the United Kingdom’s macroeconomic instability (71st, down 13 places since last year).”

China continued to lead the way among large developing economies, improving by one place to 29th. Of the three other large BRIC economies, Brazil and India also improved, while Russia fell by 12 places. A number of Asian economies performed strongly, with Japan, Hong Kong, South Korea and Taiwan all in the top 20. In Latin America, Chile was the highest-ranked country, followed by Costa Rica and Brazil.

“The strong interdependence among the world’s economies makes this a truly global economic crisis in every sense. Policy-makers are presently struggling with ways of managing these new economic challenges, while preparing their economies to perform well in a future economic landscape characterised by growing uncertainty,” said Klaus Schwab, founder and executive chairman of the World Economic Forum. The survey is designed to capture a broad range of factors affecting an economy’s business climate. The rankings, covering 133 countries, are calculated from publicly available data and the Executive Opinion Survey, an annual survey conducted by the WEF together with its network of Partner Institutes. This year, over 13,000 business leaders were polled in the 133 economies.

Meanwhile, the UK moved up one place in the World Bank’s annual global Doing Business survey, from sixth to fifth position. The report tracks the ease of doing business in 183 economies around the world in terms of their regulatory environments, and only Singapore, New Zealand, Hong Kong and the US were deemed to offer more favourable conditions. The tough economic conditions of 2008/09 saw governments introduce more regulatory reforms than in any year since 2004, it said, as they attempted to assist businesses. Reforms were likelier in low- or lower-middle-income countries (with Rwanda leading the way), but the UK scored highly for the introduction of new rules on construction and registering property.
 

IT sector remains strong engine for global growth
In information technology (IT) competitiveness, the US remains the most supportive of all the world’s economies of technology companies, although it still lags behind in research and development and high-tech infrastructure. That was the conclusion of an annual survey of the IT sectors of 66 countries, conducted by the Economist Intelligence Unit (EIU) for trade organisation the Business Software Alliance. Now in its third year, the report (entitled Resilience Amid Turmoil: Benchmarking IT industry competitiveness 2009) examines variables such as a country’s overall business climate, the pervasiveness of its technology infrastructure, the strength and transparency of its legal system and the availability of a well-educated and technologically literate workforce.

Finland climbed from 13th place last year to second in 2009, and was followed by Sweden in third. These Scandinavian countries are home to technology giants Nokia and Ericsson respectively. They were followed by Canada and the Netherlands and then the UK in sixth place, down from third in 2008. The top ten was completed by Australia, Denmark, Singapore and Norway. Last year’s runner-up, Taiwan, fell to 13th position, while South Korea, eighth in 2008, dropped to 16th. This was partly the result of researchers being able to access a key new source of data, the European Patent Office.

The US ranked only seventh for IT infrastructure, behind European countries such as Denmark, Switzerland and the Netherlands, partly because of its low rate of broadband penetration. In the R&D category, which accounts for 25 per cent of the overall score, it ranked fifth, well behind Canada, which led that category, as well as Singapore and Israel. It fared better in human capital, with US universities still the best in the world at producing technology-literate graduates in relevant fields. Next in this category was South Korea, closely followed by the UK and China.

Generally, the importance of broadband will grow as more IT services and applications are delivered over the internet, concluded the report. Technology producers in broadband-rich countries in western Europe, North America and developed Asian countries have an advantage in this respect. The IT sector is rightly viewed by most policy-makers as an important engine of growth. However, the EIU noted a trend towards protectionism on the part of many governments, as they attempted to stimulate growth in the technology sector while imposing “buy local” conditions. This, it said, was a cause for concern, given the global nature of the IT industry, and would only prevent more innovative IT firms from being able to compete.
 

The new Ghost – originally known as the RR4 and described as a smaller, ultra-luxury saloon – will be built on its own dedicated assembly line at Goodwood, but will share the output of the specialist workshops with the larger-size Phantom series of cars. In future, Rolls-Royce will offer a range of five luxury cars consisting of the Ghost and standard V12-engined Phantom plus extended wheelbase, coupé and drop-head variants of the latter.

The McLaren Formula One Grand Prix racing group is to produce a new range of high-performance, high-technology road sports cars. A planned McLaren Production Centre (MPC) will be built next to the company’s existing HQ and technology centre in Woking near London, where a new workforce of 800 will construct up to 20 mid-engine vehicles a day for delivery from 2011.

As part of this $400 million investment plan, McLaren Automotive will later this year be elevated from the group to become an independent company, in effect creating a new UK-based carmaker. McLaren last produced its own road car, the F1, from 1994 to 1998. For a time this was the fastest production car ever made and a variant won the Le Mans 24-hour race in 1995. From 2003, it designed and manufactured the Mercedes-Benz SLR McLaren line of sports cars with the German car-maker, but this partnership has now ended. The company has spent more than two years developing a range of pure sports cars under the P11 codename that will build on the success of these models. “It is a long-held dream of mine to launch high-performance sports cars,” commented McLaren boss Ron Dennis.

The first model in the new range will be known as the McLaren MP4-12C and it will be a high-performance, two-seat, mid-engine model that will sell for between $200,000 and $280,000. The car is built around a one-piece carbon fibre chassis structure that helps keep its weight down. According to McLaren, this enables the use of lighter body panels that should help improve performance, but it is also part of the firm’s efforts to produce a car with lower carbon dioxide (CO2) emissions than its rivals. The MPC expects to increase its annual capacity progressively from 1,000 cars to about 4,000 when the range is complete.

Planning permission has been granted for a new factory, though funding has not yet been secured and detailed plans have not yet been finalised. Eventually, McLaren Automotive expects to employ 800 people, which should help absorb staff from within the group as F1 racing teams are under pressure to cut budgets. “We’ll do our best to redeploy people in other parts of the business. … In this group, we’re looking to grow our business outside racing,” said Martin Whitmarsh, chief executive of McLaren Racing and chief operating officer of McLaren Group.
 

The future looks bright for Lotus, which last financial year increased its sales by 2 per cent to $178 million, despite the challenging market. A major contributor was Lotus Engineering, the group’s high-tech engineering consultancy, which increased sales by 23 per cent despite the curtailment of new product plans by clients in the sector. Overall, Lotus increased its manufacturing workforce by 30 per cent and earmarked over $32 million for product investment in the current year to fuel continued growth, in addition to the $44.8 million it invested in 2008/09. It will develop future variants of all Lotus products, including an automatic gearbox version of the Evora for 2011.

“We will open up a new segment with this car,” said Ian Robertson, BMW Group sales and marketing director, of the coupé. The company also has “plenty of other ideas” for forthcoming models that will further extend the Mini brand, which has already sold 1.5 million cars since its relaunch in 2001. The Mini is emerging as a test-bed for BMW’s ‘Project I’, an autonomous division within the group which is working to identify future trends for the motor industry in terms of new materials, how cars are powered and how they are used. Earlier in September, BMW Group was rated the world’s most sustainable automobile manufacturer for the fifth year running in the Dow Jones World Sustainability Indexes.

Toyota used the Frankfurt show to unveil a precursor to the Auris HSD Full Hybrid, its first full hybrid mainstream model in Europe. The vehicle will be built at the Japanese giant’s UK plant at Burnaston, Derbyshire in the East Midlands, with sales scheduled to start in the second half of 2010. ‘Full Hybrid’ means that the car can be driven on petrol engine alone, electric motor alone or a combination of both. The new model marks a significant milestone in Toyota’s plan to equip its mainstream European models with full hybrid technology. The company is committed to making the environmental benefits of its Hybrid Synergy Drive (HSD) accessible to a wider customer base and it is on track to offer a hybrid version of every model in its range by the early 2020s.

Toyota to produce the Auris HSD Full Hybrid in Burnaston, East Midlands.

Using technology that was first brought to the market in the latest-generation Prius, the Auris HSD Full Hybrid Concept also further develops solar-powered ventilation, with solar panels covering the entire roof. Similar technology is used inside the cabin, with solar panels on top of the dashboard that generate sufficient energy to recharge mobile phones or portable music players. In future, Toyota aims to advance this technology to provide solar-powered recharging of the hybrid battery. Further energy-saving measures include the use of LED technology for the front and rear lights. The news that Europe’s first hybrid production model would be built in the UK was welcomed by the UK Government. Business Secretary Lord Mandelson said: “The unveiling of the new car … brings the vision of making the UK the best place in the world to develop low-carbon vehicles a step closer. I look forward to seeing the cars roll off the line next year.”

Ford launched its next-generation, high-efficiency, low-CO2 Ford EcoBoost four-cylinder petrol engine family in Germany. According to the company, the new engines reduce fuel consumption and CO2 emissions by up to 20 per cent compared with conventional petrol engines. Its European applications will initially focus on two four-cylinder engines of 1.6-litre and 2.0-litre capacities, with an advanced, small-capacity engine to be launched later. The first production engines will be introduced in Europe from 2010, and the 1.6-litre version will be manufactured at the company’s Bridgend Engine Plant in South Wales.

The technology featured in the engines builds on existing petrol engine knowledge, and offers customers a more affordable alternative to reduce carbon emissions than equivalent hybrid or diesel engine designs, according to Ford. “The new family of Ford EcoBoost four-cylinder petrol engines coming in 2010 is a key element of Ford Motor Company’s global blueprint for sustainability,” said John Fleming, chairman and CEO, Ford of Europe.

Electric motors point the way ahead for auto researchers
UK researchers are at the forefront of numerous initiatives to design more environmentally sustainable vehicles. For example, an advanced lightweight electric motor designed by engineers at Oxford University has been selected to power a new four-seat sports coupé, with track tests scheduled for the end of 2009. The new motor promises considerable benefits in high-performance cars, but its improved efficiency and energy-saving also have huge potential in a range of other applications. Isis Innovation, the university’s technology transfer company, is managing the intellectual property and commercial agreements for the project. The first user, UK engineering company Delta Motorsport, plans to track test its prototype car towards the end of 2009.

The key to the new motor’s efficiency lies in technology advances that include a segmented armature and novel use of materials. The reduced use of copper and iron lowers its weight, while the innovation in use of materials gives a claimed efficiency of 97 per cent. The design allows for the use of novel combinations of materials even for large motors. Importantly, the technology is ‘scalable’ for large generators such as those used in renewable energy (e.g. low-speed wind and tidal) applications, as a generator is effectively a motor ‘working in reverse’. The group is also looking at aerospace, renewable and industrial uses of the design.

Nick Carpenter, technical Director of Delta Motorsport, said: “We believe electric motors are the only way forward for road cars. All road cars will be driven electrically, regardless of how the energy is stored in the vehicle. It is an incredibly exciting time for the automotive market. There hasn’t been a rate of change like this since the first few years, and we think that electric drive is going to be the one common theme.”

The Government has announced a $16 million loan to Tata Motors European Technical Centre (TMETC) under its Automotive Assistance Programme (AAP), set up to support investment in lower-carbon technology. The loan will support $40 million of investment from Indian-owned Tata Motors to develop and manufacture electric vehicles in the UK. TMETC, based in the West Midlands, is engaged in advanced automotive technology and vehicle product development and employs around 180 people. Tata Motors has developed a four-seater electric vehicle, based on the Tata Indica Vista passenger car, which was launched in India last year. The Indica Vista has a range of up to 200km and a top speed of 104kph, and will be in production before the end of 2009.

The Department of Energy and Climate Change (DECC) has launched a competition for up to $11.5 million of funding for companies to develop hydrogen and fuel cell technology. The scheme is part of the measures for stimulating low-carbon technologies announced in this year’s budget. Companies will be able to bid to the Technology Strategy Board, which will manage the programme, for a share of the cash. The fund is intended to support demonstration projects such as fuel cell and hydrogen vehicles, residential micro-CHP and distributed power generation products, or the production of hydrogen from non-carbon sources. It could also support the development of scalable processes and equipment for the mass manufacture and testing of fuel cells, or product testing for performance and reliability under realistic operating conditions.

Pasquale Sorrentino / Science Photo Library.

Meanwhile a consortium of low-carbon experts led by the University of East Anglia (UEA) in Norwich, Eastern England has launched the first bus in the UK to run on clean, biomethane gas. The consortium is led by UEA’s Low Carbon Innovation Centre (LCIC) and includes independent bus operator Anglian Bus, bus manufacturer Optare plc and engine conversion specialists Hardstaff Group of Nottingham, East Midlands. The dual-fuel vehicle is a standard Optare Solo single-deck diesel midi-bus from the Anglian Bus fleet. Originally powered entirely by diesel, the Mercedes-Benz engine has been adapted to run for 60-80 per cent of the time on clean, low-carbon biomethane.

Biomethane is chemically identical to the methane in natural gas but it is made by bacterial action on biowastes. It is extracted from landfill sites or from biogas produced in purpose-built anaerobic digestion facilities. The technology will reduce pollutant emissions and greenhouse gas emissions by around 50 per cent, according to its developers. It is hoped that it will be rolled out to bus fleets across UK country and further afield. Project leader Dr Bruce Tofield of the LCIC said: “The cost of conversion of a diesel bus to dual-fuel use is a small fraction of the cost of a new natural gas bus. Conversion to dual-fuel use is potentially a viable option for most if not all diesel buses in the UK and, indeed, across Europe and more widely.”


Wales takes the lead in electric vehicle development
Wales is emerging as a centre for electric vehicle technology. For example, the most advanced rolling road system of its kind in the UK is being built at the University of Glamorgan, where the facility will form the centrepiece of a new Centre for Alternative Powertrain Engineering that opens next year. The R&D centre will be dedicated to environmental and applied green performance technology, and will be capable of testing components for pure electric and hybrid electric engines as well as traditional internal combustion engines. Earlier this year the University of Glamorgan opened the UK’s first Advanced Battery Development Facility and last year it pioneered Europe’s first clean, green, zero-emission minibus.

The Centre for Alternative Powertrain Engineering will work with industry on a range of knowledge transfer projects. It will provide the opportunity for research and testing of high-power electric motors, processors, speed controllers, super-fast rapid chargers, power systems, electric drivetrains and high-capacity energy storage technologies. Jonathan Williams, advanced energy systems programme director at the University of Glamorgan, said: “The new test facility will enable us to provide a wealth of new services, experiences and knowledge transfer based on these new capabilities at both individual component level and whole system level.”

CalsonicKansei Group of Japan plans to invest $18.2 million at its plant in Llanelli, South Wales to enable it to design and manufacture its next generation of products. The investment is seen as vitally important for the future of the plant, which makes engine cooling and air-conditioning systems for the major automotive groups. It is being supported by the Welsh Assembly Government with $5.1 million from the Single Investment Fund. The new investment, which will safeguard 237 jobs and create 37 new jobs, will focus on the introduction of new products for next-generation vehicles, including hybrid and electric vehicle technologies that require lighter and more efficient components. Calsonic has recently won a major new contract with Jaguar Land Rover for the next-generation Range Rover platform. The Llanelli factory employs nearly 400 people and its European Technology Centre is seen as a centre of excellence for R&D within the group.

Fresh investment powers growth in renewable energy sector
The Government has announced grants for three offshore wind energy companies, one of which will manufacture the world’s biggest wind turbine blades in the UK, according to Energy and Climate Secretary Ed Miliband. The 70-metre blades will be produced by Clipper Wind Power, a US company that will receive $7 million to develop the first prototype blade for its Britannia project. From April 2010, the company will start work at a plant on the River Tyne in North East England, where blades for its giant turbines will be developed. Each blade will weigh over 30 tonnes, and will be fitted to turbines that stand 175 metres tall. The plant will initially employ 60 people by the end of 2010.

The other two companies are UK-based Artemis Intelligent Power, which will receive $1.6 million to transfer its existing technology from automotive to wind energy, and Siemens Wind Power UK, which receives $1.8 million to develop next-generation power convertors for a larger offshore turbine. In another development, the Government has given the go-ahead for a new 60MW power plant, fuelled by biomass and waste, to be built on a disused site at Tilbury Docks in Essex, Eastern England.

Investment agency Scottish Enterprise has approved $21 million in funding for the next phase of investment at Energy Park Fife, which aims to make Scotland a world-leading centre for advanced manufacturing for the renewable energy sector. The investment will help the country secure a significant share of the UK offshore wind market, estimated to be worth $30 billion, and will have the potential to create more than 800 jobs and up to $317 million in gross value add (GVA) over the next 10 years.

Energy Park Fife is a 134-acre site strategically located close to new offshore wind-farm leasing sites in the North Sea. It was highlighted as a key project by the Scottish Government to receive accelerated funding during 2009/10 as part of its economic recovery programme. The additional funding will be used to upgrade the quayside and undertake coastal protection works. Linda McPherson, regional director of Scottish Enterprise, said: “The Energy Park is a site of national importance for Scotland. With extensive acreage and deepwater load-out facilities, it is perfectly placed to service the European offshore wind market, providing infrastructure and accommodation for leading-edge companies to grow and expand.”

Also in Scotland, two new wind farms have opened in the Highlands. The company behind the development, Italian energy company Falck Renewables, has received approval to extend operations at its Kilbraur plant, near Rogart in Sutherland, in a move that will create a further 30 construction jobs. When operational, the facility will join the 20-turbine strong Millenium farm, near Glenmoriston, which has been in service since last July. It is hoped that the farms will generate enough renewable electricity to power 50,000 homes. Falck Renewables has also revealed plans to monitor its Europe-wide operations from its headquarters near Inverness, a move that will create 20 jobs. The company currently operates five wind farm schemes across the UK, with more planned in the future.

The new Dragon liquefied natural gas (LNG) terminal at Milford Haven, West Wales has started commercial operations after completing its commissioning phase. The Waterston facility, owned by a consortium comprising BG Group of the UK (50 per cent), Petronas of Malaysia (30 per cent) and 4Gas of the Netherlands (20 per cent), can supply 5 per cent of UK demand for LNG and is capable of pumping 6 billion cubic metres of gas a year into the national transmission system. Imported LNG is a significant component of the UK’s long-term energy strategy, and tankers now arrive several times a month at the two terminals.

A new Centre of Renewable Energy (CORE) has opened in East Drayton, Nottinghamshire in the East Midlands. CORE is a business and conference site which offers carbon-neutral managed workspaces and meeting facilities, and acts as a showcase for a range of cutting-edge renewable energy technologies. The building is designed to produce more heat, cooling, electricity and power through green technologies than it uses during its day-to-day operations, and is already exporting electricity back into the grid. It incorporates biomass heating, ground and air source heat pumps, rainwater harvesting, a wind turbine, electricity-generating photovoltaics and solar panels. Three companies have already moved into the facility.


London continues to attract wide range of investors
US company TerraCycle – a world leader in ‘up-cycling’, where difficult-to-recycle waste material is turned into affordable, eco-friendly products – has chosen London as its base to expand into the UK and Europe. Founded in 2001, the company aims to build a new, more responsible way of doing business, making eco-friendly and affordable products from waste materials normally regarded as non-recyclable. It puts great emphasis on its social and environmental impact, creating jobs in inner-city areas, working with schools and paying volunteers to collect packaging such as drink pouches and yoghurt cartons. Its products, ranging from fertilisers to schoolbags, are sold by the US’s biggest retailers, including Wal-Mart and Target. Its revenues totalled $7.2 million in 2008 and are predicted to increase to $12.3 million in 2009.

At the same time, TerraCycle has concluded its first commercial partnership, with Kraft Foods UK, which will see Kenco and Tassimo coffee packaging diverted away from landfill. London’s food and drink manufacturing output totals some $3.2 billion per year and more than 40 manufacturers in the sector have their UK, European or global HQs in the city, among them Tate & Lyle, Nestlé and Coca-Cola. Albe Zakes, TerraCycle’s vice president media relations, said: “We chose London because we always wanted to be in the hub of the action. We hope that we will be part of the London 2012 Olympics. … I’d advise any foreign company to be sure to understand UK consumers and media. They are very aware and inquisitive and have high demands for the products and services they buy. It’s also important to find local, experienced partners who understand the landscape and can help you properly market your company.”

Another company moving to London is e-trader Alibaba, the latest of 60 Chinese companies to set up shop in Britain. The company’s new 14-strong London HQ will act as a hub that helps European small and medium-sized businesses find global suppliers and trading partners. The platform – similar to that of eBay – works by allowing sellers and exporters to post company information and product descriptions online, together with specifications and shipping terms. Buyers and importers can search and browse the seller’s products and then make inquiries to negotiate or place orders. The company has already attracted 40 million registered users worldwide and has seen a 55 per cent increase to 400,000 users in the UK this year – some 2,000 a week, and growing. According to general manager Maggie Choo, the UK is Alibaba’s third-largest overseas market after the US and India, while user numbers in the EMEA zone have increased by 80 per cent this year.

The capital is also set to gain a new landmark building. The “Shard”, funded by four Qatar-based companies, is due to be completed in 2012 and will be western Europe’s tallest skyscraper. Qatar National Bank, Qatar Islamic Bank, QInvest and Barwa International each hold a 20 per cent stake in the project, while Qatari Diar Real Estate Investment Co., a unit of the Qatar Investment Authority, will fund the Shard’s construction. The 1,016 ft (310 metre), $730 million tower will be built adjacent to London Bridge, just across the River Thames from the City of London financial district. Designed by architect Renzo Piano, the wedge-shaped glass structure will contain offices, a five-star hotel, restaurants and apartments in its 80 storeys. Tenants will include Transport for London, which has agreed to lease 190,000 sq ft for a period of 30 years, and luxury hotel group Shangri-La Asia Ltd., based in Hong Kong, which intends to take 200,000 sq ft of space over 19 storeys.

Construction has already started and when complete in May 2012, two months before the opening of the London Olympics, the tower will be the first building in the EU to break through the 1,000 ft barrier. It will be more than 200 ft taller than Canary Wharf Tower in Docklands, and in all of Europe only two skyscrapers in Moscow will be taller. “The Shard will cater for a much wider tenant audience. Corporates might consider going there that wouldn’t go into the City. That will be one of the attractions,” said a spokesman for broker Drivers Jonas. The biggest structure still going ahead in the City is the 945 ft Pinnacle office tower, which is due to be built by 2013. This is also being funded by investors from the Middle East, Arab Investments Ltd.


Oxford beats Cambridge to University of the Year title
The University of Oxford has overtaken its great rival Cambridge to top The Sunday Times university league table for the first time. Imperial College London was in third place, followed by University College London (UCL), and the University of St Andrews. Completing the top ten were the universities of Warwick, Durham and York, the London School of Economics and the University of Bristol. After 11 years in second place, the achievement earned Oxford the newspaper’s University of the Year award. UCL, which won the title in 2004, was runner-up, with the universities of Birmingham, Glasgow and Stirling completing the shortlist. Stirling won the Scottish title, with Glasgow runner-up.

Oxford is University of the Year 2009

There was significant change in this year’s league table, prompted by the first research assessment exercise (RAE) in seven years and the move to measuring teaching quality primarily by levels of student satisfaction, based on the National Student Survey (NSS). Oxford, located in South East England, came out top based on the outcomes of the 2008 and 2009 NSS, the views of academics and head teachers from Britain’s leading schools, the qualifications of its students on entry, their job prospects when they leave, the number of high-class degrees awarded, drop-out rates, the ratio of students to staff and the outcomes of the 2008 RAE.

Oxford’s 30 undergraduate colleges and five permanent private halls attract 16,000 applicants each year, and the University’s 24,000-strong student body has access to some of the best facilities and resources in the world. This year’s RAE saw the university win 7.5 per cent of all central research grants in England, amounting to $190 million. No university entered more than Oxford’s 2,246 academics for assessment (200 more than Cambridge), while music achieved the greatest proportion – 50 per cent – of world-leading (4*) academics.

Such results attract more funding, which allows Oxford to provide academics and students with even better facilities. “We have seen the establishment of close to 50 new research centres and institutes, many of them interdisciplinary centres and institutes addressing the challenges that society faces today – everything from global health problems and climate change to some of the intriguing changes to human endeavour that new technologies are allowing and creating,” said Dr John Hood, the university’s outgoing Vice Chancellor.

A $78.4 million biochemistry building accommodating 300 lecturers, researchers and students opened in December 2008, and next year sees the opening of a $61 million flagship earth sciences building. Students rate the teaching of academics at Oxford as highly as the funding council rates their research. Performing arts (88.3 per cent) and medicine and dentistry (87.9 per cent) topped Oxford’s NSS results, followed by sociology and anthropology (85.7 per cent), European languages (84.3 per cent) and computer science (82.1 per cent).

Regional News
British Airways launched the first ever long-haul route from London City Airport to New York JFK at the end of September, offering business-class only flights. The service, Club World London City, uses a specially configured 32-seater Airbus A318s, the largest aircraft that can be flown from London City. According to BA, the service has been designed to minimise airport travel and check-in times whilst maximising on-board productivity for passengers, who are able to send e-mails and text from mobile phones and connect to the internet throughout the flight.

Meanwhile, American Airlines will launch a non-stop daily service between Manchester Airport in North West England and New York JFK next summer, in addition to its existing route from Manchester to Chicago. The new service will offer connections across the carrier’s US network, including Boston, Miami, Orlando, Dallas, Los Angeles and San Diego. American Airlines is the world’s largest carrier both in terms of the number of passengers it transports and in the overall distance it transports them.

A new research centre has been established in Reading, Berkshire in South East England to provide digital design solutions for engineering companies. The Design Innovation Research Centre (DIRC) has been set up at the University of Reading’s School of Construction Management and Engineering with the help of a $1.6 million grant from the Engineering and Physical Sciences Research Council (EPSRC). The university is already home to more than 50 research facilities, many of which are recognised as international centres of excellence, including those related to biology, physical sciences and agriculture.

Ecologia, an environmental consultancy based in Italy, is to develop a new international headquarters and centre of scientific excellence at Kent Science Park in South East England. The company’s in-house team of scientists, engineers, chemists and geologists undertakes high-quality site investigation projects. Kent Science Park currently has 500,000 sq ft of high-specification accommodation for technology companies and houses more than 80 companies with 1,100 employees on its site. It is about to embark on a $24 million expansion plan, which it believes will boost the number of workers to 1,600 by 2014. It has gained approval for the development of two new industrial technology units and a 4 hectare expansion of the site, which will provide facilities for both domestic and international businesses. Most of its existing tenants are engaged in the life sciences, engineering, ICT, medical technology or environmental sectors.

A new electronics R&D centre, the Southampton Nanofabrication Centre, has opened at the University of Southampton in Hampshire, South East England. The $80 million centre will enable local businesses to carry out fast prototyping of new devices, and is expected to attract academics and industry groups from around the world. The state-of-the-art facility has a focused ion beam and a unique helium ion microscope, which will be of particular use to semiconductor companies in trialling innovative new technologies.

New Zealand Pharmaceuticals (NZP) has acquired specialist analytical services company Dextra Laboratories from Summit Corporation, a drug discovery company based in Oxfordshire, South East England, for around $1.6 million. NZP will align Dextra’s capabilities with its carbohydrate manufacturing operations to utilise its medicinal contract synthesis capacity. Meanwhile Summit, which is listed on the Alternative Investment Market of the London Stock Exchange, intends to focus its operations on its iminosugar drug detection business. Steven Lee, chief executive of Summit, said: “We believe NZP offers the best strategic fit for the Dextra business and provides the best opportunity to realise the potential of Dextra and its employees.”

The European Molecular Biology Laboratory’s European Bioinformatics Institute (EMBL-EBI) in Cambridge, Eastern England is to receive $16 million of funding from the Biotechnology and Biological Sciences Research Council (BBSRC). The council has committed to dramatically increasing the data capabilities of the institute, and it is hoped that the EMBL-EBI will be able to expand into a central hub for the emerging European Life-Science Infrastructure for Biological Information (Elixir). The $320 million Elixir initiative is a collaboration between 13 countries, which are aiming to establish an infrastructure for biological information in Europe. The EBI is vital to the project, currently holding 2.5 petabytes of data and doubling the amount it stores each year.

Taiwanese semiconductor giant MediaTek Inc. – one of the world’s top 10 fabless semiconductor companies for wireless communications and digital multimedia solutions – has expanded its UK operations into a new facility at the Cambourne Business Park in Cambridge, Eastern England. Having run out of space at Melbourn Science Park near Royston, the company has taken a 10-year lease for 15,969 sq ft of space in the park’s Building 2030, where it is currently focusing on developing multiple generations of cellular products. Cambridge has been the centre of creative development in the cellular industry sector over the past two decades, and has an established talent pool of creative people from all over Europe. “If you want to be a serious player in the wireless communications industry you need an R&D presence in Cambridge or in the US. Cambridge is the most important technology town in Europe. It continues to generate good technology and is a good source of talent,” said JiChang Hsu, vice president of MediaTek.

Milton Keynes in Eastern England received investment from more than 80 domestic and international businesses in the past financial year, according to Invest Milton Keynes (IMK). Inward investment from 18 new global corporations was recorded in 2008 and 2009, securing 1,666 jobs and creating 1,247 more. Among the companies to relocate to the Buckinghamshire city were organisations from Canada, Germany, India, Japan, Taiwan, the US and Sweden. Grant Seeley, spokesman for IMK, said that figures measuring business growth and commercial property demand had also risen over the past 12 months. Milton Keynes is set to be one of the UK’s largest cities by 2031, and currently has $1.6 billion of investment projects in development.

The first phase of construction work has been completed at Whitley Business Park in Coventry, West Midlands. Set in 93 acres, the $21 million park will provide up to 1.1 million sq ft of office and industrial accommodation adjacent to Jaguar’s R&D centre in the city. The first phase comprises 49,578 sq ft of accommodation in the Lakeside development, spread across six Grade A office buildings ranging in size from 2,800 sq ft up to 26,000 sq ft. Whitley Business Park is located at the centre of Coventry’s transport network, fronting onto the A45 and close to the A46 arterial roads, which connect with the surrounding motorway network. Birmingham and Coventry airports are a short drive away, and there are mainline rail connections at Coventry, Warwick Parkway and Birmingham International.

A new website has been launched to promote Coventry to inward investors. The site, www.relocate-to-coventry.com, provides up-to-the-minute information on job vacancies, rental values, commercial developments and local attractions. Meanwhile the East Midlands Development Agency (emda) has launched a new programme to help fast-track businesses considering a UK investment. Businesses can access a range of free, confidential services and up to six months’ free office space on a range of sector-specific business parks, along with many other services. Visit www.englandseastmidlands.com/vip for more details.

Nottingham City Council in the East Midlands has granted outline planning permission for a $160 million business park for science and medical-related companies. The MediPark scheme will provide accommodation for up to 200 firms on a site next to Queen’s Medical Centre, the largest hospital in the UK and the largest teaching hospital in Europe. The scheme will be developed over a period of 13 years, subject to approval of detailed plans, and it is hoped that it will confirm Nottingham’s status as a national centre for biological and medical research. Initial designs, which include futuristic buildings in pods, each one in the shape of a cloverleaf, have been praised for their architectural merit. The plans include extensive tree planting, with car parking hidden underground and pedestrian routes across the site. Three-storey buildings will be arranged around courtyards.

The University of Nottingham’s Centre for Geospatial Science (CGS) has signed an agreement designating it an Oracle Spatial Centre of Excellence – the only one of its kind in Europe and one of just three worldwide. This new relationship with Oracle, the world leader in integrated information management, will give CGS access to the company’s very latest solutions. This will assist in its work on location-based information technology in vehicle and pedestrian navigation systems, which has a huge variety of potential applications. Established in 2005, CGS is a postgraduate multidisciplinary research centre which investigates spatial data infrastructures, geospatial intelligence, geospatial interoperability and location-based services. Its director, Professor Mike Jackson, said: “Our relationship with Oracle is an important development for CGS. Oracle is the world’s largest business software company. They are innovators in spatial database technology. For CGS to be one of only three global Oracle Spatial Centre of Excellence is a pleasing endorsement of how far we have progressed in the four years since we launched.”

Dynex, a technology firm based in Lincoln, East Midlands, that is now Chinese-owned, has announced expansion plans, following rising profits and a record order book. The company designs and manufactures power switches for use in fields such as renewable and distributed energy, marine and rail traction motor drives, aerospace and industrial automation. Chinese business Zhuzhou CSR Times Electric (a leading provider of electrical systems for China’s railway industry that is listed on the Hong Kong stock exchange) acquired a 75 per cent stake in Dynex in October last year. The company now proposes to expand its factory site, where it employs 270 workers, creating a special testing facility for high-voltage power switches and increasing its overall capacity.

Overseas investors own or manage a third of the 150 top businesses in Yorkshire, according to research by accountants and business advisors BDO LLP. The research found that just 22 per cent of the county’s top 150 companies in terms of revenue could be classed as publicly quoted, with foreign ownership constituting 35 per cent of Yorkshire businesses. A total of 39 per cent of Yorkshire’s top 150 companies are privately owned or owned by private equity, and these generate more than $28.8 billion in sales and $645 million in profits before tax. Foreign companies generate sales of $46.4 billion and pre-tax profits of $1.8 billion. Ian Beaumont, managing partner at BDO LLP in Leeds, said that the past 10 years have seen a sea change across the region, with a greater acceptance of outside influence in the way that local companies are managed. He commented: “In Yorkshire, we now have an extremely varied business landscape and the region’s businesses have a well diversified portfolio spanning around 45 sectors, mainly in financial services, food and drink, specialist manufacturing and retail.”

Rotherham in South Yorkshire has seen a steady flow of investment despite the toughest recession for more than half a century, according to Rotherham Investment & Development Office (RiDO). Between April and July, 149 companies moved into the borough or relocated, expanded or started up. Inward investments, worth tens of millions of dollars, created 908 jobs and safeguarded a further 978. RiDO worked with 27 of the companies and helped in roughly a third of the jobs. Major investors included Sandvik medical products, which has created 100 new positions, and Dormer Tools of Sweden, which has created 60. Five major development sites represent about $1.6 billion of investment. These are four former coalfield sites – Manvers, Cortonwood, Dinnington and the Advanced Manufacturing Park (AMP) at Waverley – and a former steel rolling mill at Templeborough. Manvers and Cortonwood account jointly for about $960 million of investment, and the same is forecast for the AMP. Manvers is the site of an ambitious project by Anglo-Dutch TCN UK, while the AMP is now home to Dormer Tools. At Templeborough, two neighbouring business parks have been created next to the existing Fusion@Magna. RiDo also reports that businesses in Rotherham’s four purpose-built business centres, aimed at start-up and growing companies, continue to outperform the national survival-rate average.

Sandvik European Centre of Excellence, Rotherham, South Yorkshire.

Paragon Law, which advises Chinese and Indian businesses on investing in the UK, has opened an office in Leeds, Yorkshire and Humber. The specialist immigration law firm already has branches in Ludhiana in India and Shanghai in China, plus links with Miami and Orlando-based Nejame & Partners. Much of its work is with investors and entrepreneurs in the Leeds area, so it made sense to open an office in the city, according to a spokesman. Paragon was founded in 2003, and has grown from a team of 11 to more than 55. Partner Thalej Vasishta said: “Opening an office in Leeds is a logical step that enables us to serve our clients more effectively. We are looking forward to working with organisations such as Marketing Leeds to promote the benefits of the city as a place to do business. Equally, with an economic shift of power to the east, we are now helping businesses to set up operations or transfer staff to India and China, and have recently advised companies such as Gleeds, Speedo and Benoy.”

Irish energy company FMC-Tech is looking to expand into the UK and has chosen Capenhurst in Cheshire, North West England as the location for its new HQ. The company, whose head office is in Shannon in County Clare, has developed a new management system for overhead electricity networks. This features sensors and software that allow engineers to locate faults quickly, and is also designed to make networks more energy-efficient. Mike McCormack, managing director of FMC-Tech, said: “As one of our key markets is the UK, we are going to put in marketing, sales and engineering support at Capenhurst to service the UK market.”

The Peel Group, a leading UK property and transport group, has acquired more land at Liverpool International Business Park, allowing it to provide more warehouse space for companies looking to invest in North West England. It will be able to sell or lease an extra 500,000 sq ft of distribution space on what is seen as one of the city’s foremost business sites. Situated in Speke, Liverpool International Business Park provides a range of office, warehouse, hotel and leisure facilities and is adjacent to John Lennon Airport. Liverpool city centre is just six miles away. A number of major companies, including Marks and Spencer and DHL, already have bases in the park.

Between 2008 and 2009, a total of 559 additional jobs were created by foreign-owned companies in Lancashire, North West England, compared with 289 between 2007 and 2008. This 93 per cent increase was achieved despite challenging economic conditions. According to Lancashire Economic Partnership, studies show that the value added by foreign-owned companies is significantly higher than the regional average. All the new jobs are based in key industrial sectors for Lancashire, ranging from the advanced manufacturing sector to the service sector. Examples include 150 jobs created at the Burnley-based aerospace systems manufacturer Aircelle, and approximately 300 jobs created by US contact centre provider Sitel, based in Accrington.

During 2008/09, Scottish Enterprise’s investment of $27.2 million in R&D projects helped to stimulate more than $160 million from the private sector, according to the agency’s annual performance review. Despite tough trading conditions, it said, companies were still willing to invest in projects that will strengthen their business through the development of new products or new ways of working. Crawford Gillies, chairman of Scottish Enterprise, said: “These projects would not have happened in Scotland without our support but they are now firmly embedded, creating much-needed jobs and investment. For every $1 we invested in these projects, the companies themselves invested more than $6. The fact that companies are continuing to invest is very significant in terms of our ability to move out of the recession.”

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