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
6
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
16
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
18
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
38
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
40
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
45
Bv Published by Caspian Media for the CBI www.caspianmedia.com
Editorial and production 020 7045 7585 edit@businessvoice.co.uk
Editor Pip Brooking
Digital design David Gamble
Creative director Nick Dixon
Publishing director Ian Gerrard
Contact the CBI 020 7379 7400 www.cbi.org.uk
Tell us what you think businessvoice@cbi.org.uk Opinions expressed do not necessarily reflect the policies of the CBI. Caspian Media Ltd and the CBI accept no responsibility for the views expressed by contributors.
46
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
#CBIdinner