Business Voice - October/November 2014

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

“”


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

“”


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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.


£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


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.


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


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%


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


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

“”


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

“”


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. ◼


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


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“”


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


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



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

“”


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


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.


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.


£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.


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

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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.

[email protected]

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INTERNATIONAL: Indian update


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


“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


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


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


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

“”


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

“”


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


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.”


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


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


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


SOUTH WESTAnnual dinner Date: Wednesday 10 December Venue: Bristol Marriott Hotel City Centre


WEST MIDLANDSEnterprise breakfast: Delivering for SMEs beyond the general election Date: Wednesday 5 November Host: Cogent Elliott, Meriden


Autumn dinner with John Cridland Date: Tuesday 25 November Venue: TBC


EAST MIDLANDSAnnual dinner Date: Thursday 16 October Venue: Athena, Leicester


Enterprise breakfast: Delivering for SMEs beyond the general election Date: Wednesday 5 November Host: Cogent Elliott, Meriden


WALESAnnual dinner Date: Thursday 4 December Venue: Cardiff City Hall


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


CBI DIARY: October/November 2014

BV

Published by Caspian Media for the CBI www.caspianmedia.com

Editorial and production 020 7045 7585

[email protected]

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.

Business Voice - October/November 2014

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