Mighty magnet for investment which is attracting attention the world over

Those words from Zhang Xiao Tian, vice-president of Chinese electronics company Jiangsu Jiang Kui, on a recent visit to the North-East reflect the high esteem in which our region continues to be regarded as a location for UK and international investment.

The region has a long and successful track record of attracting inward investment. Responsibility for maintaining that momentum passed to Regional Development Agency One NorthEast upon its establishment in April 1999. This has entailed taking a new approach to attracting the world's best companies.

One NorthEast, working with a wide range of groups and organisations in the region, has produced an economic strategy to take the region's economy forward over the next ten years.

The strategy consists of six broad inter-related objectives to create the conditions for generating more wealth and jobs for the region. The agency's inward investment activity has to reflect and meet these objectives.

This means a greater focus on attracting what could be described as higher added value investments - i.e. those requiring a high order of technical skill or intellectual input.

The role of the North-East is no longer limited to the manufacture or assembly of products. The intellectual elements of production - design, research and development, software and marketing - are now major factors in attracting investment from outside the region.

This has major implications for the region and especially for young people who will form the workforce of the future. We need a different kind of workforce to the one we had in the past - a workforce which is well educated, well trained and capable of being creative, innovative and flexible.

One NorthEast is addressing education and skills issues to ensure that the companies leading the region's economic renaissance have a local workforce capable of helping them achieve success, and that the people of the North-East are able to find work in the region with competitive businesses which will continue to grow and create wealth.

The global nature of business today is also creating a demand for workers with linguistic skills, or at least an understanding and appreciation of other cultures.

In many of the region's leading companies, even today, the workforce is becoming increasingly international and mobile. The complex web of suppliers, customers and other parts of a company's organisation is spread around the world.

Imagine working on a team with a Japanese and an American colleague, and the three of you having to make a presentation to a customer in Germany! It happens. In some organisations it is commonplace.

The region's traditional industries such as coal-mining, shipbuilding, steelmaking and heavy engineering have all experienced difficult times in recent years. Lower costs elsewhere have meant tougher battles being fought to secure and compete for investment. for the North-East in those sectors.

That is why One NorthEast is leading the region in building a diversified economy built on knowledge, the product of what is in our heads - rather than manual dexterity, the product of what we can make with our hands. The region's inward investment policy has to reflect that aspiration.

In the past two years, One NorthEast and its regional partners have been involved in attracting substantial inward investment projects to the region.

These projects involve international companies or companies from other parts of the UK which have committed to creating 10,833 jobs and safeguarding 8,317 jobs through the establishing of new operations or the expansion of existing operations.

Going forward, One NorthEast has set itself a target to attract 35 major inward investment projects from all over the world, producing 3,000 jobs and safeguarding 1,000 over the next two years. International investment for the region means more overseas exposure, and success breeds success. The agency can assist overseas investors in finding appropriate premises, securing support funding and locking them onto key business contacts and suppliers in the region.

Many of our inward investors are leading global companies whose names are known around the world - Nissan, Procter and Gamble, Philips, or Orange, to name a few. They are a tremendous advertisement for the region and help to ease the difficult task of attracting new investment and beating off competition from other areas.

An important part of One NorthEast's strategy is to support strategic companies such as those mentioned above, as well as indigenous companies such as Sage, to help them achieve success from their North-East base. This support to hundreds of companies in the region involves helping to source and develop suppliers in the region, benchmarking their performance against the best in their industry in the world to help them improve, and helping them develop their workforces.

A look at the inward investment successes of the past two years illustrates the trend towards the higher added value end of the spectrum. This is especially true in the customer communications sector. The region's strengths in this area are now evolving to meet the more sophisticated demands of investors.

Thousands of jobs have been created in the region in the past two years through the development of shared services centres and customer contact centres. EDS and SITEL of the US and twenty4help, of Germany have set up customer support, e-commerce and IT centres respectively. French-owned Orange, which has had substantial operations in Darlington for some time, also took the decision after carefully considering a number of locations throughout the UK, to develop further sites in North Tyneside and Peterlee, creating about 4,000 jobs.

The region has also attracted high value shared service centres operated by Procter and Gamble of US and Equinox Business Services of UK/Hong Kong, creating more than 700 jobs.

A major achievement for the region was the decision by Nissan to build the new Micra model at its Sunderland car plant. The company will achieve increased capacity enabling 500,000 units to be produced on site. It manufactures three car models on two production lines and continues to maintain its proud reputation as the most productive car plant in Europe.

The announcement of an investment by Atmel of the USA in semiconductor manufacturing has been cause for much celebration. The company has taken up occupation of the former Siemens microelectronics facility in North Tyneside, creating 1,550 jobs and investing £550m in equipment to manufacture a wider portfolio of microchips and including, very importantly, research and development activity on site.

There have been a number of other arrivals, notably Filtronic and Senstronics in Newton Aycliffe reflecting the region's ability to support this sector's investments in terms of skill.

The region is back on the map as a location for advanced micro-electronics, and this provides a basis on which to build further high technology activity.

There is also an excellent example of how knowledge is a magnet for investment. A close relationship has been built up with the region's medical school and a major hospital trust in Newcastle, resulting in the signing of a cooperation agreement with a Japanese research institute.

The institute serves clients in the Japanese pharmaceutical industry and hopes, through the collaboration with the medical school, to bring about research and development and clinical trial contracts between Japanese companies and the region's universities.

Seminars in Japan, in support of this objective to attract higher added value knowledge-based activity to the region, have involved senior clinicians and researchers from Newcastle and Durham universities and the hospital trust and will help to market the region's expertise in life sciences.

The recent arrival of Japanese company Katsushiro Matex, a primary converter of heavy gauge steel plate used in the production of large vehicles such as earth movers and tractors, is another feather in the cap for the North-East. The company boasts a number of plants worldwide and now has established a production facility in the Tees Valley.

Before investing, the company outlined very specific parameters for the premises it was seeking. This project therefore required extremely involved and complex negotiations and exhaustive searches, but local partners worked together to meet Katsushiro's requirements and agree a location.

One of the main ingredients for a successful regional economy is the establishment of excellent industrial developments. The region must be both attractive for global business investments and suitable for indigenous companies to expand. One NorthEast is making a long-term commitment to the establishment of first-class business parks as well as continuing to manage its extensive portfolio of more than 900 properties on 64 estates across the region.

The development of Newburn Riverside Industry Park, to the west of Newcastle, is a flagship project, with One NorthEast investing more than £33m in its reclamation. Over 200 acres of land is being transformed into a prime industrial site, one of the largest civil engineering projects in the country, and the business park will provide the highest quality development space, generating over £100m of private sector investment and 5,000 jobs.

One NorthEast and its regeneration partners are heavily involved in promoting two key Enterprise Zones (EZ) within the region: in east Durham and North Tyneside.

The East Durham EZ was established five years ago and has six sites within its designation, stretching from Peterlee to Seaham. The new £8.6m Dawdon link road has opened up 13 hectares of land at Dawdon Business Park and 18 at neighbouring Fox Cover, where more than 2,000 jobs are to be created.

Further south, One NorthEast, in partnership with Redcar and Cleveland Borough Council, is developing the South Tees Imperial Food Park with a £1.2m infrastructure development, identifying a gap in the market for a dedicated food manufacturing park which will attract investment to the Tees Valley. MP Mo Mowlam has officially opened a £4.5m production for Britannia Biscuits, the first business to locate there.

Sites such as these hold the key to future inward investment in the North-East. One NorthEast is aiming to bring at least 90,000 new jobs to the region over a ten-year period.

Much of this new employment will be secured by successfully attracting global companies to establish themselves in the locality, taking advantage of lower property costs, good transport links, sound infrastructure and a dependable, reliable and diligent workforce.

Last year, One NorthEast's North American office in Chicago won the gold award in the International Economic Development category of the 2000 Achievement Awards judged by Business Facilities, a monthly magazine written and edited for top-level executives.

The award was made against a three-tiered scoring system accounting for innovation, effectiveness, and positive business impact. This year the agency is going one better with a three-way joint venture.

The agency has joined forces with its sister agencies, Yorkshire Forward and the Northwest Development Agency, to create the North of England Inward Investment Agency to attract more US investment.

The joint venture will create a clearer sense of identity for the North of England in the important American market, with a network of offices in Boston, Chicago, Atlanta and on the west coast. One NorthEast is keen to build on previous success which has attracted companies such as Procter and Gamble, Huntsman, EDS, Merck Sharp and Dohme, and Atmel to Tyne and Wear, the Tees Valley, Durham and Northumberland.

China is another overseas business source which is being targeted. It has been predicted that China will be the biggest economy in the world by 2020, so the North-East is building relationships to ensure it is well placed for trade and investment opportunities in the coming years.

The UK Government has designated China as one of the ten key markets for British goods and services. Britain is already the largest European investor in China with £5.7bn of investment in 2,600 projects.

Bilateral trade with China in 1999 was a record at £7.4bn, with direct British exports to China at £1.2bn, the latter figure 40 per cent higher than in 1998. That makes Britain the second largest European trader with China, after Germany.

One NorthEast is already active in the promotion of the region to the Chinese market, and last year coordinated an investment seminar in Guangzhou (formerly Canton) to introduce the North-East to more than 100 Chinese companies.

The agency hosted more than 70 visits to the region from Chinese companies in 1999 and works closely with the China-Britain Business Council to keep abreast of Chinese market conditions.

The establishment in the region of a dedicated office for regional businesses seeking to enter the China market is providing further stimulus for trade and investment relationships. The office, in Billingham, Teesside, is the result of a partnership between the China-Britain Business Council (CBBC), the principal agency in the UK promoting trade and investment into China, and One NorthEast.

There is enormous potential among local companies to develop business in China against a background of significantly increasing UK exports to the China market. Chinese companies are now represented at the China-Britain Business Council office as well as at the International Business Centre in Gateshead, a joint initiative between One NorthEast and Gateshead Borough Council.

The International Business Centre is attracting investors from overseas by providing an environment for companies to explore and expand business opportunities in the UK and Europe with the support of a team of on-site advisors. It offers high quality business support, with low-cost, low-risk packages for international investors who need an initial base to serve UK and European markets.

The Chinese are exploring the potential for establishing joint ventures and partnerships with UK companies. Visiting companies have sampled at first hand the UK's regional investment climate, with a view to setting up sales operations before committing to longer term manufacturing investment.

On one of the many inward visits last year, One NorthEast put together a programme of events tailored specifically for the Chinese interests. A delegation of potential investors from the electronics and chemical industries of mainland China was split into two groups to make regional visits to Sanyo's manufacturing plant at Newton Aycliffe, ADI's operation at Cramlington, the Phoenix Centre at the Wilton International Site on Teesside, and Linpac at Sedgefield.

Within its inward investment strategy, One NorthEast has launched an interactive website with key regional partners designed to attract software and electronic businesses to the region from all over the world.

www.digitallocations.co.uk is raising awareness of the region on the Internet and promoting the North-East as an ideal location for inward investment, mainly from high-tech operations in the US, Europe, India and Australia, as well as from other areas of the UK and Europe.

The site, established by One NorthEast and sub-regional partners with support from Shell, Exxon and Mobil, is particularly targeted at software, digital media and other e-business companies seeking to establish a high-quality European development base for their operations.

The website, developed by North-East based Enigma Interactive, offers a wide variety of services, with information on property and premises, infrastructure, telecommunications, transport, and key company contacts in the region. It includes a comprehensive database of software and digital media companies across the North-East. Entry to the database is free of charge, with each company benefiting from its own page.

It has been marketed by the agency in a number of ways, via e-mailshots and search engines, key intermediaries and partners, and by tapping into directories of target companies in the US in particular. It is also being utilised as a sales tool for the region when the agency hosts inward visits from foreign companies or leads trade missions overseas. One NorthEast is the first regional development agency to market its region in this manner.

www.digitallocations.co.uk will develop so that organisations such as the China Software Association, which recently visited the region, will eventually be able to access a Chinese translation of the services and facilities described on the website.

The agency is also alive to opportunities closer to home. Continuing with the knowledge-based economy theme, a rapidly growing software development and consultancy company has established itself in the North-East from its traditional base in the South-East.

Colchester-based CCS IT has opened a fully-serviced office in the region, with a view to expanding its presence with up to 30 employees as its North-East client base increases. CCS IT's business focuses on the effective management of large quantities of data with simultaneous provision of access to a large number of users. The company provides consultancy, manpower, bespoke software and systems development, e-commerce, programme and project management and other network infrastructure services.

Typical clients include banks, insurance and utilities companies whose service requirements are driven by the need to move information from older mainframe computer systems to more flexible, state of the art client and web servers. The company has a proven track record and has created IT solutions for Merrill Lynch, Royal London Mutual Insurance, ABB and Norwich Union among others.

With e-commerce continuing to flourish in the region, E3Net Limited is another example of a high-tech IT support company setting up a North-East office with assistance from One NorthEast.

E3Net specialises in Internet service provision and web solutions, offering its services across the UK and Europe. The company's new operation will ultimately include 11 field consultants, in-house software developers, project managers, sales and administrative staff who will seek to expand the business in the North-East as well as continuing to serve existing European clients.

One NorthEast was able to offer E3Net help with its regional business plan and advise on suitable premises. Ward Hadaway, Project North-East and the E-commerce Foundation were also involved in the company's application for funding from the North-East Investment Fund.

twenty4help is another internationally renowned IT company bringing more high-tech employment to the North-East, adding to the investments and jobs brought by the likes of EDS, Equinox and Orange.

twenty4help assists its clients in round-the-clock management of digital systems and all communication channels, providing third party support to major global IT companies. The company is set to create a substantial number of high-quality, wide-ranging jobs for IT personnel, providing excellent prospects and contributing to the rapid growth of the sector in the North-East.

Initial enquiries by the company came via the Invest UK office in Dusseldorf, with One NorthEast's strategic investment team following up with a visit to twenty4help's headquarters in Germany.

One NorthEast, Tyne and Wear Development Company, Tyneside Tec and Government Office for the North-East arranged several visits to the region during negotiations, persuading the company to choose the North-East as an investment location ahead of Birmingham and the North-West.

Founded in 1992, the company has developed rapidly with more than 2,000 personnel servicing clients from eight sites around Europe. As Internet and technology- based services become increasingly important to businesses, twenty4help is aiming to become synonymous with IT service in Europe.

As part of comprehensive customer relationship management packages, the company specialises in providing "out-sourced" technical support for international market leaders in IT, multimedia and telecommunications.

Prominent industrial companies, trading enterprises and financial service providers have also assigned the complete or partial operation of internal user help desks to the company.

These are just some of the success stories which are rapidly contributing to the North-East's rising profile as an ideal location for business investment, whether from overseas or from elsewhere in the UK.

We need many, many more of these type of investments in the future to make the region more competitive, more attractive and more vibrant for business.