UK: PROPERTY AND RELOCATION - CLEVELAND'S COUP.

UK: PROPERTY AND RELOCATION - CLEVELAND'S COUP. - A last-minute trip to Seoul by a team of Cleveland businessmen secured for the area its biggest inward investment ever.

by Erik Brown.
Last Updated: 31 Aug 2010

A last-minute trip to Seoul by a team of Cleveland businessmen secured for the area its biggest inward investment ever.

The story of the North-East's attempts to lure big business to the Wynyard business park in Cleveland has all the ingredients of a blockbuster novel. Intrigue, suspense and high drama all played a part in persuading electronics giant Samsung to choose a picturesque corner of south Durham as the site for its new factory. Relocation at this level, as site-owner Sir John Hall discovered, is a hugely competitive business. So in the battle to attract Samsung, how did Cleveland manage to win the field?

Early in 1994, the portents for Cleveland looked good. Samsung was already familiar with the Cleveland workforce as a result of its 1987 investment of £2.8 million in a small plant in Billingham. The success of that small site had encouraged a further investment of £9.2 million in 1992.

Cleveland's grim employment statistics for once worked in its favour. With more than 40,000 out of work - on some of the sprawling council estates, described by the media as 'cowboy country', the male unemployment rate is as high as 40% - a pool of skilled labour was already on site to fill Samsung's expected demand for 3,500 to 4,000 workers. Samsung's arrival would still only cut the county's jobless figures by 25%. Any future employment requirements could easily be met from within the region.

The advantage of prior knowledge of the region and the availability of a skilled pool of labour were not enough, however, to make Dr John Bridge, chief executive of the Northern Development Company (NDC) and the rest of his team complacent. All recognised that Wynyard Park - a visionary business, leisure and residential development created by Sir John Hall on Lord Londonderry's former estate - was a relatively late runner in the race to capture Samsung. The Koreans were already considering sites in Scotland, Yorkshire, Spain, Ireland and Eastern Europe. And the rival Scottish site - at the old Ravenscraig steelworks in the Lanarkshire Enterprise Zone - already had a hefty marketing machine and the Scottish Development Agency behind it.

In contrast, the 5,400-acre Wynyard estate was still in the early stages of its development - a fact which had not gone unnoticed by Samsung. The estate was purchased in 1987 for £3 million by Sir John Hall. This wealthy 54-year-old (son of a miner and himself a former mining surveyor) could merely have thrown a wall around it and settled back to enjoy life in the Palladian house designed by Phillip Wyatt, overlooking a landscape created by a pupil of Capability Brown. But that was not the style of the man famed for building the trend-setting Metro Centre - the biggest shopping centre in Europe - on a run-down industrial estate at Gateshead, and creating 6,000 jobs in the process. Instead Sir John decided to transform the scenic backdrop to his mansion into a world-class business park. The Londonderry family had created Wynyard out of the North East, he said. His plan was to recreate the North East out of the run-down Wynyard. Sir John had a new philosophy for his initiative. Having travelled world-wide and seen at first hand the struggle to regenerate redundant brownfield industrial sites repeated time and time again, he determined that his business park would be different. He would design the business park as an attractive place to live and use the site as a magnet to pull new money into the North. It would include a lake, hotels and restaurants and, among its attractions, a golf course to rival Wentworth. Quality of life would be the key.

In addition to Wynyard's unique scenic advantages, its transport network is excellent. Rapid road links connect it to the A19 and the A1M, there are two airports within an hour's drive and ports only half an hour away.

Yet by the summer of 1994, those involved with the Wynyard project began to fear that the charms of the visionary new site were insufficient to draw Samsung in. On Thursday 25 August the Cleveland team of Bridge, Bruce Stevenson, chief executive of Cleveland County Council, Bill Locke, North-East regional director of English Partnerships and Russell Jones, managing director of Cameron Hall (the development centre that built Gateshead's Metro Centre) heard an anxious whisper that Samsung was thinking of going to Scotland instead.

Word had filtered back that the Samsung study team was disappointed with Cleveland for not giving an advanced visual presentation of the way the Wynyard development would look. Even more serious, Samsung was unhappy with the amount of grant the Department of Trade and Industry was prepared to offer. This grant had capitalised out at £58 million over a wide range of products, but it was not enough. Samsung's study team, according to rumours, was ready to recommend Scotland.

On the brink of losing the biggest inward investment into England for years and the biggest in Cleveland ever, Bridge and his team determined on an all-or-nothing, last-ditch attempt to bring Samsung round. There was only one thing to do: get to Samsung in Seoul, quickly. Bridge called a meeting of the Cleveland group in his office on 26 August - the Friday before the Bank Holiday weekend. Business and social appointments were cancelled and a flight to Korea was arranged 'in about half an hour'. A consultant architect, used to working with English Partnerships, was called in to create the missing visuals. These, as it turned out, were drawn up on the plane and in a hotel bedroom in Seoul.

There was no time to warn Samsung of the visit and wait for a response, so a fax was sent - and the Cleveland team flew to Amsterdam on the Sunday to pick up the connecting flight to Korea. When they landed on Monday, they still didn't know whether they would be given an appointment: but they were banking on surprise and the natural politeness of the Korean businessman.

Grants clearly were a crucial part of the package. Before leaving England, Bridge phoned the Department of Trade and Industry and told them Teesside would lose the investment if there was no movement on grants. The DTI contacted him in Seoul on Monday, before the Samsung meeting, to say that 'movement' had been arranged: the grants would be increased by 20%. 'When we got to the meeting,' Bridge says, 'I was able to say, "Well, we're here obviously to make this presentation - but I'd like to start with some good news: we have been able to secure this additional support for the project". And that immediately relaxed them because it had been a big sticking point, and they were therefore prepared to listen. If we hadn't been able to come up with that news we would have been in a very different position.'

The first meeting - with 10 people from Samsung - lasted four hours and continued through lunch. The following day, the visitors were shown around Samsung's main complex in Korea. Altogether, there were three or four meetings over two days. Two months later, on Monday 17 October, Reuters confirmed that the deal was on. 'The North of England has achieved an outstanding investment coup,' ran the press release, 'with the announcement today that Korean electronics giant Samsung Electronics is going to develop a multi-product industrial complex in the region' - a terse comment which belies the months of worry and effort required to secure the deal.

Cleveland county council's Stevenson has no doubt that it was the flight to Korea that won the day. 'It was absolutely crucial,' he says. 'Had we not gone to Seoul I'm certain that the recommendation to locate in Scotland would have gone ahead unchallenged. In the end, you've got to be able to respond to the circumstances as they arise. Flexibility is a critical factor.' Wally Measor, general affairs director of the existing Samsung plant in Cleveland, agrees that it was a 'great effort by the NDC, Cleveland County and English Partnerships'. But he says there were other powerful factors in play too: 'If the workforce at Billingham had not performed well, Samsung wouldn't even have considered the North East.' Measor, a local man from Hartlepool, had personally lobbied his company for a decision in favour of Cleveland.

Seven years after Sir John undertook to build his dream business park, its first major client was signed up. Hall is now 61 and though retired is, as his marketing director David Bosomworth confirms, still a major force behind the site's development. Wynyard now boasts three golf courses, the first of the 800 houses Hall planned are already occupied and Samsung, with 400 acres on a site next to the business park, will eventually have a bigger operation at Wynyard than it does at its main facility in Korea. Hall's vision is already a certain success. In total, it will be a £1 billion scheme - just about the biggest mixed development in the country, says Bosomworth.

Hall has handed the chairmanship of Cameron Hall to his son Duncan and is remarkably coy about his role in Wynyard's success. The Metro Centre had given the Wynyard scheme credibility and a solid financial base from which to work, he says. Moreover the 'highly-professional team' and a stronger relationship with the local authority had all helped.

Russell Jones, Cameron Hall's managing director, has a more catchy summation of the way to a potential relocator's heart: quite simply do, he says, what you need to do. And that, in this highly competitive world, may involve a lot more than clearing a site.

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