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The magazine of the CBI, the UK's premier business lobbying organisation
Citation preview
October/ November
2014
Gear changeSiemens UK’s Jürgen Maier on the new industrial revolution, and why manufacturers should be more confident
BUSINESS VOICE | THE CBI MAGAZINE
BUSINESS VOICE | THE CBI MAGAZINE
October/November 2014
10 INFOGRAPHIC:
THE BUSINESS VISION FOR A BETTER BRITAIN The choices that people make in next year’s election needs to be underpinned by an ambitious, long-term sense of where we’re trying to get to.
The Siemens UK’s boss demands
more long-term thinking from both
industry and government if the
country is to perform at its best.
16 INTERVIEW:
JürgenMaier
4 CRIDLAND’S NOTEBOOK:While the effects of the Scottish referendum are far from over, the build up to the general election brings prosperity for all into the spotlight.
30 INTERNATIONAL:India’s new government needs to accelerate its pace and increase the scale of its ambitions if it is to achieve further change and growth.
36 MEMBER NEWS:Charting business growth across the UK. In this issue: Edrington; Jankel; Tidal Lagoon Power; Thomas Dudley; Titanic Quarter; Tullis Russell.
38 MEMBER CLINIC: There are several new business reporting requirements, so how have companies responded? BV asks EY’s head of corporate governance for advice on best practice.
42 CBI DIARY:Events and photo gallery. In this issue: London skills gap, growth theme for annual conference, and first forum for MSBs.
REGULARS
32 MEMBER PROFILE:
UNIPART GROUPThe automotive manufacturing, supply chain and logistics business has successfully evolved over the years by focusing on its people and driving productivity.
20 FEATURE:
SET FOR LIFEThe UK’s strong science base and history of discovery put it in a healthy position to exploit life sciences opportunities – but cross-sector collaboration is vital.
12 EVENT FOCUS:
BRINGING BUSINESS INTO THE CLASSROOMThe CBI’s Education Conference highlighted how collaboration between business and schools helps young people and the economy.
26 BUILDING BRITAIN:
A GREENER ELEPHANT London’s Elephant & Castle is being transformed, with a £1.5bn scheme that includes not only housing and shops but also an abundance of green areas.
6 GUEST COLUMNIST:
CARDINALVINCENT NICHOLSWe need to explore why trust in business is currently so lacking. Part of the solution must be bringing the best of society’s values to the workplace.
Time for growth
While the effects of the Scottish referendum are far from over,
the build up to the general election places prosperity for all
in the spotlight.
The Union works best for creating jobs, raising growth and improving living standards
“”4 BUSINESS VOICE | AUGUST/SEPTEMBER 2014
Scotland the braveBy a margin of 55 per cent to 45 per
cent, Britain remains united.
A definitive response from Scottish
voters has kept Scotland as part of
the United Kingdom.
Over the past few years, as the
economic landscape has become
less unsettled, as the dense and
unpredictable economic problems
which took root during the crisis
slowly began to clear, the political
landscape has done the reverse.
Chief among the risks causing
uncertainty for businesses was,
undoubtedly, the recent referendum;
and while the general election next
year and then a possible referendum
on our place in the EU are now higher
up on the risk register, the effects of
the referendum are far from over.
The CBI understands that the
Union works best for creating jobs,
raising growth and improving living
standards. Following cross-party
promises in the build up to the
referendum, the re-established unity
of our nations must now be reconciled
with proposals for further devolution.
Not only for Scotland, Wales and
Northern Ireland – the call for new
English powers is growing louder, too.
Negotiations for devolution will not be
easy, and many of the questions
underlying constitutional reform will
be hard to answer.
As in all things, business favours
stability and certainty. A steady
predictable hand on the economic
and political dials gives rise to
innovation, enterprise and
entrepreneurship. I hope that our
collective strength will support
devolution policy which is carefully
created, acts in the best interests of
citizens living in all parts of the UK,
and doesn’t destabilise or undermine
our single internal market.
Our economic storyThe most significant economic news
over the last few weeks has
undoubtedly been the Office of
National Statistics’ reassessment of
the UK’s economic activity: the largest
in a generation. It came about after
the need to align to a more modern
international accounting system.
The majority of the revisions show
that the recession was shallower,
and the subsequent recovery
stronger, than previously estimated.
The most encouraging adjustment
concerned business investments,
which were assessed as being
greater than previously thought,
now three per cent above their
pre-crisis peak in Q1 2014, compared
to 16 per cent below on the basis of
the previous data.
Although our economic story is
now a strong one, with business
confidence high, output broad-based,
and the number of people in work
currently at an all-time high, the UK’s
productivity levels are, however,
low-slung and wage growth remains
flat. Pay has barely grown since 2008,
which means that the increase in
wages that people are getting is less
than the rate of inflation. Turning this
around is one of the country’s most
pressing concerns.
Prosperity in focusFrom this year’s Labour and
Conservative party conferences (at
the time of writing, I am yet to attend
the Liberal Democrats’) there are two
clear narratives emerging about how
to help workers better feel the
benefits of our recovery.
Ed Miliband used his conference
speech to address low pay, by
announcing measures to increase
the National Minimum Wage to £8
per hour by 2020. Having spent 10
years on the Low Pay Commission,
I believe wholly in its ability to set
the rate at the highest level possible
without undermining job creation;
its independence should not be
undermined by politicians.
Then the prime minister used his
speech to announce tax cuts:
increasing the level at which the 40
per cent rate is paid, to help middle
income earners, and raising the
personal tax allowance to £12,500,
taking a large number of low earners,
especially part-time workers, out of
income tax altogether.
There were other proposals
supporting these announcements,
of course, but I mean to highlight
wage growth as being one of the
more significant areas over which the
election next May will be fought. It’s
why the CBI’s Annual Conference on
10 November will have as its main
theme “Growth for All”. We want to
explore how we can ensure that the
benefits of economic growth can be
more widely felt throughout society.
Business knows that one of the
best ways to improve wages is to
raise skills levels and help people
progress into higher paid, higher
skilled work. At our conference,
we’ll be looking into and beyond
the political rhetoric and debating
productivity levels, sluggish wage
growth, workforce skills and the UK’s
education system – how they all fit
together, and what solutions there
might be for the future.
I look forward to seeing many of
you in November. ◼
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 5
CRIDLAND’S NOTEBOOK
T he CBI, as an employers’
organisation, is rightly
concerned about
the serious erosion of public
confidence and trust in business.
Debate about why that trust has
declined, and what changes may
need to be made by businesses
to address it seriously, is both
necessary and timely.
A thriving business sector, with
people finding fulfilment through
productive work at the service of
wider society, is vitally important.
Business and society need each
other. As one chief executive has
put it, “you cannot have a business
that succeeds in a society that fails”.
We all know that there are
many excellent businesses that
hold themselves to the highest
standards and make that positive
contribution. But we also know that
the core problem is real, and that it
is not one that better PR can solve.
There is a deeper issue underlying
the loss of trust, which must be
confronted for the long-term good
of both business and society.
My starting point is simple.
It is the good of the human
person. As a Catholic I have a
fundamental belief, shared by
many others with or without
faith, that we must start from the
conviction that people matter.
None of us are simply producers,
consumers or employees. What
we all share, first and foremost,
is a common humanity.
Good societies are built on that
respect for the human person. All
human institutions — public or
private, charitable or for-profit,
secular or faith-based – have an
obligation to act in a way that
serves human dignity and promotes
the common good. When they fail
to do that – and the Catholic Church
has experienced in recent years
just such failures – then trust is
eroded. Recovering trust, or better
recovering trustworthiness, is
hard work and takes a long time.
A socially responsıble purposeThe reasons for the lack of trust in businesses need to be explored. Part of the solution must be bringing the best of society’s values to the workplace.
Words: Cardinal Vincent Nichols, Archbishop of Westminster.
6 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
Serving societyAt the end of 2011, I was asked
by a number of business leaders,
who were deeply concerned about
the loss of trust in business, to
work with them. They thought
the wisdom in the faith traditions
about the good of humanity, and
how organisations can best serve
society, had something important
to offer that was sorely needed.
At a conference in September
2013 to take forward the work of
what has become known as the
Blueprint for Better Business,
one of the business leaders
listed 10 “ills” that needed to
be addressed. These were:
1. Anything illegal;
2. Mis-selling;
3. Selling harmful products;
4. Employing people in unsafe
or harmful conditions
or child labour;
5. Aggressively avoiding tax,
even if strictly legal;
6. Taking risks with the
environment, even if
strictly not illegal;
7. Shutting factories without regard
to the impact on communities;
8. A pay and bonus culture
divorced from performance
and proportionality;
9. Cheating for corporate or
individual advantage;
10. Taking advantage of weak
regulation and weak consumer
pressure to maximise profits
at the expense of consumers.
This is a bracing list. It captures
exactly the issues that weigh with
many people in society, within and
outside the business community.
But it is much easier to list the
ills than to cure them. And it is
clear that law and regulation
alone, necessary as they are,
cannot be the sole answer.
At a seminar I organised in
2009, after the financial crisis, the
chairman of one of the big banks
said the problem has been that
people have got used to asking just
two questions: “is it profitable?”
and “is it legal?” If the answer
given to both is “yes”, then other
considerations are rendered
irrelevant; you can do what you like.
He said that such an approach
destroys the basis of trust in the
market, which is the foundation
of all profitable activity. It is this
culture that leads to mis-selling,
because there is no real concern
for the customer as a person.
Everything is subordinated to the
sole goal of maximising profit.
Fit for purposeThe answer from those developing
the Blueprint for Better Business
was that any business should
be able to state clearly why it is
there. It should have a purpose
that is compelling, attractive
and operational – that should
enable the business leader to
look at each product and service
and ask: “Does selling this take
me towards delivering my true
purpose or away from it?”
But not just any old purpose
will do. A sustainable business
needs a purpose that enables its
people to encounter and respond
We must start from the conviction that people matter. None of us are simply producers, consumers or employees. We all share a common humanity
“”
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 7
GUEST COLUMN: Cardinal Vincent Nichols
to the true needs of society with
the resources and innovation
at their disposal. That process
demands respecting the human
person, creating a common good
– in which the business and its
investors share – and entering a
dialogue on being true to purpose.
The Blueprint initiative has
developed “Five principles of a
purpose-driven business”
(www.blueprintforbusiness.org).
These principles embrace both
the business purpose itself and
the relationships needed to build
commitment and trust — with
customers and suppliers, with
an extended workforce, with the
communities within which it works,
and with future generations.
And while the Blueprint sets
aspirational goals, it also sets
out clear challenges around the
perennial issues I listed above
that erode trust — inexplicable
pay differentials; exploitation
of workers, suppliers and
customers; tax planning to avoid
a fair contribution to society
and abuse; or manipulation
of regulation for self-interest.
And, most importantly, the five
principles commit businesses
to seek inclusiveness of the
underserved and disadvantaged.
These principles are
acknowledged to be relevant
and challenging to business.
But they have not come from
business. They are from long-
standing philosophy and faith
traditions present in our society.
From the smallest to the largest
business, I have seen how business
can benefit from a definition of
business behaviours that comes
from outside business itself.
Once people grasp that this is not
another iteration of corporate social
responsibility but a radical
re-centring of the core of the
business, then it becomes truly
liberating. It enables businesses
to bring the best of society’s
values to the workplace and
ends the corrosive, divided
life of different values in the
workplace and within society.
I believe we need a combination
of courageous leaders,
demonstrable change of behaviours
and constructive challenges, from
within and beyond business. I
believe that a common frame of
reference to define the role of
business in society – what I call
the ‘purpose’ of business – would
help. We also need practical actions
and open dialogue about business
being true to that purpose.
The end result should be common
standards by which all people in
business are judged, challenged
and appreciated. I encourage all of
you to join this conversation, so that
business can play its fullest role
within society for the benefit
of both. ◼
This viewpoint was originally
published on www.greatbusiness-
debate.co.uk, the website behind
the CBI’s campaign to help build
public confidence in business.
Any business should have a purpose that is compelling, attractive and operational
“”
Once people grasp that this is a radical re-centring of the core of the business, it becomes liberating
“”
8 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
Join us at the CBI’s inaugural MSB Summit to gain new insight on:
Getting new skills into your business Securing growth finance Exporting with confidence Getting to the next level, and Change management
Book your place cbi.org.uk/msbsummit
1 dec 2014, 200 AldErSGAtE, london
MSB SuMMit
Helping tHe UK’s mid-marKet firms realise tHeir potential
the MSB summit is complimentary for medium-sized businesses.
In partnership with
22%of economic revenue and 16% of UK
employment are generated by the UK’s medium-sized businesses, despite making
up just 2% of its companies. Their potential will be unlocked by targeted ideas to
improve productivity, increase access to finance and boost their exports.
£50bnThe possible long-term boost
to investment if we bring the UK’s capital allowances regime in line with other G7
economies.
8 in 10CBI members would vote
to stay in the EU in a referendum.
500mThe number of consumers in the EU Single Market, which is
the first export market for many UK businesses before they sell
further afield.
£10bnThe potential annual boost
to UK GDP if the Transatlantic Trade and Investment
Partnership is signed.
General elections are about the choices people make that shape this country’s future. These choices have to be underpinned by a sense of where we’re trying to get to, so the election in 2015 is about not just the next five years but the next 50. Accordingly, the CBI’s business manifesto sets out an ambitious, long-term vision for Britain.
THE BUSINESS VISION FOR A BETTER BRITAIN
We need to get the right conditions in place for our
businesses to drive economic growth, unleashing their
potential to invest, invent, export and expand.
Forge our future economy to unleash business potential
To foster an environment where entrepreneurs and established businesses can prosper, the next parliament needs to focus on
strengthening supply chains and undertake an ambitious exports strategy, as well as enhance the research and development tax credit. We need a pro-competition, pro-consumer approach to markets, and
for financial regulation to focus on achieving sustainable financing for our businesses.
We need to renew our role as a trading nation, and reinforce
our position on the global stage by making the most of
the opportunities that come from a rapidly changing and
increasingly interconnected world.
Secure our global future to capitalise on the changing world
We must maintain access to the single market, progress the single markets in digital and services, and push for reforms so the EU doesn’t
regulate on things that are better done at a member state level and here at home.
10 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
£68bnof savings havestill to be found
by 2018/19.
4.4mThe increase in the number
of over-65s in the UK by 2030, presenting unprecedented challenges for our services.
Only 22%of the public trust politicians to say what infrastructure we need, compared with 64% who trust independent experts. An
independent body should be established to determine needs and speed up delivery.
£4bnThe bill for our housing shortage in
extra housing and transport costs that is being footed by households across the UK. Average house prices have
jumped 56% since 2004.
10The number of garden cities that should be built – or under way – by 2025, to help meet the need for 240,000 new homes a year.
£100bnThe amount of private sector investment needed in UK energy infrastructure by 2020 to keep the lights on and decarbonise energy supply. To deliver this
investment, the energy market needs stability.
2 in 3children from low-income
families who are behind their classmates at age seven will
not go on to achieve five good GCSEs. The education system
should encourage rounded development, and not just
focus on exam results.
28%of employers are reporting skills shortages while 58%
are not confident of meeting future needs. The skills
agenda, and apprenticeships, still need more focus.
19.7%The gap in pay between
women and men in 2013. A target is needed to show
government is serious about tackling inequality.
We need to balance the public finances now and for the future
in a way that maximises our prospects for economic growth.
Shape the state to deliver growth To meet these challenges, the next parliament needs to get the deficit down and direct public spending towards capital spending and
innovation, as well as pursue bold reform to our public services. Once we’ve locked in improvements to our tax system, we must turn to the increasing national insurance burden, and reform of business rates.
We need to take difficult decisions today to meet the needs of
tomorrow – building homes for the future, powering the economy,
keeping the lights on, and connecting our people and businesses to
each other and to the world.
Get Britain building to meet our infrastructure needs
We must also ensure the recommendations of the Airports Commission are implemented swiftly.
Make growth work for everyone to raise living standardsWe need to give everyone opportunities to participate fully in a prosperous economy and society, so we
can make the most of the UK’s potential and the benefits of economic growth are widely shared.
In the next parliament, we need the unhelpful net migration target to be scrapped and to turn our attention to better supporting the skilled immigration that continues to add value to the economy. We
also need to put improving productivity – the real route to boosting pay and opportunity – at the centre of a long-term labour market strategy, and to avoid tampering with the flexibility of our labour market.
INFOGRAPHIC: People and prosperity
Katja Hall
“F or business, there are few issues that matter more than our
schools,” said CBI deputy director-general Katja Hall, at the CBI
Education Conference held in September. Yet the consensus
among both speakers and delegates at the event – which was sponsored by
National Grid – was that things have gone seriously awry, and that reform
needs more speed, leadership and vision.
Hall pointed to the disparity between firms struggling to hire people with the
right skills and youth unemployment figures that are almost 17 per cent.
Commenting on current reforms, she said: “It is not enough to devolve
responsibility to headteachers and toughen exams.” What has been “arguably
more rigorous but less relevant”is dropping the assessment of speaking and
listening from English GCSE and practicals in science A-levels, she added.
Business also needs to do more, and increase its engagement in schools,
Hall argued. “There is no more important determinant of our long-term
growth. We should start acting like this matters.”
She called on government to reinstate compulsory work experience for years
10 and 11, as an incentive for schools and businesses to forge closer links.
She also emphasised the importance of leadership from within schools, arguing
that headteachers now had more in common with a chief executive than with
teachers in their classrooms – a point echoed many times during the morning.
Businesses and schools have more in common than you’d think – and the CBI’s Education Conference highlighted why collaboration between them is crucial for the success of the UK’s young people, and for the economy.
BRINGING BUSINESS INTO THE CLASSROOM
12 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
BRINGING BUSINESS INTO THE CLASSROOM
Learning and earningFor example, the first keynote
speaker, shadow education
secretary Tristram Hunt, said
that he regretted the “absence
of focus on school leadership”.
He declared Labour’s ambition
to improve teacher quality and
promote greater collaboration with
businesses on leadership training.
Hunt also hit a popular note
when he said: “Resilience and grit
is just as important to learning
and earning as test scores.”
He said he was optimistic
about reform and, in the interest
of stability, suggested Labour
wouldn’t rip up what had gone
before. But in response to Hall, he
said Labour would restore practical
elements to science exams, and
reverse the decision that has
made work experience optional.
Hunt also outlined the key areas
that Labour would prioritise. These
included making English and maths
compulsory to 18; introducing a
technical baccalaureate with strong
links to business; making the
best further education colleges to
institutes of technical education;
and encouraging more schools
to keep destination data for
school leavers for three years.
Lord Young, adviser to the
prime minister on enterprise,
also highlighted the importance
of making 10-year earnings data
available from every course at every
university, so that students could
make more informed decisions.
Other initiatives he outlined
included offering all headteachers
access to an enterprise adviser “to
break the silo that is schools”; and
introducing an “enterprise passport”.
This document would highlight
pupils’ extra-curricular activities,
to help schools to recognise the
importance of enterprise and
employers to take a more rounded
view of prospective recruits.
Lord Young added he wanted
to see a voluntary course that
teachers could go on to help
them understand business and
“gradually open up schools to the
outside world”. Such a scheme
would require significant business
involvement to make it work.
But he was disappointed that
the problems facing the education
system today were similar to those
he tried to solve three decades ago
– and that measures introduced
then had gone by the wayside.
However, he was optimistic that
change was being made for the
better. “I’m hopeful that what we
are doing today will not depend
on the vagaries of government,
but will be something that the
private sector, and all parts of this
community, can work on together.”
Good for businessThe main thrust of the two panel
discussions was a similar one:
that it makes good business sense
for business to get involved.
The first discussion looked at
what business and schools can
learn from each other. Comparisons
were drawn between not only
CEOs and headteachers, but
also the board of governors and
companies’ governing boards.
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 13
EVENT FOCUS: Education Conference
Panellists, including Wroxham
School head Dame Alison Peacock
and Tulsi Naidu, executive director
for UK and offshore at Prudential,
encouraged more business leaders
to join school boards. But Naidu
added that companies needed to do
more to support those employees
who wanted to take on such a role.
Peacock agreed that joining
school boards couldn’t be a
half-hearted commitment, and
emphasised that those who got
involved needed to offer leadership
and advice that fitted the school’s
needs. “I don’t need someone
on our board who says they can
reduce our postage bill,” she said.
The same goes for business
engagement in schools at any
level. Naidu argued that such
engagement needed to be
structured and for the long term.
She added that taking such a
strategic approach at Prudential
meant the company was “more
attractive as an employer”.
Meanwhile, sending Prudential
staff into “an unfamiliar
environment” in schools was
a management development
opportunity for these people.
Importantly, however, Brett
Wigdortz, founder of Teach
First – the organisation set up to
improve leadership in schools –
said that business engagement
needed to improve outside
London and other cities.
This was a point picked up in
the second panel by Hayley Tatum,
Asda’s senior vice president for
people. The supermarket “adopts”
a school in every community it
operates in – and is encouraging
businesses in its supply chain
to do more in this area.
Partner for successPanellists highlighted that careers
advice has, until recently, been
seriously lacking, and companies
have an important role to play
in delivering such advice. But
much of their work should be
simply about sparking interest,
and raising understanding
of what it’s like to work.
“Businesses must stop competing
for employees and collaborate to
inspire school kids today,” said
Steve Halliday, chief executive
at National Grid (pictured).
He highlighted the company’s
Careers Lab initiative, which
is rolling into 500 schools this
year and has attracted support
from companies including HS2,
Costain, Compass and Whitbread.
It gives schools the framework
14 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
they need to engage businesses
and collaborate with them on
careers advice – centring on four
modules based on inspiration,
aspiration, exploration and action.
There was consensus that the
education system needed to be
better tailored to where the jobs
will be. “We don’t need 50 per
cent of pupils to go to university,”
said David Bell, chief corporate
development officer at JCB and
chair of governors at the JCB
Academy. This academy shows
what can be achieved with a clearer,
long-term focus on the world of
work, rather than just on passing
exams. No one leaves the academy
without a job, apprenticeship
or place at either further or
higher education, said Bell.
There was frustration in the
room that this success wasn’t
being replicated in schools up
and down the country. But there
was also agreement that the
foundations for change been laid
– as long as the momentum led to
more collaboration and action.
As Brian Lightman, general
secretary of the Association of
College and School Leaders,
said: “School leaders want to
take the system forward and
business is saying it wants to
help. That’s really powerful.” ◼
Most important
factors when
recruiting school or
college leavers
Attitudes towards work/character
83%Aptitudes for work
63% Basic literacy & numeracy
44% Qualification
obtained
38%
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 15
EVENT FOCUS: Education Conference
Siemens UK’s new chief executive has clear ambitions for UK manufacturing, but they all demand more long-term thinking.
GRAND DESIGNS
words PIP BROOKINGphotography PETER SEARLE
16 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
W ith such a Germanic
name, you wouldn’t
expect Jürgen Maier,
Siemens UK’s new chief executive,
to speak with a broad northern
accent. But the Austrian moved to
Leeds as a child, then started his
career at Siemens on the shop floor
in the company’s factory in Congleton,
Cheshire. Having worked his way up
from there, you could say he is a
good fit for a German company that
prides itself on its investment – and
the roots it has made – in the UK
over the past 170 years.
After three months in his new role,
Maier says his personal ambitions
as CEO and what he wants for the
engineering company are also one
and the same. And he’s not exactly
aiming for the low-hanging fruit.
“We have a genuine opportunity
to help the country achieve its
sustainability targets,” he says.
Linked to that, he wants to help
Britain renew and upgrade its
infrastructure – he points to
transport and energy on the one
side, and cities and buildings on the
other. And he is keen to improve
manufacturing capability and
productivity, both at Siemens and
among the businesses it supplies.
But there are two aims he is more
passionate about. The first is to see
the UK “again become a world-leading
industrial powerhouse”. The second
is to do far more as a business to
support the communities Siemens
operates within. Here, he’s talking
about not just “nice charity projects”
that are good for the communities
and his staff, but making a serious
commitment to the skills agenda.
It’s a lot of responsibility for one
company to take on – but there’s a
clear sense Maier is driven by his
belief in the UK’s potential, and by
respect for what Siemens has
achieved so far. There isn’t anything
broken at the business he’s inherited,
he says. And the business’s focus
on, and motivation for, what it needs
to achieve is what allows him to
focus on the bigger picture.
Helping the country“Britain is falling in love with
engineering and manufacturing,”
he says. “Combine that with what
we do as a business, and it’s going
to make us stronger and enable us
to help the country more over the
next 10 years.”
Although the UK still has a
“some way to go”, he believes it
can secure a better reputation for
its manufacturing prowess. “We
can’t go back to where we were
in the 1900s, but can we increase
manufacturing as a percentage of
GDP? Can we regain our reputation
for being innovative and having
some of the best manufacturing?
The answer is yes,” he says.
Maier has referred to “a new
industrial revolution”, or the
“reindustrialisation” of the UK. But
the process has to start with getting
the basics right – and he is clear that
UK manufacturing needs to invest
more in automation, productivity
and energy efficiency. Its failure
to do so over the past couple of
decades is “why we are where we
are”, he argues.
Britain is falling in love with engineering and manufacturing – it’s going to make us stronger
“”
If we can be part of the bigger picture and help set the strategy, then that’s going to be good not just for us
“”
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 17
BIG INTERVIEW: Jürgen Maier
This is where it’s easy to see the
part he wants Siemens to play – and
certainly where the business can
benefit. The company’s industry
division – where he has spent most
of his 28 years with Siemens –
contributes almost 25 per cent of its
revenues worldwide.
But Maier says: “It’s my priority to
get close to some of the government
stakeholders, and to work with
organisations such as the CBI and
the EEF to make sure that we’re part
of not just being able to deliver the
technological solutions, but also
helping the country define its best
path and its best strategy for how
businesses can engage.
“We work with thousands of
suppliers to achieve what we
achieve here in the UK. If we can be
part of the bigger picture and help
set the vision, the direction and the
strategy, then that’s going to be
good not just for us.”
Catapult involvementIn that light, it comes as no
surprise that Maier supports the
government’s industrial strategy,
and that Siemens is heavily involved,
in particular, in one of its technology
and innovation centres – the
Advanced Manufacturing Catapult.
The company has partnered
with the latter on a “Industry 4.0”
initiative, which brings together a
lot of Siemens’ existing technology,
as well as creating new software
applications to build a digital factory.
“This is a factory that pretty much
organises itself, plans itself and
is working. It delivers amazing
productivity, efficiency and quality
levels, and all that is enabled with
technology. It’s moving into another
revolution of manufacturing,” he says.
The initiative plays to the trend
of “mass customisation”, or the
need for manufacturers to deliver
more for less, while preserving
margins. For example, it could
be used to build a car ordered
directly from the consumer, to
their specification, says Maier. The
order goes straight onto the factory
floor, where the manufacturing unit
will start to organise itself to be
able to produce it without manual
intervention. It knows what features
have been ordered, starts it along
the production line, and moves it to
where there is spare capacity at each
stage in the process. “Ultimately,
all of this should serve to give a
better customer experience and
better customer choice, at affordable
prices,” he says.
Siemens’ vision of how it wants to
help Britain is also apparent at the
location for Maier’s interview with
Business Voice: The Crystal, one
of the world’s greenest buildings
and home to the world’s largest
exhibition focused on urban
sustainability. “It was [built to] try
and enthuse decision makers in
cities about what is achievable and
what is possible with technology to
create a more sustainable city,” he
says. The fact it also attracts school
children and inspires them about the
relevance of science and technology
is also, clearly, important.
But asked which project excites
him most, he says it’s the new
£310m offshore wind turbine factory
that Siemens is building in Hull, in
partnership with Associated British
The skills agenda needs to be better joined-up – between government, the regions, colleges, schools and business
“”
18 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
The Maier CV
July 2014 – presentChief executive, Siemens UK.
2008-14Managing director at Siemens industry for UK, Ireland, Nigeria and Ghana.
2004–08Sales director for Europe, then MD, Siemens automation and drives.
2001–04MD, Siemens shared services.
1986Joined Siemens as a production engineer in the automation and drives division in Congleton, progressing to general manager by 1997.
Ports, which is set to create up to
1,000 jobs. “We’ve got to make sure it
works, not just for Siemens, but for the
community and the customer,” he says.
The bigger pictureSiemens wind turbines already
create about 50 per cent of the UK’s
wind power capacity. And Maier
says that the company’s investment
in the UK is heavily influenced
by big infrastructure decisions.
Here, he also refers to the rail
projects Thameslink and Crossrail.
It’s a shame, he says, that the public
don’t get the full picture of the scale
of the company’s involvement in
the country, pointing to the debate
that has rumbled on for three years
around its contract to deliver a
new fleet of trains for Thameslink.
“Yes, those trains are being built
in Germany, but actually, we’re
creating 2,000 jobs here on the back
of that contract, and we’ve got 13
factories manufacturing things here
employing 14,000 people.”
To secure future investment,
the company also depends on the
long-term vision and certainty of
government policy. “The key thing
that we need is stability,” says
Maier. He believes that the UK has
finally got that direction on energy
policy. But he’s more concerned
about transport – in particular, High
Speed 2 and other electrification and
upgrade projects on the rail network.
Yet his big ask for the next
government lies on the skills agenda.
“We still haven’t really got a long-
term view on that,” he says. “So
this needs another look and to be
better joined-up – between BIS,
the Department for Education, the
regions, the colleges and schools,
and business.”
The biggest concern he has
with current initiatives is that
there is too much complexity
in how employers are
engaged, he says. Siemens
was one of the first to sign
up to the Employer Ownership
of Skills pilot last year, and it is
also involved in offering a range of
school support and apprenticeships.
But he says: “It’s just not well
co-ordinated. At Siemens, we end
up taking it a little bit into our own
hands, and deciding which ones to
support. But where does an SME
go to get the best advice on what it
can do?
“What would be nice is if we
could have a joint initiative between
government and the private sector
to decide the priorities – a bit like
we’ve done on industrial strategy.”
There’s the small question of
staying in the European Union too
and Maier has been vocal in his
support of continued membership.
After all, Siemens is a global
company, not used to the “more
insular” behaviour that the UK can
be accused of.
But beyond talk of European
energy regulations being an
important driver for innovation, for
example, his arguments show a
remarkable consistency. He insists
on taking a long-term view and
looking at the bigger picture. And
he thinks the economy could be
even healthier if more businesses
and policy makers did the same. ◼
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 19
BIG INTERVIEW: Jürgen Maier
With its strong science base and history of discovery, Britain is well placed to take advantage of opportunities in the life sciences sector – as long as it works towards cross-sector collaboration.
Fighting fit By Dan Jellinek
20 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
O f the 204 Nobel prizes that
have been awarded for
physiology or medicine
over the years, the UK can be
credited with winning 30 – not bad
for a small nation. Prize-winners
include the geneticist and
co-discoverer of the structure of
DNA after whom the new Francis
Crick Institute has been named.
The institute, modelled on the
US-style interdisciplinary medical
science research body, is set to
open its doors in a year’s time.
Founded by the Medical Research
Council, Cancer Research UK,
the Wellcome Trust and London’s
University, Imperial and King’s
colleges, it will directly support
more than 1,000 scientists.
This development is just one of
many in the UK’s expanding life
sciences sector. It’s a broad field,
encompassing human, animal and
plant biology; medical science;
biochemistry; and bioengineering.
It covers activities ranging from
genetic research to the manufacture
of pharmaceuticals and medical
equipment. And according to UK
Trade & Investment, it’s worth
more than £50bn to the economy,
employing about 165,000 people.
In March, BIS and the Department
of Health opened a joint office for
life sciences, signalling the sector’s
importance. The office is charged
with pulling together policy strands,
including research and development
tax credits worth about £1bn a year;
the Patent Box – a tax incentive for
companies profiting from research
patents worth a similar amount;
and the £52m Science Industry
Partnership, which is expected to
create more than 7,800 education
and skills opportunities over the
next two years.
Life sciences is also one of
11 sectors to fall under the
government’s industrial strategy,
and is the focus of the Cell Therapy
Catapult – one of seven new
publicly funded accelerator bodies.
A further Catapult is imminent for
precision medicine: a new field
deploying customised treatment
for individual patients.
Other moves have centred on
making the NHS more accessible
for research and better at
adopting innovative medicines
and technologies. In August,
the prime minister announced a
public-private investment package,
worth £300m, to decode 100,000
human genomes by 2017. The
aim is for the NHS to become the
first mainstream health service to
offer genomic medicine as part of
routine care for conditions such as
cancer and genetic diseases.
New frontiers for innovation
in life sciences keep on coming,
and the UK is well placed to take
advantage of the challenges. But
it is not the only nation to spot
the potential. Competition will be
fierce, both with emerging high-
tech economies such as India and
with established powerhouses such
as the US and Japan – which holds
many patents in key areas such as
stem cell research.
In austere times, extracting the
most from the UK’s strong science
base will depend on cross-sector
collaboration. Over the next few
pages, we look at four examples
where this is already happening.
The aim is to offer genomic medicine as routine care for conditions such as cancer“”
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 21
FEATURE: Life sciences
T he Cell Therapy Catapult
(CTC) has a mission that
sounds even more
dramatic than its name – to boost
therapies across the so-called
“valley of death” between
early-stage development and
commercial viability.
Set up by the government in 2012
with an initial £70m of funding
over five years, the scheme has
more than 90 staff with expertise
in clinical development, regulation,
manufacturing and market access,
who are ready to help with
innovations that could benefit
the whole industry. Few firms,
especially SMEs, could otherwise
afford access to such resources
at early-stage development.
One high-profile example of the
Catapult’s collaboration with an
SME is its work with Videregen,
a company developing a tracheal
replacement technology, which
involves repopulating an acellular
“scaffold” with the patient’s
own stem cells and epithelial
cells, to avoid rejection. The firm
won £2m from the Technology
Strategy Board (TSB – now
Innovate UK) to use the CTC to
access equipment and expertise.
“It was enough to get them into
the first clinical trials, in a rigorous
way that will prove it works,”
says the CTC’s chief executive,
Keith Thompson. “It also brought
investor confidence, leading to
a recent £1.25m fund-raising
round from private industry.”
The Catapult has also
collaborated with a Scottish
SME, Roslin Cells, to develop its
clinical-grade induced pluripotent
stem (iPS) cell bank. iPS cells
are produced from adult cells
which are “reprogrammed” using
growth factors and implanted
genes. The process reverses
cell differentiation, making them
completely versatile (hence
“pluripotent”) – similar to an
embryonic stem cell, but easier
to source; more able to match
pre-defined tissue types; and with
fewer ethical barriers to their use.
“Once we have created a
bank of these cells that are safe
to go into clinical trials, it will
shorten the innovation time for
academics and companies by two
or three years,” says Thompson.
“The Catapults are not a
quick fix – they are expected to
become a key part of the UK
innovation landscape, to bridge
the gap between academic
invention and industrial use,
because there have been many
examples over the years of
products “invented in the UK,
commercialised somewhere else”.
“We want to facilitate SMEs,
in particular, to be able to
innovate, take risks and push
products forward, crossing that
‘valley of death’,” he says.
But it’s by no means just the
SMEs that have benefited. The
CTC is also supporting global
medical technology business
Smith & Nephew, with regulatory
requirements for the late-stage
clinical development and market
approval of a wound spray that
facilitates healing. It also has
an agreement in place with
GlaxoSmithKline to explore
joint working on cell therapies,
as well as partnerships with
several UK universities.
Once we have a bank of pluripotent stem cells, it will shorten innovation time
“”
Bridging the gap for cell therapy
22 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
J ust as IT systems or flatpack
furniture can be modular, the
human body has its sections
and they too can pose problems
for pharmaceutical designers. So
how can a therapy reach the part
we want to treat, if, for example,
it has been swallowed as a pill?
“Our bodies consist of
compartments that are separated
from each other by biological
barriers,” says Andreas Schätzlein,
chief executive of bioscience
pioneer Nanomerics, a specialist
in drug delivery systems spun off
from University College London
(UCL). “These include the blood-
brain barrier, which prevents many
molecules entering the brain from
the bloodstream, and hence can
block substances ingested as pills
from treating brain conditions
such as tumours and dementia.”
To overcome this and similar
internal barriers, Nanomerics has
developed “molecular envelope
technology” (MET), which uses
a biocompatible polymer to
wrap around drug molecules.
This envelope can be used
to carry peptide (amino-acid
based) drugs across barriers,
because the body no longer
perceives them as a risk or tries
to break them down as food.
The company’s lead product,
NM0127, developed with a £1.2m
grant from the TSB (now Innovate
UK), uses MET to allow a peptide
pain suppressant to pass directly
into the olfactory nerve once it
has been inhaled through the
nose. This approach offers more
effective relief than opioids to
millions of patients with chronic
pain, with potentially fewer side-
effects and lower risk of abuse.
It’s thought that the technology
could also be used for delivering
drugs both orally and through the
eye. And earlier this year, £1m
of funding to develop the MET
systems to deliver antibodies to
the brain was won by a consortium
formed by Nanomerics, UCL,
the University of Exeter and
Danish pharmaceutical company
H Lundbeck. The funding
comes from the Engineering
and Physical Sciences Research
Council’s (EPSRC) healthcare
impact partnership scheme.
Support from the EPSRC,
and Innovate UK and Wellcome
Trust funding, have been “a
game-changer” in helping his
firm innovate and compete,
says Schätzlein. The pain relief
product enters clinical testing
next year, with antibody therapies
potentially following within five
years. “We have been working
on commercialising this for quite
a while, but seed funding allows
you to come up with a much
more refined proposition.”
This approach offers more effective pain relief than opioids, with fewer side-effects
“”
A route across the body’s barriers
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 23
FEATURE: Life sciences
Where life becomes digital
I f the life sciences sector is
a big deal for the UK, the
digital sector is even bigger
– estimated to reach about 10 per
cent of UK GDP by 2016, according
to government estimates. The two
intersect in areas such as telehealth
and telecare, combining medical
science with the power of digital
networks.
NHS England is supporting a
project to demonstrate the power of
this mix: technology enabled care
and support (TECS). A home patient
monitoring system to test the project
in the field has been built in Surrey
by Telehealth Solutions, part of out-
of-hours care firm Medvivo Group,
together with Surrey County Council;
local NHS clinical commissioning
groups; and council partners
Virgin Care; First Community
Health & Care and CSH Surrey.
Telehealth has developed
software and systems to allow
people suffering from chronic
diseases such as lung disease,
heart problems, mental illnesses
and pain – all on the rise thanks to
an ageing population – to self-
manage their conditions at home.
About 2,000 patients nationwide
have been issued with a
“HomePod”, an off-the-shelf
consumer touchscreen tablet or
smartphone that works with a
range of peripheral devices such
as blood pressure meters and
pulse oximeters. A simple interface
prompts users to take readings,
and displays questions for them
to answer before sending the data,
encrypted, to a secure server.
The system can be multilingual
and allows videoconferencing.
At the central support centre,
specialist nurses follow established
clinical protocols to monitor and
respond to the data, including
routinely calling patients. “The
value is in the clinical triage of
the patients’ data and the way
in which the clinician actively
tries to reinforce the patient’s
confidence and make them feel
there is someone available who
has the time to care,” says Medvivo
group chairman John Dyson.
In the longer term, more and
more health devices will be
standardised and commoditised,
offering growing opportunities
for services such as TECS to link
them together, he says. “It’s
possible to foresee cameras and
wristbands with the algorithms
to provide much of the data in a
more simple way. Other algorithms
will be developed that enable
better diagnosis and advice to be
generated automatically from the
mass of data that will be available.
The technology will help many
patients and is likely to reduce
the cost of care, he says. “We
think there are about one million
patients who might benefit, and
the cost of providing the service
would be expected to be no more
than 50 per cent of the savings
to existing methods of care.”
It’s possible cameras and wristbands might provide the data more simply
“”
24 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
O ne of the most
memorable discoveries
in recent scientific
history was that the human
body may contain up to 10 times
more microbial than human cells
(by number), living largely in
balanced symbiosis with their host.
Understanding more about the
workings of this “microbiome”, and
gaining the ability to manipulate its
delicate balances, may turn out to
have revolutionary implications for
medical science.
A current research collaboration,
between medical, pharmaceutical
and consumer product giant
Johnson & Johnson and
Manchester University, is exploring
the potential applications of
probiotic extracts to the human
microbiome for preventing
and treating skin, oral and
respiratory conditions.
“This is a good example of
the types of collaborations in
early-stage science between
industry and academia that we
expect to drive transformational
new products,” says Elena
Fernandez-Kleinlein, lead for
consumer scientific innovation
at the Johnson & Johnson
innovation centre in London.
“The microbiome is an emerging
science that we think has broad
applicability across many areas
such as skincare, and oral and
digestive health, but there is still
much to learn. The science is in its
early stages, and the regulatory
pathway is not yet well defined.”
The company’s provision of
funding and lab support signals
both the potential value of this
field to medical and consumer
science and the willingness
of the world’s biggest firms to
invest in UK life sciences.
Last year, Johnson & Johnson
chose London as the location
for one of its four new global
innovation centres – the others
are in Shanghai, Boston and
San Francisco.
The London centre will serve
as a regional hub for spotting
innovations and establishing
collaborations such as the
Manchester project to invest in,
and accelerate, their development.
The hub is supported by regional
presence at six UK research
campuses and life science clusters
in Cambridge, Cardiff, Edinburgh,
Oxford, Manchester and Stevenage,
working with local academics and
entrepreneurs to develop their own
ideas or feed them back to London
or the other global centres. ◼
We think this science has broad applicability, but there is still much to learn
“”
Unlocking the microbiome
FEATURE: Life sciences
A transformation of south London’s Elephant & Castle area is under way – including transport improvements, investment in schools and vegetable plots. At the heart of the ambitious £1.5bn project lies Elephant Park, claimed to be one of the world’s most sustainable development projects.
GIVING THE
ELEPHANTBACK ITS CROWN
2004 2007 2013
2013Lend Lease received planning
permission for three sites in Elephant
& Castle – which will become
Trafalgar Place, One The
Elephant and Elephant Park.
2007Lend Lease was selected as
the council’s preferred partner.
The two signed a regeneration
agreement in 2010.
2004Southwark Council published
a development framework
for Elephant & Castle, which
included the demolition of
the Heygate Estate.
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 27
BUILDING BRITAIN: Southwark regneration
2,988 The number of new homes
in the scheme, at least 20%
of which are expected to be
affordable housing. 500 will
be ready for residents over
the next two years as part of
the Trafalgar Place and One
The Elephant developments,
already under construction.
The rest will be built on the
Elephant Park site.
70At the heart of the
development will be central
London’s largest new park
for 70 years. There will be
a total of 30,000 sq feet of
new publically accessible
play space, five new public
squares, two new “pocket
parks” and a new
community garden.
60% The increase in tree canopy
in the area, as 1,200 new
trees are planted over the
next 10 years.
50 The number of shops
and restaurants in the
scheme. Some will form a
high street, relinking the area
with Walworth Road.
Of these shops, 10% will
give independent retailers
lower rates.
6,000The number of new jobs: 5,000
in construction, and 1,000 on
completion of the development.
Since construction started, 50
local people have already been
employed on site.
£3mThe value of regeneration works
contracts already awarded to local
businesses in Southwark.
£42mThe additional household spending
expected to originate from the
area each year as a result of the
development. Employees will be
spending an estimated £600,000
per year during construction,
while workers in the completed
developments could boost
local spending by £1m.£30m The investment made towards
transport improvements, including
the northern roundabout, Northern
Line ticket hall improvements
and an extension of the cycle
hire scheme.
28 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
£1.5mThe amount of investment being made in local schools. Pupils have also
become engaged in the project. For example, children in the area were
granted access to the Heygate demolition site to create a series of artworks
inspired by the regeneration, in the Demolition Drawing Project led by local
artist Reuben Powell.
2020The year by which
the Elephant & Castle
regeneration should
become climate-positive,
through innovation,
technology, a commitment
to nature, and effective
management
of resources. 30%
The estimated energy
savings for residents
because of efficient building
design and technology; all
homes will be 30% more
energy-efficient than current
regulations require.
20% The proportion of car
parking spaces that will
be fitted with electrical
charging points. There
will also be 19 ZipCar club
spaces and more than 3,000
cycle parking spaces.
18 The number of global projects in
a flagship programme of the C40
Cities Climate Leadership Group
– created in partnership with the
Clinton Climate Initiative – aimed at
reducing greenhouse gas emissions
across the world’s megacities.
Elephant Park is one of them.
40The number of vegetable
plots in each of the rooftop
gardens in the South
Gardens development.
There will also be
communal rooms available
for resident events.
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 29
BUILDING BRITAIN: Southwark regeneration
Modi’s first100 daysThere are clear signs of change and growth in India. But the country’s new government needs to quicken its pace and extend the scale of its ambitions.
I ndia’s new government,
which swept into power
after Narendra Modi led the
Bharatiya Janata Party (BJP) to a
landslide victory, is a little over 100
days old. But already the prime
minister’s office is perhaps the
most powerful the country has
seen in its post-colonial history.
Its approach is measured and
determined. It may also hold the key
to significant changes in the system
– when they come. Whether it is
crafting a new foreign policy with Asia
at its heart, urging foreign investors
to “Make in India” or protecting
the food security of millions of
Indians, Prime Minister Modi is
in complete control of the central
government. And when it comes to
scope for change, he’s not stopping
at economic and foreign policy; he is
also directing efforts to bring about
administrative and judicial reform.
Momentum is slowly building,
helped along by a growth rate in
the last quarter of 5.7 per cent – the
highest seen in the past two years.
Stock markets have risen more than
11 per cent since the new government
came into office. While credit for the
growth spurt goes to the previous
regime, Modi’s government has
been making the right noises to
improve business sentiment.
Although his first budget failed to
excite many, there are several notable
changes. There is now urgency behind
the implementation of the goods and
services tax scheme and changes to the
Land Acquisition Law. A disinvestment
map is also on the cards, with
proposals for the government to
shed up to 10 per cent of its holdings
in 10 public sector units so far.
There is also enthusiasm around the
passage of the defence bill increasing
the foreign direct investment (FDI)
cap from 26 per cent to 49 per cent
and opening up FDI in the railways;
the big push on infrastructure and
manufacturing, with faster approvals
for projects; reforming the Factories
Act and amending labour laws; and a
financial inclusion scheme, involving
the banks and insurance companies,
to address the needs of those who
are economically marginalised.
International opinionThe new government may have an
eye on pleasing the voter, but foreign
players are not impressed with the
pace and scale of reforms. Slow
decision making, and difficulties
in doing business, remain serious
problems. The latest budget did
precious little on the retrospective
taxation and transfer-pricing
“The latest budget did little on the retrospective taxation and transfer-pricing front”
“”
By Shehla Raza Hasan
arin
dam
ban
erje
e / S
hu
tter
sto
ck.c
om
30 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
front. And unless time frames for
corrective measures are set, the new
government will fast lose its credibility.
Of particular concern is the fact
that India is the only big economy
that is going down in the World
Economic Forum’s competitiveness
index. It is also the worst performer
among the BRIC nations for ease of
doing business. Foreign businesses
need to be on a level playing field
with their Indian counterparts – and
they argue that fiscal and regulatory
policies need to be fair. Large
telecom players are disappointed
that little spectrum is available in the
country, while the foreign energy
sector is concerned about the delay
in the gas price hike, which is holding
back investments worth £2.44bn.
Doubts were also raised about
the government’s intentions when it
scuttled the World Trade Organization
trade facilitation talks, something that
had been agreed to by the previous
government last December. India
argued there had been insufficient
attention to food security matters
since then, so it could not adopt
the trade facilitation package.
However, India has recently
signed a free trade agreement
(FTA) in services and investment
with the ASEAN countries, dispelling
growing fears that all FTAs would
be moved to the back burner.
Challenging statesA new foreign policy is slowly
unfolding and so far it seems, by
and large, Asia-centric. This policy
is illustrated by Modi’s invitation
to all his South Asian neighbours
for his swearing-in ceremony; state
visits to Japan, Nepal and Bhutan;
and the high-profile visit of Chinese
premier Xi Jinping. The focus may
change once Modi meets the US
president at the end of September
but, in the meantime, both China and
Japan have promised substantial aid
and investment into the country.
Yet the biggest challenge facing
businesses is not investment but
project implementation. And although
the central government seems to
have got the plot right domestically,
pushing the development
agenda forward depends on the
various state governments.
The BJP rules in only nine out
of the 29 states in India. Modi
has to ensure that all states,
including those ruled by the
opposition parties, buy into his
vision of investment-led growth.
The first stumbling block was the
insurance bill, aimed to raise the cap
on FDI in the insurance sector, which
failed to pass through the upper
house of parliament, the Council of
States, which is dominated by the
Congress Party-led opposition.
The battle has only just begun. ◼
Shehla Raza Hasan is the
CBI’s policy director in India.
Nis
arg
Lak
hm
ani /
Sh
utt
erst
ock
.co
m
INTERNATIONAL: Indian update
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 31
Introducing Oxford students to logistics
It’s a problem that needs to be tackled by the UK economy. But productivity – along with internal training and recognition – is what Unipart Group credits for its success.
PRODUCTIVITY PAYS
32 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
“A t the strategic level, there
are only three enduring
sources of competitive advantage
for a business: operational
excellence, customer engagement
and innovation,” says John Neill,
founder and CEO of Unipart Group.
“And all of those depend on
growing and developing people.”
That is why, Neill explains, Unipart
– which was created through a
management buy-out from auto
manufacturer British Leyland in
1987 – set up what it describes
as the UK’s first “corporate
university” in 1993, to develop
the best-practice management
systems that have become what
it calls the “Unipart Way”.
This is a set of tools and
techniques designed to boost
productivity, innovation and
customer service levels through
better employee engagement.
And it’s been implemented not
just across the company’s global
automotive manufacturing, supply
chain and logistics businesses. It
has also been adopted by blue-chip
clients including National Grid,
Shell and HM Revenue & Customs.
“We knew we couldn’t
compete on low pay:
we had to compete
on the talent, drive
and motivation of
our people,” says
Neill. The ability
to replicate the
philosophy –
and university
“faculties” –
across the company’s
industries, and in every
territory it’s in, have been the secret
of the group’s success, he says.
He has recently returned
from a trip to China where
he opened Unipart’s newest
factory-floor faculty. “They’re
all exactly the same: they teach
the same body of knowledge in
the same way, because we’ve
worked out what works.”
Another important way the
company disseminates its
approach among staff
is through the
regular “Mark in
Action” awards.
“The awards
have generated
hundreds of
stories and
examples of things
that our staff have
done using the Unipart
Way, to deliver outstanding
customer service either internally
or externally,” says Neill.
Recent winners include a team
that successfully moved a complex
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 33
MEMBER PROFILE: Unipart Group
data centre, which Unipart had
been running for several decades,
to a new location. “They put
in a huge amount of planning,
professionalism, deep technical
expertise, fantastic teamwork, and
incredible hours. We don’t want
people to work 18 hours a day but
sometimes you have to,” he says.
“We celebrate those successes
because they build a culture
of employee engagement, and
a desire among our people to
learn and grow and develop
new skills and capabilities.”
A wider reachUnipart began life in the 1970s,
manufacturing and sourcing
car parts for its parent company
British Leyland. However, Neill
says, this business did not
have a long-term future.
“We were pretty good at what
we did, but even if we had been
absolutely the best in the world
on all key metrics, we would not
have survived, because the core
business upon which we depended
was not to going to survive.”
This lack of a future led to the
decision to branch out and start
making and sourcing parts for all
makes of cars. “After we bought out
the company in 1987, we did logistics
for Jaguar,” he says. “Again, we
got better and better at that.”
Here again, the company decided
to widen its focus. “Managing the
logistics and supply chains for the
car industry is perhaps the most
complex job in the world. So we
said, ‘instead of just doing logistics
for the car industry, why don’t we
have do logistics for the world?’”
This shift in emphasis has
resulted in supply chain work
for the rail industry, fashion
manufacturers, and for technology
firms such as Vodafone. But there
was still further to go. The success
of the Unipart Way, says Neill,
meant that the next logical step was
to set up a consulting business.
“Companies want help and
advice to engage their people to
drive high levels of productivity
and innovation. To this end,
we’re able to implement the
Unipart Way in partnership
with a wide and growing range
of global clients,” he says.
The company will work alongside
these clients, and bring their
people into its business, to see
how the Unipart Way works –
an approach that Neill believes
makes Unipart different.
For example, following a recent
tie-up with National Grid in the
UK, the group’s consultancy
arm, Unipart Expert Practices,
has been hired to work with the
firm in the US. It’s further proof
that the Unipart Way crosses
national borders with ease,
says a Unipart spokesman.
Lesson for governmentPoliticians would do well to mirror
Unipart’s focus on innovation and
productivity, Neill adds. “The UK
government has done a good job in
creating growth at a time when the
rest of Europe is flatlining,” he says.
“But there is still a huge amount to
do: we still have a massive deficit
and debt. To get that down, we
have to grow the economy. And
the only way to do that is to be
more competitive and productive.”
The only recent blip came when
a firm that Unipart sold three years
ago, parts supplier Unipart
Automotive, went into
administration in July this year. UEP consultant teaching Unipart Way in the office
34 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
Unipart had ceded control as well as majority ownership to H2 Equity Partners,
but it had licensed the firm to continue using the Unipart brand. This decision
appeared to have backfired when newspaper headlines appeared in the
summer announcing “Unipart in administration”.
“People who didn’t read the body copy were left with the residual impression
that we as a company had gone into administration, which was galling,” Neill
says. However, the firm got support from the CBI. “The CBI helped us write
to our customers and industry leaders to explain what had happened.”
The situation was both costly and put jobs at risk. “It was annoying
because of the money it cost us, but it was particularly disappointing
because it risked 1,400 jobs,” says Neill. Happily, he adds, many of those
employees have now managed to find work elsewhere in the industry.
But the saga has taught him two lessons: “Beware private equity making
promises it can’t keep. And never license your brand to anybody.” ◼
Unipart manufacturing in Coventry
F A C T F I L E :
Unipart Group
F O U N D E D :
1987 through management buy-out from British
Leyland
H E A D Q U A R T E R S :
Oxford
S T A F F :
Almost 10,000
O W N E R S H I P :
Employees, managers and the Unipart Pension Trust
T U R N O V E R :
£1,056.3m
P R O F I T :
£26.2m (including joint ventures, before
exceptional items)Unipart Way used in the NHS
BUSINESS VOICE | JUNE/JULY 2014 35
MEMBER PROFILE: Unipart Group
Tidal Lagoon Power has moved into a new head office in Gloucester
Docks, as it gets ready for construction to start on the world’s first tidal
lagoon power plant in Swansea Bay in spring 2015. The company’s
workforce has doubled over the past year, and a team of 40 full-time
employees will be joined by up to 95 people from delivery partners
Atkins and Costain. The office at Pillar & Lucy House has capacity for 150
employees, which the firm is likely to need as it develops five tidal lagoons
in UK waters over the coming years. Gloucester MP, Richard Graham, said:
“Tidal Lagoon Power’s move to Gloucester Docks is an investment in the
future of our city. The skilled jobs in such an innovative company, that will
diversify our country’s sources of energy, is great news for our engineers
and science students.”
Edrington, the Scottish spirits
distributor, has secured planning
approval for a new £100m distillery
and visitor centre for The Macallan
whisky brand. The new facility,
in Speyside, is scheduled to open
to the public in spring 2017 – and
has also been designed to deliver
extra capacity to meet growing
demand from both domestic and
international markets. Rogers,
Stirk, Harbour and Partners are the
architects behind the project, while
local business Robertsons has been
appointed as contractor and Forsyths
of Rothes will provide the copper
stills. Graham Hutcheon, Edrington
group operations director, said:
“We are delighted that regionally
based businesses will benefit from
our investment, which means even
greater economic and employment
benefits for the local and surrounding
areas.” Separately, Edrington – which
also sells The Famous Grouse whisky
– has created a global travel retail
unit, based in Singapore, to capitalise
on international duty-free growth.
Charting business growth & investment around the UK
36 BUSINESS VOICE | AUGUST/SEPTEMBER 2014
Jankel has launched an apprenticeship scheme. The Surrey-based
manufacturer of armoured vehicles and survivability solutions is offering two
prospective mechanical technicians or product engineers a two-year programme
– as part of the National Apprenticeship Scheme – in collaboration with
Brooklands College in Weybridge. Mike Mullen, Jankel’s managing director, said:
“Having started my career as an apprentice, I appreciate the value of internal
development and training in core engineering and manufacturing skills. Jankel
is working to develop its own skills base, and secure employment for anyone
interested in a future in production engineering”.
Thomas Dudley is sponsoring the Black Country Living Museum’s
schools membership scheme. Funding from the West-Midlands manufacturer
enables more than 1,000 local children to visit the museum. The firm’s
joint managing director, Martin Dudley, said: “This sponsorship follows our
work in putting together the UK’s first dedicated foundry apprenticeship
scheme and our careers-in-the-classroom initiative. We look forward to
working with the museum, to giving youngsters an insight into the Black
Country’s manufacturing capabilities and to nurturing the next generation
of engineers”. The partnership could also lead to engineering-themed
learning visits, and invitations to key stage 2 and 3 students to attend tours
of Thomas Dudley’s state-of-the-art foundry and plastics-moulding divisions.
Titanic Quarter in Belfast has
received planning permission for an
additional film studio development.
The facility will be located near the
existing Titanic Studios, where the
fifth season of television drama
Game of Thrones is being filmed.
It will feature two studios, workspace
and support space. The news follows
the Queen’s visit to the Game of
Thrones set in June.
Tullis Russell has appointed
Niall MacDonald as managing
director for its Markinch mill,
which produces premium paper
and boards for the graphics, cards,
cover and packaging markets.
The firm is looking to MacDonald,
previously MD at print specialist
Oki, to “accelerate the delivery”
of its growth strategy. The mill
recently started using the UK’s
largest combined heat and power
biomass plant, built and run
on-site by npower, to meet its
steam and electricity demands.
Tullis Russell is Scotland’s largest
employee-owned business,
and was named as Vistaprint’s
supplier of the year in August.
Let us know your news at [email protected]
BUSINESS VOICE | AUGUST/SEPTEMBER 2014 37
Last year saw several changes to business reporting requirements, so how have companies responded? To find out, EY has studied the output from the FTSE 350. And as firms with December year-ends start compiling their next annual reports, BV asks Ken Williamson, EY head of corporate governance, for his advice on best practice.
Room for improvement
38 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
The thrust of the recent changes was to ensure the report reflects the tone and character of the board
“”
Q. There has been a lot more focus recently on what
good reporting looks like. Have companies responded in the
spirit of the regulatory changes, or more with compliance?
A. I believe that many companies followed
the spirit of the regulatory changes and made a
concerted effort to improve their 2013 annual reports
and accounts (ARAs). That said, both the extent of
change and the lead time companies were given
to adopt the changes meant that some had to limit
their focus on compliance – understandably so.
So now there is an opportunity for companies to
reflect, look at how reporting practice has developed,
and use the guidance issued since the regulations
were finalised to enhance their annual reports this
year. Companies also have to understand what their
shareholders want, and how to communicate this
in an accessible and understandable manner.
This process will be unique for each company – so it
cannot be just a box-ticking exercise. The fundamental
thrust of the recent changes was to ensure that the annual
report of a company reflects the tone and character of
the board, and the narrative they want to convey.
Q. Is the move to integrated reporting being
accompanied by signs of more integrated thinking?
A. Companies adopting this reporting model certainly
seem to be running their businesses in a more sustainable
and integrated way. And there are clear benefits to
doing so, including better connections across different
functions within companies; a better understanding of
supply chain risks, and improved operational efficiencies;
and business planning and decision making that are
focused on the creation of longer-term value.
But it will be some time yet before we know whether
this new reporting model creates more sustainable
companies, or simply reflects practices and processes
already embedded into sustainable companies.
It is time for reports to provide better insights on what the nomination committee has done
“”
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 39
MEMBER CLINIC: Annual reports
Q. How much scope remains for reporting
innovation, around structure or format in particular?
A. There is scope to think about how and where to
make disclosures in the ARA. Companies should think about
structuring their ARAs in a manner that facilitates effective
communication. For example, they are still structuring
their report by “author” – chairman, chief executive, chief
financial officer and so on – as opposed to telling the story
in a logical narrative flow. There is no requirement for
each executive board member to have their own section.
But there are still regulatory and legal barriers.
For example, despite the fact that information being
reported in the directors’ reports is very technical
and unlikely to change vastly or at all from year
to year, it still has to be in the ARA by law.
Q. When it comes to governance, the roles and
expectations of the remuneration, nomination and audit
committees are all changing. How is this being reflected
in reports?
A. Given the recent changes in regulation and law,
audit committee and remuneration committee reports have
been enhanced, in terms of the insights they provide on the
workings of these committees and some of the judgements
they have exercised. But there is room for improvement.
With the focus on these two committees, the
nomination committee has remained the poorer
cousin – at least in a reporting sense. It is time to
put the spotlight on the workings of this committee,
and for reports to provide better insights on what
it has done during the year, and the outcomes.
It is the nomination committee that is essentially
responsible for board and committee composition, and
shareholders need to have confidence that the
processes for selecting, recruiting and replenishing
the board are working.
Q. Gender diversity has risen up the agenda. Should
reports always capture a company’s approach to this issue?
A. There is a legal requirement for quoted companies
to disclose the number of men and women they employ
– throughout the company and at senior manager
level. But reporting these figures in the absolute
makes them less relevant and understandable.
Companies should link their gender diversity statistics
to their strategy and business model, explain whether
it is important to have a specific gender mix to achieve
their strategy, and address the question “so what?” At
board level, the requirement is slightly different. The
UK Corporate Governance Code includes a provision
for premium-listed companies to disclose on a comply-
or-explain basis the board policy on diversity, and
to report their achievement against that policy.
This provision is supposed to be about diversity in
its broadest sense – the mix of skills, talent, sector
expertise, age, gender, ethnicity, personality types and
so on – rather than just gender. Some companies have
narrowed down their disclosures to gender, but it is
Companies should explain whether it is important to have a specific gender mix to achieve their strategy
“”
40 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
crucial that the broader definition of diversity is used,
to determine the effectiveness of the board as a team.
Q. There has also been a growing interest in companies’
tax affairs. How should this be addressed in reports?
A. Initiatives to help streamline ARAs have led to
an increase in voluntary disclosures appearing outside
the ARA – for example, on company websites. More
boards are disclosing reviews of their tax policies,
and reporting on the principles underpinning their tax
decisions. Others are also including explanations of
commercial issues that influence their effective tax rates.
Stakeholders become used to receiving the same
categories of information on tax, so it’s easier to introduce
new tax reporting than to stop disclosures that were
provided in the past. Accordingly, reporting changes
on tax policy and related matters should be viewed
as a long-term commitment. Where appropriate, such
disclosures should meet UK Corporate Governance Code
requirements for fair, balanced and understandable
reporting. It’s critical to ensure tax disclosures are robust
and correct, regardless of whether they are compulsory.
Q. What was the biggest missed opportunity
in the 2013 reporting season, and how do
you hope to see that rectified in 2014?
A. The main opportunity that many companies
missed, in my view, was to clearly articulate the
links between key components of the report.
After reading the key narrative sections of an ARA,
my acid test is to check whether I can answer the
following questions with relative clarity and ease:
• How does this company make its money?
• What are the key inputs, processes and outputs in the value
chain, and do I understand how its key assets – including its
people and technology – are engaged in the value chain?
• What does the company do better than
its competitors, and how will it sustain this
competitive advantage over time?
• Do the key performance indicators (KPIs)
specifically help to measure progress against
the company’s strategic objectives?
• What are the risks that may affect the successful delivery
of the company’s strategy? Can I see the direct link
between the two?
• Do the KPIs that measure progress against
strategic objectives also drive executive
remuneration? Is this link visible?
If I can answer all these questions, then the company
concerned has succeeded in communicating key
messages in an accessible manner in its ARA. ◼
It’s easier to introduce new tax reporting than to stop disclosures that were provided in the past
“”
Read more from EY’s review of the FTSE 350 reports – including best practice examples – at bit.ly/EYreporting
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 41
MEMBER CLINIC: Annual reports
Mind the gap
N early half of London’s businesses (45%) say there is a skills shortage among
current employees, according to the latest quarterly CBI/KPMG London
Business Survey. And two-thirds of firms are finding it difficult to recruit highly
skilled people, including technology, finance, engineering and creative specialists.
The problem remains a drag on otherwise improving business optimism. It is also likely
to be highlighted further in the coming months, as 66 per cent of firms said they were
planning to expand their business over the next year and 62 per cent aim to increase
headcount over the next six months.
More than half of employers surveyed wanted to see a change in the visa system to
widen the talent pool they can access, but an equal proportion have established links with
schools or colleges to help tackle the issue at the grassroots.
Such links are crucial, said CBI London director Lucy Haynes. “It’s so important that
businesses seize the opportunity to work with schools and colleges and ensure that
London’s students, who will build the capital’s future, are equipped with the skills that
firms want in their employees.”
KPMG London chairman Richard Reid added: “Failure to act swiftly on the skills agenda
will see London slip in its reputation as a world-class business destination, to the highly
educated centres of the likes of Shanghai, Singapore and Mumbai.”
42 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
First forum for MSBsA CBI event for medium-sized businesses –
the first of its kind – will be held in London on 1
December. The MSB Summit will be led by CBI director
general John Cridland and António Horta-Osório, group
chief executive at Lloyds Banking Group.
The event, which is free to medium-sized businesses, is
designed for networking, and will support development
and growth. Topics include change management, how
to get new skills into the business, securing growth
finance, and exporting with confidence. There will be
workshops led by Lloyds, BDO, Grant Thornton and
Standard & Poor’s.
All set to become household namesGraze, Brewdog, First Utility, Spabreaks.com,
Crowdcube, We are Social and Steelite are some of
the companies on the shortlist for this year’s Growing
Business Awards. The CBI supports the Real Business
event, which is now in its 15th year and has identified
many firms that are now household names in Britain –
including Innocent, Tyrrells, EasyJet and LoveFilm.
The awards will be presented on 25 November at the
London Marriott Hotel, Grosvenor Square.
FOR MORE INFORMATION, GO TO WWW.CBI.ORG.UK/EVENTS
Accent on growthThis year’s annual CBI conference has the theme “Growth for all”. The event will see high-profile political
speakers share the stage with the Archbishop of York; Commissioner of the Metropolitan Police, Sir Bernard
Hogan-Howe; Pinewood Shepperton’s Ivan Dunleavy; Damon Buffini, the founder partner of Permira and
chairman of the Social Business Trust; and a range of businesses that have succeeded in overseas markets.
The conference, which will be held on Monday 10 November at the Grosvenor House Hotel in London, is
supported by EY and Hays as strategic partners.
UPCOMING EVENTS
LIVING WITH MINERALS 5Date: Monday 17 NovemberVenue: QEII Conference Centre, LondonClick for more information
PUBLIC SERVICES NETWORK EVENTDate: Thursday 30 OctoberVenue: Skyloft, Millbank, LondonClick for more information
MEMBERS’ CHRISTMAS RECEPTIONDate: Tuesday 9 DecemberVenue: Church House Conference Centre, LondonContact: [email protected]
CHINESE NEW YEAR DINNERDate: Thursday 5 FebruaryVenue: Victoria & Albert Museum, LondonContact: [email protected]
Save the date
BUSINESS VOICE | OCTOBER/NOVEMBER 2014 43
CBI DIARY: October/November 2014
LONDONGreat Business Debate breakfast Date: Thursday 16 October Venue: CBI, Cannon Place
Roundtables on manifestos Dates: Friday 24 October, Thursday 6 November Venue: CBI, Cannon Place
Senior executive round table Date: Thursday 27 November Venue: Panasonic, Bracknell
Contact: [email protected]
SCOTLANDWestminster Parliamentary Reception Date: Tuesday 28 October Venue: Scotland Office, Whitehall, London
Skills seminar Date: Tuesday 17 November Venue: University of Aberdeen, King’s College
Aberdeen annual dinner Date: Thursday 27 November Venue: TBC
Contact: [email protected]
EAST OF ENGLANDEducation conference with Ofsted’s Sir Michael Wilshaw Date: Tuesday 18 November Venue: Kaetsu Centre, Cambridge
Midwinter lunch with John Cridland Date: Wednesday 10 December Venue: The Old Riding School, Hatfield
Contact: [email protected]
SOUTH WESTAnnual dinner Date: Wednesday 10 December Venue: Bristol Marriott Hotel City Centre
Contact: [email protected]
WEST MIDLANDSEnterprise breakfast: Delivering for SMEs beyond the general election Date: Wednesday 5 November Host: Cogent Elliott, Meriden
Contact: [email protected]
Autumn dinner with John Cridland Date: Tuesday 25 November Venue: TBC
Contact: [email protected]
EAST MIDLANDSAnnual dinner Date: Thursday 16 October Venue: Athena, Leicester
Contact: [email protected]
Enterprise breakfast: Delivering for SMEs beyond the general election Date: Wednesday 5 November Host: Cogent Elliott, Meriden
Contact: [email protected]
WALESAnnual dinner Date: Thursday 4 December Venue: Cardiff City Hall
Contact: [email protected]
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.
REGIONAL EVENTS
44 BUSINESS VOICE | OCTOBER/NOVEMBER 2014
CBI DIARY: October/November 2014
BV
Published by Caspian Media for the CBI www.caspianmedia.com
Editorial and production 020 7045 7585
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 [email protected]
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.