UK: Relocation - An object lesson in teamwork.

UK: Relocation - An object lesson in teamwork. - The need to attract industry to the North East has had a unifying effect on local groups with different loyalties.

by
Last Updated: 31 Aug 2010

The need to attract industry to the North East has had a unifying effect on local groups with different loyalties.

Dr John Bridge would like to meet any industrialist with a few hundred million pounds to spare for expansion projects. Bridge is chief executive of the Northern Development Company (NDC). His job is to attract industry to the North East.

In the mid-1980s the NDC's predecessor, the North of England Development Council, helped persuade Japanese car company Nissan to build its major European plant in Sunderland. Four years later the NDC was instrumental in attracting Japanese semiconductor company Fujitsu to County Durham. Nissan has already committed £900 million to its project, Fujitsu £400 million. The spin-offs have been enormous.

Bridge calculates that he needs one strategic investment like this every four or five years to keep the region healthy. The Nissan and Fujitsu investments are important in themselves, but they are also significant, says Bridge, because of the new products and new technologies which flow in their train. "To stimulate local business development, to get the changes you need in the local supplier base, in the services, the technical support, training and all sorts of issues like that, you need these major investments." Projects like Nissan and Fujitsu have a galvanising effect, says Bridge. Take quality, for example: "Both Nissan and Fujitsu are operating at world-class manufacturing standards so any companies that are supplying into them have to meet those same standards. What we're getting, therefore, is a filtering down of very, very high-class-quality standards." The big companies also act as magnets for associated manufacturers. Since 1986 there have been 19 further investments by automotive component manufacturers, both British and foreign, and 47 other Japanese companies have followed Nissan.

Are there dangers in the new mix of companies? Twenty years ago more than a third of non-service employment in the North East was in coal, steel and shipbuilding. Today it is less than 3%, as those industries have collapsed. How can Bridge make the area less dependent on the fortunes of a small number of very large employers?

Bridge is a realist. "There's no permanent guarantees in this business. But we are investing in the sort of activities which have a reasonably long future. You're constantly hoping that those sorts of companies (and their suppliers) are operating at the leading edge of the market and that they're going to be more productive. The real trick with major investments like this is to get them embedded into the local economy and to get the local economy operating at the same standard. That way you do spread the risk."

At bottom Bridge believes that landing companies like Nissan and Fujitsu is not simply a matter of suitable sites, cheap labour and grants. "Quite frankly an awful lot of places both in the UK and continental Europe have those sorts of incentive, in fact some of them are better than what we offer. What it's really about is very good project management. The one thing this region has learned from Nissan is that it needed to put together a group of people from different types of organisation and get them all to operate together in a single project management group, so that they forget their local loyalties, throw away their business cards and say, 'We're part of a Northern team that's dealing with this particular company.'"

Tyne and Wear is a success story for those involved in attracting industry to once blighted areas. In the Black Country the struggle to reach "critical mass" (the point at which other companies are attracted to the area simply by evidence of the sheer numbers who have successfully preceded them) goes on. The comparatively slow rate of regeneration has hinged round the so-called Spine Road, which was supposed to link the M5 and M6. The Black Country Development Corporation (BCDC), set up in 1987, was charged by the Government with the regeneration of 10 square miles of Sandwell, Walsall and parts of Wolverhampton, traditional metal bashing areas devastated by the late '70s recession. The BCDC's area, lying mainly to the west of the M5/M6 corridor, contains around 1,500 acres of derelict land. The corporation acquires land, reclaims it and puts it back on the market. But because the area is an old one, built up around small communities, the communications system is poor.

"It's great to get to it using the motorway system," says Ian Page, BCDC's marketing director "but once you get off the motorway system it's traditionally been very difficult to move about." So the Spine Road was identified as probably the single most important factor in getting regeneration going. Originally the road was planned as a motorway-standard route which would run from Junction 1 on the M5, through the BCDC's area, where it would service, among other things, the now derelict 125-acre site that was once the Patent Shaft steelworks. From Patent Shaft it would carry on northwards to link with another proposed road, the Black Country Route, which was to link Wolverhampton to Junction 10 on the M6.

The original estimated cost had been about £50 million for 4.8 miles. "Ultimately the Government approved a budget of £120 million," says Page, "but that rose to almost £200 million at which point the Government, not surprisingly, called it in." Whitehall has reviewed the project, decided that the greatest impact of the road would be in the southern part (from Junction 1 on the M5 up to Patent Shaft) and put a limit of £93 million on it of which the development corporation will have to find £25 million. So the Black Country has now got half a road which, like half a loaf, is probably better than none. How quickly could the areas round the Spine Road be regenerated, assuming work starts on the road soon?

"Certain sites, because of the way the Spine Road will be built, will be available before others," says Page. "It's not a case of waiting for the whole Spine Road to be completed. We'll be bringing sites to the market as the road is built." But the problem has delayed regeneration. "We're two years behind where we expected to be at this time."

THE NISSAN EFFECT

Nissan's car assembly plant in Sunderland has helped draw many automotive component manufacturers to Tyneside. TRW, the major American corporation which provides products and services to the automotive, space and defence industries, opened its first UK plant in 1988 at Peterlee, County Durham. The Peterlee plant makes seat belts. In 1989 TRW Transportation Electronics set up a factory at Rainton Bridge, Sunderland, to make electrical switches for vehicles, and last year at Washington, Tyne and Wear, the company opened a £25-million high precision engine valve plant. The plant makes valves for Nissan, Ford, Rover and Vauxhall.

Nissan itself will directly employ 4,600 people by this year, but the collateral job creation in other associated companies on the Wearside site is enormous. Planners estimated it in associated companies at more than 1,000.

The Nissan Sunderland plant now manufactures cars for 30 markets worldwide, including Japan and Taiwan.

THE FUJITSU FACTOR

Persuading Fujitsu Microelectronics, one of the world's leading manufacturers of semiconductors, to come to the North East was an object lesson in teamwork. The first overtures were made in 1987 by the Northern Development Company's office in Tokyo and the Invest in Britain Bureau. Over the next two years a team drawn from the County Durham Development Company, the NDC, Sedgefield District Council, various government departments and the local universities and polytechnics, tried to meet all the stringent requirements laid down by Fujitsu, which was looking at other sites in the UK and Europe. In fact the company gave serious consideration to more than 20 sites throughout the EEC.

The final decision rested on several factors, says the NDC, such as a ready supply of graduates from the universities and polytechnics, a high quality workforce, including qualified engineers, as well as special transport and infrastructure needs.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today