Business Voice - April 2014

Busines s voice | the CBI magazine

New networks With £1.3bn to spend, Huawei’s Victor Zhang thinks that the UK is a great place to invest

April/ May 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

APRIL/MAY 2014

14.interview:

Victor Zhang The Huawei UK boss is overseeing a five-year investment plan in this country – and he hopes to make a better name for the Chinese ICT firm in the process.

SOLD

8.infographic:

HOUSE TO HOME Housing activity is picking up, but employers are concerned about the shortage of affordable homes for their staff.

Regulars Cridland’s notebook: The budget was positive for business, particularly when it came to energy prices, export and investment. But the Scottish referendum poses risks 22. MANUFACTURING:

Time to return A small but growing number of companies are reshoring, bringing back to Britain the manufacturing operations that they had previously sent overseas.

But how far is this trend likely to go?

30. building britain:

drax power station

to the economy.

international:

Conversion to biomass will make the

Diplomatic disputes can disrupt

former coal-fired facility the largest

a company’s overseas growth

single renewable energy generator, with

plans, but the potential rewards

a further carbon capture and storage

make it worth persisting.

plant planned.

member news: Charting business growth across the UK. In this issue: Aquamarine Power, Gemini PR, SPTS, Adnams and Devro.

member clinic: The Department of Health’s adviser on work and health Dame Carol Black suggests what action employers should 10.EVENT FOCUS:

36. Member profile:

PSN LAUNCH

welcome to yorkshire

The challenge of delivering public services to a growing and ageing population was the focus of the debate at the CBI’s event to launch its Public Services Network.

take with regard to mental health in the workplace.

CBI diary:

Hosting two stages of this year’s Tour

Events and photo gallery. In

de France cycle race is sure to put the

this issue: looking ahead to the

spotlight on “God’s own county”.

International Festival of Business

We speak to the man leading the charge.

and the awards season.

6. guest columnist:

ALEX CHISHOLM The advent of the Competition & Markets Authority will bring a firm but fair regime to bear on business.

“As confidence has returned, so has the desire among businesses to invest more and sell what we make to the rest of the world�

4

Busines s voice | APRIL/MAY 2014

Cridland’s notebook

Best foot forward The March budget contained some welcome initiatives for businesses up and down the UK. As the economy improves, so does investment appetite. But, as they stand, the Scottish government’s proposals for independence risk jeopardising future prosperity.

A budget for business?

extension until 2015, as well as

white paper contained no full plan

The chancellor’s budget put the wind

the chancellor promising a more

for deficit reduction, no alternative

in the sails of our recovery – it was in

effective finance facility for our

plan for the currency used by an

many ways the budget for business

exporters by doubling the direct

independent Scotland, and no

we’d hoped for in order to unlock as

lending scheme and cutting its

clarity over the future relationship of

much growth potential as possible.

interest rates.

Scotland with the European Union.

One of the biggest challenges facing

These things combined risk

businesses is rising energy costs.

Scotland’s future

jeopardising the competitiveness

We needed costs to be mitigated

One of the most significant risks

and prosperity Scotland has enjoyed

and we needed to secure support

on the horizon is the forthcoming

from within our United Kingdom.

for manufacturing jobs. But we must

referendum on Scottish

also underpin necessary investment.

independence due to take place on

The reshoring agenda

The budget’s announcements have

18 September.

Following David Cameron’s speech

We are clear that the decision

on the opportunities of reshoring at

including freezing the carbon price

is, of course, one for the Scottish

the World Economic Forum in Davos

floor at 2015/16 levels.

people. But the voice of business

in January, the CBI recently hosted

pushed us down the right road,

needs to be heard in the debate

a roundtable on reshoring with the

the economy and without the right

on the economics. The CBI has

prime minister in Brussels on the day

measures in place our long-term

provided a comprehensive response

of the European Council meeting. CBI

prosperity is not guaranteed.Two of

to the Scottish government’s white

members proposed reforms to the

the vital areas where the chancellor

paper proposals for independence.

EU which would encourage them to

focussed his fire, therefore, were

We argued that the plans fail to

reshore, in line with the EU reform

business investment and exports.

provide a coherent vision for how

agenda set out in the Our Global

As confidence has returned, so

an independent Scotland would be

Future report.

has the desire among businesses to

economically better off by erecting

invest more and sell what we make to

barriers to the rest of the UK.

We also need to properly rebalance

the rest of the world.The dial needed

And the break-up of the UK’s

CBI completes City move We are now at our new home in

to turn on both, so the chancellor’s

internal market and its established

Cannon Place. The exciting new

measures have been encouraging.

rules and regulations would result

chapter of the CBI’s history began at

in increased costs and complex new

the beginning of April, so feel free to

doubling of the annual investment

rules for businesses and consumers

drop in and see us any time and make

allowance to £500,000 and its

on both sides of the border.The

use of our new member facilities.

I particularly welcomed the

Busines s voice | APRIL/MAY 2014

5

A firm but fair regime The Competition & Markets Authority takes up its powers in April. And when it comes to its dealings with businesses, the emphasis is on shared goals.

Words: Alex Chisholm, chief executive, Competition & Markets Authority

Competition and markets feature

as banking and energy, are examples

strongly in the current public debate.

of where businesses are not just the

Politicians agree competition is

suppliers but also the customers.

“Decisions will be made by expert panellists with experience of the business and commercial worlds”

a key part of lowering the cost of

At first, those dealing with us in

living for voters. Consumers and

the business community shouldn’t

consumer groups demand more of

notice a dramatic change. In bringing

it. And business representatives,

together two well understood

including the CBI, have been

and respected organisations – the

authorities. Although competition is

vocal proponents of competition

Competition Commission and the

widely accepted as a common good,

as a driver of economic growth.

Office of Fair Trading – we benefit

and having effective authorities

But when different groups put

from continuity and the best features

overseeing it is important, we also

forward their perspectives on the

of the previous regime, so this isn’t

recognise that being the subject of a

specific outcomes they want to

aYear Zero approach. However, we

merger, market or cartel investigation

see, the consensus breaks down.

would be missing an opportunity if

can create uncertainty and impose a

we didn’t have the ambition to make

considerable burden on a business

and Markets Authority (CMA) – the

this new competition body better

from, for example, the call on

UK’s new unified competition body

than what went before.

management time and resources.

This is where the Competition

which took up its full powers this

Together with a high-calibre board

The challenge is to minimise that

month – comes in. Our job is to

led by former Ofcom chair David

burden while still carrying out the

make markets work well by taking

Currie, and a senior team, I have

comprehensive and independent

an independent look at the facts, and

been looking at the improvements

investigations that businesses

intervening only where necessary

we can make in how we do our work

rightly expect and that our surveys

to improve outcomes. Our ultimate

and conduct our investigations. One

have always told us they value

focus is how consumers fare but,

important aspect has been how we

more than anything else. I believe

overall, businesses benefit from

interact with business.

the changes we are making will go a long way towards meeting

effective competition too.They need to operate with confidence that

Know where you stand

this challenge in providing greater

the playing field is level.The key

Companies won’t always welcome

certainty, speed and transparency

economic infrastructure sectors, such

the attention of the competition

for businesses and satisfying their

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Busines s voice | APRIL/MAY 2014

guest column: Alex Chisholm

“In bringing together two well understood and respected organisations, we benefit from continuity and the best features of the previous regime” frequently voiced wish to “know

for these panel members to be

process, alongside more effective

where we stand”.

part of the decision groups that

competition in the economy.

In combining the two authorities,

decide these cases. Other changes

For many businesses, their contact

we can reduce the duplication

include businesses being able to

with the competition authorities

between the first phase and, where

see the substance of a merger

will be more limited. Only a small

required, the more in-depth second

decision at phase one before

number of mergers will get the full

phase of an investigation – a

coming to the authority with a

treatment – only around 10 per cent

constant bugbear, we know – which

potential offer to resolve those

of mergers examined by the OFT

until now has been carried out by a

concerns; greater access to decision-

now lead to a full inquiry. Our market

separate organisation.This benefit

makers; and the appointment of

investigations and studies will be

is underpinned by the addition of

a procedural officer to facilitate

chosen carefully based on where

binding, and in some cases shorter,

resolution of procedural disputes

they can make the most impact, and

statutory timescales across all

without recourse to the courts.

our enforcement cases on where

phases of the process.

At the same time, we have also

there is clear evidence of an offence.

Speedier process

The vast majority of businesses

preserved the principle that this

The CMA will also have new powers

want to comply with the law. In our

second phase looks at the case with

in areas such as information-

plan for this year, we are investing in

fresh eyes. Crucial to this process

gathering, requesting co-operation,

clear and accessible information and

is the retention of the system of

and requiring merging companies to

guidance to help them do so. When

independent members, so that

remain separate until the completion

we do have to take tough action, it

such decisions are made by expert

of an investigation – as well as a

will be in the interests of the efficient

panellists with extensive experience

strengthened criminal cartel offence.

and innovative companies that

of the business and commercial

I would stress two things about these

benefit from competition as much as

worlds, as well as of competition,

new powers: firstly, the quid pro

those of anyone else. While it won’t

law and economics.

quo of having them is that we will

always be plain sailing, we believe

ensure they are used responsibly;

that by operating firmly but fairly,

decision-making on competition

and secondly, they are aimed at

we can work well with business

law investigations – previously the

achieving an outcome that all parties

towards achieving the common

preserve of the OFT – by allowing

want to see – a better, quicker

goals we all share.

We plan to strengthen our

Busines s voice | APRIL/MAY 2014

7

infographic: Home advantage

HOME ADVANTAGE The slump in housing activity accounted for a third of the six per cent drop in GDP during the recession. It’s now starting to pick up and the benefits are spreading into the wider economy. But employers remain concerned about the impact on their staff of the affordability of homes – and that won’t improve drastically unless more houses are built.

221,000

Building There is a serious disconnect between supply and demand in UK house building, which has been allowed to exist for far too long.

Estimated number of households that will be formed per year up until 2021 in England, suggesting that a supply of 200,000-250,000 new homes are needed each year to meet demand.

BUT there were only…

122,590

109,370

AND

housing starts in England in the 12 months to December 2013 (up 23% year on year but still 33% below the 2006 peak).

housing completions in the same period (down 5% on 2012 and 38% below the 2007 peak).

(Source: DCLG)

Buying After years of little movement, there are signs of recovery in the housing market – but issues remain that need to be addressed.

29.9% Increase in residential property transactions between January 2014 and January 2013.

(Source: HM Revenue and Customs)

SOLD

That was boosted by:

20,000+ people benefiting from the Help to Buy equity loan scheme, with more than 6,000 assisted by Help to Buy mortgage guarantees.

AND

A

38% rise in the number of loans made to first-time buyers between January 2013 and January 2014, to total 21,800.

Estimated gross mortgage lending for January was £15.5bn, up 33% year on year.

But house prices are rising, particularly in London:

£250,000

£475,000+

Average house price in the UK, a 5.5% increase on last year.

Average house price in Greater London – prices in the capital are increasing at more than double the UK average.

(Source: ONS)

69%

AND

of those polled in a KPMG survey said any recovery “won’t feel real” until it genuinely gets easier for young people to own a home.

Renting

18%

The structure of the UK housing market is changing. A lack of supply, high purchase prices and difficulties in securing mortgages have driven more of the population to consider renting. It means more investment is needed in the sector.

of the English housing market is accounted for by private rentals. It’s now the second largest tenure type in England, having doubled in just over a decade. (Source: English Housing Survey, DCLG)

AND

54% of respondents to a recent survey believe that more people will be renting in the UK rather than owning in 15 years’ time.

(Source: Grainger)

BUT

demand is also affecting prices.

And prices in London are

£800+

96.3%

£57bn

Average cost of renting a home in the UK in February 2014, 5.1% higher than the previous year.

higher than the rest of the UK (with Greater London figures removed) – the biggest gap on record.

(Source: HomeLet Rental Index)

Investment needed each year by 2016 to meet demand for private renting if growth trends mirror the five years leading up to 2010. (Source: Jones Lang LaSalle)

Busines s voice | APRIL/MAY 2014

9

Stand and deliver

The UK government is faced with a stark reality: it needs to deliver better public services for a growing and ageing population with less money. Whichever party is in power, whatever their approach to deficit reduction and public service reform, government cannot afford to do this alone. The CBI’s new Public Services Network aims to provide a forum for all those involved to thrash out the best solutions to the challenge.

By 2035, the UK’s population is set

These were just some of the facts

save around £22.6bn a year.

to rise to 73 million and the number

that kicked off the panel discussion

But, referring to a recent poll in

of people over the age of 85 is

at the launch event of the CBI’s new

which only half the sample of the

expected to double.Yet the challenge

Public Services Network (PSN), held

public surveyed thought public

of delivering public services to these

in March at the Hospital Club – an

services could gain from private

people is about to get even tougher:

old disused hospital turned creative

sector expertise, Newman went on

60 per cent of the Coalition’s planned

hub in London.

to pose the most common question

spending cuts are still to come, and

Channel 4 News presenter Cathy

levelled at the business community:

the Institute for Fiscal Studies has

Newman also cited CBI figures

“How do you persuade the public to

warned that after the general election

showing that 60 per cent of what

trust you?”

next year, whichever party is in

the government spends on public

power, Whitehall will see the deepest

services could be opened up to

was the first to respond. “The fact

cuts since 1948.

competition – a move that could

that we have a great British success

10

Busines s voice | APRIL/MAY 2014

CBI director general John Cridland

event focus: Public Services Network launch

Public perceptions Ben Page, chief executive at Ipsos Mori

We’ve got to 2014 with 65 per cent of the public saying that they haven’t noticed any changes to their local services, and this is despite quite major cuts to local government and many other services. In many cases, satisfaction with public services is being maintained and in some cases, such as Hackney Council, even increased. Outsourcing, the role of choice and competition have all played a part in that.

But the difficulty is what happens next: we’ve got a lot of austerity still to go. When I talk to chief executives in local government, to people running NHSTrusts or to chief constables, they say that they’ve cut what was the “nice to have” rather than the essential, but that the 2015/16 settlement will really cause challenges.

People will need to be fundamentally looking at how they can configure services – and persuading the public, which we haven’t even begun to do yet, that they may need to accept different outputs to achieve the outcomes they want.

The public might not particularly trust businesses to do it, but they are pragmatic. When we ask them whether they think the public sector, the voluntary sector or the private sector is more efficient, they tend to think there’s not a lot in it – although they think the public sector is better at achieving fairness.

But they would accept private sector involvement if the outcomes were better. They won’t necessarily embrace it – they may even resist it – but once it happens, it will be OK.

She added that “it’s clear to everybody” that the public sector needs the skills and expertise of the private sector. And she said that businesses’ role was “already immense” – according to government figures, the private sector accounts for almost half the £200bn the government spends each year on goods and services.

But she warned that businesses had to expect – and live up to – the extra scrutiny that comes from operating in the public domain, at the expense of the taxpayer.

On the front foot The debate itself focused on

story in the role of the private sector

instead of addressing the faults

transparency, competition, contract

delivering public services [it’s worth

and championing something that

management and the importance of

more than seven per cent of GDP

can help us deliver for the British

consistency in government policy. It

in the UK] is why we must nurture

citizenship at a time of austerity.”

emphasised that there was room for

Margaret Hodge, chair of the

improvement in both the private and

it, strengthen it and address the

Public Accounts Committee, is often

public sectors. No-one thought the

heard leading the attack on private

current, divisive messaging about

network because we need more

sector involvement. But at the

which side was better at delivering

dialogue and more regular debate

PSN launch, she argued that she is

public services was helpful.

about the issues. Otherwise, the

“agnostic as to who provides that

political debate gets pushed into

service. What I want to ensure that

head of the National Audit Office,

the corner, where we question the

whoever provides, provides in the

for example, credited the private

contribution of the private sector

public interest”.

sector with being open to the drive

criticisms of it,” he said.

Cridland added: “We want this

Both Hodge and Amyas Morse,

Busines s voice | APRIL/MAY 2014

11

for greater transparency, including open-book accounting. “All too often, it’s the government that hides behind commercial confidentiality because it doesn’t want the services, and the way they are delivered, to

Local government perspective Graeme McDonald, Society of Local Authority Chief Executives

There’s been a big focus in local government on strategic commissioning and improving those commissioning skills, but Solace members still recognise that there is a long way to go.There is a model of commissioning and procurement that was relevant pre2008, which enabled big strategic contracts to be developed.

The world has moved on.

Commissioning is now not just about more transparency; it’s also about being able to flex a contract as budgets and income evolve.To do that, you need to build a relationship with your partners, as opposed to with your contractors. It’s not just about the contractual management of the day-to-day contract.

Local government may be a bit further ahead than central government on this. It will vary from area to area, but I don’t think that there are the public sector or private sector discussions that you have in central government.There’s a recognition in local government that the private sector has a lot to offer us in terms of innovation. Local government doesn’t necessarily have the skills, particularly now that some of the central services it previously had in-house no longer exist.

Commissioning is less about service delivery contracts than it is about getting intelligence and insight – as much as someone who can deliver a service for less – into the public sector.

12

Busines s voice | APRIL/MAY 2014

be inspected and interrogated too closely,” said Hodge.

The participants were honest about failings during what Cridland called a “rocky 12 months”. But they also highlighted the difference between mistakes and wrongdoing.

Morse warned businesses not to take advantage of their superior commercial skills, while Cridland said government policy had to play its

to the public domain,” said Hodge.

part, alongside better commissioning

“We don’t want to end up with large

and contract management.

companies that are too big to fail, as

Concerns were raised about the commissioning process, which tends to favour larger firms over

then there is no alternative that can step in when things go wrong.”

There were also complaints about

small and medium-sized enterprises,

the difficulty of voicing concerns

especially as greater competition

about the quality of contracts during

helps to drive greater quality. “For

the competitive process. Responding

too many SMEs, it’s difficult to

to these comments, Interserve chief

compete in the contract-winning

executive Adrian Ringrose said: “It

arena and therefore their expertise

is incumbent on the private sector

– often in delivering, sensitively,

to use its expertise to help better the

good-quality public services – is lost

process and understanding – maybe

The CBI commitment

To coincide with the PSN launch, the CBI has released recommendations on transparency. These include:

• In every contract negotiation, contractors and their customers should discuss how to release information proactively and in response to public enquiries, but also make the information released as accessible and comparable as possible.

• All government contracts should be published online, as long as the customer is happy for this to happen. When a contract isn’t

event focus: Public Services Network launch

“We need to start operating as a single community” Christian Rogers, director, Capita Symonds

I don’t believe there is a public and a private sector any more in terms of delivering service. People have been moving backwards and forwards between the two for years.The private sector is completely integrated into the delivery of public sector services. It’s a reality, and we need to start operating like a single community.

The maturity of the market for some of the bigger partnership deals needs looking at, where there are currently only a few players, such as Capita, G4S and Serco. A network that allows us to understand the wider supply chain could be really good for those bigger players, and give not in the heat of competition, but at other times. We shouldn’t just sit back and wait for the government to act to make things better.”

Morse agreed: “We know it needs to be better, but we need more evidence and detail from you about that. We need you to find a way to put your head above the parapet.”

He hoped the PSN would be a forum that allowed companies to provide just that feedback.

more confidence to tax payers and government.

Within government, those people who are responsible for commissioning services are very clear about the extent to which the private sector is involved in delivering public services. But how much of the general public actually realises what savings have been delivered to the public purse as a result of the innovation, technology and investment that has come from private sector investment? If people realise that it’s saving them money and giving them better service – and actually it’s very widespread – that would lead to a great deal more understanding and acceptance.

It would also help to dispel some of the myths [within the public sector], that private sector involvement leads to massive job losses, for example.The reality is it often leads to improvements beyond efficiencies and savings; commercialisation often leads to growth and new opportunities for career progression.

published or is in any way redacted, there should be a clear explanation of why this has been done.

• In every contract negotiation, there should be a presumption in favour of open-book accounting. In practice, this means a full and frank discussion between the contractor and its public sector customer about the contractor’s profit margin. Profit information should include the value or savings being delivered.

•T he National Audit Office should be able to audit government contracts with the private sector.

This audit should take place on a structured and systematic basis, to avoid adding a regulatory burden that will increase the cost of services.

The PSN seeks to connect experts from across the sector who are involved or interested in public services and public services reform. This launch was the first

of three annual events aimed at strengthening the network of professionals interested in public services – the next in the series will be held on 10 July.

Find out more about the PSN at www.cbi.org.uk/PSN

Read the latest CBI report on public services http://www.cbi.org.uk/ media/2607468/cat_report_final.pdf Busines s voice | APRIL/MAY 2014

13

BIG interview: Victor Zhang

IT’S GOOD TO TALK Huawei is an influential inward investor into the UK and a major player in the telecoms market, so why have so few heard about the company?

Words: Pip Brooking | Photography: Peter Searle

14

Busines s voice | APRIL/MAY 2014

Busines s voice | APRIL/MAY 2014

15

BIG interview: Victor Zhang

with 14 regional headquarters and 150,000 employees of more than 150 nationalities. “At Huawei globalisation is one of our top strategies,” he says. “As is localisation. For example, in the UK more than 70 per cent of our employees are local recruits. And, more importantly,

“”

most of the members of the top management team are local. So this reflects the fact that Huawei

We are going to be more open and transparent and have more communication with all the stakeholders

tries to be a business that relies on local resources and that builds a relationship with the local community as well.”

Huawei is also 100 per cent private, owned by 70,000 of its employees. Nevertheless, as part of its drive towards transparency, it still releases financial data (audited revenue for 2013 was $39.5bn, with

Huawei is the largest inward

media, to the extent that its planned

UK sales orders totalling nearly

investor into the UK from the

expansion into the US was cut off at

$1bn). And, interestingly, as part

Chinese mainland. It’s been here

the pass. As a result, Huawei is on a

of its goal to demonstrate good

for 13 years. It provides network

mission to open its doors and raise

corporate governance, its founder

infrastructure for big players from

its profile.

Mr Ren Zhengfei now shares the role

BT to Vodafone. And it’s part way

“We are going to be more

of CEO of the board with three other

through a five-year investment

open and transparent and have

executives, who each spends six

plan that will see it spend £1.3bn

more communication with all

months in the post.

in the country.Yet, outside its

the stakeholders, governments,

customer base, the ICT firm

the media and the public,” says

Research driven

remains relatively unknown.

Zhang, who admits there are

The telecoms player also offers

“some challenges” and that a “lack

up a compelling argument against

Victor Zhang, you get the sense

of communication causes some

the prevailing opinion that “the

that this is because it has gone

misperceptions”.

Chinese copy stuff”. The company

Talking to its UK chief executive,

quietly and studiously about its own

But he adds: “We are very

spent over $25bn on research and

business, focusing on its clients’

confident because our customers

development in the 10 years to 2013

needs to “deliver the best product

trust Huawei, because they know

and $5.4bn last year alone. Half of

at the best value”. But concerns

Huawei, they understand Huawei.”

all its employees are dedicated to

over cyber security have raised

Zhang is keen to emphasise

it. Zhang himself worked in R&D at

suspicions about the Chinese

that Huawei is a global company,

Huawei’s Shenzhen headquarters

company, fuelled – as ever – by the

rather than a Chinese one –

for six years before he came to the

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Busines s voice | APRIL/MAY 2014

The Zhang CV 2011 Named chief executive, Huawei UK.

2010 Appointed general manager & chief operating officer, Huawei UK.

2004 Moved to Huawei Europe, working closely with BT as head of solution & strategy for Huawei UK & Ireland.

1998 Joined Huawei Technologies in an R&D role, after attaining an MBA from Northwestern Polytechnical university, Shaanxi Province.

Busines s voice | APRIL/MAY 2014

17

BIG interview: Victor Zhang

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Busines s voice | APRIL/MAY 2014

against its plans to date down to the UK’s enabling business environment. “We found that the

“”

UK is one of the most open and free countries to do business in, and we’ve received a lot of support from

The UK is one of the most open and free countries to do business in, and we’ve received a lot of support from the government

the government, from institutes and also from our customers.”

He explains, for example, that the government has helped ensure it can bring in experts from its other R&D centres around the world when it needs to – although no doubt Zhang will be watching changes in the visa regime closely.

Partnership model But he reserves most of his respect for the customers Huawei works with,

UK in 2004. In total, the company

by six universities, including

in the UK and elsewhere. Although

has submitted nearly 45,000 patent

Cambridge and Imperial College. It

Huawei has enterprise and consumer

applications in China and 16,200

will be working with the University

divisions, its bread and butter is the

outside it – and last year alone it

of Surrey on 5G mobile technology,

carrier networks. Across the world,

submitted more than 1,000 to the

for example.

Huawei works with 45 out of the top

European Patent Office.

Those figures are only likely

These are all part of the £1.3bn investment announced in 2012. Half

50 telco operators, reaching a third of the world’s population.

to increase with the investment

of this is being spent on bringing

Huawei is making in the UK. In

the number of its UK centres of

was BT – and Huawei is the main

January 2012, it acquired the Centre

excellence up to 10 (these include

partner behind the superfast

for Integrated Photonics from the

centres for cyber security, design and,

broadband rollout.Their relationship

East of England Development

more recently, global finance) and

has included establishing a joint

Agency, which had in turn rescued

doubling staff numbers from 700 to

innovation centre in Ipswich, where

it from closure when its US owners

1,500 (it currently has more than 920).

Zhang worked for his first three years

were pulling out. When George

The remaining £650m will be spent

in the UK and at which Huawei has

Osborne visited Shenzhen in

on procuring software, components

helped BT to achieve a broadband

October 2013, Huawei announced

and services from UK firms, including

bandwidth of more than 100MB on

it was building a £200m UK R&D

ARM Holdings.

its existing copper-wire infrastructure.

centre to focus on optoelectronics,

“We’re investing in the UK

Its first major client in the UK

Huawei also has a joint innovation

device design and software

because we are confident in this

centre with Vodafone, where it is

development, with 300 high-tech

market,” says Zhang. His praise

working on a SingleRAN (radio

roles to fill. Two months later, when

extends beyond the country’s

access network unit) or base

the prime minister led a trade

world-class universities and its

station that can support all the

mission to China, it announced a

technical and IT talent, and he puts

technologies from 2G to 4G and

£10m research fund to be shared

the company’s over-achievement

all the frequencies from 900Mhz

Busines s voice | APRIL/MAY 2014

19

BIG interview: Victor Zhang

Consumer comforts The consumer business is the 27-year-old firm’s youngest division, but it’s one that is

“”

Huawei has helped BT to achieve broadband bandwidth of more than 100MB on its existing copper-wire infrastructure

growing fast. Last year, it achieved revenues of nearly $9bn

to 2.68Ghz. “This can protect their

investor into the UK seriously, and

globally, ranking it number three

investment for the long term,” says

is already working with UKTrade &

in the industry, on that basis,

Zhang. “In all our innovation, the

Investment (UKTI) to improve ties

after Samsung and Apple. It’s

number one target is to provide

between the two countries.

gone from being a white-label

the customer with more business

manufacturer to a brand name

benefit for less investment.”

in its own right – although it will

Customer-focused innovation

to host the first SME programme in Shenzhen, where it introduced UK

take time for that name to stick.

provides a big business benefit

participants both to companies in its

Last year it launched the Ascend

for Huawei too. “The partnership

own supply chain and to different

P6 in London, the slimmest

between Huawei and our

industries to help them to access the

smartphone in the world.

customers actually gives us a

Chinese market. It is also sharing

lot of confidence and plenty of

its experience with other Chinese

challenge the dominance of Apple

guidance regarding the business

companies in an effort to persuade

and Samsung, Zhang replies:

direction,” explains Zhang.

more to invest over here. Zhang also

It is further evidence that

wants more of them to join Huawei’s

someone. Our challenge is to

Huawei’s business structure

undergraduate student scheme, now

provide our customers with the

is not all that Chinese. Zhang

in its fourth year, which will have

best product and the most cost-

explains that most of its resources

funded work-experience placements

effective offers.”

are focused on the customer

in China for 63 second-year students

engagement and support teams.

by the end of 2014.

Asked how it planned to

“Our strategy is not to challenge

He is confident that its focus on the quality of what it offers will

“It’s a very frontline organisation,”

automatically attract consumers,

he says. “And the company gives

that Huawei wants to build

but adds that Huawei will work

the customer team full authority

a relationship with the local

with the carriers to build its

to meet with and deliver solutions

community, it co-hosted the CBI’s

footprint in the market. It did,

quickly to their clients.” Even big

inaugural Chinese New Year dinner

however, embark on its first

decisions won’t necessarily make

in London in February.

marketing effort last year and,

their way back to China.

perhaps rather suitably for its

And reflecting Zhang’s sentiment

“Because we have received the support from the community, from

“global, local” positioning,

Influencing investment

the government here, we need to

it has signed as Arsenal FC’s

But Huawei UK is far from shaking

try to find a way to give back and

smartphone partner.

off its Chinese heritage. It’s taking its

return this support,” he says.

role as the biggest China-mainland 20

Last June, it worked with the UKTI

Busines s voice | APRIL/MAY 2014

Busines s voice | APRIL/MAY 2014

21

MADE IN

Britain

By Ben Hargreaves

22

Busines s voice | APRIL/MAY 2014

MANUFACTURING: Reshoring

After years of outsouring there is a small but definite trend of British companies bringing their manufacturing back home, or reshoring, as it’s called. Will this trickle turn into a storm?

Busines s voice | APRIL/MAY 2014

23

RDM’s new interior trim shop, where work on the Morgan three-wheeler interior takes place.

The creation of 25 new jobs, an

low-volume automotive work,

a tough time during the financial

investment of more than £400,000

and partly dedicated to producing

crisis. He adds: “Now we are

in production machinery and a

a rechargeable torch for local

expanding and times are better.

20,000 square foot production

manufacturer Jaguar Land

And we find we’re part of this trend

facility were announced at the

Rover: a job that RDM Group had

of reshoring.”

turn of the year by an automotive

outsourced, until recently, to China.

supplier in the West Midlands.

RDM Group isn’t the only one.

RDM director Miles Garner says

Indeed, the concept of moving

the logic behind bringing the torch

production from overseas back

the reason for this success may

work back to Britain from China was

to the UK was also on the Prime

be significant, because it involves

simple: the quality was not all it

Minister’s mind at the World

the return of manufacturing work

could have been, the cost of having

Economic Forum in Davos in

to Britain that had been carried

the item manufactured overseas had

January. In his speech to the

out in low-cost economies in Asia.

shot up and the difference in time

forum, David Cameron identified

The investment, by RDM Group,

zones made communication difficult.

Small beer, you may think. But

which will see a new factory kitted

“As [overseas] companies try to

out with state-of-the-art machine

keep up in the domestic market, I

tools and computer-aided design

believe some are struggling with

software, is partly devoted to

exports,” says Garner. Like many

producing special vehicles and

automotive companies, RDM had

24

Busines s voice | APRIL/MAY 2014

Together, MAS and the UKTI have launched Reshore UK, a service to help companies bring production back to the country

MANUFACTURING: Reshoring

what he described as a “small but

survey of small and medium-

British, born and bred

sized businesses found that more

Some companies choose not to go

than one in 10 has brought back

offshore at all. One such is telecoms

to Britain some production in the

firm Daisy Telecom, which is based

discernible trend” in which jobs that had been offshored were coming back to Britain. He added: “A recent

in Nelson, Lancashire. It has decided

past year; more than double the proportion sending production in the opposite direction.”

On firm ground Given that the threat of offshoring

to retain all its operations in the UK. Chief executive Matthew Riley says he was determined to provide employment in the region – and especially for his home town of Burnley.

“We simply decided we would give our customers a better experience by staying onshore,” he says. It is not a decision he thinks will ever be reversed, other than in employing technicians with particular expertise overseas

can cause social and economic

to develop software. Riley is even determined that the company’s cloud

consternation – witness mobile

computing services are all – despite their ethereal nature – geographically

phone giant O2’s spat with the

anchored in the UK. “And we are finding that is a selling point for our

unions over alleged plans to

customers – they want to know where their data is being stored.”

offshore call centre jobs last year

Riley adds: “I don’t ever see any parts of the core business of Daisy

– any reversal of seeking cheaper

being offshored. We have all had shocking customer services experiences

partners overseas would be

when you end up calling overseas. For our business customers, they

welcome.The creation of fresh jobs

don’t want to be kept waiting for 40 minutes by a call centre.They just

for UK plc would also be welcome.

Certainly, Stephen Barr, head of the Manufacturing Advisory Service (MAS), thinks so. He thinks that Cameron’s speech picked up on a trend already observed by MAS in its barometer of SME manufacturers.

Barr says: “We send out a

want whatever issue they have to be fixed.”

In addition to the language barriers inherent in operating call centres for British customers overseas, Riley also believes such a move cannot replicate the values of the business. “I think it is language, but it’s also culture. You create your own culture within your company, which is very difficult to outsource.

“The customer service people need to be able to walk around and chat to installations, to the engineers, to credit control.That creates a culture within a company that is important, and difficult to put a value on.”

quarterly barometer survey and have had responses specifically about reshoring. A surprisingly

Together, MAS and the UKTI have

been reshored in the UK since

large number of companies had

launched Reshore UK, a service to

2011 – modest fare. According to

either done some reshoring, or

help companies bring production

the Institution of Mechanical

were to planning to in the next

back to the country. It will offer a

Engineers, 28 per cent of

few months to a year. It got us

matching and location service, as

companies it questioned said they

thinking that there was something

well as access to advice, to both UK

were still offshoring manufacturing

in this: we put those ideas to the

and international firms.

capability, compared to just 20 per

Department of Business, Innovation

It is not a matter of huge

cent who were reshoring.

& Skills, and the end result of that

numbers or sweeping trends. For

was we started talking with UK

example, UKTI has identified about

probably expect little in purely

Trade & Investment (UKTI).”

1,500 manufacturing jobs that have

financial terms – a survey by

Companies that do reshore can

Busines s voice | APRIL/MAY 2014

25

The best of both Fashion clothing manufacturer Rapanui is combining the best of British with the best of overseas. The company, based on the Isle of Wight, used to work with a number of suppliers in the UK and overseas to produce its garments.

It recently took the decision to rationalise production at a dedicated facility

The billions being devoted to the aerospace sector by the government might make it attractive for companies wanting to expand production in the UK

on the Isle of Wight, investing nearly £100,000 in a screen-printing facility in Cowes, which has just opened. Organic cotton is produced in India and then

manufacturers’ organisation the

cut, printed, embroidered and finished in Britain.

EEF found that more than 50 per

Simplifying the supply chain for Rapanui products has saved money

cent did not increase turnover,

and reduced waste, says co-founder Rob Drake-Knight. “There are fewer

although some managed to

middlemen and that means our products are cheaper,” he says.

increase profitability by up to 10 per

“We’ve taken anything that could be done in terms of manufacturing

cent (and a few by more than 15

and brought it here: the only things that aren’t are things we are physically

per cent). “It will take another year

unable to do. For example, we would not take raw cotton from India and

to determine what the genuine cost

do the spinning on the Isle of Wight – it just wouldn’t make sense.”

is of doing things in the UK,” says

Textiles is not an industry that one normally associates with the UK – despite the heritage of the Industrial Revolution. But John Lewis recently

Garner of RDM Group.

Encouragingly, however, very few

announced it was also planning to bring textile manufacturing back to the

companies reported decreases in

UK. Could a renaissance be on the cards?

turnover or profitability following

“The UK, and especially the North, has a rich history in textiles – so it would be nice to see a little bit of that revived,” says Drake-Knight.

the decision to bring work back.

And cost, time and quality are the issues most repeatedly reported to MAS in the decision to reshore, says Barr. “Wages are levelling up,” he says. “It is getting more expensive when you take freight into account – which takes away the myth about why it was attractive to offshore in the first place.”

Seizing the initiative ADS, which represents the British aerospace, defence and space industries, has indicated that reshoring is on its radar – for the first time in rather a while, if ever. At any rate, a survey of its members’ efforts to bring work thought to have been lost overseas back to the UK is set to take place this month, the association has revealed.

“The survey should highlight

26

Busines s voice | APRIL/MAY 2014

MANUFACTURING: Reshoring

Why manufacturers are reshoring Quality

52% Intellectual Property 32% Maintaining unit costs 30% Shipping costs 28% Exchange rates 18% UK skills better 7% Source: Institute of Mechanical Engineers

In the automotive sector just a third of all parts that go into the average Britishbuilt car come from UK suppliers; in Germany, the figure is double that

sector: Brent Cheshire, UK chairman for Dong Energy, has previously told Business Voice that the company would procure more in the UK, if only it could.

The CBI is also calling for the expansion of the Advanced Manufacturing Supply Chain

aerospace initiatives, such as the

Initiative (AMSCI) – and emphasises

Aerospace Technology Institute,”

the importance in raising

Kakkad says.

awareness among companies in

In its industrial strategy report, the CBI has highlighted the need to strengthen British supply chains

the supply chain of the support that exists for them.

But Barr of MAS argues that

in areas such as aerospace in the

there is a perception of “the great

face of fierce global competition.

British brand winning through”.

Companies such as Rolls-Royce,

And RDM’s Garner believes Jaguar

the aero engine maker, are

Land Rover generates extra kudos

working through initiatives such

by using components designed

as Sharing in Growth to improve

and manufactured in Britain. In that

the performance of an elite group

context, the reshoring trend, however

of suppliers. It is hoped this will

small, could help to make the UK’s

mean British companies retain and,

manufacturing revival sustainable

ultimately, expand their work in the

– as long as it prompts even greater

global aerospace market, which,

levels of support to nuture the

some of the anecdotal evidence

even if no new orders were made

country’s supply chain capabilities.

that it is taking place among

today, has about a decade’s worth

our members,” explains Jeegar

of production in the pipeline.

Kakkad, chief economist and director of policy at ADS. He adds that the billions being

But there are still huge areas of concern. In the automotive sector, for example, just a third of all parts

devoted to the aerospace sector

that go into the average British-

by the government might make

built car come from UK suppliers;

it an attractive environment for

in Germany, the figure is double

companies wanting to expand

that. Dr Wolfgang Schreiber, chief

production in the UK – after all, there

executive of Bentley Motors,

is little point bringing manufacturing

has urged the government to

back if there aren’t the skills or

focus on the “simple supply

capacity to deliver the goods.

chain” – making basic metal

“We are expecting some

parts, sealants and rubber parts

announcements where companies

– as well as mechatronics, and

are investing in new capacity at

not just invest in research for

home because of what they’ve

next-generation technology.

seen in terms of the government’s

It’s a similar story in the wind

Read the CBI’s industrial

strategy report www.cbi.org.uk/media/2353489/ raising_the_bar.pdf

Find out more from the Manufacturing Advisory Service www.mymas.org

Busines s voice | APRIL/MAY 2014

27

Managing threats to business as usual In today’s globalised business world, diplomatic disputes at a high level can throw a curveball into a company’s international growth trajectory. But despite such obstacles, the opportunities that overseas markets offer can make the effort worth the risk.

Words: Sarah Knaus

28

Busines s voice | APRIL/MAY 2014

International: China trade mission

to take actions to prepare for any eventuality and protect against potential losses.

Be prepared Importantly, it is not just businesses that invest in, or export to, foreign countries that can be affected by international upheaval. Those that import natural resources, talent or goods from outside the UK, or that partner with foreign companies, must also think about the repercussions that could affect their bottom line.

Although these risks may seem insurmountable With greater connectivity and integrated global supply

for companies seeking to expand their international

chains, British businesses are exposed to any number of

footprint, many of the CBI’s members will tell you that the

international pressures. Whether it is the ongoing debate

preparation and up-to-date intelligence are necessary for our businesses to navigate these minefields

over the future of Crimea, Japan and China’s conflict over a series of islands, or the meltdown of diplomatic relations between India and the US over the arrest of a consular official, these volatile situations have the

size of the prize in key foreign markets makes the effort

potential to spill over into the commercial space.

worthwhile. As the CBI laid out in its report The only Way

Often, these diplomatic spats remain just that, with

is Exports, sustaining the UK’s economic recovery relies

little impact on cross-border business relations. However,

on an export- and business investment-led recovery, with

as we are witnessing with the Crimean situation,

an emphasis on expanding the presence of UK business

when diplomatic tensions escalate and tools such as

in emerging markets.

sanctions are brought into the fold, the ability to carry on with “business as usual” can be threatened.

As we go to print, the G7 leaders are planning to meet

Only time will tell whether the current international hotspots ultimately bubble over into doing business.

Regardless of how these situations develop, preparation

in Brussels to discuss future joint actions to counter

and up-to-date intelligence are necessary for our

businesses with investments or other interests in either ukraine or russia are watching to see what might happen

businesses to navigate these minefields.

Russia’s annexation of Crimea. What the sanctions will

Please contact us if you have any concerns that you

look like, and how Russia could retaliate against any

would like voiced.

The CBI is working with government to ensure that our members receive timely intelligence that can help smooth the progress of making business decisions.

action, are still very much up in the air.

Businesses with investments or other interests in either Ukraine or Russia are therefore watching and waiting to see what might happen. The higher the tensions escalate overseas, the more likely it is that businesses will begin

Sarah Knaus is senior international policy adviser at the CBI. sarah.knaus@cbi.org.uk

Busines s voice | APRIL/MAY 2014

29

building britain: Drax Power Station

Drax is the UK’s largest power station. Based near Selby, Yorkshire, it’s also set to become the largest single renewable electricity generator, as it is in the process of converting three of its six generating units to burn sustainable biomass in place of coal. And the developments don’t stop there – plans for the neighbouring White Rose carbon capture and storage (CCS) project are gathering pace.

30

Busines s voice | APRIL/MAY 2014

£650m+ The cost of converting three of Drax’s six generating units to sustainable biomass, including related infrastructure and investment in two pellet plants and a port facility in the US. A recent £75m loan has been underpinned by the UK guarantee scheme.

4 The number of biomass storage domes on site, capable of storing a total of 300,000 tonnes of pellets.

1.6m tonnes of biomass were burnt in 2013, compared to 8.5m tonnes of coal, after the first converted generating unit went live in the spring, saving 2.7m tonnes of CO2. It is planned that all three generating units will be running on biomass by 2016, saving approximately 10m tonnes a year.

Busines s voice | APRIL/MAY 2014

31

building britain: Drax Power Station

80%

100+

Carbon savings that can be delivered through sustainable biomass, relative to coal, across its full life cycle.

Local farmers are also involved in the supply of energy crops and farming by-products, such as straw, for use as biomass.

1m+ Number of homes that could be supplied with renewable energy by each converted unit. Currently generation capacity is only 15MW lower for sustainable biomass than it is for coal, and with further investment and the right support from government even that difference could be ironed out.

200 Number of purpose built rail freight wagons, designed by Lloyd’s Register and built by WH Davis to keep the biomass dry, move more of it at a time and speed up delivery. They will carry biomass supplies from the ports of Hull and Immingham.

32

Busines s voice | APRIL/MAY 2014

2m tonnes

2020

Amount of CO2 that will be

20m tonnes

Date it is hoped the CCS plant

captured at the White Rose plant

The capacity of the National

will be operational, providing low

per year – 90% of all emissions

Grid pipeline – enough for other

carbon electricity to more than

produced. The carbon will be

projects to connect to the Humber

630,000 homes.

stored in geological formations

CCS cluster in the future.

below the North Sea bed.

1,000 Number of construction jobs that will be created by the project, which is expected to last 50 months. A further 954 jobs would be created by the proposed

60 Once up and running, there will

£2bn

be 60 new operational jobs at

The potential investment in

the plant, and further indirect

the region as a result of

roles relating to supply and

the project.

pipeline.

maintenance.

WHITE ROSE CCS PROJECT Capture Power – the consortium involving Drax, Alstom and BOC – was awarded a front end engineering and design (FEED) contract for the planned CCS demonstration project in December 2013.They now have two years to nail down plans for the proposed 426MW power plant, which will sit adjacent to the existing power station, ahead of the final investment decision.The contract also includes the planned development of a CO2 transportation and storage solution – the Yorkshire Humber CCS Pipeline – to be undertaken by National Grid.

Busines s voice | APRIL/MAY 2014

33

Charting business growth & investment around the UK Gemini PR & Marketing

Adnams

Devro

has appointed its first

has appointed Nicky Dulieu as

has announced a £50m

apprentice. Rachel Kelso, 18,

non-executive director, effective

investment in a new

joined the Nottingham-based

from 1 May. Dulieu announced

manufacturing facility in China.

PR firm earlier this year under a

she was stepping down as chief

The London-listed sausage

12-month, level 2 apprenticeship

executive of fashion retailer

casing firm has invested £70m

scheme, with the qualification

Hobbs in February. She has a

in upgrading technology and

provided by Training Services

financial background,

creating 20 per cent additional

2000. She then has the option of

joining Hobbs in 2006 as finance

capacity over the past three

undertaking a level 3 apprentice-

director from Marks & Spencer,

years. It is now targeting more

ship for a further 12-18 months.

where she was finance director

strategic investments to reduce

Her role includes writing and

of the food division. She will

its manufacturing costs and

issuing press releases, assisting

continue at Hobbs as non-

extend its reach into emerging

at events, research and

executive director. Adnam’s

markets. The company has just

administrative support. Kelso

chairman Jonathan Adnams,

completed the expansion of its

said: “With little experience of

said: “We are delighted to

plant in the Czech Republic and

an office environment, I found

welcome another high-calibre,

is also investing £40m into its

that I was unsuccessful with

independent, non-executive

South Carolina facility. China is

other job applications, and that’s

director to the Adnams board.

now the world’s biggest

why the apprenticeship scheme

Nicky will bring a wealth of

collagen casing market. The

is so valuable. It breaks the cycle

experience from her finance

new facility in Nantong, near

of unemployment that can so

background in the corporate

Shanghai, should be up and

easily trap willing and capable

sector and, most recently, in a

running in 2015, with space to

workers who simply have a lack

leading role at a high-quality

expand in line with future

of experience. I would

fashion retailer.”

market demand.

recommend an apprenticeship to anyone, as they have a great deal to offer.”

34

Busines s voice | APRIL/MAY 2014

CBI members: News in brief

Aquamarine Power

SPTS Technologies

founder Allan Thomson has been awarded the Saltire

is opening a new office in Korea. As a supplier to the

Prize Medal for his outstanding contribution to the

semiconductor industry, the company has worked with

ocean energy industry. Thomson founded Wavegen,

clients in the country for several years, but increased

the world’s first wave energy company, in 1991, and

demand for its products have prompted it to expand.

Aquamarine Power in 2005. The company has since

The new office, in Pangyo, will be a base for its sales,

commercialised the Oyster wave power technology.

field process and engineering staff. The company already

The medal was presented by Scottish minister for

has Asian offices in Taiwan, Singapore, China, Japan and

energy and climate change, Paul Wheelhouse. He

Malaysia. Its rapid growth has also led the Welsh govern-

said: “The Saltire Prize is an excellent catalyst for

ment to name it one of its anchor companies. Economy

creativity in the sector, which it is hoped will help

Minister Edwina Hart said: “SPTS is a strong example of

Scotland capitalise on our extraordinary wave and

Welsh manufacturing excellence at its best, creating em-

tidal stream resources.”

ployment for highly skilled talents within the technology sector here.”

Let us know your news at edit@businessvoice.co.uk

Busines s voice | APRIL/MAY 2014

35

God’s own country In a few months, the 2014 Tour de France cycle race will depart from Leeds. At the end of last year, Lonely Planet declared Yorkshire as one of the top destinations in the world to visit. Does the rest of the UK have something to learn from the region’s marketing success?

36

Busines s voice | APRIL/MAY 2014

member profile: Welcome to Yorkshire

shout about it.

“We can be as creative as the bank account allows,” he says.

Welcome to Yorkshire has less than £2m a year to spend on marketing.

“We get no government funding, so all the money is from the aggregation of membership fees, the support of corporate Yorkshire, and some support from forwardthinking local authorities.”

Does that mean the UK doesn’t take tourism as seriously as it should? “It takes it more seriously than it might have done in the past, especially because of London 2012,” he says. “But if you compare it with Yorkshire Air Museum, Elvington, York

Australia, which has a fraction of the UK’s population, we don’t take

“Yorkshire 2014 is not the

was already responsible for brewing

it anything like as seriously as we

Yorkshire of 1974,” says Welcome

one-third of the nation’s beer.

could. You could argue that tourism

In fact, Verity – who is a sheep

is more important to the Australian

Verity. “Things have moved on.”

farmer in his spare time – believes

economy, but that’s the chicken and

The clichés about the north of

that Yorkshire has all the necessary

the egg, isn’t it?”

England being all flat caps and

ingredients to successfully attract

whippets are now opposed by the

visitors: shopping, culture, food

biggest sector, worth more than

gleaming new shopping arcades

and drink, national parks, coastline,

£7bn to the economy each year.

in Leeds, the winter gardens in

castles and stately homes, sporting

“Probably the more significant

Sheffield, and the fact that Hull is

grounds for cricket and horse-

stat is that 250,000 jobs rely on

gearing up to become the European

racing, and good transport links to

it,” says Verity. And although the

city of culture in 2017. The region

London and the Continent. He just

region weathered the credit crunch

has also proclaimed itself the

doesn’t have much of a budget to

relatively well – capturing more

to Yorkshire’s chief executive Gary

Tourism is Yorkshire’s third-

European capital of sculpture, with the opening of the Hepworth Wakefield art gallery and the Yorkshire Sculpture Park, as well as Leeds’ Henry Moore Institute. And Yorkshire now has more Michelinstarred restaurants than anywhere else in the UK outside London. It

“Probably the more significant stat about tourism in Yorkshire is that 250,000 jobs rely on it”

Scarborough bay, North Yorkshire

Busines s voice | APRIL/MAY 2014

37

member profile: Welcome to Yorkshire

Gary Verity V with the peloton on the Champs-Élysées

of the domestic travel market – the weather itself made 2012 a particularly tough year, he says.

“We are working closely with UKTI to make sure that businesses across the UK have the platform to make the most of this”

Tour de force Considering the importance of

will be the biggest event to hit the

She had said that in all overseas

tourism to the region, and the

north of England; the biggest event

surveys, perceptions of the UK

lack of budget to push it, winning

to ever happen in Yorkshire.”

fall down on how friendly it is and

the Tour de France cycle race’s

And, as the third stage of the

on its countryside. Two days of

Grand Départ has been a profile-

race runs between Cambridge and

television coverage of the Yorkshire

raising triumph for Welcome to

London to get the riders back to

Peaks and Dales will go some way

Yorkshire. But even here, Verity had

France, it’s not just Yorkshire that

to addressing the latter concern.

to put in the winning bid without

will benefit.

government backing. “That’s now

Verity is expecting the tourism

In addition, cycling is popular in mainland Europe, Yorkshire’s largest

water under the bridge, but it

legacy to be “very strong indeed”.

target market – and the race route

certainly didn’t make our job any

Before he met Business Voice in

will be permanently waymarked, so

easier at the time,” he says.

Welcome to Yorkshire’s offices

enthusiastic cyclists can follow it for

in the regenerated Holbeck area

years to come.

However, things have improved in terms of government support,

near Leeds railway station, he had

Verity adds. “We have some good

been talking to an official from the

Business benefits

supporters in government now. This

Foreign and Commonwealth Office.

Verity adds that the Tour will also

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Busines s voice | APRIL/MAY 2014

White Scar Caves, Yorkshire Dales National Park Busines s voice | APRIL/MAY 2014

39

Hull Marina

be great for business. Welcome to

sponsoring the Tour Makers – a

to make sure businesses across the

Yorkshire has already hosted more

volunteer initiative that aims to

UK have the platform to make the

than 100 roadshows, talking to

repeat the success of the Games

most of this,” says Verity.

10,000 businesses about what the

Makers at the London Olympics –

opportunities are. “A lot of Yorkshire

and from Yorkshire Water, which is

to be had. Verity was keen to bid for

businesses are looking to engage,

supporting the Yorkshire Festival

the Tour in the first place because

and in innovative and creative

– 100 days of art and culture

he knew it would make a difference

ways,” he says.

leading up to the race. UK Trade &

to the region’s confidence – as

Investment is involved, too. “We are

happened in Manchester after the

working closely with UKTI as well,

Commonwealth Games in 2002.

Headline support is coming from supermarket Asda, which is

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Busines s voice | february/march 2014

There are other, less direct, gains

£7bn

Value of tourism in Yorkshire & Humber

0.25m Tourism employees

£100m+

Predicted value of Tour de France to Yorkshire

216m

Number of visits each year

“There are not many sectors other than the visitor economy where you could be a general manager by the time you’re in your mid-20s” Positioning “Yorkshire as a modern and vibrant place to visit, live in or invest in” makes it easier for businesses to attract and retain staff, he says. “They will want to eat in the same pubs and restaurants, visit theme parks, walk in the national parks. If those places are boarded-up,

Ye Olde Starre Inne, York

crumbling down, third-division, it’s not great. Businesses can see we are all in this together.”

He welcomes the corporate support that Welcome to Yorkshire gets as a Yorkshire sculpture park

result, but returns to his point about

The visitor economy has certainly

government funding. “I’ve always

got Verity hooked. Before joining

said the support to the sector should

the organisation five years ago, his

be on a match-funded basis,” he says,

career had spanned 18 years with

adding that joined-up thinking and

Royal Insurance and two years in

working together would strengthen

Bradford & Bingley’s retail-property-

the outcome for the region. And

services division, as well as stints

he believes the visitor economy

as managing director of Prontaprint

should be better valued as a route

and Kall Kwik, and at Johnsons

to rebuilding the UK’s economy as

Cleaners. But ask him what his

a whole and rebalancing it from

favourite part about Yorkshire is and

south to north. “There are not many

he replies simply: “Home”.

other sectors where you could join

He also jokes that the people in

as a young person and be a general

Yorkshire are “generous of spirit –

manager by the time you’re in your

even if not in kind all the time”.

mid-20s,” he says.

Busines s voice | february/march 2014

41

Mental health in the workplace Focus is increasing on businesses’ responsibility for their employees’ mental wellbeing. This year the government published an action plan on the issue and the OECD released a report highlighting the extent of the problem in the UK. Dame Carol Black, adviser on work and health at the Department of Health, suggests what action employers should take.

Q.

Why should employers worry about the

are starting to put something in place. There are very

issue of mental health in their workplaces?

good examples of it in GSK, BT, EDF Energy and BP. EDF

A. Mental ill health costs the UK £70bn every year,

has a very good online resource programme that an

accounts for 52 per cent of the loss in employment

are experimenting with online cognitive behavioural

and productivity and 47 per cent of healthcare costs.

therapy. Some also extend help to employees’ families.

Employers who don’t care will have staff not performing

employee can go through at home. Some companies

It becomes more difficult if you’re a medium sized

as well as they could, as well as a lot of absence.

or small company. But being reasonable with people,

Caring for people’s resilience or positive mental health

respecting them, listening to them and giving them a

is important if you want to meet your bottom-line

sense of autonomy doesn’t have to cost much.

productivity and quality of product.

If you have some resources, I would spend it on line-

Q. Are employers to blame for some of

manager training. ACAS does some fantastic courses,

the problems?

Health First Aid trains employees to look out for each

A. Core managerial behaviour contributes hugely

other, which is very powerful – if you’ve got a mental

to mental ill health. That’s not to say it’s the managers’

a colleague to start with.

fault – they are promoted for their technical skills, but

for example, as does Mindful Employer. And Mental

health problem you may be more comfortable talking to People often forget that physical activity also helps

they aren’t given training in how to work with people

your mental health. A walking group at lunchtime

and how to be sensitive to the knowledge that people

doesn’t cost money. You can encourage people to bicycle

perhaps are not themselves. Good management and

if that’s appropriate. But I think it is the mindset and the

good leadership will reduce those big numbers.

company culture that starts you on this road, with some

Q. What proportion of businesses have a clear

pretty good rewards.

mental health policy or some sort of training in place?

A. Increasingly, large companies with global reach 42

Busines s voice | APRIL/MAY 2014

Q. Much of what employers do now is voluntary, should there be more coercion for them to help?

Member clinic: Mental health in the workplace

A. You can’t easily mandate wellbeing but I would

they might need a graduated return to work, some

mandate training line managers. To give an example, the

ongoing cognitive behavioural therapy for a while or

NHS has a whole range of training programmes available

support from employee-assistance programme providers.

to their line managers, including one that covers this

The most difficult thing is that when you go back to work

whole area; but voluntary uptake is only 19 per cent.

after a knee replacement everybody knows how to talk

Q. Is the government helping?

A. One of the big things it’s doing is the ongoing

to you; if you go back after a mental health problem, a good manager will have tried to ensure that colleagues understands the situation and can be supportive.

campaign about the stigma of mental health – it’s still a

Q. How do you think we can make more

huge problem in certain companies. It’s also put more

progress on issue of mental health in the

money into Improving Access to Psychological Therapies

workplace?

(IAPT), which it started three years ago. I think that this needs to work alongside employment advice. IAPT

A. We need to get real support for the health and

may help you feel less depressed, anxious or stressed,

wellbeing agenda from organisations like the CBI

but if that stress caused you to leave work temporarily

and Federation for Small Businesses, the Chambers

then it would be much more effective if there were an

of Commerce. The government listens to them. This

employment adviser to make sure there was nothing

has been difficult as the issue has been portrayed

wrong at work – there’s no point sending you back into

as something soft and fluffy, a matter of social

the same situation.

responsibility. But there are good examples of companies

Q. Is enough being done to avoid job loss

that have saved money or have better quality or better

because of mental health issues?

A. The ideal would be to try and make adaptations at work to make their job better, or offer an alternative job,

products by getting this right.

Q. How should a company start to set up a help scheme?

but medium and smaller sized companies in particular

A. Look for good examples of companies the same size.

may not be able to do that. If that’s the case it is better

Ask your employees what they want – you need a good

to know sooner rather than later because once someone

survey and potentially some focus groups. Look to the

has been out of work for 12 weeks the chances of them

places that you’re likely to find good advice because you

going back to their job is less than 20 per cent.

need to do it in steps; you can’t do this all in one fell swoop.

Employers should do everything in their power to help

I’m in the process of this for my own organisation,

people because those who have severe mental health

Newnham College, Cambridge. I asked ACAS and our

problems are usually incredibly loyal and capable if they

local council how they could help. I’ve contacted Mental

have an employer who can be accommodating. They will

Health First Aid and Mindful Employer. It’s taught me

give 110 per cent when they are able to.

a huge amount about where I should prioritise the

Q. What more can employers do to help people

resources we have.

back into work?

A. If somebody were off sick then a good company would keep in touch – that’s the first fundamental. And that should be the manager, rather than farming it out

Read the OECD report here: http://www.oecd.org/els/emp/mentalhealthandwork-unitedkingdom.htm

or giving it to HR, as doing it well increases the chances of people coming back. Companies should also try very hard to make adjustments, perhaps when people come back. People might not be able to work five days a week,

The CBI has signed up to the Mental Health and Wellbeing Pledge, as part of the Public Health Responsibility Deal. Its Health and Wellbeing report, sponsored by Medicash, will be out in May.

Busines s voice | APRIL/MAY 2014

43

News & events from the CBI

Upcoming events International Festival for Business The CBI has joined calls for British businesses to get involved in the first International Festival for Business, a 50-day event being hosted in Liverpool in June and July. The IFB is designed to be a global showcase for great British industry across multiple sectors, offering opportunities for small, medium and large businesses to make international connections, exchange new ideas, promote their products, create new partnerships and seek new sources of finance. It will also incorporate established events such as the British Business Embassy, Accelerate 2014 and BT’s Global City Leaders Summit. More than 1,000 delegates are expected each week.

“We want it to be the norm for small and medium sized companies to be considering exports from day one. But this will require a major shift for Britain and its entrepreneurs – it’s a national mission and to do that you need an event that matches that level of ambition,” says CBI director-general John Cridland. “It’s the scale of the IFB that excites me – I’d like it to be a mass Davos, with businesses of all sizes and from all sectors in one space.” www.ifb2014.com

The future of housing Following the introduction of the Help to Buy scheme, the CBI believes the focus for a healthy housing market should now shift to ensuring supply side conditions are optimal to enable sustainable growth in the sector. A roundtable, being held on 7 May at Lend Lease’s London offices, will

44

give industry the opportunity to express their views to the shadow housing minister Emma Reynolds as the political parties begin to map out their manifestos. www.cbi.org.uk/events/the-future-of-housing

FDs’ Excellence The finance directors from ARM, Easyjet, BT, Babcock, Britvic, Hays, Standard Life and Circle Housing are among those shortlisted for the FDs’ Excellence Awards.

The awards recognise the UK’s top FDs and their service providers. They are hosted by Real Business, in association with ICAEW and supported by the CBI.The winners will be unveiled at an event on 1 May at the London Marriott, Grosvenor Square. fdx.realbusiness.co.uk

regional events

SCOTLAND Annual lunch – celebrating all things Scottish Date: Friday 27 June Venue: The Roxburghe Crowne Plaza, Edinburgh Annual dinner Date: Thursday 28 August Venue: Hilton Glasgow Email: colette.cunningham@cbi.org.uk

CBI Annual Dinner

First Women Awards

Date: 21 May 2014 Venue: Grosvenor House, London

Date: Thursday 12 June 2014 Venue: London Marriott Hotel, Grosvenor Square

www.cbi.org.uk/events/annual-dinner

fwa.realbusiness.co.uk

Busines s voice | APRIL/MAY 2014

CBI DIARY: April/May 2014

NORTHERN IRELAND

SOUTH WEST

Global Role Breakfast Briefing with Northern Ireland’s new MEPs Date: 31 July Venue: Belfast Hotel

EAST OF ENGLAND

Economic briefing with Dr. Martin Weale, Bank of England Monetary Policy Committee & Bank of Ireland economist Alan Bridle Date: Wednesday 18 June Venue: Hilton Hotel Belfast

Annual Lunch with Sunderland Football Club CEO Margaret Byrne Date: Thursday 25 September Venue: Titanic Belfast Email: anthea.savage@cbi.org.uk

WEST MIDLANDS

Annual dinner with Sir Michael Rake, CBI President Date: Thursday 5 June Venue: Edgbaston Stadium, Birmingham Email: nikki.campin@cbi.org.uk

Annual lunch with RBS head of economics Stephen Boyle Date: Friday 9 May Venue: At-Bristol Email: colette.cunningham@cbi.org.uk

Spring dinner with CBI director-general John Cridland Date: Wednesday 14 May Venue: Paddocks House, Newmarket Chair’s dinner Date: Wednesday 11 June Venue: University of East Anglia Midsummer dinner with Katja Hall, CBI chief policy director Date: Wednesday 16 July Venue: TBC Email: nikki.campin@cbi.org.uk

Busines s voice | APRIL/MAY 2014

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Busines s voice | APRIL/MAY 2014

Where business and politics meet

Will you be there?

Get the inside information you need to face the challenges of the year ahead at the CBI Annual Dinner.

Senior figures from the worlds of business, politics and media will come together in style to network and share their views.

Places are limited and early bookings attract a discount so hurry, reserve your tickets today.

Book online at: www.cbi.org.uk/annualdinner

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