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Business Insight Thursday September 5 2013

The Angel of the North

Ready for take-off LORD ADONIS: Chairman, the North East Economic Review

PAUL WOOLSTON: Chairman, the North East LEP – page 10

BRIDGET ROSEWELL: Economist ROY SANDBACH: World-renowned and business woman – page 4 innovation leader – page 5

Thursday September 5 2013 | the times

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Welcome

Time for action They call it a road map these days. And when the North East Local Enterprise Partnership (LEP) last year commissioned a high-ranking team of leaders from UK finance, industry, public and civil society to produce a constructively critical review of the North East economy with a view to stimulating new growth, it needed an experienced driver.

Chosen to chair a panel of internationally recognised economists and academics carrying out in-depth research to provide up-to-date evidence about the region’s economic performance was Lord Andrew Adonis, former transport and schools minister.

After six months’ work with North East private and public sector bodies, universities, and voluntary and community groups, his report’s contents were revealed in April. With the creation of more and better jobs for the North East LEP economy at its heart, it called for the implementation of a set of strategic interventions over five years.

Five priorities were cited – promotion of the region as a magnet for trade, talent, tourism and inward investment; a doubling of youth apprenticeships; creation of a North East Innovation Board charged with developing strong innovation and growth clusters; big improvements in transport infrastructure and services; and the locating of stronger public institutions – such as the new British Business Bank – in the North East.

All of which has been thoroughly digested by the region’s business community. So what now? The map’s routes need to identify detailed turnings with the help of dynamic business leaders on the ground. To that end, many of them are gathering this Friday for a conference entitled Driving Forward Economic Growth, at Newcastle’s International Centre for Life, to put the flesh of real action on the review’s direction of travel. We wish them a fair wind. Never has the theme of this column been more apt: Welcome…

Inside

Profile: Bridget Rosewell An economist’s-eye view Page 4 Ambitious flight plan Newcastle airport is taking off Page 11 The Times (virtual) Forum Where do we go from here?

Pages 14-15 To advertise in the next edition of Business Insight: Freephone 0800 027 0403 or contact: stuart@timesnorth.co.uk PICTURES: KEVIN GIBSON OF KG PHOTOGRAPHY

A partnership determined to bring the best out of the NE region’s talent He was instrumental in setting it up – and now the momentum to take forward the ideas of the North East Economic Review rests with the region’s LEP chief executive Edward Twiddy, says Mike Cowley

E

dward Twiddy’s role as chief executive at the North East Local Enterprise Partnership (LEP) could well be viewed as a case of a gamekeeper turned poacher, for the former Treasury official who dealt with regional finances – including the Growing Places Fund – now finds himself firmly on the other side of the negotiating table when it comes to funding discussions.

Instead of handling overall regional economic policy decisions – he was involved in closing down the old Regional Development Agencies (RDAs) including One North East, reshaping regional economies and helping to develop the LEP model – Mr Twiddy now finds himself coming out fighting from one specific corner, that of the North East LEP. Having been instrumental in setting the North East Economic Review – regarded as the blueprint for the success of the region – the momentum needed to take it forward now rests very much in Mr Twiddy’s safe hands.

That involves regular discussions with the Treasury, his employer for the previous 11 years – not that he sees anything particularly difficult or stressinducing in dealing with people who are often old friends and associates. After all, it hardly compares with his days with the UN in the late 1990s when he was involved with post-war reconstruction in Iraq and someone fired a rocketpropelled grenade at him.

“Now I’m not creating policy and financing it as the Treasury does,” Mr Twiddy says. “Instead, I’m working with, and bending where it is malleable,

the policy that departments are responsible for promoting.

“In many respects, it is the same thing in that we are dealing with numbers – there are fewer significant numbers in front of the decimal point – but the decisions you make and the choices you have to go through are exactly the same.”

The success of Mr Twiddy’s efforts on the other side of the table can best be judged in terms of funding for the North East – where, using his carefully constructed diplomatic language, there has been “good progress in terms of accessing finance”. Without this, there would be little hope of progress generally.

Since the North East LEP was formed, it has convinced the Government to put £30 million of capital from the Regional Growth Fund into the LEP’s investment fund (now valued at just under £60m), and recently to award it £7.5m to promote finance for small businesses – which, in turn, has leveraged another £20m of European funding. The LEP has almost hit the halfway mark towards the £200m target that its chair has set to pump-prime the regional economy.

With this “free” money – and £500m to come from Europe next spring, the third-largest allocation to any of the 39 LEPs – there is a genuine opportunity for the area to shape more of what is done and how business is supported than many people thought possible when the RDA was abolished.

Not that the LEP intends to create a war chest, as previous regional bodies have done. The sole objective here is to get the money out and working at the earliest opportunity.

“We’ve deliberately put ourselves in a position where we want to be investing – not grant-making,” Mr Twiddy says, “and we want the investments to be either fixing a problem which the banks won’t, or we want to be putting money at risk where the banks simply would never have gone.”

That is why the North East LEP is constantly seeking to get its hands on “discretionary funding”, as it is known.

“I’m interested in having discretionary cash,” Mr Twiddy says. “Local authorities still have a lot of money, but the level of discretion [what they can choose to spend it on] is still very, very low because of the statutory obligations they’ve got.

“That’s where the LEP comes in – raising tens of millions to finance our ambitions or to contribute in part to those things we can’t do ourselves.”

Where the money goes is decided by an investment panel which has deliberately avoided adopting a partisan approach. It comprises three businesspeople: a financier / business angel, an accountant with his own portfolio of companies, and someone who runs a joint venture pipeline business with Qatar Petroleum in the North East.

Known to be hard-headed businessmen in their own right, they screen all potential spending projects. Even when they give the nod, each project still has to go before the 18-strong LEP board, where it is subjected to the value added test based on its potential to provide employment and on whether it fits the strategic economic objectives.

It has not all been about the LEP managing to access Government money, however. There have also been some serious moves to ensure that businesses in the region struggling to obtain the backing of High Street banks now have alternative sources to tap.

The North East LEP hosted a national conference on regional banking, and has persuaded the Government to allow continued regional control of venture

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Gearing up for the conference: Edward Twiddy and his LEP team have been busy putting flesh on the bones of the North East Economic Review capital. Here Edward Twiddy’s new localist credentials have come very much to the fore.

“One of our more important dialogues with Government was when the initial advice and guidance came out on European money,” he recalls. “The Government was going to initially top-slice the European money, keep a pot centrally and use it to fund a single national venture capital model.

“Through a series of debates and presentations, we won the argument for local control. That’s all to do with the firm belief that relationships need to be at the heart of finance. We know there is an administration burden that comes with running multiple schemes, but the benefits of discretion at local and business level far outweigh this.

“All we are working for is more competition, more accessibility, a better supply of finance to businesses seeking working capital, invoice financing or expansion.”

These wide-ranging objectives stem directly from the Economic Review which Edward Twiddy helped shape. In fact, he was a prime mover to get Lord Adonis on board. “I’d seen the impact of Andrew Adonis as a senior minister under the Brown administration,” he says, “and felt the impact of his analysis and policy leadership in Number 10 under the Blair administration. I’d also been exposed to him just walking into City Deal meetings and others at the invitation of Michael Heseltine and Michael Gove. He was clearly very much part of the senior debate.

“So I thought here is the guy – someone who crosses the political divide – with a really substantial brain on his shoulders who can demonstrate to everybody he can lead both politically and in the field of policy.”

The signing of former cabinet minister Lord Adonis was sufficient to ensure a premier league team in terms of heavy hitters could then be gathered around him, people such as other public policy reviewers Will Hutton and Lord Don Curry. To as-

Where the money has gone to date

Infrastructure for the Stephenson Quarter – a regeneration site adjacent to Newcastle Central Station, leveraging £30m of private finance in partnership with Newcastle City Council.

Speculative build of industrial units in Washington and North Tyneside with local developer Hellens.

Asset finance to Durham County Cricket Club for a new stand at its Emirates Riverside Cricket Ground, completing the seating at the North

The idea was to get people to think about their place in a European and worldwide economy

East’s international cricket ground in time for the Fourth (and series-deciding) Ashes Test.

Investment in Enterprise Zone infrastructure and groundworks near Nissan and on the north bank of the River Tyne.

Projects currently under consideration:

Innovation assets for the subsea and offshore industries.

Demonstrator sites for innovative energy projects.

sist them, the LEP brought together some of the most impressive and sometimes contentious academics in an expert panel.

While Edward Twiddy rates all members of the panel highly, he singles out for particular mention Professor Philip McCann, a special adviser for regional policy to the European Commission.

What Professor McCann did was to map the North East in trade terms against both its competitors and its partners in Europe.

Even taking Nissan out of the equation, the North East still has a significant trade surplus. And he found in Europe that this was going to places such as Marseille, Île de France, Barcelona and the Ruhr Valley.

“The thing he found that struck most people,” Edward Twiddy says, “was that we were trading with these European industrial heartlands which are not only our partners but our competitors. So it was all about industrial success breeding industrial success.

“The idea then was to get people to think about their place in a European and worldwide economy. That’s what our oil and gas and automotive sectors are already thinking. These guys don’t think about themselves as UK companies, or even European companies, they are European manufacturers producing for world markets. That’s the thinking we need throughout the North East as we seek to rebalance the economy.

“That’s where we see innovation based on our proven existing skills playing a key role in the economy of the North East in the future.” (See page five – Professor Roy Sandbach.)

So with the North East Economic Review in place, what next? “People are already saying we should go further than this,” says Mr Twiddy. “So I am envisaging the implementation should be a combination of Yes, we should do X, Y and Z. Andrew [Adonis] was quite focused on institutional fixes – so there is a lot about institutions and brands and collaborative plans. By inclination, as with lots of others, I find myself wanting to be more actionorientated. The LEP is a loose and open partnership, and I don’t want to be on too many boards, or have too many panels when what is needed is leadership and action.

“To the credit of our leaders, the institutional glue is getting stronger in the North East, much of it prompted by the creation of the combined authority by the seven local authorities in the area.

This has so much potential to add value, create better outcomes and work with the business community to shape the big choices that localism offers us.

“The [Economic] Review also gave the business community a clear feel that we [the LEP] are going to remain small in ex-

ecutive terms, so strategically, we are not going to be thumping the tub for every sector grouping, that’s something that business can do better itself. What we are going to be about is advocacy to make it happen.”

Meanwhile, Edward Twiddy and his LEP team have been busy putting flesh on the bones of the Economic Review (see separate panel), and have set up the conference for tomorrow – September 6 – to ensure the stakeholders not only have their say but help make it all happen.

The conference has also been designed to ensure that the North East LEP is not seen as – or even accused of – being topdown. And there is a need for the conference delegates to focus on a very clear and immediate timetable to be met to maintain the momentum created by the launch of the Economic Review. September, October and November will be used to produce a draft of proposals on what to do with “a very substantial European budget”, and to finalise the strategic economic plan to bid for single local growth fund money.

“This is our moment to take these recommendations, put a draft into Government by end of September, final document by end of January,” Mr Twiddy says.

“This is our moment at the conference to engage and make the most of the ideas from our whole community.

“We have deliberately focused on the business community in designing this event – businesses don’t turn up to conferences generally. This is their chance as employers, as investors and as innovators – to determine what programmes they need, what kind of innovation assets should be built, what transport links should be prioritised.

“If we are going to have a business-led LEP, this is absolutely critical. We are relatively isolated, but what we can’t afford to be is self-contained. We are clear that our objective is more and better jobs – and we’ll do it by making, trading and innovating – the three areas where we have particular strengths – doing what we are good at and being the best at it.”

Edward Twiddy is not from the North East, although it was a big part of his formative years. This distance allows him a degree of objectivity needed in his role as the LEP chief executive. Born in the South, he first came to Middlesbrough in the 1970s when his father, who worked for the Inland Revenue, was posted there. He attended Durham University, where he met his wife, Helen. They went on to lead separate lives for 10 years after graduating, before meeting again and eventually marrying – with Helen working in IT in the City and Edward initially working for spin-out companies from Durham.

The spin-outs role saw Mr Twiddy in a number of unusual jobs, including coastal planning and even working on boundary disputes in Arabia. Eventually he arrived in Kurdistan working with UNICEF, from where it was a short if somewhat fraught hop to working for the UK Government in post-war Iraq.

Having subsequently ended up in the Treasury for more than a decade, he saw the role at the North East LEP not only as a challenge but also the opportunity to bring up his two sons – Joe aged six and Jim, four – in a pleasant environment that both he and his wife knew and remembered with affection.

Immersed in the North East as he is today, he has yet to be consumed with a passion for either black-and-white or red-and-white football. When pressed on which team he supported, he rather reluctantly offered “Middlesbrough”, because of his previous affiliation there.

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Outside view

There’s so much to shout about – so get shouting

Top economist who crossed North-South divide was impressed, reports Mike Cowley

statements Bridget Rosewell made after arriving in the North East was based on an awareness that the region was “hiding its light under a bushel”.

“The fact that this is the only region with a positive balance of trade is good,” she says, “though that was pretty much unknown, really. So shouting about successes and encouraging people to come along and invest further in those successes seems to me to be one of roles the commission has had and hopefully will continue to have – and I’m part of that outreach.”

The general lack of awareness of the North East’s recent success story was brought home to her when she was asked to appear on the BBC’s Newsnight on the day the Economic Review was published.

“I went on that evening talking about the success of the North East – and people looked at me as if I was slightly mad,” she recalls.

One of the roles the economist has taken on herself is to ensure there is a move towards the right kind of technical knowledge in banking and in the City in

W

hat surprised economist Bridget Rosewell most, as one of the key members of the North East Economic Review commission led by Lord Adonis, was that the popular perception of the region as a dependency culture was now so wide of the mark.

A former chief consultant economist for the Greater London Authority, Bridget Rosewell is not from the North East – and although she had done some studies there previously, she readily admits to having been no expert on the region before joining the commission. But with the benefit of hindsight, she concedes that she did almost unwittingly arrive with some preconceived ideas.

“What challenged the preconceptions – so they were obviously there – was what I saw as a real sea change in attitudes on the part of the whole community,” she says. “Businesses, decisionmakers, local government – no longer expecting someone else to solve the problems, wanting to get on and do it for themselves.”

The former member of the “Seven Wise Men” team which advised Ken Clarke – and who is also consulted by the Treasury’s select committee on monetary policy – points to 30 years of regional policy as the reason the North East is still seen as one of the poorer regions. “From this has come the traditional perception that poorer regions require handouts from the rest of the country,” she says.

But she recognises that there has been a shift away from the begging-bowl approach, with Manchester having taken the view in the mid-1980s that they had to attract inward investment – and, as they no longer could expect the Government to do it for them, they had to go and do it themselves.

“But I hadn’t expected that the North East had picked up that ball quite so quickly and run with it quite as hard as they have,” she says. “So that is a really strong and positive thing I have taken away from my engagement with the North East.” She also welcomes the move towards a combined local authority.

“I hope the [Economic Review] commission has been part of the catalyst,

general, so they can understand the potential for investment in the North East.

“If the region continues to be a centre of innovation in manufacturing and engineering,” she says, “then financing requires people who can understand what’s involved. Getting all the ducks in a row to make sure a large business can grow requires finance – venture capital, basic banking, that’s what it is all about. And getting the finance people to understand the technology will make this happen quicker.”

With one of her recognised areas of expertise being statistical modelling, Bridget Rosewell was asked to explain how the Economic Review commission came up with the figure of 60,000 new and better jobs. “There are a variety of ways,” she says. “If the investments are successful, it will generate more business – which, in turn, will generate more jobs. It will only happen if we make it happen. And we feel this is a reasonable number the region can expect within the timescale of 10 years.”

She admits that as an economist she still wants to change the world – although isn’t now convinced she can make it better. “I no longer believe I know better than everyone else,” she says. “When I was a rebellious student, I did believe I knew better than anyone else – but I don’t now. Other people know what’s right for them, I don’t know what’s right for them.

That’s why we came to the North East – to listen, not to tell them what to do.”

She signs off by saying that while she has changed her perception of the North East for the better, the North East needs to change its view of itself. “The big mistake,” she says, “is to say if we had a Government department up here, or if the Government was here, things would be better.

“The reality is that the North East needs to show a willingness to put itself on the map in a positive way – then the Government and everyone else will view the North East in a positive way.”

Sticking together

B even if it means councils taking a smaller share of a bigger pot – this is better than squabbling over a smaller and smaller one. When change comes, it is painful, it is difficult, you have to accentuate the positive to manage a regeneration. And that’s what’s going on in the North East.”

How did she find herself on the Lord Adonis team? “They asked me and I said yes, it was as simple as that.” But why did she accept the task? “The reason I said yes was that it was a region I wanted to know better. I had been a critic of previous regional policies and I’m interested in how you turn something round.”

Given the brief of looking at inward investment funding, one of the first public

Bridget Rosewell: a key member of the Economic Review team and admirer of the way the North East ‘picked up the ball and ran with it’

ridget Rosewell has worked with Lord Adonis before – when he was Transport Minister and looking at the then fledgling HS2 project.

Asked to submit her proposals, she made the radical suggestion that it should start in Manchester and spread out both north and south – a view that was rejected.

She remains, however, an ardent supporter of HS2 and rail in general, seeing it as vital to the UK overall and now – particularly since her time on the commission – to the North East.

“It is just as important that Newcastle should be well connected to Leeds and Manchester as it is to London,” she says. “And it is just as important that we have internal transport systems to make sure everyone can get together in the cities in the North East.”

It is this need for togetherness, as opposed to isolation, which fits in neatly with Bridget Rosewell’s other specific field of expertise – agglomeration. For those who don’t know – which probably means most of us

– she describes agglomeration as “how things stick together”.

The principle here is that when they stick together, they tend to be better, more productive, more successful – which, in turn, influenced her input into the North East Economic Review. “It’s the glue,” she says, “and transport is part of that glue.”

Lord Adonis: an earlier colleague

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Innovation

Bring us your problems and we will solve them That’s the message from Professor Roy Sandbach of Newcastle University Business School – who is aiming to raise his native North East to centre stage in the world of open innovation, writes Mike Cowley

I

t seems unusual, to say the least, that the scientist behind Lenor and Fairy Bio might be about to help the North East clean up in the global world of innovation. But Stockton-born Roy Sandbach, currently the David Goldman visiting professor of innovation and enterprise at Newcastle University Business School, has joined up with the North East Local Enterprise Partnership (LEP) to do just that.

The former research and development (R&D) leader at Procter & Gamble is one of the world’s chief authorities on open innovation, seen as a key plank in the North East Economic Review.

Professor Sandbach will pick up and run with the Economic Review recommendations laid out by Will Hutton, chairman of the Big Innovation Centre and principal of Hertford College, Oxford, and turn this into a cohesive innovation strategy.

He is already constructing a high-profile international innovation board, many of its members coming from within the multinational arena which he knows well, with the objective of opening up significant opportunities for the North East.

A key part of Professor Sandbach’s vision is of innovation hubs running throughout the North East: specialist centres, with universities, small and medium-sized enterprises (SMEs) and agencies working collaboratively, and to which some of the world’s biggest companies will come for solutions – and pay for them.

The first hurdle he will have to overcome, however, will be to explain to the region’s businesspeople what the somewhat esoteric term “open innovation” really means (see separate panel) and how they can benefit from it in practical terms.

Roy Sandbach first came across open innovation – and went on to help develop it – during his 30-year career as a research fellow with Procter & Gamble, the company that first took what was then the academic theory of open innovation and turned it into reality.

Procter & Gamble pioneered the concept after coming to the realisation that while, globally, the company had 8,000 people working in R&D, there were around two million people in the world working on innovation topics which were relevant to the Procter & Gamble strategy.

The key was being able to access these people and with them this previously untapped vast resource – hence open innovation in practice was born.

So in addition to their R&D, Procter & Gamble implemented a branded open innovation process called Connect and Develop, which was designed to tell the world what their needs were, so that people who felt able to offer solutions could get in touch and start a dialogue.

Additionally, just as in top-flight football, the company created global scouts looking for innovation centres with which they might build bridges. The arrival of the internet and social media has transformed the way business communicates, so creating the perfect environment for the dialogue needed for open innovation.

What then happened is that many multinationals with foresight, seeing the excellent results at Procter & Gamble, began to embrace open innovation – so creating a global market of potentially unlimited size.

This was the scenario presented to the LEP in the Economic Review – one which they have been quick to grasp and so reach out to Professor Sandbach to make it happen.

It will not be a case of Roy Sandbach reinventing the wheel, rather using his expertise to cherry-pick approaches from Procter & Gamble’s pioneering strategy and latest open innovation thinking to ensure they meet the needs of the North East region.

What may surprise people is that open innovation is already happening in the North East. The Centre for Process Innovation on Teesside is just one example, in that it delivers development solutions for organisations across the country.

Similarly Neptune, the subsea centre of excellence, which has received support from the North East LEP and will involve Newcastle University and subsea companies working together, is typical of the type of open innovation hub which Professor Sandbach would like to see opening up throughout the North East.

One partnership already places the North East firmly on the open innovation world stage. Durham University and Procter & Gamble have created a strong strategic relationship that will undoubtedly continue to grow, supported by the LEP and its commitment to support innovation.

Despite having spent most of his working life abroad, he remains true to his North East roots – he is a Sunderland AFC season ticket holder and a member of Durham County Cricket Club. “I am from the North East and very much committed to it,” he says.

So the professor looks on his new role – as innovation tsar – as the opportunity to give something back. “In order to deliver the kind of jobs the region requires,” he says, “we’ve got to have skills, then innovation programs that use those skills – and so become a prosperous region, less dependent on public funding.

“There are people out there in the world that could use the fantastic innovation capabilities we have here. They just don’t come to this region for it – and the

‘Dialogue is what it’s all about’ – Professor Sandbach means business back on his home turf

objective is to change that. This is about getting people to bring their problems – and therefore their money – to the North East, and for us to deliver solutions using a highly skilled workforce.

“Clearly for the region to succeed, it needs a deep understanding of its core competencies, a powerful co-ordinated message, engagement with global-player innovation needs and high-quality innovation delivery systems. It remains very much work in progress.”

Roy Sandbach has not, however, always been held in such high esteem as he is today. When he swapped his role as

a research scientist with ICI to work on fabric softeners at Procter & Gamble, this prompted a call from one his professors at Imperial College. “What are you doing working on Lenor?” he demanded. A silence followed, before he went on. “Roy, you are abdicating your academic responsibilities.”

“I can still recall that conversation vividly – and that was 32 years ago,” says Professor Sandbach. With the benefit of hindsight, though, if he hadn’t made the move, he probably wouldn’t have embraced open innovation and so be in the position to help his native North East today.

What is open innovation?

Professor Roy Sandbach explains

T

he best way to describe this is to go back to the definition of innovation itself, something that is also not well understood. There are many thousands of definitions of innovation, but the one that has served me well is a relatively simple one. Innovation matches “what is needed” with “what is possible”, for wealth creation and/or the social good.

This definition speaks to a dialogue – after all, there has to be a clear understanding of what is needed before solutions or opportunities can be identified.

In addition, it speaks to output and impact. There is a result. It’s not a wholly complete definition, but it helps.

For me, this definition ensures that we do not mix up innovation with invention. Innovation is a manageable process – requiring a vibrant and dynamic and risk-taking organisational culture. Invention is unpredictable.

In addition, innovation can occur at many different points of the business model, not just in the “creative spaghetti” that exists in early, novel research.

Now, briefly, to open innovation. Again, there are many definitions that derive from the original thoughts created by Henry Chesbrough. I try to make things simple – simply adding “from anywhere” to the innovation definition above.

In business, this concept has been a driving force for innovation during the current century. Essentially, businesses were finding it difficult, using their own internal resources, to deliver the scale of innovation required to maintain competitiveness.

The development of powerful global informationsharing infrastructures allowed businesses to look outside for problem solutions and/or new opportunities. Open innovation is the umbrella term for this.

It has more sophisticated elements within it, which involve the sale and licensing of internal technology, but the essential concept is to gain value from the world of expertise external to the business world.

Thursday September 5 2013 | the times

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Subsea

Neptune promises a new-life sea change

Favoured project of Newcastle University’s vice-chancellor could revive the Tyne’s maritime history, writes Rick Wilson

They used to build large ships here, then that went... wouldn’t it be wonderful if Newcastle and the Tyne could reconnect with their maritime history?

A

proud boast of Professor Chris Brink’s university is that it was the only one in Britain to award an honorary degree to Martin Luther King during his lifetime. With the latter’s “I have a dream” speech being celebrated in this, its fiftieth year of legendary status, it is notable that the professor too is familiar with the aspirations of less-advantaged peoples.

The South African vice-chancellor of Newcastle University feels he has witnessed the condition close at hand.

When he took up his current role six years ago – on leaving a similar position with Stellenbosch University and putting his family on a plane for a new life – it was suggested to him that his destination had some pretty deprived areas.

“Really?, I thought,” says the whitebearded, avuncular professor. “I knew there had been hardship and job losses, but I couldn’t quite see it, compared to what I had seen in other places.” He is referring to African poverty and asserting that all things are relative, while not denying that the North East of England faces many challenges. He is happy to call the challenges “exciting”, however – and to describe the university’s city the same way.

In other words, Professor Brink sees the potential for economic improvement as expressed in the Lord Andrew Adonis-chaired North East Economic Review published in April. But while happily promoting new growth for this promising young tree, he believes in appreciating its already-strong roots. Not the least of these he sees as the surprising depths of the area’s relative wealth – its “economic resilience” – that has become apparent despite, or perhaps because of, this period of severe austerity.

In that spirit, he accentuates the positives in university-specific strengths, citing impressive facts such as “We are already a net importer of talent: 44 per cent of our graduates stay in the North East to work, providing key skills for sectors such as engineering and marine technology, and this year there has been a 47 per cent increase in graduate business start-ups”.

There are many other universityrelated positives, including a £350 million partnership to transform Newcastle into a City of Science, and the Living Lab use of university research to inform

Professor Chris Brink is happy to call the North East’s economic challenges ‘exciting’

transport planning across all Tyne and Wear authorities. “A good transport structure is essential for the development and jobs we all want to see,” Professor Brink says simply.

Among the review proposals to be acted upon by the North East Local Enterprise Partnership (LEP), its partners and the Government, is the creation of three managed entities: North East International, Transport North East and Skills North East. The combined authority of all seven local authorities in the North East LEP area and the LEP itself would work in partnership to deliver these.

As the university’s presenter to the review panel and also as a board member of the LEP, the vice-chancellor stressed the case for more open innovation – the showing and sharing of all their idea cards by teams in university research and business collaborations. But a particularly cheering response to his review contribution has been the development

of a centre devoted to subsea research and development.

After working for six months with North East private and public sector, universities, and voluntary and community groups, the Lord Adonis-inspired agenda for the North East identified the aim of creating more and better jobs for the area and highlighted five priorities in achieving it. Among these was the case for a North East Innovation Board, charged with developing strong “innovation and growth clusters”, stimulating universities and their graduates, and existing companies and public institutions, to create and finance new high-growth enterprises and jobs.

A favoured collaborative project of the professor’s was not a million miles away from that. “In our submission of ideas we made a very strong case for something that has now happened,” he says, “the Neptune National Centre for Subsea and Offshore Engineering, collaborating with industry on the Tyne.

It was strongly endorsed and we managed to get funding to develop it from the Higher Education Funding Council for England.”

Working with already-extant businesses? “Yes, on the north bank of the Tyne there is a strong cluster of companies that deals with offshore and subsea – which doesn’t mean only windfarms, it also means sea-bed communications, cables and oil pipelines. Lots of this is about bringing bringingmanufacturing manufacturing back back with with a view to strengthening exports. a view to strengthening exports.

“They used to build very large ships here and then that went. Now they’re not going to build ships again, but they are doing maritime work involving offshore engineering and we believe university collaboration can help it all grow again.”

He adds with real passion: “Wouldn’t it be wonderful if Newcastle and the Tyne could reconnect with their maritime history?”

It’s a remark that reveals true devotion to his adopted patch. Another comes when describing his role as chair of the N8, a collaboration between the universities of Durham, Lancaster, Leeds, Liverpool, Manchester, Newcastle, Sheffield and York, which uses the combined expertise and capabilities of these research-intensive universities.

Centres have been established established which which focus on multi-disciplinary multi-disciplinary research research strengths such as regenerative regenerative medicine medicine and molecular engineering, each workworking to create collaborations.

Professor Brink’s responsibilities responsibilities as as chair of that grouping grouping include include the the develdevelopment of new strategic strategic research research colcollaborations with business and and research research users to support support innovation, innovation, economic economic growth and job-creation in the the North, North, as well as in the rest of of the the UK. UK. He He also also engages with with key keystakeholders stakeholdersincluding including Technology Strategy Board the the Technology Strategy Board andand the the Department for Business, InnoDepartment for Business, Innovation vation and as Skills, as providing and Skills, well as as well providing leaderleadership the N8 Research Partnership to theto N8 Research Partnership ship andVice-Chancellors Pro Vice-Chancellors BoardBoard and Pro Group.

Group.

“It is another manifestation of my “It is another of my personal ambitionmanifestation to make academic personal ambition to makeand academic work economically, socially culturwork economically, culturally useful,” he says,socially with a and philosophially useful,” says, withona this, philosophical air.

To ahecomment he recal air. with To aacomment on ofthis, responds smile: “One the he things sponds with a smile: “One of the things I studied in my second academic career Iwas studied in my second academic career philosophy.” was Tophilosophy.” be precise, Professor Brink is a loTo bewith precise, Professor PhD, Brink and is a logician a Cambridge ingician with a Cambridge PhD, and interdisciplinary DPhil, master’s degrees terdisciplinary DPhil, master’s degrees in philosophy and mathematics and a in philosophy andinmathematics and a bachelor’s degree computer science. bachelor’s in computer science.

Born and degree raised “in the southern end Born raised “in the southern end of theand Kalahari Desert”, Stellenbosch of the Kalahari Desert”,forStellenbosch represented a challenge him in later represented a challenge for him incareer later life. He was pursuing a university life.

He was pursuing university career in Australia when thea call came to help in when the call came to “new help theAustralia South African university in its the Southtransition.

African university in its “new society” society” transition.

Though the professor and his reloThough the –professor histeenaged relocatcated family his wifeand and ed – his wife and teenaged boyfamily and girl – are happily settled inboy the and – are happily settledainfew the miles leafy leafygirl village of Ponteland village Pontelandhe a few miles outside outsideofNewcastle, admits they have Newcastle, he admits theyenjoying have not not quite gone native yet, as quite gone native yet, enjoying as they they do a summer holiday every year do a in summer holidaywhere every the year back back Stellenbosch, culture in where the culture of of Stellenbosch, wine and rugby contrasts sharply wine rugby contrasts sharply with and Newcastle’s background of with beer Newcastle’s of beer Newand and football.background “We’re not exactly football.

“We’resupporters not exactly Newcastle castle United yet,” he says, United supporters yet,” he football says, “butfans we “but we are generally are generally football fans now.” now.”

If his super-firm handshake handshake is anyanything to go by, it would be fair to assume assume he tackled that cultural gear change change just as robustly as he is dealing dealing with with his his current handful of challenges challenges towards towards aa better future for for the the North North East.

East.

the times | Thursday September 5 2013

7

Business Insight

Collaboration

New partnership style that means big US business Durham University is a key pioneer in its long, wide-open relationship with a global multinational, Dr Tim Hammond tells Rick Wilson

S

tanding proud in a glass-fronted alcove in the foyer of Durham University’s Upper Mountjoy Building is a stylised transparent objet d’art that immediately catches the visitor’s eye. It is one of a series of artworks peppering the entrance, but one of which Tim Hammond is clearly particularly proud.

It bears the words “Procter & Gamble” – but, before further elaboration, the university’s director of business and innovation services is heading for a conference room with the assurance that “We’ll talk about that”.

Indeed we will, it turns out. For while Dr Hammond makes many compelling points pertinent to the North East Economic Review – to which he presented relevant thoughts of his university – the institution’s four-year relationship with the giant US multinational consumer goods company (pet foods, cleaning agents and personal care products) is a special point, symbolic of the ever-widening road both parties want to travel.

And not just these parties. While everyone seems to be talking of open innovation these days, Dr Hammond can already report back with some authority on how enhanced university-and-business collaboration works in practice, albeit at a development stage which he still cautiously calls “proof of concept”.

But it is already a highly fruitful relationship, acknowledged by that trophy – the US company’s Global Business Development University Partner of the Year award, saluting a remarkable partnership that had by then (2011) already secured several millions in external funding for a series of projects and studentships.

“It’s a very close interactive relationship which we see as an example of best practice on how business and universities may interact – and which is now being recognised as such both nationally and internationally,” says Dr Hammond. “And that manifests itself in the breadth of activity that we have with this giant of a company.

“It’s a global $80 billion turnover business headquartered in Cincinnati, Ohio,

but with long North East connections [its first UK purchase was Newcastle’s Thomas Hedley Co in 1930]. Durham is seen by it as an exemplar of how a university and a big company can interact to their mutual benefit. And that’s been recognised not just in that award but also in the number of people in day-to-day dialogue between the two parties.”

Around 90 Durham academics are now linked with a similar number of Procter & Gamble researchers, in locations ranging from Newcastle to Frankfurt, Brussels, Beijing and Cincinnati, in areas including surface sciences, biophysical sciences, electronic goods, manufacturing and consumer psychology.

“Durham has thus developed not in a small way, but in a very extensive way, a model for business interaction that we wish to further build upon – not least by working closely with the North East Local Enterprise Partnership [LEP] to realise that across a broad range of industrial sectors.

“We are very keen to ensure that the extensive experience we have in open innovation, supply chain management and business strategy tie very closely in terms of technology.”

Despite being born and brought up in South Wales, Dr Hammond is a committed champion of his adopted region, describing it as “marvellous” and confessing to being a Sunderland AFC season ticket holder. He therefore likes the use of the word “champion” in the first recommendation of the

Dr Tim Hammond can talk with some authority on how enhanced university-andbusiness collaboration works in practice

Adonis report for the North East LEP economy – which urges the championing of “North East International” to promote the region at home and abroad as a magnet for trade, talent, tourism and inward investment.

“That aligns incredibly well with Durham University’s thinking,” he says. “Durham is an international university which has focus at local, national and international levels. And we can benefit the region by introducing our global links to it.

We are a world top 100 university working with leading academic institutions and leading businesses globally, and we want to bring both more into the region through our collaboration models.”

The director makes a second point with reference to the third major recommen-

dation of the review report – the creation of a North East Innovation Board charged with developing strong “innovation and growth clusters”, stimulating universities and their graduates, and existing companies and public institutions, to create and finance new high-growth enterprises and jobs.

“The original review as published is a work in progress,” he says, “but a key input from us is that we have really put flesh on the bones of the innovation centre concept and brought a much clearer view on how an open innovation agenda might be developed. We trust that reflections in the coming ‘review’ conference will see this vision growing and extending.

“This way of working embraces key mutual objectives of both universities and business partners. We want to make sure that our business school activities and our technology development activities are well aligned and working together, because together they will surely deliver important impact.”

What kind of impact? “That is an incredibly important word in the university sector,” he says. “It doesn’t just mean financial impact, it can be societal, it can be impact on new products and processes, on policy, on the Government agenda to add value to the national economy.”

It also seems like a relatively impactful word to be using in this room-witha-view’s long, low, glass-fronted building set in a tranquil, sylvan serenity a few miles outside the city’s picturesque centre. But the competitive outside world cannot be escaped for long.

“Durham is working with business to deliver leading quality research outputs,” Dr Hammond says, “but also to engage and embrace their needs whereby we can deliver that impact. This kind of wide-open collaboration means moving away from the old traditional model which was typically a single academic working with a single industrial supervisor; we are looking for a much more allembracing engagement with many more points of contact.”

Tim Hammond has 12 North East years under his belt, having originally come to work in the chemical sector.

Will many more now be following his footsteps after the Economic Review’s observation that the region needs to keep – and attract – more of the “brightest and best”? “We are gradually bringing our own talented people back,” he says. “Many are keen to return and the review’s strategy is very much about providing that vibrant environment with the required infrastructure.

“I think that by undertaking some of the things mentioned – secondments, apprenticeships, internships – we will be able to attract them permanently. For once they come and work here and see what is actually being achieved, that will certainly give them a very positive perspective.”

The case for moving fast

T

he Adonis report says there is no time to lose in boosting the North East’s economic fortunes. Does Dr Hammond agree? “I think we’ve got great potential,” he says.

“We have an active manufacturing base, a growing export base, and an appetite to embrace the mechanisms for change.

“We are very well placed to embrace a number of key players and key tiers of expertise which will

allow us to do that – given the smooth co-operation of university, business and Government. And the North East Local Enterprise Partnership is, of course, the glue that ties all three together.

“But yes, there is no time to lose, because everybody’s in the race. If we don’t move quickly we will be overtaken. Not just within the UK. We must never forget that we are now competing in an international market.”

Thursday September 5 2013 | the times

8

Business Insight

Local talent

Alliance propels economic growth Already a big ally of business, Northumbria University is all set for bigger co-challenges, reports Mike Cowley

W

hat does a 21st-century university bring to the modern economy? This is a subject on which Professor Andrew Wathey, vicechancellor and chief executive of Northumbria University, has a clear set of views.

He is well aware that all universities, while still offering a rounded education, now want to be seen first and foremost as playing an increasingly important role in their respective local economies. Gone are the days when universities were ivy-clad, remote cloisters of learning existing at a discreet distance from the external world of business. They are now locked together – and Northumbria is no exception.

The North East Economic Review demonstrated this clearly, and has enabled universities to highlight their role in boosting North East business. It saw Northumbria University participate in the research stage of the review, providing significant input from the wide-ranging business sector with which it has close links – and Professor Wathey is clear that Northumbria is

Closer still: Northumbria University’s vicechancellor and chief executive Professor Andrew Wathey

Research-rich: Northumbria University “a research-rich and business-focused university”, committed to helping companies in these challenging economic times.

That Northumbria has interfaced successfully with the business community is reinforced by the fact that more than 550 local employers sponsor the university’s programmes, while many students graduate with chartered or professional accreditation. Northumbria is also seen as a magnet for attracting local talent.

“We are recruiting about 55 per cent of our students from the North East,” the vice-chancellor says, “and for the highachieving students from the North East – those with 360 UCAS [Universities and Colleges Admissions Service] points or more – we are increasingly the regional university of choice. It is also Northumbria

It was partly a matter of putting things together that were already there

that places the largest number of graduates from the North East into professional roles, including a significant number from outside the region.”

Meanwhile, Professor Wathey has himself forged strong links with local business, sitting on the board of the Confederation of British Industry (CBI) regional council.

He is also on the board of the Newcastle Gateshead Initiative, which is now playing a key role in inward investment and working closely with Northumbria University to ensure international businesses can move here in the knowledge that there is a strong, talented graduate pool to take up jobs in business and develop their emerging research and development agendas.

“We’re no stranger to working closely with the business community,” Professor Wathey says, “in Newcastle upon Tyne, in Gateshead, and across the region.”

The impact of Northumbria University on the local economy is also well documented. The university has helped to achieve a milestone in the Gateshead regeneration project, with an active role in the £150 million Trinity Square project in the centre of Gateshead which features new student accommodation for almost 1,000 Northumbria students as well as a Tesco Extra store, new shops, a cinema, health centre, bars, restaurants and offices.

The project created around 1,000 construction jobs and provided employment for over 4,000 workers and specialist trades people. But key to the project is the fact that it will attract nearly 1,000 students to the area, bringing an additional vibrancy that will further stimulate the regeneration of the centre of Gateshead.

A partnership between Northumbria University and Northumberland County Council is boosting the county’s economy and improving the quality of life of its residents. The partners are working together to benefit the county’s business community, with the aim of developing Northumberland as a “research and development county”, recognising that its economic future will be driven by growth in small and medium-sized enterprises (SMEs) and microbusinesses particularly.

Regeneration is also on the agenda, with a specific focus on Ashington. The university and the council are working with other partners to explore programmes that will enable Ashington to become a healthier place, bringing together education, culture and research on wellbeing to transform the town.

While the local economy has been at the forefront of activities, the cultural offerings – so important in the inward investment offering – have not been overlooked. BALTIC 39 – a collaboration between the BALTIC Centre for Contemporary Art and the university – is a prime example.

In 2001, the two organisations came together to set up a new MA Fine Art and Education course for teachers of art. Ten years later, they came together again in a groundbreaking partnership. The collaboration has established a new Institute of Contemporary Art – the BxNU Institute – which unites academic research excellence and cutting-edge contemporary art practice. It is the only facility in the UK where an art school sits alongside a major contemporary arts centre.

Northumbria University has also extended its influence on the region’s cultural scene via strategic partnerships with Live Theatre – renowned as a centre of excellence in the North East for performing arts and creative writing – as well as with the Tyneside Cinema and Tyne and Wear Museums. These are all leading to opportunities for many graduates who go on to work across the North East’s cultural landscape.

As a result of its influence on the cultural scene, the university was recently named Best Arts and Business Partnership in the local Journal Culture Awards.

“Partnership focus is very important to us,” says Professor Wathey. “Local authorities have been excellent partners – projects like Trinity Square in Gateshead will transform the economy, as will the cultural work we have done across the North East.

“With the absence still of FTSE 250 companies in the North East, local authorities and the universities are the two sets of organisations that have a placeshaping ability.”

While Professor Wathey is obviously a flag-waver for Northumbria, he doesn’t seek to downplay the other three universities in the North East. “You have four quite evenly balanced universities within the LEP area,” he says. “And the role of our universities has grown. Look at the economic impact and the number of graduates they put into North East businesses.”

The North East universities are faring well nationally, too. In terms of student recruitment, 2012 reforms produced a dip but it has come back strongly with the North East outperforming national growth with a 4.6 per cent increase in applications as against 3 per cent for England as a whole. “This year at Northumbria we have had more applicants and more acceptances of places from high-achieving students than at any point in our history,” Professor Wathey says.

“Ten years ago, Higher Education participation in the North East was significantly below the national rate. It is still behind, but the gap it is closing – that’s partly to do with growing aspiration, but also because students increasingly recognise the advantage when it comes to employability.

“If you are a non-graduate, you are four times more likely to be unemployed. If you are graduate you simply have a much better chance of getting a good-quality job – so university is seen as a source of opportunity – and Northumbria has a great employment record.”

Professor Wathey has his own perspective on the North East Economic Review.

“What is emerging is strong and I think [Lord] Adonis has been a very good accelerator. He brought a lot of energy and enthusiasm to bring it together – it was partly, but not only, a matter of putting things together that were already there.”

the times | Thursday September 5 2013

9

Business Insight

Research

The worker who rose by degrees ‘Accidental academic’ from North East brings own unique perspective to review

By Mike Cowley

W

ith a first-class honours degree in computer science and a PhD in applied artificial intelligence, you might be forgiven for thinking that Professor John MacIntyre would be something of a geek.

You would be completely wrong. The Dean of the Faculty of Applied Sciences and Pro Vice-Chancellor at the University of Sunderland – who headed the team of 10 which was tasked to conduct research within the North East’s manufacturing sector and submit proposals to the North East Economic Review – is a self-declared “accidental academic”.

An extrovert by nature, here is one professor who is something of an action man outside the lecture theatre. Having played both football and cricket, now focuses on snowboarding, tennis and golf – not forgetting scuba diving.

It is not, though, his energy-sapping pastimes but his unusual background – first in manufacturing, where he excelled despite a lack of qualifications, then in academia where he acquired a host of them – which enabled Professor MacIntyre to bring his own unique perspective to the Economic Review.

The son of a Highlander who had decamped to eventually work in the in South Shields pits, Professor MacIntyre did not even attend university until he was 29 years of age. And when he did, it was at Sunderland – at that time a polytechnic – where he has effectively remained ever since.

It was while working as a journeyman printer after leaving school that he realised that the skills he was learning would soon be overtaken by new technology. So he trained himself as a computer programmer, attending night school until he was fully proficient.

Soon afterwards, he found himself using his new-found expertise in IT (information technology) in the Middle East. This was in the 1980s, and large engineering firms were looking for people to write high-end scheduling programs for projects. John MacIntyre was in demand in a niche market and became an assistant factory manager in Saudi Arabia in what was then the world’s largest pre-cast concrete plant.

Then, like many who hail from the North East, he found the call of the region too strong – and in due course headed home.

Even though he had by this time acquired significant expertise in both management and programming, his lack of formal qualifications effectively disbarred

Going up: Professor MacIntyre sees the Economic Review as only the first step on a long road him from the jobs he both wanted to do and could do in the North East. There was only one way out of this impasse: get a degree.

So he went to what was then Sunderland Polytechnic, with a view to obtaining both a degree in computer science

The professor with his Sunderland team and also an MBA – which would give him a recognised career springboard to return to a role in management in the manufacturing sector.

He had to do it the hard way, however.

When most of his student cohort were thinking about enjoying themselves, John MacIntyre had to take a night job back in printing to help support his young wife

and family, as his once substantial income was now a thing of the past. He continued to do this – attending classes during the day, working shifts at night – for most of his early days in academia.

“When I decided to come back to the UK,” he recalls, “I had to get some qualifications. Here I was, a working-class lad who had ended up in a management position with a lot of people working for me, but I realised if I wanted to progress over here I needed to get some formal qualifications, and definitely a degree.”

With a first-class honours degree under his belt, the next step then was an MBA, which he saw as the guaranteed ticket back into the world of manufacturing.

However, he was offered the opportunity to study for a PhD, which appealed particularly as the area of research involved both computer science and engineering.

While doing his PhD, he started teaching, and so found himself not just caught up in the world of academia but also – as when he had previously worked in manufacturing – in demand.

All the skills he had wanted to hone anyway – computing science, engineering, artificial intelligence – were part of the package of staying on. So the working-class lad who had arrived without any qualifications suddenly found himself an academic.

“It hadn’t been part of my thinking,” he says, “so it was really an accident. It has been a great and exciting journey and an adventure anyway.”

Part of that excitement has been generated, of late, by being able to help his beloved region as the academic in charge of the University of Sunderland team participating in a section of the background

No longer is it what and why but how. The Economic Review Conference is the next step in bringing people together to answer that

research on which the North East Economic Review is based.

All four universities within the North East Local Enterprise Partnership (LEP) area were each assigned research briefs which played to their particular strengths.

In the case of Sunderland, they were asked to come up with an analysis of the opportunities across advanced manufacturing – including automotive, advanced engineering, pharmaceuticals, and energy – which were looked on as being the key sectors for job generation.

“The fact that in the university works closely with the manufacturing sector meant that we could forget the survey route and go and get the information directly from the horse’s mouth by talking to business leaders,” Professor MacIntyre says. “It was also important to show that there is a lot more to advanced manufacturing in the region than just Nissan and the automotive sector. There are a lot of very important companies out there generating jobs who were happy to talk to us as part of the research for the North East Economic Review.”

He is convinced that the Economic Review will play an important part in shaping the economic future of the region.

“The North East has a richness, a real personality, a real sense of identity,” he says. “Sometimes the flipside of that can be parochiality, not knowing what is going on in the other side of the world.

“Yet we have real entrepreneurs here, who still have a strong sense of identity as being from the North East, but who realise we are part of a global marketplace. I hope that the Economic Review will help the region to develop to take advantage of that global marketplace.”

However, Professor MacIntyre sees this as being only the first step on a long road.

“The only thing about the Economic Review,” he says, “was that it was constrained by time and resource. It’s not that I disagree with anything, but the LEP recognises that it was a starting point. However, the Economic Review is out there – the headlines came out, then there are recommendations that various groups and stakeholders have been looking at and seeing how they can turn them into reality.

“The questions are no longer what and why, but how. The LEP’s Economic Review Conference is the next step in bringing people together to answer that question.”

Like most North Easterners, John MacIntyre feels he is woven into the very fabric of the region. Football is, of course, part of it. As a Newcastle United supporter, he has followed his team since his elder brother – who now runs a successful PR business in New Zealand – took him to his first match, in 1971. And it was an important match in the history of the club, which the professor recalls clearly to this day. It was the home debut of Malcolm Macdonald, who scored a hat-trick as Newcastle beat Liverpool 3-2, and who went on to be the club’s top scorer for the next five seasons.

There is more to it than just football, however – if you can say such a thing in the North East. It is the indefinable quality of belonging somewhere, something that you normally only feel when you have been away. This reflects very much the sentiments of John MacIntyre, when he recalls the times he returned home from working in the Middle East.

“When I was flying back,” he says, “I never really felt excited until I could see the Tyne Bridge. When the plane banked across and you could see the two piers, the south and north, and the mouth of the Tyne, then I would feel I was coming home.”

Thursday September 5 2013 | the times

10

Business Insight

Executive action

He’s so at home, fighting for a new age of prosperity

Review initiator and LEP chairman Paul Woolston’s goal is to generate a wave of 60,000 new private sector jobs by 2030

By Mike Cowley

T

he North East has always been a close-knit community, and now that pride and sense of identity has been channelled into a successful reboot of its economy to the point where – in terms of exports, the sector seen by the Coalition as the primary vehicle for a return to prosperity – it leads the UK. One man whose personal and professional roots are firmly planted in the North East is Paul Woolston, the senior partner of PwC (PricewaterhouseCoopers) in the region for the last 12 years. His oft-declared passion for the region led him to take on the role of the chair of the North East Local Enterprise Partnership (LEP), the body which commissioned the critically important North East Independent Economic Review, seen as the blueprint for future prosperity.

The review marked the start of a new chapter for the North East as a potential powerhouse, not only in the UK but in the world economy. Now the LEP is building on the key recommendations to create the foundations for both the Strategic Economic Plan and the European Structural and Investment Funds strategy.

Paul Woolston and his LEP team collectively hit the ground running after the review was published in April. They are currently in the vanguard of the initiative to implement the key goal of the Economic Review – to achieve not only an additional 60,000 private sector jobs by 2030, but also to ensure they match an increased emphasis on skill levels.

This will see the LEP play to the key strengths of the region – making, trading and exporting – and so create an outward-looking idea of a “North East International”, turning the area into a truly global business player.

Naturally, all this will need money.

And the LEP has already proved more than adept at drumming up funds from both UK and European Government sources, being halfway to the target of £200 million-plus estimated to be

needed to pump-prime the existing local economy.

This remarkable local success story is meat and drink to Paul Woolston, a man so enamoured by the North East that he has spent his life either working there or trying to get back there. His first job after graduating was with the Inland Revenue, which offered the opportunity to train as an accountant for the National Audit Office. Mr Woolston said yes, not only because it meant a professional qualification but also – as he was working in Glasgow at the time – because it would involve a move back to the North East.

Wherever his career has taken him – London, Glasgow and Manchester – he has always had one eye on getting back home. And that is why he is driven by the objective of creating jobs for young people from the North East, so that they have the opportunity to realise their potential in their home region. “I am happy if they want to move out,” he says, “but I feel they should have the chance here.”

This sense of belonging has also been carried over into the office he runs in the North East for PwC, by some margin the biggest accountancy firm in the region. “One of the nicest things people say about us is we are very friendly and there is a family feel about us,” he says.

“That fits in with my thinking. When I meet our new graduates on first day, I

ask them what they think is the most important thing for me – and then tell them it is inclusiveness. We work as a team – I don’t believe in hierarchy” That inclusiveness also embraces diversity. “When I say that I’m not talking about race or sexuality,” he says.

“It’s not about whether you are small or tall – or even a Newcastle supporter [Mr Woolston has supported Sunderland since he was aged five] – we all work together as a family unit.”

With thinking like this, it was a natural step for Mr Woolston to take over the chair of the North East LEP, the body that followed the old Regional Development Agency (RDA), One North East.

However, he sees clear water between the old and the new.

“The LEPs are nothing like the RDAs,” he says, “and we have moved on pretty quickly since being established. In a way, we didn’t want the big budget associated with RDAs, we wanted to be pretty lean and more strategic. Even now, though we’ve been very successful in attracting funds, we don’t want to sit on them. We want to pass them on as quickly as possible.”

Paul Woolston firmly believes that the LEP is a force for change for the better, with the North East Independent Economic Review which it commissioned being the major milestone in its rela-

Paul Woolston is driven by the objective of creating jobs for South East youngsters so they can realise their potential in their home region

There are some brilliant things happening but we shouldn’t be arrogant about them

tively brief history. “When we were established as a LEP,” he says, “we realised we needed a clear economic strategy – so what better way than to ask eminent people to produce this for us? That was the basis of our thinking.

“It was also critical to get the right person to chair this. If we got the right person, we would get other people to sign up for it – so we needed someone pre-eminent in Government who understood and supported the regions. He or she had to have an interest in creating employment, a better base for economy in the region. They also had to be well respected across parties. Lord Adonis ticked all the boxes.”

While Mr Woolston is well aware of the inequalities that remain in the region – youth unemployment being the obvious example – he also insists that, increasingly, the North East has a lot to offer. “There are some absolutely brilliant things happening,” he says, “but we shouldn’t be arrogant about them. We should feel a lot more confident as a region and that will filter through to our young people so they can have greater aspirations.”

The LEP chairman also tackled the thorny issue of the tale of the two LEPs in the region: North East and Tees Valley. “When I think of the North East as a region, I would include Tees Valley in that emotionally,” Mr Woolston says.

“When I talk about football teams in the North East, that includes Middlesbrough. However, I can also recognise there are specific characteristics to economic sub-regions – Tees Valley has its own.”

There remains a dichotomy here, however: loving the region but facing the reality of two LEPs. “I still look on it as one area,” he says. “If you are from another part of the world, you won’t know the difference between Middlesbrough and Morpeth.

“What we don’t want is that to work against us in terms of business in the North East. If I found someone interested in a business activity in Tees Valley, of course I would direct them there – and celebrate the success if they went there.”

He is mindful, though, that the rest of the world – or even the rest of the country – still sees the North East as one region, whether or not it has two LEPs. “I’m certain there is a view out there that the workforce in North East as a whole is exceptionally good – even though we have got some skills gaps. There are engineering skills built into our DNA. People in the North East work hard, they turn up for work, work is important to them – they have the determination to do well. The real answer is to create more jobs.

“We’re the best region in UK for exporting, and the current Government’s economic strategy is based on exportdriven economy. If the rest of the country could do as well as us, we would be in clover.”

But although Paul Woolston wishes Tees Valley well, he is well aware of his role as an ambassador for the North East LEP. “Compare us with other LEPs,” he says. “We’ve got three cities, four universities, an international airport, thriving ports, two world heritage sites. We’ve got Nissan – truly iconic, two Premier League football teams, a first-class country cricket team and a Premiership rugby team. That’s pretty good.

“And as someone who loves the North East, I’d be quite happy if we had three Premier League clubs. Middlesbrough comes a close second to Sunderland for my long-term football loyalty.”

the times | Thursday September 5 2013

11

Business Insight

Air links

Big plans (as well as planes) are taking off at Newcastle airport The man at the helm has steered the North East’s biggest airport through some tough times – but things are looking up today

By Heidi Soholt

T

he ability to stay calm in the face of 30,000 baying football supporters is a skill which Dave Laws has found useful in running one of the UK’s major airports.

His past as a football referee, and latterly as a Premier League delegate, taught him valuable man-management techniques while also providing a welcome release from the stresses that come with being a chief executive.

Having started his career as a trainee fireman at Newcastle Airport in the late 1970s, Mr Laws worked his way up the ranks to become its chief executive six years ago. These have not been the easiest

Ready for take-off: that masterplan... of years, with the recession bringing massive challenges to the aviation industry, but Mr Laws is now confident that he has weathered the worst of the storms.

Underpinning this positive attitude is the launch of the airport’s new masterplan. This, the third such plan, lays down development requirements up to 2030, a period during which it is hoped that over 2,000 new jobs will be created with an increase in economic delivery from the current £646 million to £1.3 billion. Another key area is in aircraft movements, which are expected to grow from 62,200 in 2012 to 87,500 over the period.

Newcastle International Airport is the largest in the North East and eleventhlargest in the country. It is owned by seven local authorities (comprising 51 per cent) and the Australian investment firm, AMP Capital (49 per cent). The airport serves

a catchment area which includes Tyne and Wear, Northumberland, County Durham, Teesside and also parts of Cumbria, North Yorkshire and southern Scotland. It plays a critical role in the area’s economy, and is a key player in the North East Economic Review.

The securing of a long-haul scheduled service to Dubai in 2007 is an achievement which Mr Laws regards as particularly important to the region. “The Emirates service demonstrates how much the right connectivity can bring to a region,” he says. “As a direct result of this daily flight, we’ve seen exports going up tenfold, and businesses developing overseas.

“There’s been an increase in trade between the North East and Australasia from around £150m in 2007 to over £360m in the last year, as well as growth in trade with the UAE, Saudi Arabia and other economies.”

Other new routes include easyJet services to Jersey, Amsterdam and Tenerife, a Scandinavian Airlines route to Copenhagen, the Aer Lingus regional Dublin service, and Jet2 “shopping trips” to New York and Toronto. Thomas Cook flights to Turkey are due to be announced next year.

Dave Laws was born and bred in the North East and is passionate about the region. Living in the same area as he works gives him a unique insight into its needs and potential, and he introduced the “Your Airport” branding to stress its community links.

“The people of the North East are warm and friendly,” he says, “and our goal is to be the most welcoming airport in the UK.” And it seems these efforts are paying off, with the airport scooping the Airport Operators Association award for the best airport under six million passengers for four years running, while the Which? passenger survey placed it top among large airports with a customer satisfaction score of 69 per cent.

Mr Laws expects the masterplan, currently undergoing public consultation, to be ready by the end of the year. It was launched after the appointment of AMP in November. “When AMP came on board,” he says, “we felt the timing was right for a new masterplan, incorporating their thoughts and vision.”

Summing up the plan as “positive” and “exciting”, Mr Laws adds that it has the full support of the area’s local authorities and city council. “The local authorities involved understand how important connectivity is,” he says.

“They recognise that the area has to

Newcastle airport’s chief executive Dave Laws: ‘We need a collective voice’

Our goal is to be the UK’s most welcoming airport

have connectivity to emerging markets and to attract inward investment. The more direct connectivity you have, the stronger the region.”

He also notes that there has been a positive reaction from the public: “Around 84 per cent of the local community fly through Newcastle, so it’s a very well-supported airport. I’m also realistic enough to know that people will have concerns and that it’s our job to listen.”

Significant investment areas include improved passenger facilities, an extended terminal building and additional aircraft stands. There are also plans for the Southside area of the airport and the creation of a development zone. “This will lead to additional jobs and suppliers, and hopefully a rise in inbound tourism,” Mr Laws says. “The key thing

for the Southside development has been securing political support.

“We’re very fortunate we have the Metro service, which comes directly to our front door. This means that you can be in the city centre in 23 minutes – a big selling point. The Southside element is also about the airport itself – the creation of additional hangars, a cargo shed and maintenance facilities.”

Environmental impact is a major consideration within the plan, with Mr Laws saying that “Noise is a big issue and we are replacing noise-monitoring equipment.” The airport was also one of the first in the UK to be awarded the coveted Carbon Trust Standard.

The masterplan is underpinned by a firm belief that any changes need to be sustainable. “If I put in a new route,” Mr Laws says, “I’m aware that people and businesses will depend on it – they expect it to be sustainable. Before coming on board, AMP carried out in-depth due diligence. We’ve looked at those reports and compared them with our own business plan. The plans were much aligned – we think we should be doing more in Europe, particularly Germany, and running a transatlantic flight.”

The airport is one of the North East’s largest employers and currently provides 3,200 on-site jobs. Newcastle College has a base there, bringing in around 500 students a day. It is also home to an offshore emergency training college which illustrates an appetite for diversification. “I believe in thinking outside the box,” Mr Laws says.

He took over the presidency of the North East Chamber of Commerce in June, something he regards as a great opportunity to get key messages across to businesses. “I strongly believe that as president I represent the whole region,” he says. “The key themes for my twoyear tenure are two campaigns – the 50 Great Reasons to Invest in the North East, and Evolution.

“I also believe we need a common voice, strategy and identity – it’s about working together and achieving that single voice. If we have a common, collective voice then it’s easier to be heard in central Government.”

The airport chief executive hopes that the economic conference will result in concrete action. “It’s about picking up and translating what is said into real action after it,” he says. “We need to get everyone behind it, to make things happen. I guess that means that it’s time for me to put up or shut up too – and get some progress on these transatlantic routes.”

Thursday September 5 2013 | the times

12

Business Insight

Offshore

Stay true to our old flames oil and gas...

Networking is still key to success, the chief executive of re-energised trade group NOF Energy tells Mike Cowley

W

hen George Rafferty took over as director of what was then the Northern Offshore Federation in 2005, it was shedding members in their droves and being funded by the taxpayer – and its future looked increasingly bleak.

Attractions such as golf days as part of an emphasis on the social scene – when no one had any time to play because of ever-increasing business pressures – had lost their appeal to the North East oil and gas industry players who made up the membership.

So, after being appointed in November 2005 to restructure and reposition the organisation, Mr Rafferty took soundings for six months to form a new strategy for a new organisation before relaunching it as NOF Energy Ltd in January 2007 and being confirmed as chief executive.

Gone was the old trade association format. In its place was a highly skilled business development organisation designed to open doors and to identify and facilitate opportunities for members at home, nationally and around the world.

Mr Rafferty also recognised that for the organisation to survive and prosper, members would need to pay for the service. That required a change in the mindset of existing members and became the first real hurdle for the new organisation to overcome. Whereas the old federation had previously been subsidised by up to 95 per cent – and being in the North East, public subsidy was part of the fabric – not everyone took kindly to having to now put hands in pockets.

But George Rafferty was having none of it, and made a strong case for members to recognise that the quality of service that would now be on offer – and the potential benefits for their businesses – was well worth paying for. And they did.

He eased the pain somewhat by setting out a schedule for a decline in the reliance

on the public purse as part of the strategy.

“We set ourselves a target of seven years to be free of public money – by March 2013,” he recalls. “And we achieved it by March 2012, a year early.

“The fact we got away from dependence on the public purse shows that we are doing something right. We were offering value to their businesses and they were prepared to pay for it. If this hadn’t have happened, we wouldn’t be around today.”

The income for NOF Energy is made up of one-third from membership fees and the remainder from commercialisation of the service and contracts with other organisations.

Finance certainly wasn’t the only change in strategy embraced by the new NOF Energy in 2007. Membership was extended from the North East – first nationally, then internationally. Today, it has risen from 170 to 430, with a hard core of 200 still to be found in the North East, and some of the original members who resigned returning when they realised that here was an organisation prepared to work on their behalf – and to get results.

International members, known as global partners, can be found in all the main global energy markets – Brazil, Malaysia, South Africa and Canada being just some – with the exception of China.

Although oil and gas remains the core business of NOF Energy members – and will do for the foreseeable future – there has also now been a shift into offshore renewables and nuclear. A membership breakdown throws up some interesting facts and gives a clear indication of the changes afoot in the sector. While all members remain in oil and gas, approximately 42 per cent are also in offshore renewables, with roughly the same percentage in nuclear.

This, in part at least, is as a result of advice from NOF Energy, which has always suggested that members should use their existing skills as a springboard to break into associated market sectors. The arrival of shale gas has also sparked interest – but, despite a lot of talk, Mr Rafferty is unaware of any member having taken it further. “This doesn’t mean it isn’t happening, though,” he says. “But it will be a very low number.”

Networking remains a key activity for NOF Energy – as it did for the former federation – but it is on a considerably

grander scale these days. A recent presentation by Premier Oil saw a turnout of 130 businesses from across the UK– now a typical figure for NOF Energy events – and they were there not just to listen but to network.

The business development association also regularly holds events in Aberdeen, where the average attendance is between 180 and 230. And these events are often well attended by member companies from the North East of England, who do a lot of business there.

So how effective is the range of services provided by NOF Energy? A recent independent study revealed that NOF Energy members had won more than £150 million of additional business over a three-year period. “We know it is more than that as some of our members tell us,” Mr Rafferty says, “but we have to respect commercial confidence.”

The annual suppliers’ day event has also proved fertile ground, with one member confiding that they had picked up £130,000 of business from one source after attending in 2012.

Just how important oil and gas is to the North East economy can be judged by the 200 North East members having a combined turnover in excess of £2.5 billion per year. And while the oil and gas industry supports 440,000 jobs nationwide, in the North East the total is 15 per cent of that – around 66,000 jobs.

Understandably, Lord Adonis and his team were not slow in beating a path to NOF Energy’s door to take findings for the Economic Review. “We organised a round-table discussion with our members for the visit of Lord Adonis,” Mr Rafferty recalls. “We also made written some submissions.

“The message we got across is that oil and gas is the here and now and the re-

George Rafferty: Getting away from the public purse ‘shows we are doing something right’

Offshore renewables will present opportunities in the future, but our message is: don’t forget the here and now

gion has got to recognise that. Offshore renewables will undoubtedly provide real opportunities in the future, so by all means look at how you can help the supply chain for renewables industry, but for goodness’ sake don’t forget the here and now – and that is oil and gas.”

George Rafferty arrived in the North East from Hamilton in Scotland to work for the steel industry in 1988 – by coincidence the year the old federation was formed. He says what dates him is that steel was still nationalised at the time. Today, he has three grand-daughters and “considers the North East as home”.

Even before taking up his present job, he had been hearing predictions that the oil and gas industry in the North East would not last – echoing what has been said even before the old federation was formed. But on the day he spoke to The Times, a front-page article appeared in the business bulletin of Aberdeen and Grampian Chamber of Commerce under the headline: “Next 50 years for the North Sea”.

“So I guess we have another 50 years,” Mr Rafferty says. And it certainly looks that way – for despite having 11 members on the staff, not one of them sells – or promotes the sale of – membership.

“Our growth comes from our activities and recommendations,” Mr Rafferty says. “We have no desire to become an organisation of 500 members – that may happen, but it is not a driver. The driver here is to provide the highest quality of service to our members. If we get that right, members will stay and they will also recommend other people they work with to join us.

“I hope my legacy will be that NOF Energy will still be working on behalf of its members long after I’ve gone.”

the times | Thursday September 5 2013

13

Business Insight

Port of Tyne

Speedy export experts make this a port apart Signed, sailed, delivered: Fast getaway cars and a happily involved staff make for a growing river of customer confidence

By Mike Cowley

A

ndrew Moffat readily admits he is a firm believer in the business principles of sharing and co-operation – not dissimilar to those behind the John Lewis Partnership. This has struck a sufficient chord with the man behind the fastest-growing port in the country that he has built those principles into its strategic plan, the core of which is keeping both the customer and the staff happy.

Last year that saw an extra 5 per cent go into the pay packets of the 500 staff – the equivalent of two-and-a-half weeks’ wages – not as a bonus, but in the form of a share of the profits.

Mr Moffat has been able to do this because the Port of Tyne is a trust port, which means that as a business it does not have shareholders. Instead, it is run by a board of independent directors accountable to its stakeholders – made up of customers, employees, the local community, Government and business. As such, all profits are reinvested for the benefit of the stakeholders.

The profit-share approach is all part of the culture change which has been developing in the port since Mr Moffat took over the reins in 2008. And the success of its impact can best be judged by the results.

In 2008, the Port of Tyne had a turnover of £48 million and reported profit before tax of £4m, while last year it was £63m and profit increased to almost £12m. Yet these numbers don’t really tell the full story.

The appointment of Mr Moffat, the former director of strategy at Orange and chief financial officer of 3 UK, meant that the board had recognised it was time for change at the port. On arrival, he realised that to exploit successfully the opportunities that existed, it needed a change of approach. “We focused on delivering value for the existing markets, finding new markets, and getting efficiency and effectiveness from our operation,” he recalls.

“Importantly, we set out our values for the organisation and these focused on our people, our customers and the future to give the strategic direction to deliver our aim of a vibrant and sustainable Port of Tyne.”

This mantra was applied to the port’s five distinct business areas: conventional and bulk cargo, car terminals, cruise and ferries, estates, and logistics – while constantly keeping an eye out to further diversify. Suffice to say, the Port of Tyne

was named as the North East Business of the Year for 2013, breaking its own growth records year-on-year for three years to win the accolade.

What the statistics don’t tell you, though, are the stories that lie behind the success. How the Port of Tyne was able to capture a major business contract using a partnership approach with Drax, the power generating company. The Drax power station in North Yorkshire was switching to biomass fuel in the form of wood pellets as part of the move to convert their boilers from coal, and needed specialist handling, storage and transportation facilities that did not exist at the time.

The Port of Tyne invested around £25m in infrastructure and facilities – and today, because of the Drax partnership, it is the leading handler of wood pellets in Europe, and has started a major expansion of this business. “We were able to secure this for the port because of innovative pricing, developing special relationships and our reputation for delivery,” Andrew Moffat says.

Then of course there is Nissan, which relies on the port to get its cars to market quickly and cost-effectively.

All of Nissan’s exports pass through the Port of Tyne – and with VW and Audi imports and transshipments, that means over 700,000 cars every year.

Then there is the logistics container terminal dedicated to import and export of manufacturing parts (for Nissan and others), retail and consumer goods, and recyclables, providing warehousing and UK distribution via a fleet of 165 trucks and trailers.

“For our customers it is all about speed of delivery,” Mr Moffat says. “They don’t want to have containers and ships waiting to come in or go out – and neither do we.”

To get some appreciation of the importance of the Port of Tyne to the North East, the total gross value added contribution made by the port to the region is almost £500m per year, and this directly and indirectly supports some 10,500 jobs. The North East is the only net exporting region in the UK, with £14 billion of exports, of which more than half is handled by the Port of Tyne.

Such is the importance of the Port of Tyne in the region that it was high on the agenda for the North East Economic Review, which fully involved the port in its deliberations, particularly around infrastructure and connectivity.

“Sea connectivity is clearly vital,” Mr Moffat says, “as is transport by rail in terms of freight capacity, and as we have our own distribution fleet road connections are also important – and air is an important part of the mix, too.

With 95 per cent of the UK’s export and imports handled by sea, there is an increasing awareness of the importance of ports, and the Port of Tyne has certainly

Set for more development: Port of Tyne, which already handles over half of the North East’s £14bn exports

It’s all about speed of delivery.

Customers don’t want to wait and neither do we

Top Tyne hits ...well, six

No.1 car exporter in the UK (no.6 in Europe).

No.4 coal importer in the UK.

2013 — the only UK port shortlisted for Lloyd’s List Global Port Operator of the Year.

stepped up to the plate in recent times to play an active role in supporting economic strategy for the region.”

In the case of the Port of Tyne, there are already significant plans to deliver economic growth, with two major projects in the pipeline. The first, due to come to fruition in 2015, is the development of £180m of infrastructure to support the power industry’s demands for wood pellets. This will create 900 jobs in construction and 300 permanent jobs in operation.

The second is the development of port land and river frontage to support the manufacture of giant turbines for offshore windfarms in the North Sea. This land has North East Local Enterprise Partnership (LEP) Enterprise

Leading wood pellet handler in Europe.

2012 — UK Best Port of Call for cruise ships.

2013 — North East Business of the Year.

Zone status. Andrew Moffat believes they are making progress in securing a manufacturer, now that there is more clarity in Government energy policy and related subsidy regimes.

But when is it likely to happen, and what impact will it have on the North East? “I think we are looking at 2015 and we are working with the LEP to secure this,” he says. “As for the impact, it has the potential to be similar to Nissan in terms of multiplier effect.”

That will be further welcome news for the North East, and evidence if it was needed of the dramatic impact that applying a bit of vision to an everyday facility such as a port can have on the economic fortunes of an entire region.

Thursday September 5 2013 | the times

14

Business Insight

North East Virtual Forum

Where do we go from here? Leading lights illuminate way ahead

George Rafferty

It’s the key question that will focus conference minds

By Michael Cape

W

here to now? That will be the question on most people’s minds on the eve of a conference set up to answer just that. So The Times decided to set the scene for tomorrow, pre-empting and possibly helping guide the con-

ference discussion by posing a series of questions that may help shape the debate.

While the usual approach of The Times to this type of project is to hold one of its high-profile Forums – where the great and good sit round a table to discuss the issues face-to-face – in this case time did not permit. Instead, we opted for a

Virtual Forum – made so much easier by today’s technology – where key local people who had been involved with the Economic Review were able to offer their views remotely. So here are some thoughts on what is seen as needing to happen post-Review, from the round table without the table.

Andrew Moffat

Jobs

With the North East Economic Review now accepted as a blueprint for the region, the stated key objective is that it will generate 60,000 additional new and better jobs. So the panel was asked to put some flesh on the bones and explain where these jobs will actually come from.

Paul Woolston, chairman of the North East Local Enterprise Partnership (LEP), was the first to take up the challenge.

“Many of these jobs,” he said, “will be created through a greater emphasis on making, trading, exporting, creating an open innovation ecosystem, growing our skills base and doubling the number of apprenticeships.

“This is not just about advanced manufacturing sectors – the team were very keen to set out the importance and potential contribution of tourism, culture and the new economy in job creation.

Undoubtedly there will be a mixed picture – a diverse economy with a series of strong specialisms will enable us to create sustainable jobs.”

George Rafferty, of NOF Energy, understandably pinpointed his members’ principle operating sector – oil and gas – as the most likely source of increased employment opportunities. “The everincreasing demand for energy worldwide will result in many opportunities,” he said, “and this in turn will result in job opportunities within the regional energy supply chain.”

Andrew Moffat, of the Port of Tyne, reported they would be trebling their number of apprentices this year and were seeing growth prospects in a number of areas: “We are reporting growth and seeing potential in renewable energies (wood pellet for power generators and offshore wind turbine manufacturing), and import and export of manufacturing parts and equipment, particularly for the automotive, oil, gas and subsea sectors.”

Dr Tim Hammond of Durham University insisted that jobs will come from “both private and cultural economics” adopting a triple-pronged approach.

“Building on excellence clusters like advanced manufacturing and processing,” he said, “the North East LEP will focus on increasing productivity and flexibility by adopting new paradigms like open innovation and resilient green supply chains, thus creating world-class excellence clusters of manufacturing.

“Fostering proactively high-velocity growth clusters – providing project-based incubation space for digital, media and software companies that can operate in a knowledge co-production model with regional universities; creating smart heritage regions – showcasing the regions assets in terms of cultural and heritage attractions and facilities using social and virtual media, as well as making the region smarter in terms of technology embedment.”

Lucy Winskell of Northumbria University was also buoyant about job prospects, pointing to her own university as an example of ongoing job generation. “Northumbria University has made a significant investment in the Northern Design Centre,” she said, “to establish a world-class centre for open innovation and growth.

It will create a focal point for high-value university and industry collaborations on a regional, national and international scale, building a global reputation for expertise, providing research solutions to a range of industry sectors and providing new and innovative job opportunities for the future.

“It will also be the home for start-up businesses of students on the BA Business Entrepreneurs programme – an innovative way of developing entrepreneurial and business skills in the region.”

Professor John MacIntyre of Sunderland University pointed out that “with investment and innovation” leading to growth, there were opportunities for job creation in many sectors – naming ad-

vanced engineering, manufacturing, software and IT, low-carbon technologies, energy, creative industries, pharmaceutical and professional services as likely to prove the most fertile.

Meanwhile, Professor Chris Brink from Newcastle University saw the universities as net importers of talent to the region – attracting both academics and students to stay here – which in turn stimulated graduate enterprise resulting in both new companies and new jobs.

“Last year, graduates from Newcastle created more than 30 businesses,” he said, “many based in the North East, boosting the regional economy and creating jobs.

We also work hard through our Science City initiative to support budding businessmen and women to develop their ideas and potential.”

Innovation

With the North East LEP having put innovation at the heart of its response to the Economic Review, the panel was asked to consider: “Is innovation really that important?”

Paul Woolston explained the LEP’s thinking. “Will Hutton led on the innovation sections in the Economic Review,” he said. “The team agreed that a co-ordinated approach to open innovation could differentiate the North East from other areas, bringing together local businesses, universities and multinational companies to develop solutions to product and process issues.

“The aim is to focus on a few sector strengths in the first instance, and start to develop a widespread culture of innovation. Professor Roy Sandbach is working with LEP with the goal of turning the theory into an action-orientated strategy and we are extremely fortunate to have access to his incredible expertise and networks.”

George Rafferty was certain of the answer: “Innovation is absolutely vital if businesses are to compete internationally

Since the recession began a significant productivity gap has opened up – which can only be resolved through innovation

Professor John MacIntyre for the opportunities referred to previously. Failure to innovate in both product and process will undoubtedly result in loss of market share and tender opportunities.”

This view was echoed by Andrew Moffat. “The ethos of innovation in the region is vital to keep a head start in the market,” he said. “Companies like Nissan that require their products to get to market efficiently and cost-effectively benefit from research and investment in innovative as well as a competitive location.”

A distinct take on innovation, meanwhile, came from Lucy Winskell. “The most straightforward way to grow productivity, price and value is through innovation,” she said. “Since the recession started, it has exposed a significant productivity gap – we can only resolve this through innovation.”

John MacIntyre looked on innovation as “as absolutely essential part of our economic future”, and added: “We have suffered for many years as a ‘branch economy’ location – where the ideas and products are being developed elsewhere. The problem, as we have seen on

the times | Thursday September 5 2013

15

Business Insight

Dr Tim Hammond

be seen as “establishing ourselves as a node in an international network which is easy to trade with – and work in”.

Chris Brink singled out specific examples of why connectivity should be high on the post-Review agenda, including dualling the main road in the North East. “At its worst, you can almost get from Newcastle to London by train faster than you can travel from Newcastle to Berwick on the A1. I would also include in that digital connectivity, which can have huge impact on social inclusion, particularly for older people and those living in rural parts of our region.

“Transport connectivity outside the region is also vital. While the region is well positioned for Asia, for us as a university a transatlantic link to North America would be very advantageous for academic links and research. And from the policy perspective, the fact that the Brussels route from Newcastle has stopped leaves a big gap.”

Lucy Winskell

Adult skills

Professor Chris Brink

Paul Woolston

The panel

Professor Chris Brink, vice-chancellor, Newcastle University.

Lucy Winskell, pro vice-chancellor, Northumbria University.

Professor John MacIntyre, dean of computing, Sunderland University.

numerous occasions, is that those jobs may not stay in the region, as the head office of corporates who have a branch in the region decide to relocate somewhere else. We need them to stay here.”

Chris Brink endorsed the consensus view that innovation is vital to the future of both the North East and UK economy. “We will never be cheaper than some Asian countries,” he said, “so we need to look for ways to be smarter.”

Connectivity With the LEP and many shareholders talking about infrastructure and connectivity, the question posed to the panel was: “But to where?” Again, Paul Woolston gave the LEP view: “Andrew Adonis viewed external connectivity as critical to our global competitiveness,” he said, “reducing journey times to London and Manchester, and introducing a transatlantic flight.

“Internal connectivity was also viewed to be important from the perspective of being able to move about the North East area in a seamless and co-ordinated way, hence the push for an Oyster-style smartcard system to link up people with jobs.”

George Rafferty was concerned that there should be the right transport links to the major energy markets in the Americas and Asia, key areas of opportunity for NOF Energy members.

Dr Tim Hammond, director of business and innovation, Durham University.

Paul Woolston, chair, North East Local Enterprise Partnership.

George Rafferty, chief executive, NOF Energy.

Andrew Moffat, chief executive, Port of Tyne.

But he added it was also important to not forget the home market and the opportunities that emanate from London, Aberdeen and Europe.

Connectivity is also a major issue for the Port of Tyne chief executive. “Connectivity is vital to stimulate economic growth to meet existing and new markets, wherever they are,” Andrew Moffat said, “via the mode of transport – road, rail, air or sea – that is most appropriate.

With over 90 per cent of goods transported by sea, having a port that connects the UK with five continents across the globe is an important asset.”

And connectivity was again high on the agenda for Lucy Winskell. “From an infrastructure point of view,” she said, “the North East is very lucky to benefit from strong ports, but we need to match this with excellent road and rail infrastructures. Connectivity at the broadband level is also critical for businesses in rural areas to survive and thrive. We need to provide a connectivity capability and capacity that enables people to be able to do business anywhere.”

Tim Hammond viewed transport as being vital to underpin the Economic Review – “Connectivity to the rest of the UK and internationally through the transport infrastructure will be critical to realising the vision” – although John MacIntyre added a warning that connectivity should not be about “pet projects which grab headlines”, but should

We need to drive up skills in the workforce.

The review sets out the tools for doing that

The panel was also asked to consider that while the need for increased skills in the adult workforce was obvious, it wasn’t quite so obvious who should provide these. Where should the responsibility lie?

Paul Woolston was quick to point out that there was no single organisation responsible. “This is being taken forward through a partnership approach between the LEP and the North East Leadership Board,” he said. “Skills providers need to be responsive – the new Skills Pilot that the LEP is leading with partners provides an incentives system to increase the proportion of courses available in key skills needs areas, for example the science, technology, engineering and maths STEM skills.”

George Rafferty said the responsibility belonged to “everyone”, although employers cannot leave it solely to the Government but must be prepared to invest in their people. He also called on education to actively engage with industry to ensure the courses meet the needs of employees and “not just the funding bodies”.

Andrew Moffat said that the Port of Tyne recognised its own responsibilities, pointing to the fact that this year they will treble their number of apprentices and have introduced an additional intensive development course for their senior managers. “In doing so,” he said, “we are planning for the future, strengthening the workforce and preparing for growth.”

Productivity

While productivity – spearheaded by Nissan – is enjoying a boom period in the North East, is there concern as to whether it can keep pace with demands on price and value?

Paul Woolston again spoke for the LEP: “What is critical is that the North East LEP partners and Government create the conditions within which businesses can grow and flourish. Our emphasis on open innovation will be a new approach to many – although not all – companies in the North East.”

Andrew Moffat saw that productivity could provide some competitive advantage, but said that “it needs to be complemented with a value offering to customers. Nissan is an example where productivity is high, but it is the design and features that ultimately sell the cars.”

Manufacturing

The manufacturing sector is cited in the North East as leading the productivity stakes, and the panel was asked to consider what pressures might damage this – and Andrew Moffat raised the issue of funds. “The ability to put in place the necessary capital investment, returned funds, access to finance and ability to invest in capital equipment in today’s environment is essential,” he said.

Tim Hammond felt that “lack of support to develop an innovative culture and environment in the region is perhaps the biggest pressure for manufacturing,” adding that there are “other but manageable external pressures”.

Professor MacIntyre looked back on the way the global economy has struggled since the crash of 2008, leading to a slow but painful recovery. “Coupled with the lack of investment finance – or at least the increased challenge in accessing such finance – it’s been a tough few years,” he said. “But failing to invest in the future is the start of a slippery slope, and most successful companies recognise that. We need investment for growth, and investment in innovation, to remain competitive in the future.”

Professor Brink’s concern, meanwhile, was for the immediate future: “We are facing a demographic timebomb of people with a particular and valued skills set that are nearing retirement. We need to have the younger generation coming through to replace them. Lack of consistency from successive national Governments makes longer-term planning and investment a lot harder.”

Exports

While the North East is showing the rest of the UK regions a clean pair of heels when it comes to exporting, can it last?

Paul Woolston acknowledged the success of late, but added: “There is more we can do. We need to improve infrastructure to enhance the ability of companies to move their goods around, and we need to drive up skills in the wider workforce through more apprenticeships and increasing aspirations. This is a responsibility for the North East LEP and its partners, and the Economic Review sets out the key tools we can use to achieve this.”

George Rafferty believed it was possible to maintain the lead in the oil and gas sector. “North East talent and expertise in oil and gas is highly valued around the globe,” he said. With support from NOF Energy, regional businesses can increase their share of the opportunities coming out from the major energy markets globally.”

Lucy Winskell, however, was concerned about the over-reliance on a small group of major manufacturers – while John MacIntyre believes a combination of factors will keep the region ahead of the game. “We have a talented and skilled workforce,” he said, “although we definitely have some skills shortages which need to be addressed, and we have good transport infrastructure to help with exports.

“We have a manufacturing-friendly attitude in our local and regional agencies, who are ready and willing to help where they can. Of course, those of us from the region know about the excellent quality of life here, which helps to attract and retain talent. And we have companies and individuals committed to the success of the region. All of these are incredibly important and part of our story.”

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