Business Voice - October/November 2014

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.

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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

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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.

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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.

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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

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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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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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