BUSINES S VOICE | THE CBI MAGAZINE
Gear change Siemens UK’s Jürgen Maier on the new industrial revolution, and why manufacturers should be more confident
October/ November 2014
B U S I N E S S VO I C E | T H E C B I M AG A Z I N E
October/November 2014
16 INTERVIEW:
Jürgen Maier The Siemens UK’s boss demands more long-term thinking from both industry and government if the country is to perform at its best.
10 INFOGRAPHIC:
THE BUSINESS VISION FOR A BETTER BRITAIN
The choices that people make in next year’s election needs to be underpinned by an ambitious, long-term sense of where we’re trying to get to.
20 FEATURE:
26 BUILDING BRITAIN:
32 MEMBER PROFILE:
SET FOR LIFE
A GREENER ELEPHANT
UNIPART GROUP
The UK’s strong science base and history of discovery put it in a healthy position to exploit life sciences opportunities – but cross-sector collaboration is vital.
London’s Elephant & Castle is being transformed, with a £1.5bn scheme that includes not only housing and shops but also an abundance of green areas.
12 EVENT FOCUS:
BRINGING BUSINESS INTO THE CLASSROOM
The CBI’s Education Conference highlighted how collaboration between business and schools helps young people and the economy.
The automotive manufacturing, supply chain and logistics business has successfully evolved over the years by focusing on its people and driving productivity.
REGULARS CRIDLAND’S NOTEBOOK: 4
While the effects of the Scottish referendum are far from over, the build up to the general election brings prosperity for all into the spotlight. 30 INTERNATIONAL: India’s new government needs to accelerate its pace and increase the scale of its ambitions if it is to achieve further change and growth. 36 MEMBER NEWS: Charting business growth across the UK. In this issue: Edrington; Jankel; Tidal Lagoon Power; Thomas Dudley; Titanic Quarter; Tullis Russell.
6 GUEST COLUMNIST:
CARDINAL VINCENT NICHOLS We need to explore why trust in business is currently so lacking. Part of the solution must be bringing the best of society’s values to the workplace.
38 MEMBER CLINIC: There are several new business reporting requirements, so how have companies responded? BV asks EY’s head of corporate governance for advice on best practice. 42 CBI DIARY: Events and photo gallery. In this issue: London skills gap, growth theme for annual conference, and first forum for MSBs.
Time for growth While the effects of the Scottish referendum are far from over, the build up to the general election places prosperity for all in the spotlight.
“�
The Union works best for creating jobs, raising growth and improving living standards
4
BUSINES S VOICE | AUGUST/SEPTEMBER 2014
CRIDLAND’S NOTEBOOK
Scotland the brave
and doesn’t destabilise or undermine
By a margin of 55 per cent to 45 per
our single internal market.
cent, Britain remains united.
Ed Miliband used his conference speech to address low pay, by announcing measures to increase
A definitive response from Scottish
Our economic story
the National Minimum Wage to £8
voters has kept Scotland as part of
The most significant economic news
per hour by 2020. Having spent 10
the United Kingdom.
over the last few weeks has
years on the Low Pay Commission,
undoubtedly been the Office of
I believe wholly in its ability to set
economic landscape has become
National Statistics’ reassessment of
the rate at the highest level possible
less unsettled, as the dense and
the UK’s economic activity: the largest
without undermining job creation;
unpredictable economic problems
in a generation. It came about after
its independence should not be
which took root during the crisis
the need to align to a more modern
undermined by politicians.
slowly began to clear, the political
international accounting system.
Over the past few years, as the
landscape has done the reverse. Chief among the risks causing
The majority of the revisions show
Then the prime minister used his speech to announce tax cuts:
that the recession was shallower,
increasing the level at which the 40
uncertainty for businesses was,
and the subsequent recovery
per cent rate is paid, to help middle
undoubtedly, the recent referendum;
stronger, than previously estimated.
income earners, and raising the
and while the general election next
The most encouraging adjustment
personal tax allowance to £12,500,
year and then a possible referendum
concerned business investments,
taking a large number of low earners,
on our place in the EU are now higher
which were assessed as being
especially part-time workers, out of
up on the risk register, the effects of
greater than previously thought,
income tax altogether.
the referendum are far from over.
now three per cent above their
The CBI understands that the
There were other proposals
pre-crisis peak in Q1 2014, compared
supporting these announcements,
Union works best for creating jobs,
to 16 per cent below on the basis of
of course, but I mean to highlight
raising growth and improving living
the previous data.
wage growth as being one of the
standards. Following cross-party
Although our economic story is
more significant areas over which the
promises in the build up to the
now a strong one, with business
election next May will be fought. It’s
referendum, the re-established unity
confidence high, output broad-based,
why the CBI’s Annual Conference on
of our nations must now be reconciled
and the number of people in work
10 November will have as its main
with proposals for further devolution.
currently at an all-time high, the UK’s
theme “Growth for All”. We want to
Not only for Scotland, Wales and
productivity levels are, however,
explore how we can ensure that the
Northern Ireland – the call for new
low-slung and wage growth remains
benefits of economic growth can be
English powers is growing louder, too.
flat. Pay has barely grown since 2008,
more widely felt throughout society.
Negotiations for devolution will not be
which means that the increase in
easy, and many of the questions
wages that people are getting is less
best ways to improve wages is to
underlying constitutional reform will
than the rate of inflation. Turning this
raise skills levels and help people
be hard to answer.
around is one of the country’s most
progress into higher paid, higher
pressing concerns.
skilled work. At our conference,
As in all things, business favours stability and certainty. A steady
Business knows that one of the
we’ll be looking into and beyond
predictable hand on the economic
Prosperity in focus
the political rhetoric and debating
and political dials gives rise to
From this year’s Labour and
productivity levels, sluggish wage
innovation, enterprise and
Conservative party conferences (at
growth, workforce skills and the UK’s
entrepreneurship. I hope that our
the time of writing, I am yet to attend
education system – how they all fit
collective strength will support
the Liberal Democrats’) there are two
together, and what solutions there
devolution policy which is carefully
clear narratives emerging about how
might be for the future.
created, acts in the best interests of
to help workers better feel the
citizens living in all parts of the UK,
benefits of our recovery.
I look forward to seeing many of you in November. ◼ BUSINES S VOICE | OCTOBER/NOVEMBER 2014
5
A socially responsıble purpose The reasons for the lack of trust in businesses need to be explored. Part of the solution must be bringing the best of society’s values to the workplace. Words: Cardinal Vincent Nichols, Archbishop of Westminster.
T
he CBI, as an employers’
We all know that there are
None of us are simply producers,
organisation, is rightly
many excellent businesses that
consumers or employees. What
concerned about
hold themselves to the highest
we all share, first and foremost,
the serious erosion of public
standards and make that positive
is a common humanity.
confidence and trust in business.
contribution. But we also know that
Good societies are built on that
Debate about why that trust has
the core problem is real, and that it
respect for the human person. All
declined, and what changes may
is not one that better PR can solve.
human institutions — public or
need to be made by businesses
There is a deeper issue underlying
private, charitable or for-profit,
to address it seriously, is both
the loss of trust, which must be
secular or faith-based – have an
necessary and timely.
confronted for the long-term good
obligation to act in a way that
A thriving business sector, with
of both business and society.
serves human dignity and promotes
people finding fulfilment through
My starting point is simple.
the common good. When they fail
productive work at the service of
It is the good of the human
to do that – and the Catholic Church
wider society, is vitally important.
person. As a Catholic I have a
has experienced in recent years
Business and society need each
fundamental belief, shared by
just such failures – then trust is
other. As one chief executive has
many others with or without
eroded. Recovering trust, or better
put it, “you cannot have a business
faith, that we must start from the
recovering trustworthiness, is
that succeeds in a society that fails”.
conviction that people matter.
hard work and takes a long time.
6
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
GUEST COLUMN: Cardinal Vincent Nichols
“”
We must start from the conviction that people matter. None of us are simply producers, consumers or employees. We all share a common humanity
Serving society At the end of 2011, I was asked by a number of business leaders,
7. S hutting factories without regard to the impact on communities; 8. A pay and bonus culture
considerations are rendered irrelevant; you can do what you like. He said that such an approach
who were deeply concerned about
divorced from performance
destroys the basis of trust in the
the loss of trust in business, to
and proportionality;
market, which is the foundation
work with them. They thought the wisdom in the faith traditions about the good of humanity, and
9. Cheating for corporate or
of all profitable activity. It is this
individual advantage;
culture that leads to mis-selling,
10. T aking advantage of weak
because there is no real concern
how organisations can best serve
regulation and weak consumer
for the customer as a person.
society, had something important
pressure to maximise profits
Everything is subordinated to the
to offer that was sorely needed.
at the expense of consumers.
sole goal of maximising profit.
At a conference in September 2013 to take forward the work of
This is a bracing list. It captures
Fit for purpose
what has become known as the
exactly the issues that weigh with
The answer from those developing
Blueprint for Better Business,
many people in society, within and
the Blueprint for Better Business
one of the business leaders
outside the business community.
was that any business should
listed 10 “ills” that needed to
But it is much easier to list the
be able to state clearly why it is
be addressed. These were:
ills than to cure them. And it is
there. It should have a purpose
1. Anything illegal;
clear that law and regulation
that is compelling, attractive
2. Mis-selling;
alone, necessary as they are,
and operational – that should
3. Selling harmful products;
cannot be the sole answer.
enable the business leader to
4. Employing people in unsafe
At a seminar I organised in
look at each product and service
or harmful conditions
2009, after the financial crisis, the
and ask: “Does selling this take
or child labour;
chairman of one of the big banks
me towards delivering my true
said the problem has been that
purpose or away from it?”
5. Aggressively avoiding tax, even if strictly legal; 6. Taking risks with the
people have got used to asking just
But not just any old purpose
two questions: “is it profitable?”
will do. A sustainable business
environment, even if
and “is it legal?” If the answer
needs a purpose that enables its
strictly not illegal;
given to both is “yes”, then other
people to encounter and respond
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
7
“”
Any business should have a purpose that is compelling, attractive and operational
to the true needs of society with the resources and innovation at their disposal. That process demands respecting the human person, creating a common good – in which the business and its investors share – and entering a dialogue on being true to purpose. The Blueprint initiative has developed “Five principles of a purpose-driven business” (www.blueprintforbusiness.org).
pay differentials; exploitation
responsibility but a radical
of workers, suppliers and
re-centring of the core of the
customers; tax planning to avoid
business, then it becomes truly
a fair contribution to society
liberating. It enables businesses
and abuse; or manipulation
to bring the best of society’s
of regulation for self-interest.
values to the workplace and
And, most importantly, the five
ends the corrosive, divided
principles commit businesses
life of different values in the
to seek inclusiveness of the
workplace and within society.
underserved and disadvantaged.
“”
Once people grasp that this is a radical recentring of the core of the business, it becomes liberating These principles are
I believe we need a combination of courageous leaders, demonstrable change of behaviours and constructive challenges, from within and beyond business. I believe that a common frame of reference to define the role of business in society – what I call the ‘purpose’ of business – would help. We also need practical actions and open dialogue about business being true to that purpose. The end result should be common standards by which all people in
These principles embrace both
acknowledged to be relevant
business are judged, challenged
the business purpose itself and
and challenging to business.
and appreciated. I encourage all of
the relationships needed to build
But they have not come from
you to join this conversation, so that
commitment and trust — with
business. They are from long-
business can play its fullest role
customers and suppliers, with
standing philosophy and faith
within society for the benefit
an extended workforce, with the
traditions present in our society.
of both. ◼
communities within which it works, and with future generations. And while the Blueprint sets
From the smallest to the largest business, I have seen how business can benefit from a definition of
aspirational goals, it also sets
business behaviours that comes
out clear challenges around the
from outside business itself.
perennial issues I listed above
Once people grasp that this is not
that erode trust — inexplicable
another iteration of corporate social
8
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
This viewpoint was originally published on www.greatbusinessdebate.co.uk, the website behind the CBI’s campaign to help build public confidence in business.
In partnership with
MSB SuMMit 1 dec 2014, 200 AldErSGAtE, london
Helping tHe UK’s mid-marKet firms realise tHeir potential Join us at the CBI’s inaugural MSB Summit to gain new insight on: Getting new skills into your business Securing growth finance Exporting with confidence Getting to the next level, and Change management
Book your place cbi.org.uk/msbsummit the MSB summit is complimentary for medium-sized businesses.
THE BUSINESS VISION FOR A BETTER BRITAIN General elections are about the choices people make that shape this country’s future. These choices have to be underpinned by a sense of where we’re trying to get to, so the election in 2015 is about not just the next five years but the next 50. Accordingly, the CBI’s business manifesto sets out an ambitious, long-term vision for Britain.
Forge our future economy to unleash business potential We need to get the right conditions in place for our businesses to drive economic growth, unleashing their potential to invest, invent, export and expand.
22%
To foster an environment where entrepreneurs and established businesses can prosper, the next parliament needs to focus on strengthening supply chains and undertake an ambitious exports strategy, as well as enhance the research and development tax credit. We need a pro-competition, pro-consumer approach to markets, and for financial regulation to focus on achieving sustainable financing for our businesses.
of economic revenue and 16% of UK employment are generated by the UK’s mediumsized businesses, despite making up just 2% of its companies. Their potential will be unlocked by targeted ideas to improve productivity, increase access to finance and boost their exports.
£50bn
The possible long-term boost to investment if we bring the UK’s capital allowances regime in line with other G7 economies.
Secure our global future to capitalise on the changing world We need to renew our role as a trading nation, and reinforce our position on the global stage by making the most of the opportunities that come from a rapidly changing and increasingly interconnected world.
8 in 10
CBI members would vote to stay in the EU in a referendum.
10
500m
The number of consumers in the EU Single Market, which is the first export market for many UK businesses before they sell further afield.
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
£10bn
The potential annual boost to UK GDP if the Transatlantic Trade and Investment Partnership is signed.
We must maintain access to the single market, progress the single markets in digital and services, and push for reforms so the EU doesn’t regulate on things that are better done at a member state level and here at home.
INFOGRAPHIC: People and prosperity
4.4m
£68bn
The increase in the number of over-65s in the UK by 2030, presenting unprecedented challenges for our services.
of savings have still to be found by 2018/19.
Shape the state to deliver growth
To meet these challenges, the next parliament needs to get the deficit down and direct public spending towards capital spending and innovation, as well as pursue bold reform to our public services. Once we’ve locked in improvements to our tax system, we must turn to the increasing national insurance burden, and reform of business rates.
We need to balance the public finances now and for the future in a way that maximises our prospects for economic growth.
We need to take difficult decisions today to meet the needs of tomorrow – building homes for the future, powering the economy, keeping the lights on, and connecting our people and businesses to each other and to the world.
Only 22%
Get Britain building to meet our infrastructure needs We must also ensure the recommendations of the Airports Commission are implemented swiftly.
of the public trust politicians to say what infrastructure we need, compared with 64% who trust independent experts. An independent body should be established to determine needs and speed up delivery.
10
The number of garden cities that should be built – or under way – by 2025, to help meet the need for 240,000 new homes a year.
£4bn
The bill for our housing shortage in extra housing and transport costs that is being footed by households across the UK. Average house prices have jumped 56% since 2004.
£100bn
The amount of private sector investment needed in UK energy infrastructure by 2020 to keep the lights on and decarbonise energy supply. To deliver this investment, the energy market needs stability.
Make growth work for everyone to raise living standards We need to give everyone opportunities to participate fully in a prosperous economy and society, so we can make the most of the UK’s potential and the benefits of economic growth are widely shared.
2 in 3
children from low-income families who are behind their classmates at age seven will not go on to achieve five good GCSEs. The education system should encourage rounded development, and not just focus on exam results.
28%
of employers are reporting skills shortages while 58% are not confident of meeting future needs. The skills agenda, and apprenticeships, still need more focus.
19.7%
The gap in pay between women and men in 2013. A target is needed to show government is serious about tackling inequality.
In the next parliament, we need the unhelpful net migration target to be scrapped and to turn our attention to better supporting the skilled immigration that continues to add value to the economy. We also need to put improving productivity – the real route to boosting pay and opportunity – at the centre of a long-term labour market strategy, and to avoid tampering with the flexibility of our labour market.
BRINGING BUSINESS INTO THE CLASSROOM Businesses and schools have more in common than you’d think – and the CBI’s Education Conference highlighted why collaboration between them is crucial for the success of the UK’s young people, and for the economy.
“F
or business, there are few issues that matter more than our schools,” said CBI deputy director-general Katja Hall, at the CBI
Education Conference held in September. Yet the consensus
among both speakers and delegates at the event – which was sponsored by National Grid – was that things have gone seriously awry, and that reform needs more speed, leadership and vision.
Katja Hall
Hall pointed to the disparity between firms struggling to hire people with the right skills and youth unemployment figures that are almost 17 per cent. Commenting on current reforms, she said: “It is not enough to devolve responsibility to headteachers and toughen exams.” What has been “arguably more rigorous but less relevant”is dropping the assessment of speaking and listening from English GCSE and practicals in science A-levels, she added. Business also needs to do more, and increase its engagement in schools, Hall argued. “There is no more important determinant of our long-term growth. We should start acting like this matters.” She called on government to reinstate compulsory work experience for years 10 and 11, as an incentive for schools and businesses to forge closer links. She also emphasised the importance of leadership from within schools, arguing that headteachers now had more in common with a chief executive than with teachers in their classrooms – a point echoed many times during the morning.
12
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
EVENT FOCUS: Education Conference
Learning and earning
best further education colleges to
would require significant business
For example, the first keynote
institutes of technical education;
involvement to make it work.
speaker, shadow education
and encouraging more schools
secretary Tristram Hunt, said
to keep destination data for
the problems facing the education
that he regretted the “absence
school leavers for three years.
system today were similar to those
of focus on school leadership”.
Lord Young, adviser to the
he tried to solve three decades ago
He declared Labour’s ambition
prime minister on enterprise,
– and that measures introduced
to improve teacher quality and
also highlighted the importance
then had gone by the wayside.
promote greater collaboration with
of making 10-year earnings data
However, he was optimistic that
businesses on leadership training.
available from every course at every
change was being made for the
university, so that students could
better. “I’m hopeful that what we
make more informed decisions.
are doing today will not depend
Other initiatives he outlined
on the vagaries of government,
Hunt also hit a popular note when he said: “Resilience and grit is just as important to learning
But he was disappointed that
and earning as test scores.”
included offering all headteachers
but will be something that the
He said he was optimistic
access to an enterprise adviser “to
private sector, and all parts of this
about reform and, in the interest
break the silo that is schools”; and
community, can work on together.”
of stability, suggested Labour
introducing an “enterprise passport”.
wouldn’t rip up what had gone
This document would highlight
Good for business
before. But in response to Hall, he
pupils’ extra-curricular activities,
The main thrust of the two panel
said Labour would restore practical
to help schools to recognise the
discussions was a similar one:
elements to science exams, and
importance of enterprise and
that it makes good business sense
reverse the decision that has
employers to take a more rounded
for business to get involved.
made work experience optional.
view of prospective recruits.
Hunt also outlined the key areas
Lord Young added he wanted
The first discussion looked at what business and schools can
that Labour would prioritise. These
to see a voluntary course that
learn from each other. Comparisons
included making English and maths
teachers could go on to help
were drawn between not only
compulsory to 18; introducing a
them understand business and
CEOs and headteachers, but
technical baccalaureate with strong
“gradually open up schools to the
also the board of governors and
links to business; making the
outside world”. Such a scheme
companies’ governing boards.
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
13
Panellists, including Wroxham
improve leadership in schools –
School head Dame Alison Peacock
said that business engagement
and Tulsi Naidu, executive director
needed to improve outside
for UK and offshore at Prudential,
London and other cities.
encouraged more business leaders
This was a point picked up in
to join school boards. But Naidu
the second panel by Hayley Tatum,
added that companies needed to do
Asda’s senior vice president for
more to support those employees
people. The supermarket “adopts”
who wanted to take on such a role.
a school in every community it
Peacock agreed that joining
operates in – and is encouraging
school boards couldn’t be a
businesses in its supply chain
half-hearted commitment, and
to do more in this area.
emphasised that those who got involved needed to offer leadership
Partner for success
and advice that fitted the school’s
Panellists highlighted that careers
needs. “I don’t need someone
advice has, until recently, been
on our board who says they can
seriously lacking, and companies
reduce our postage bill,” she said.
have an important role to play
The same goes for business
in delivering such advice. But
engagement in schools at any
much of their work should be
level. Naidu argued that such
simply about sparking interest,
engagement needed to be
and raising understanding
structured and for the long term.
of what it’s like to work.
She added that taking such a
for employees and collaborate to
meant the company was “more
inspire school kids today,” said
attractive as an employer”.
Steve Halliday, chief executive
Meanwhile, sending Prudential
at National Grid (pictured).
staff into “an unfamiliar
He highlighted the company’s
environment” in schools was
Careers Lab initiative, which
a management development
is rolling into 500 schools this
opportunity for these people.
year and has attracted support
Importantly, however, Brett
14
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
“Businesses must stop competing
strategic approach at Prudential
from companies including HS2,
Wigdortz, founder of Teach
Costain, Compass and Whitbread.
First – the organisation set up to
It gives schools the framework
EVENT FOCUS: Education Conference
Most important factors when recruiting school or college leavers
they need to engage businesses
without a job, apprenticeship
and collaborate with them on
or place at either further or
careers advice – centring on four
higher education, said Bell.
modules based on inspiration,
There was frustration in the
aspiration, exploration and action.
room that this success wasn’t
There was consensus that the
being replicated in schools up
education system needed to be
and down the country. But there
better tailored to where the jobs
was also agreement that the
will be. “We don’t need 50 per
foundations for change been laid
cent of pupils to go to university,”
– as long as the momentum led to
said David Bell, chief corporate
more collaboration and action.
development officer at JCB and
As Brian Lightman, general
chair of governors at the JCB
secretary of the Association of
Academy. This academy shows
College and School Leaders,
what can be achieved with a clearer,
said: “School leaders want to
long-term focus on the world of
take the system forward and
work, rather than just on passing
business is saying it wants to
exams. No one leaves the academy
help. That’s really powerful.” ◼
Attitudes towards work/character
83%
Aptitudes for work
63%
Basic literacy & numeracy
44%
Qualification obtained
38%
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
15
GRAND DESIGNS Siemens UK’s new chief executive has clear ambitions for UK manufacturing, but they all demand more long-term thinking.
words PIP BROOKING photography PETER SEARLE
16
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
BIG INTERVIEW: Jürgen Maier
“”
Britain is falling in love with engineering and manufacturing – it’s going to make us stronger
W
ith such a Germanic
But there are two aims he is more
name, you wouldn’t
passionate about. The first is to see
its manufacturing prowess. “We
expect Jürgen Maier,
the UK “again become a world-leading
can’t go back to where we were
Siemens UK’s new chief executive,
industrial powerhouse”. The second
in the 1900s, but can we increase
to speak with a broad northern
is to do far more as a business to
manufacturing as a percentage of
accent. But the Austrian moved to
support the communities Siemens
GDP? Can we regain our reputation
Leeds as a child, then started his
operates within. Here, he’s talking
for being innovative and having
career at Siemens on the shop floor
about not just “nice charity projects”
some of the best manufacturing?
in the company’s factory in Congleton,
that are good for the communities
The answer is yes,” he says.
Cheshire. Having worked his way up
and his staff, but making a serious
from there, you could say he is a
commitment to the skills agenda.
good fit for a German company that
It’s a lot of responsibility for one
prides itself on its investment – and
company to take on – but there’s a
the roots it has made – in the UK
clear sense Maier is driven by his
over the past 170 years.
belief in the UK’s potential, and by
After three months in his new role,
respect for what Siemens has
Maier says his personal ambitions
achieved so far. There isn’t anything
as CEO and what he wants for the
broken at the business he’s inherited,
engineering company are also one
he says. And the business’s focus
and the same. And he’s not exactly
on, and motivation for, what it needs
aiming for the low-hanging fruit.
to achieve is what allows him to
“We have a genuine opportunity
focus on the bigger picture.
to help the country achieve its
can secure a better reputation for
“”
If we can be part of the bigger picture and help set the strategy, then that’s going to be good not just for us Maier has referred to “a new
sustainability targets,” he says.
Helping the country
industrial revolution”, or the
Linked to that, he wants to help
“Britain is falling in love with
“reindustrialisation” of the UK. But
Britain renew and upgrade its
engineering and manufacturing,”
the process has to start with getting
infrastructure – he points to
he says. “Combine that with what
the basics right – and he is clear that
transport and energy on the one
we do as a business, and it’s going
UK manufacturing needs to invest
side, and cities and buildings on the
to make us stronger and enable us
more in automation, productivity
other. And he is keen to improve
to help the country more over the
and energy efficiency. Its failure
manufacturing capability and
next 10 years.”
to do so over the past couple of
productivity, both at Siemens and
Although the UK still has a
among the businesses it supplies.
“some way to go”, he believes it
decades is “why we are where we are”, he argues.
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
17
able to produce it without manual intervention. It knows what features have been ordered, starts it along the production line, and moves it to where there is spare capacity at each stage in the process. “Ultimately, all of this should serve to give a better customer experience and better customer choice, at affordable prices,” he says.
“” This is where it’s easy to see the
government’s industrial strategy,
part he wants Siemens to play – and
and that Siemens is heavily involved,
certainly where the business can
in particular, in one of its technology
benefit. The company’s industry
and innovation centres – the
division – where he has spent most
Advanced Manufacturing Catapult.
of his 28 years with Siemens –
The company has partnered
contributes almost 25 per cent of its
with the latter on a “Industry 4.0”
revenues worldwide.
initiative, which brings together a
But Maier says: “It’s my priority to
lot of Siemens’ existing technology,
The skills agenda needs to be better joined-up – between government, the regions, colleges, schools and business Siemens’ vision of how it wants to
get close to some of the government
as well as creating new software
help Britain is also apparent at the
stakeholders, and to work with
applications to build a digital factory.
location for Maier’s interview with
organisations such as the CBI and
“This is a factory that pretty much
Business Voice: The Crystal, one
the EEF to make sure that we’re part
organises itself, plans itself and
of the world’s greenest buildings
of not just being able to deliver the
is working. It delivers amazing
and home to the world’s largest
technological solutions, but also
productivity, efficiency and quality
exhibition focused on urban
helping the country define its best
levels, and all that is enabled with
sustainability. “It was [built to] try
path and its best strategy for how
technology. It’s moving into another
and enthuse decision makers in
businesses can engage.
revolution of manufacturing,” he says.
cities about what is achievable and
“We work with thousands of
The initiative plays to the trend
what is possible with technology to
suppliers to achieve what we
of “mass customisation”, or the
create a more sustainable city,” he
achieve here in the UK. If we can be
need for manufacturers to deliver
says. The fact it also attracts school
part of the bigger picture and help
more for less, while preserving
children and inspires them about the
set the vision, the direction and the
margins. For example, it could
relevance of science and technology
strategy, then that’s going to be
be used to build a car ordered
is also, clearly, important.
good not just for us.”
directly from the consumer, to
But asked which project excites
their specification, says Maier. The
him most, he says it’s the new
Catapult involvement
order goes straight onto the factory
£310m offshore wind turbine factory
In that light, it comes as no
floor, where the manufacturing unit
that Siemens is building in Hull, in
surprise that Maier supports the
will start to organise itself to be
partnership with Associated British
18
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
BIG INTERVIEW: Jürgen Maier
Ports, which is set to create up to
the Department for Education, the
1,000 jobs. “We’ve got to make sure it
regions, the colleges and schools,
works, not just for Siemens, but for the
and business.”
community and the customer,” he says.
The biggest concern he has with current initiatives is that
The bigger picture
there is too much complexity
Siemens wind turbines already
in how employers are
create about 50 per cent of the UK’s
engaged, he says. Siemens
wind power capacity. And Maier
was one of the first to sign
says that the company’s investment
up to the Employer Ownership
in the UK is heavily influenced
of Skills pilot last year, and it is
by big infrastructure decisions.
also involved in offering a range of
Here, he also refers to the rail
school support and apprenticeships.
projects Thameslink and Crossrail.
But he says: “It’s just not well
It’s a shame, he says, that the public
co-ordinated. At Siemens, we end
don’t get the full picture of the scale
up taking it a little bit into our own
of the company’s involvement in
hands, and deciding which ones to
the country, pointing to the debate
support. But where does an SME
that has rumbled on for three years
go to get the best advice on what it
around its contract to deliver a
can do?
new fleet of trains for Thameslink.
“What would be nice is if we
“Yes, those trains are being built
could have a joint initiative between
in Germany, but actually, we’re
government and the private sector
creating 2,000 jobs here on the back
to decide the priorities – a bit like
of that contract, and we’ve got 13
we’ve done on industrial strategy.”
factories manufacturing things here employing 14,000 people.”
There’s the small question of
The Maier CV July 2014 – present Chief executive, Siemens UK.
2008-14 Managing director at Siemens industry for UK, Ireland, Nigeria and Ghana.
staying in the European Union too and Maier has been vocal in his
2004–08
the company also depends on the
support of continued membership.
long-term vision and certainty of
After all, Siemens is a global
government policy. “The key thing
company, not used to the “more
Sales director for Europe, then MD, Siemens automation and drives.
that we need is stability,” says
insular” behaviour that the UK can
Maier. He believes that the UK has
be accused of.
To secure future investment,
finally got that direction on energy
But beyond talk of European
policy. But he’s more concerned
energy regulations being an
about transport – in particular, High
important driver for innovation, for
Speed 2 and other electrification and
example, his arguments show a
upgrade projects on the rail network.
remarkable consistency. He insists
Yet his big ask for the next
on taking a long-term view and
government lies on the skills agenda.
looking at the bigger picture. And
“We still haven’t really got a long-
he thinks the economy could be
term view on that,” he says. “So
even healthier if more businesses
this needs another look and to be
and policy makers did the same. ◼
2001–04 MD, Siemens shared services.
1986 Joined Siemens as a production engineer in the automation and drives division in Congleton, progressing to general manager by 1997.
better joined-up – between BIS,
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
19
Fighting fit
By Dan Jellinek
With its strong science base and history of discovery, Britain is well placed to take advantage of opportunities in the life sciences sector – as long as it works towards cross-sector collaboration.
20
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
FEATURE: Life sciences
“”
The aim is to offer genomic medicine as routine care for conditions such as cancer
O
f the 204 Nobel prizes that
Trade & Investment, it’s worth
for research and better at
have been awarded for
more than £50bn to the economy,
adopting innovative medicines
physiology or medicine
employing about 165,000 people.
and technologies. In August,
over the years, the UK can be
In March, BIS and the Department
the prime minister announced a
credited with winning 30 – not bad
of Health opened a joint office for
public-private investment package,
for a small nation. Prize-winners
life sciences, signalling the sector’s
worth £300m, to decode 100,000
include the geneticist and
importance. The office is charged
human genomes by 2017. The
co-discoverer of the structure of
with pulling together policy strands,
aim is for the NHS to become the
DNA after whom the new Francis
including research and development
first mainstream health service to
Crick Institute has been named.
tax credits worth about £1bn a year;
offer genomic medicine as part of
The institute, modelled on the
the Patent Box – a tax incentive for
routine care for conditions such as
US-style interdisciplinary medical
companies profiting from research
cancer and genetic diseases.
science research body, is set to
patents worth a similar amount;
New frontiers for innovation
open its doors in a year’s time.
and the £52m Science Industry
in life sciences keep on coming,
Founded by the Medical Research
Partnership, which is expected to
and the UK is well placed to take
Council, Cancer Research UK,
create more than 7,800 education
advantage of the challenges. But
the Wellcome Trust and London’s
and skills opportunities over the
it is not the only nation to spot
University, Imperial and King’s
next two years.
the potential. Competition will be
colleges, it will directly support more than 1,000 scientists.
Life sciences is also one of
fierce, both with emerging high-
11 sectors to fall under the
tech economies such as India and
government’s industrial strategy,
with established powerhouses such
many in the UK’s expanding life
and is the focus of the Cell Therapy
as the US and Japan – which holds
sciences sector. It’s a broad field,
Catapult – one of seven new
many patents in key areas such as
encompassing human, animal and
publicly funded accelerator bodies.
stem cell research.
plant biology; medical science;
A further Catapult is imminent for
biochemistry; and bioengineering.
precision medicine: a new field
most from the UK’s strong science
It covers activities ranging from
deploying customised treatment
base will depend on cross-sector
genetic research to the manufacture
for individual patients.
collaboration. Over the next few
This development is just one of
In austere times, extracting the
of pharmaceuticals and medical
Other moves have centred on
pages, we look at four examples
equipment. And according to UK
making the NHS more accessible
where this is already happening.
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
21
Bridging the gap for cell therapy
T
he Cell Therapy Catapult
cells, to avoid rejection. The firm
pre-defined tissue types; and with
(CTC) has a mission that
won £2m from the Technology
fewer ethical barriers to their use.
sounds even more
Strategy Board (TSB – now
“Once we have created a
dramatic than its name – to boost
Innovate UK) to use the CTC to
bank of these cells that are safe
therapies across the so-called
access equipment and expertise.
to go into clinical trials, it will
“valley of death” between
“It was enough to get them into
shorten the innovation time for
early-stage development and
the first clinical trials, in a rigorous
academics and companies by two
commercial viability.
way that will prove it works,”
or three years,” says Thompson.
Set up by the government in 2012
says the CTC’s chief executive,
“The Catapults are not a
with an initial £70m of funding
Keith Thompson. “It also brought
quick fix – they are expected to
over five years, the scheme has
investor confidence, leading to
become a key part of the UK
more than 90 staff with expertise
a recent £1.25m fund-raising
innovation landscape, to bridge
in clinical development, regulation,
round from private industry.”
the gap between academic
manufacturing and market access,
The Catapult has also
invention and industrial use,
who are ready to help with
collaborated with a Scottish
because there have been many
innovations that could benefit
SME, Roslin Cells, to develop its
examples over the years of
the whole industry. Few firms,
clinical-grade induced pluripotent
products “invented in the UK,
especially SMEs, could otherwise
stem (iPS) cell bank. iPS cells
commercialised somewhere else”.
afford access to such resources
are produced from adult cells
at early-stage development.
which are “reprogrammed” using
in particular, to be able to
growth factors and implanted
innovate, take risks and push
Catapult’s collaboration with an
genes. The process reverses
products forward, crossing that
SME is its work with Videregen,
cell differentiation, making them
‘valley of death’,” he says.
a company developing a tracheal
completely versatile (hence
replacement technology, which
“pluripotent”) – similar to an
SMEs that have benefited. The
involves repopulating an acellular
embryonic stem cell, but easier
CTC is also supporting global
“scaffold” with the patient’s
to source; more able to match
medical technology business
One high-profile example of the
own stem cells and epithelial
“”
Once we have a bank of pluripotent stem cells, it will shorten innovation time
22
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
“We want to facilitate SMEs,
But it’s by no means just the
Smith & Nephew, with regulatory requirements for the late-stage clinical development and market approval of a wound spray that facilitates healing. It also has an agreement in place with GlaxoSmithKline to explore joint working on cell therapies, as well as partnerships with several UK universities.
FEATURE: Life sciences
A route across the body’s barriers a biocompatible polymer to
game-changer” in helping his
wrap around drug molecules.
firm innovate and compete,
This envelope can be used
says Schätzlein. The pain relief
to carry peptide (amino-acid
product enters clinical testing
based) drugs across barriers,
next year, with antibody therapies
because the body no longer
potentially following within five
perceives them as a risk or tries
years. “We have been working
to break them down as food.
on commercialising this for quite
The company’s lead product,
J
NM0127, developed with a £1.2m
you to come up with a much
grant from the TSB (now Innovate
more refined proposition.”
ust as IT systems or flatpack
UK), uses MET to allow a peptide
furniture can be modular, the
pain suppressant to pass directly
human body has its sections
into the olfactory nerve once it
and they too can pose problems
has been inhaled through the
for pharmaceutical designers. So
nose. This approach offers more
how can a therapy reach the part
effective relief than opioids to
we want to treat, if, for example,
millions of patients with chronic
it has been swallowed as a pill?
pain, with potentially fewer side-
“Our bodies consist of compartments that are separated
effects and lower risk of abuse. It’s thought that the technology
from each other by biological
could also be used for delivering
barriers,” says Andreas Schätzlein,
drugs both orally and through the
chief executive of bioscience
eye. And earlier this year, £1m
pioneer Nanomerics, a specialist
of funding to develop the MET
in drug delivery systems spun off
systems to deliver antibodies to
from University College London
the brain was won by a consortium
(UCL). “These include the blood-
formed by Nanomerics, UCL,
brain barrier, which prevents many
the University of Exeter and
molecules entering the brain from
Danish pharmaceutical company
the bloodstream, and hence can
H Lundbeck. The funding
block substances ingested as pills
comes from the Engineering
from treating brain conditions
and Physical Sciences Research
such as tumours and dementia.”
Council’s (EPSRC) healthcare
To overcome this and similar
impact partnership scheme.
internal barriers, Nanomerics has
a while, but seed funding allows
“”
This approach offers more effective pain relief than opioids, with fewer side-effects
Support from the EPSRC,
developed “molecular envelope
and Innovate UK and Wellcome
technology” (MET), which uses
Trust funding, have been “a
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
23
Where life becomes digital
I
f the life sciences sector is a big deal for the UK, the digital sector is even bigger
– estimated to reach about 10 per cent of UK GDP by 2016, according to government estimates. The two intersect in areas such as telehealth and telecare, combining medical science with the power of digital networks. NHS England is supporting a project to demonstrate the power of this mix: technology enabled care and support (TECS). A home patient
prompts users to take readings,
monitoring system to test the project
and displays questions for them
in the field has been built in Surrey
to answer before sending the data,
by Telehealth Solutions, part of out-
encrypted, to a secure server.
of-hours care firm Medvivo Group,
The system can be multilingual
together with Surrey County Council;
and allows videoconferencing.
local NHS clinical commissioning
At the central support centre,
groups; and council partners
specialist nurses follow established
Virgin Care; First Community
clinical protocols to monitor and
Health & Care and CSH Surrey.
respond to the data, including
“”
It’s possible cameras and wristbands might provide the data more simply
Telehealth has developed
routinely calling patients. “The
wristbands with the algorithms
software and systems to allow
value is in the clinical triage of
to provide much of the data in a
people suffering from chronic
the patients’ data and the way
more simple way. Other algorithms
diseases such as lung disease,
in which the clinician actively
will be developed that enable
heart problems, mental illnesses
tries to reinforce the patient’s
better diagnosis and advice to be
and pain – all on the rise thanks to
confidence and make them feel
generated automatically from the
an ageing population – to self-
there is someone available who
mass of data that will be available.
manage their conditions at home.
has the time to care,” says Medvivo
About 2,000 patients nationwide have been issued with a
group chairman John Dyson. In the longer term, more and
The technology will help many patients and is likely to reduce the cost of care, he says. “We
“HomePod”, an off-the-shelf
more health devices will be
think there are about one million
consumer touchscreen tablet or
standardised and commoditised,
patients who might benefit, and
smartphone that works with a
offering growing opportunities
the cost of providing the service
range of peripheral devices such
for services such as TECS to link
would be expected to be no more
as blood pressure meters and
them together, he says. “It’s
than 50 per cent of the savings
pulse oximeters. A simple interface
possible to foresee cameras and
to existing methods of care.”
24
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
FEATURE: Life sciences
Unlocking the microbiome
O
ne of the most
and treating skin, oral and
both the potential value of this
memorable discoveries
respiratory conditions.
field to medical and consumer
in recent scientific
“This is a good example of
history was that the human
the types of collaborations in
of the world’s biggest firms to
body may contain up to 10 times
early-stage science between
invest in UK life sciences.
more microbial than human cells
industry and academia that we
(by number), living largely in
expect to drive transformational
chose London as the location
balanced symbiosis with their host.
new products,” says Elena
for one of its four new global
Understanding more about the
Fernandez-Kleinlein, lead for
innovation centres – the others
workings of this “microbiome”, and
consumer scientific innovation
are in Shanghai, Boston and
gaining the ability to manipulate its
at the Johnson & Johnson
San Francisco.
delicate balances, may turn out to
innovation centre in London.
have revolutionary implications for medical science.
“The microbiome is an emerging
science and the willingness
Last year, Johnson & Johnson
The London centre will serve as a regional hub for spotting
science that we think has broad
innovations and establishing
applicability across many areas
collaborations such as the
between medical, pharmaceutical
such as skincare, and oral and
Manchester project to invest in,
and consumer product giant
digestive health, but there is still
and accelerate, their development.
Johnson & Johnson and
much to learn. The science is in its
The hub is supported by regional
Manchester University, is exploring
early stages, and the regulatory
presence at six UK research
the potential applications of
pathway is not yet well defined.”
campuses and life science clusters
The company’s provision of
in Cambridge, Cardiff, Edinburgh,
A current research collaboration,
probiotic extracts to the human microbiome for preventing
funding and lab support signals
Oxford, Manchester and Stevenage, working with local academics and entrepreneurs to develop their own ideas or feed them back to London or the other global centres. ◼
“”
We think this science has broad applicability, but there is still much to learn
GIVING THE
ELEPHANT BACK ITS CROWN
A transformation of south London’s Elephant & Castle area is under way – including transport improvements, investment in schools and vegetable plots. At the heart of the ambitious £1.5bn project lies Elephant Park, claimed to be one of the world’s most sustainable development projects.
BUILDING BRITAIN: Southwark regneration
2013
2004
Southwark Council published
Lend Lease received planning
a development framework
permission for three sites in Elephant
for Elephant & Castle, which
& Castle – which will become
included the demolition of
Trafalgar Place, One The
the Heygate Estate.
Elephant and Elephant Park.
2007 Lend Lease was selected as the council’s preferred partner. The two signed a regeneration agreement in 2010.
2004
2007
2013
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
27
70
2,988
50
60%
At the heart of the development will be central
The number of new homes
The number of shops
The increase in tree canopy
in the scheme, at least 20%
and restaurants in the
in the area, as 1,200 new
London’s largest new park
of which are expected to be
scheme. Some will form a
trees are planted over the
for 70 years. There will be
affordable housing. 500 will
high street, relinking the area
next 10 years.
a total of 30,000 sq feet of
be ready for residents over
with Walworth Road.
new publically accessible
the next two years as part of
Of these shops, 10% will
play space, five new public
the Trafalgar Place and One
give independent retailers
squares, two new “pocket
The Elephant developments,
lower rates.
parks” and a new
already under construction.
community garden.
The rest will be built on the Elephant Park site.
6,000
£42m
The number of new jobs: 5,000
The additional household spending
in construction, and 1,000 on
expected to originate from the
completion of the development.
area each year as a result of the
Since construction started, 50
development. Employees will be
local people have already been
spending an estimated £600,000
employed on site.
per year during construction,
£30m The investment made towards
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
developments could boost local spending by £1m.
the northern roundabout, Northern
£3m
Line ticket hall improvements
The value of regeneration works
and an extension of the cycle
contracts already awarded to local
hire scheme.
businesses in Southwark.
transport improvements, including
28
while workers in the completed
BUILDING BRITAIN: Southwark regeneration
18 The number of global projects in
20%
2020
The proportion of car
– created in partnership with the
The year by which
parking spaces that will
Clinton Climate Initiative – aimed at
the Elephant & Castle
be fitted with electrical
reducing greenhouse gas emissions
regeneration should
charging points. There
across the world’s megacities.
become climate-positive,
will also be 19 ZipCar club
Elephant Park is one of them.
through innovation,
spaces and more than 3,000
technology, a commitment
cycle parking spaces.
a flagship programme of the C40 Cities Climate Leadership Group
40
to nature, and effective management of resources.
plots in each of the rooftop
30%
gardens in the South
The estimated energy
The number of vegetable
Gardens development.
savings for residents
There will also be
because of efficient building
communal rooms available
design and technology; all
for resident events.
homes will be 30% more energy-efficient than current regulations require.
£1.5m The amount of investment being made in local schools. Pupils have also become engaged in the project. For example, children in the area were granted access to the Heygate demolition site to create a series of artworks inspired by the regeneration, in the Demolition Drawing Project led by local artist Reuben Powell.
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
29
arindambanerjee / Shutterstock.com
Modi’s first 100 days By Shehla Raza Hasan
There are clear signs of change and growth in India. But the country’s new government needs to quicken its pace and extend the scale of its ambitions.
I
ndia’s new government,
highest seen in the past two years.
proposals for the government to
which swept into power
Stock markets have risen more than
shed up to 10 per cent of its holdings
after Narendra Modi led the
11 per cent since the new government
in 10 public sector units so far.
Bharatiya Janata Party (BJP) to a
came into office. While credit for the
landslide victory, is a little over 100
growth spurt goes to the previous
passage of the defence bill increasing
days old. But already the prime
regime, Modi’s government has
the foreign direct investment (FDI)
minister’s office is perhaps the
“”
cap from 26 per cent to 49 per cent
most powerful the country has seen in its post-colonial history. Its approach is measured and determined. It may also hold the key to significant changes in the system – when they come. Whether it is crafting a new foreign policy with Asia at its heart, urging foreign investors to “Make in India” or protecting the food security of millions of Indians, Prime Minister Modi is
“The latest budget did little on the retrospective taxation and transfer-pricing front”
There is also enthusiasm around the
and opening up FDI in the railways; the big push on infrastructure and manufacturing, with faster approvals for projects; reforming the Factories Act and amending labour laws; and a financial inclusion scheme, involving the banks and insurance companies, to address the needs of those who are economically marginalised.
International opinion
in complete control of the central
been making the right noises to
The new government may have an
government. And when it comes to
improve business sentiment.
eye on pleasing the voter, but foreign
scope for change, he’s not stopping
Although his first budget failed to
players are not impressed with the
at economic and foreign policy; he is
excite many, there are several notable
pace and scale of reforms. Slow
also directing efforts to bring about
changes. There is now urgency behind
decision making, and difficulties
administrative and judicial reform.
the implementation of the goods and
in doing business, remain serious
services tax scheme and changes to the
problems. The latest budget did
helped along by a growth rate in
Land Acquisition Law. A disinvestment
precious little on the retrospective
the last quarter of 5.7 per cent – the
map is also on the cards, with
taxation and transfer-pricing
Momentum is slowly building,
30
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
INTERNATIONAL: Indian update
front. And unless time frames for
argued there had been insufficient
corrective measures are set, the new
attention to food security matters
businesses is not investment but
government will fast lose its credibility.
since then, so it could not adopt
project implementation. And although
the trade facilitation package.
the central government seems to
Of particular concern is the fact that India is the only big economy
However, India has recently
Yet the biggest challenge facing
have got the plot right domestically,
that is going down in the World
signed a free trade agreement
pushing the development
Economic Forum’s competitiveness
(FTA) in services and investment
agenda forward depends on the
index. It is also the worst performer
with the ASEAN countries, dispelling
various state governments.
among the BRIC nations for ease of
growing fears that all FTAs would
doing business. Foreign businesses
be moved to the back burner.
need to be on a level playing field
The BJP rules in only nine out of the 29 states in India. Modi has to ensure that all states,
with their Indian counterparts – and
Challenging states
including those ruled by the
they argue that fiscal and regulatory
A new foreign policy is slowly
opposition parties, buy into his
policies need to be fair. Large
unfolding and so far it seems, by
vision of investment-led growth.
telecom players are disappointed
and large, Asia-centric. This policy
that little spectrum is available in the
is illustrated by Modi’s invitation
insurance bill, aimed to raise the cap
country, while the foreign energy
to all his South Asian neighbours
on FDI in the insurance sector, which
sector is concerned about the delay
for his swearing-in ceremony; state
failed to pass through the upper
in the gas price hike, which is holding
visits to Japan, Nepal and Bhutan;
house of parliament, the Council of
back investments worth £2.44bn.
and the high-profile visit of Chinese
States, which is dominated by the
premier Xi Jinping. The focus may
Congress Party-led opposition.
Doubts were also raised about
The first stumbling block was the
The battle has only just begun. ◼
change once Modi meets the US
scuttled the World Trade Organization
president at the end of September
trade facilitation talks, something that
but, in the meantime, both China and
Shehla Raza Hasan is the
had been agreed to by the previous
Japan have promised substantial aid
CBI’s policy director in India.
government last December. India
and investment into the country.
shehla.hasan@cbi.org.uk
Nisarg Lakhmani / Shutterstock.com
the government’s intentions when it
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
31
PRODUCTIVITY PAYS It’s a problem that needs to be tackled by the UK economy. But productivity – along with internal training and recognition – is what Unipart Group credits for its success. Introducing Oxford students to logistics
32
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
MEMBER PROFILE: Unipart Group
“A
t the strategic level, there
And it’s been implemented not
he opened Unipart’s newest
are only three enduring
just across the company’s global
factory-floor faculty. “They’re
sources of competitive advantage
automotive manufacturing, supply
all exactly the same: they teach
for a business: operational
chain and logistics businesses. It
the same body of knowledge in
excellence, customer engagement
has also been adopted by blue-chip
the same way, because we’ve
and innovation,” says John Neill,
clients including National Grid,
worked out what works.”
founder and CEO of Unipart Group.
Shell and HM Revenue & Customs.
“And all of those depend on growing and developing people.” That is why, Neill explains, Unipart
“We knew we couldn’t compete on low pay: we had to compete
Another important way the company disseminates its approach among staff is through the
– which was created through a
on the talent, drive
management buy-out from auto
and motivation of
Action” awards.
manufacturer British Leyland in
our people,” says
“The awards
1987 – set up what it describes
Neill. The ability
have generated
as the UK’s first “corporate
to replicate the
hundreds of
university” in 1993, to develop
philosophy –
stories and
the best-practice management
and university
systems that have become what
“faculties” –
it calls the “Unipart Way”.
across the company’s
This is a set of tools and
industries, and in every
regular “Mark in
examples of things that our staff have done using the Unipart Way, to deliver outstanding
techniques designed to boost
territory it’s in, have been the secret
customer service either internally
productivity, innovation and
of the group’s success, he says.
or externally,” says Neill.
customer service levels through better employee engagement.
He has recently returned from a trip to China where
Recent winners include a team that successfully moved a complex
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
33
data centre, which Unipart had
have survived, because the core
been running for several decades,
business upon which we depended
advice to engage their people to
to a new location. “They put
was not to going to survive.”
drive high levels of productivity
in a huge amount of planning,
“Companies want help and
This lack of a future led to the
and innovation. To this end,
professionalism, deep technical
decision to branch out and start
we’re able to implement the
expertise, fantastic teamwork, and
making and sourcing parts for all
Unipart Way in partnership
incredible hours. We don’t want
makes of cars. “After we bought out
with a wide and growing range
people to work 18 hours a day but
the company in 1987, we did logistics
of global clients,” he says.
sometimes you have to,” he says.
for Jaguar,” he says. “Again, we
“We celebrate those successes because they build a culture
got better and better at that.” Here again, the company decided
The company will work alongside these clients, and bring their people into its business, to see
of employee engagement, and
to widen its focus. “Managing the
how the Unipart Way works –
a desire among our people to
logistics and supply chains for the
an approach that Neill believes
learn and grow and develop
car industry is perhaps the most
makes Unipart different.
new skills and capabilities.”
complex job in the world. So we
For example, following a recent
said, ‘instead of just doing logistics
tie-up with National Grid in the
A wider reach
for the car industry, why don’t we
UK, the group’s consultancy
Unipart began life in the 1970s,
have do logistics for the world?’”
arm, Unipart Expert Practices,
manufacturing and sourcing
This shift in emphasis has
has been hired to work with the
car parts for its parent company
resulted in supply chain work
firm in the US. It’s further proof
British Leyland. However, Neill
for the rail industry, fashion
that the Unipart Way crosses
says, this business did not
manufacturers, and for technology
national borders with ease,
have a long-term future.
firms such as Vodafone. But there
says a Unipart spokesman.
“We were pretty good at what
was still further to go. The success
we did, but even if we had been
of the Unipart Way, says Neill,
Lesson for government
absolutely the best in the world
meant that the next logical step was
Politicians would do well to mirror
on all key metrics, we would not
to set up a consulting business.
Unipart’s focus on innovation and productivity, Neill adds. “The UK government has done a good job in creating growth at a time when the rest of Europe is flatlining,” he says. “But there is still a huge amount to do: we still have a massive deficit and debt. To get that down, we have to grow the economy. And the only way to do that is to be more competitive and productive.” The only recent blip came when a firm that Unipart sold three years ago, parts supplier Unipart Automotive, went into
UEP consultant teaching Unipart Way in the office
34
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
administration in July this year.
MEMBER PROFILE: Unipart Group
Unipart manufacturing in Coventry
Unipart had ceded control as well as majority ownership to H2 Equity Partners, but it had licensed the firm to continue using the Unipart brand. This decision appeared to have backfired when newspaper headlines appeared in the summer announcing “Unipart in administration”. “People who didn’t read the body copy were left with the residual impression that we as a company had gone into administration, which was galling,” Neill says. However, the firm got support from the CBI. “The CBI helped us write to our customers and industry leaders to explain what had happened.” The situation was both costly and put jobs at risk. “It was annoying because of the money it cost us, but it was particularly disappointing because it risked 1,400 jobs,” says Neill. Happily, he adds, many of those employees have now managed to find work elsewhere in the industry. But the saga has taught him two lessons: “Beware private equity making promises it can’t keep. And never license your brand to anybody.” ◼
FACTFILE:
Unipart Group FOUNDED:
1987 through management buy-out from British Leyland HEADQUARTERS:
Oxford STA F F :
Almost 10,000 OWNERSHIP:
Employees, managers and the Unipart Pension Trust TURNOVER:
£1,056.3m P R O F I T:
£26.2m (including joint ventures, before exceptional items) Unipart Way used in the NHS
BUSINES S VOICE | JUNE/JULY 2014
35
Charting business growth & investment around the UK Edrington, the Scottish spirits distributor, has secured planning approval for a new £100m distillery and visitor centre for The Macallan whisky brand. The new facility, in Speyside, is scheduled to open to the public in spring 2017 – and has also been designed to deliver extra capacity to meet growing demand from both domestic and international markets. Rogers, Stirk, Harbour and Partners are the architects behind the project, while
Tidal Lagoon Power has moved into a new head office in Gloucester
local business Robertsons has been
Docks, as it gets ready for construction to start on the world’s first tidal
appointed as contractor and Forsyths
lagoon power plant in Swansea Bay in spring 2015. The company’s
of Rothes will provide the copper
workforce has doubled over the past year, and a team of 40 full-time
stills. Graham Hutcheon, Edrington
employees will be joined by up to 95 people from delivery partners
group operations director, said:
Atkins and Costain. The office at Pillar & Lucy House has capacity for 150
“We are delighted that regionally
employees, which the firm is likely to need as it develops five tidal lagoons
based businesses will benefit from
in UK waters over the coming years. Gloucester MP, Richard Graham, said:
our investment, which means even
“Tidal Lagoon Power’s move to Gloucester Docks is an investment in the
greater economic and employment
future of our city. The skilled jobs in such an innovative company, that will
benefits for the local and surrounding
diversify our country’s sources of energy, is great news for our engineers
areas.” Separately, Edrington – which
and science students.”
also sells The Famous Grouse whisky – has created a global travel retail unit, based in Singapore, to capitalise on international duty-free growth.
36
BUSINES S VOICE | AUGUST/SEPTEMBER 2014
Titanic Quarter in Belfast has received planning permission for an additional film studio development. The facility will be located near the existing Titanic Studios, where the fifth season of television drama Game of Thrones is being filmed. It will feature two studios, workspace and support space. The news follows the Queen’s visit to the Game of Thrones set in June.
Tullis Russell has appointed
Thomas Dudley is sponsoring the Black Country Living Museum’s
Niall MacDonald as managing
schools membership scheme. Funding from the West-Midlands manufacturer
director for its Markinch mill,
enables more than 1,000 local children to visit the museum. The firm’s
which produces premium paper
joint managing director, Martin Dudley, said: “This sponsorship follows our
and boards for the graphics, cards,
work in putting together the UK’s first dedicated foundry apprenticeship
cover and packaging markets.
scheme and our careers-in-the-classroom initiative. We look forward to
The firm is looking to MacDonald,
working with the museum, to giving youngsters an insight into the Black
previously MD at print specialist
Country’s manufacturing capabilities and to nurturing the next generation
Oki, to “accelerate the delivery”
of engineers”. The partnership could also lead to engineering-themed
of its growth strategy. The mill
learning visits, and invitations to key stage 2 and 3 students to attend tours
recently started using the UK’s
of Thomas Dudley’s state-of-the-art foundry and plastics-moulding divisions.
largest combined heat and power biomass plant, built and run on-site by npower, to meet its
Jankel has launched an apprenticeship scheme. The Surrey-based
steam and electricity demands.
manufacturer of armoured vehicles and survivability solutions is offering two
Tullis Russell is Scotland’s largest
prospective mechanical technicians or product engineers a two-year programme
employee-owned business,
– as part of the National Apprenticeship Scheme – in collaboration with
and was named as Vistaprint’s
Brooklands College in Weybridge. Mike Mullen, Jankel’s managing director, said:
supplier of the year in August.
“Having started my career as an apprentice, I appreciate the value of internal development and training in core engineering and manufacturing skills. Jankel is working to develop its own skills base, and secure employment for anyone interested in a future in production engineering”.
Let us know your news at edit@businessvoice.co.uk
BUSINES S VOICE | AUGUST/SEPTEMBER 2014
37
Room for improvement Last year saw several changes to business reporting requirements, so how have companies responded? To find out, EY has studied the output from the FTSE 350. And as firms with December year-ends start compiling their next annual reports, BV asks Ken Williamson, EY head of corporate governance, for his advice on best practice.
38
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
MEMBER CLINIC: Annual reports
“”
The thrust of the recent changes was to ensure the report reflects the tone and character of the board Q.
There has been a lot more focus recently on what
Q.
Is the move to integrated reporting being
good reporting looks like. Have companies responded in the
accompanied by signs of more integrated thinking?
spirit of the regulatory changes, or more with compliance?
A. Companies adopting this reporting model certainly
A. I believe that many companies followed
seem to be running their businesses in a more sustainable
the spirit of the regulatory changes and made a
and integrated way. And there are clear benefits to
concerted effort to improve their 2013 annual reports
doing so, including better connections across different
and accounts (ARAs). That said, both the extent of
functions within companies; a better understanding of
change and the lead time companies were given
supply chain risks, and improved operational efficiencies;
to adopt the changes meant that some had to limit
and business planning and decision making that are
their focus on compliance – understandably so.
focused on the creation of longer-term value.
So now there is an opportunity for companies to
But it will be some time yet before we know whether
reflect, look at how reporting practice has developed,
this new reporting model creates more sustainable
and use the guidance issued since the regulations
companies, or simply reflects practices and processes
were finalised to enhance their annual reports this
already embedded into sustainable companies.
year. Companies also have to understand what their shareholders want, and how to communicate this in an accessible and understandable manner. This process will be unique for each company – so it cannot be just a box-ticking exercise. The fundamental thrust of the recent changes was to ensure that the annual report of a company reflects the tone and character of the board, and the narrative they want to convey.
“”
It is time for reports to provide better insights on what the nomination committee has done BUSINES S VOICE | OCTOBER/NOVEMBER 2014
39
Q.
How much scope remains for reporting
shareholders need to have confidence that the
innovation, around structure or format in particular?
processes for selecting, recruiting and replenishing
A.
the board are working. There is scope to think about how and where to
make disclosures in the ARA. Companies should think about structuring their ARAs in a manner that facilitates effective communication. For example, they are still structuring their report by “author” – chairman, chief executive, chief financial officer and so on – as opposed to telling the story in a logical narrative flow. There is no requirement for each executive board member to have their own section. But there are still regulatory and legal barriers. For example, despite the fact that information being
“”
Companies should explain whether it is important to have a specific gender mix to achieve their strategy
reported in the directors’ reports is very technical
Q.
and unlikely to change vastly or at all from year
reports always capture a company’s approach to this issue?
to year, it still has to be in the ARA by law.
A. There is a legal requirement for quoted companies
Q.
When it comes to governance, the roles and
Gender diversity has risen up the agenda. Should
to disclose the number of men and women they employ
expectations of the remuneration, nomination and audit
– throughout the company and at senior manager
committees are all changing. How is this being reflected
level. But reporting these figures in the absolute
in reports?
makes them less relevant and understandable.
A.
Companies should link their gender diversity statistics Given the recent changes in regulation and law,
to their strategy and business model, explain whether
audit committee and remuneration committee reports have
it is important to have a specific gender mix to achieve
been enhanced, in terms of the insights they provide on the
their strategy, and address the question “so what?” At
workings of these committees and some of the judgements
board level, the requirement is slightly different. The
they have exercised. But there is room for improvement.
UK Corporate Governance Code includes a provision
With the focus on these two committees, the
for premium-listed companies to disclose on a comply-
nomination committee has remained the poorer
or-explain basis the board policy on diversity, and
cousin – at least in a reporting sense. It is time to
to report their achievement against that policy.
put the spotlight on the workings of this committee,
This provision is supposed to be about diversity in
and for reports to provide better insights on what
its broadest sense – the mix of skills, talent, sector
it has done during the year, and the outcomes.
expertise, age, gender, ethnicity, personality types and
It is the nomination committee that is essentially responsible for board and committee composition, and
40
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
so on – rather than just gender. Some companies have narrowed down their disclosures to gender, but it is
MEMBER CLINIC: Annual reports
crucial that the broader definition of diversity is used,
Q.
to determine the effectiveness of the board as a team.
in the 2013 reporting season, and how do
Q.
you hope to see that rectified in 2014? There has also been a growing interest in companies’
tax affairs. How should this be addressed in reports?
A.
A.
What was the biggest missed opportunity
The main opportunity that many companies
missed, in my view, was to clearly articulate the Initiatives to help streamline ARAs have led to
an increase in voluntary disclosures appearing outside
links between key components of the report. After reading the key narrative sections of an ARA,
the ARA – for example, on company websites. More
my acid test is to check whether I can answer the
boards are disclosing reviews of their tax policies,
following questions with relative clarity and ease:
and reporting on the principles underpinning their tax
• How does this company make its money?
decisions. Others are also including explanations of
• What are the key inputs, processes and outputs in the value
commercial issues that influence their effective tax rates.
chain, and do I understand how its key assets – including its
Stakeholders become used to receiving the same
people and technology – are engaged in the value chain?
categories of information on tax, so it’s easier to introduce
• What does the company do better than
new tax reporting than to stop disclosures that were
its competitors, and how will it sustain this
provided in the past. Accordingly, reporting changes
competitive advantage over time?
on tax policy and related matters should be viewed
• Do the key performance indicators (KPIs)
as a long-term commitment. Where appropriate, such
specifically help to measure progress against
disclosures should meet UK Corporate Governance Code
the company’s strategic objectives?
requirements for fair, balanced and understandable
• What are the risks that may affect the successful delivery
reporting. It’s critical to ensure tax disclosures are robust
of the company’s strategy? Can I see the direct link
and correct, regardless of whether they are compulsory.
between the two?
“”
It’s easier to introduce new tax reporting than to stop disclosures that were provided in the past
• Do the KPIs that measure progress against strategic objectives also drive executive remuneration? Is this link visible? If I can answer all these questions, then the company concerned has succeeded in communicating key messages in an accessible manner in its ARA. ◼
Read more from EY’s review of the FTSE 350 reports – including best practice examples – at bit.ly/EYreporting
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
41
Mind the gap
N
early half of London’s businesses (45%) say there is a skills shortage among current employees, according to the latest quarterly CBI/KPMG London Business Survey. And two-thirds of firms are finding it difficult to recruit highly
skilled people, including technology, finance, engineering and creative specialists. The problem remains a drag on otherwise improving business optimism. It is also likely to be highlighted further in the coming months, as 66 per cent of firms said they were planning to expand their business over the next year and 62 per cent aim to increase headcount over the next six months. More than half of employers surveyed wanted to see a change in the visa system to widen the talent pool they can access, but an equal proportion have established links with schools or colleges to help tackle the issue at the grassroots. Such links are crucial, said CBI London director Lucy Haynes. “It’s so important that businesses seize the opportunity to work with schools and colleges and ensure that London’s students, who will build the capital’s future, are equipped with the skills that firms want in their employees.” KPMG London chairman Richard Reid added: “Failure to act swiftly on the skills agenda will see London slip in its reputation as a world-class business destination, to the highly educated centres of the likes of Shanghai, Singapore and Mumbai.”
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BUSINES S VOICE | OCTOBER/NOVEMBER 2014
CBI DIARY: October/November 2014
UPCOMING EVENTS
Accent on growth This year’s annual CBI conference has the theme “Growth for all”. The event will see high-profile political speakers share the stage with the Archbishop of York; Commissioner of the Metropolitan Police, Sir Bernard Hogan-Howe; Pinewood Shepperton’s Ivan Dunleavy; Damon Buffini, the founder partner of Permira and chairman of the Social Business Trust; and a range of businesses that have succeeded in overseas markets. The conference, which will be held on Monday 10 November at the Grosvenor House Hotel in London, is supported by EY and Hays as strategic partners.
First forum for MSBs
All set to become household names
A CBI event for medium-sized businesses –
Graze, Brewdog, First Utility, Spabreaks.com,
the first of its kind – will be held in London on 1
Crowdcube, We are Social and Steelite are some of
December. The MSB Summit will be led by CBI director
the companies on the shortlist for this year’s Growing
general John Cridland and António Horta-Osório, group
Business Awards. The CBI supports the Real Business
chief executive at Lloyds Banking Group.
event, which is now in its 15th year and has identified
The event, which is free to medium-sized businesses, is
many firms that are now household names in Britain –
designed for networking, and will support development
including Innocent, Tyrrells, EasyJet and LoveFilm.
and growth. Topics include change management, how
The awards will be presented on 25 November at the
to get new skills into the business, securing growth
London Marriott Hotel, Grosvenor Square.
finance, and exporting with confidence. There will be workshops led by Lloyds, BDO, Grant Thornton and Standard & Poor’s.
FOR MORE INFORMATION, GO TO WWW.CBI.ORG.UK/EVENTS
Save the date LIVING WITH MINERALS 5 Date: Monday 17 November Venue: QEII Conference Centre, London Click for more information
MEMBERS’ CHRISTMAS RECEPTION Date: Tuesday 9 December Venue: Church House Conference Centre, London Contact: grace.capener@cbi.org.uk
PUBLIC SERVICES NETWORK EVENT Date: Thursday 30 October Venue: Skyloft, Millbank, London Click for more information
CHINESE NEW YEAR DINNER Date: Thursday 5 February Venue: Victoria & Albert Museum, London Contact: karen.scott@cbi.org.uk
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
43
CBI DIARY: October/November 2014
REGIONAL EVENTS
LONDON
WEST MIDLANDS
Great Business Debate breakfast Date: Thursday 16 October Venue: CBI, Cannon Place
Enterprise breakfast: Delivering for SMEs beyond the general election Date: Wednesday 5 November Host: Cogent Elliott, Meriden
Roundtables on manifestos Dates: Friday 24 October, Thursday 6 November Venue: CBI, Cannon Place Senior executive round table Date: Thursday 27 November Venue: Panasonic, Bracknell
Contact: julia.fox@cbi.org.uk Autumn dinner with John Cridland Date: Tuesday 25 November Venue: TBC Contact: anne.cullom@cbi.org.uk
Contact: rebecca.clarke@cbi.org.uk
SCOTLAND Westminster Parliamentary Reception Date: Tuesday 28 October Venue: Scotland Office, Whitehall, London Skills seminar Date: Tuesday 17 November Venue: University of Aberdeen, King’s College Aberdeen annual dinner Date: Thursday 27 November Venue: TBC
Annual dinner Date: Thursday 16 October Venue: Athena, Leicester Contact: anne.cullom@cbi.org.uk Enterprise breakfast: Delivering for SMEs beyond the general election Date: Wednesday 5 November Host: Cogent Elliott, Meriden Contact: julia.fox@cbi.org.uk
Contact: colette.cunningham@cbi.org.uk
WALES
EAST OF ENGLAND
Annual dinner Date: Thursday 4 December Venue: Cardiff City Hall
Education conference with Ofsted’s Sir Michael Wilshaw Date: Tuesday 18 November Venue: Kaetsu Centre, Cambridge Midwinter lunch with John Cridland Date: Wednesday 10 December Venue: The Old Riding School, Hatfield Contact: anne.cullom@cbi.org.uk
SOUTH WEST Annual dinner Date: Wednesday 10 December Venue: Bristol Marriott Hotel City Centre Contact: collette.cunningham@cbi.org.uk
44
EAST MIDLANDS
BUSINES S VOICE | OCTOBER/NOVEMBER 2014
Contact: colette.cunningham@cbi.org.uk
BV Published by Caspian Media for the CBI www.caspianmedia.com
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