No great shock

New ESRC-backed research from Michael Kitson and David Primost, comparing the reactions to macroeconomic shocks in the technology and research-intensive biotech and aerospace industries. For the younger biotech sector, it's no surprise to anyone who's been following the VC market over the past few years:
'To generate new finance, many biotechnology firms tried to increase revenues streams, improve efficiency and many altered their business models. Venture capitalists were, however, stymied by a lack of exit routes for their investments so they only continued to finance firms with technologies in the later stages of development - and therefore closer to market. This caused some firms to drop technology in its early stages - technology that could in the longer term have made a significant contribution to economic growth.'

The more mature aerospace industry meanwhile shows more resilience:
'There was a strong awareness of business cycles and macroeconomic changes. To avoid vulnerability, portfolios of activities driven by different business cycles were developed, and risks were reduced by changing sources of revenue from high value equipment, to an emphasis on after market service and sales. Many made a ‘virtue of necessity’ in response to world events and pushed through organisational changes such as, reducing excess capacity post 9/11. In addition, the global crisis in aviation was used as an opportunity to implement process improvements and rationalise supply chains.'

Full press release here.

Pennies in the wind

Interesting report from the New Economics Foundation on renewable energy sources. Advocates have often claimed that all the world's energy needs can potentially be sourced from renewable sources - wind, solar, geothermal, etc. The UK is particularly well placed for wind power, both offshore and on. Small wind farms are an established feature of the Pennines along the Yorkshire-Lancs border, a graceful addition to the moorland landscape of old mills and viaducts. I use a renewables electricity suppler at home, so it's fair to say that all my writing is wind-powered (including the odd feature on this very subject).

The NEF report largely focuses on micro-generation - household or community scale generation, such as small wind or solar projects, or CHP boilers. Key to the spread of these technologies is the simple fact that they can pay for themselves in a few years, and then be cash-generative as you sell excess generation back to the grid.

The case is charmingly illustrated by the islanders of Gigha, who bought their island in 2002 and have now installed three second-hand wind turbines named Faith, Hope and Charity. The Guardian report quotes the no-less-charmingly named spokesman, Willie McSporran: "You just hear a little swish as the blade passes overhead. You can speak beside them as you would normally ... . When you hear the noise, it's saying pennies, pennies. It's making money for the community all the time."

Chasing air

To the Paris Air Show last week, where all eyes were on Airbus' mammoth offering, the A380. (Click here for more pics of this and other eyecatching tech from the show.)

Inside the exhibition halls, almost everyone was boasting of their connection with, or trying to catch the eye of, Airbus and its trans-Atlantic rival Boeing. And not just the equipment suppliers, pushing everything from complete engine and landing gear assemblies to improved rivets and sheet titanium. The regional development agencies were out in force.

Yorkshire Forward had a large stand in Hall 4, alongside the Japanese delegation. The RDA had made a deliberate decision to position itself away from the main UK presence over in Hall 2. There, the reps from Wales, the North West, the Midlands, the South West, and most points in between were crammed together, trying to get a slice of global aerospace pie. In between, you'd find the stalls set out for everywhere from Ile de France to New Mexico. Everyone, it seems, has or wants an aerospace cluster.

The industry ticks all the regional development boxes: it employs everyone from engineering PhDs to trolley-pushers, and pays them well; it can draw on and support traditional manufacturing industries that otherwise face decline; there are plentiful opportunities for academic collaboration; most of the signs are for continued growth in the sector; and, not least, it's real gee-whizz stuff.

But with every region chasing the two big players, and their first tier of OEM suppliers, it's obvious that most are going to be disappointed. Yorkshire has a good toehold with the 'AMRC with Boeing' on the border of Sheffield and Rotherham - an enginnering research centre spun off from the University of Sheffield, to which the US giant has lent its name as a centre of excellence (I'll have to admit some vested interest here, as t'other half works there - but for more info, see this feature from 2003).

The AMRC is intended to form the keystone for a wider cluster development, the Advanced Manufacturing Park - but building on this first success has proved difficult. The AMP, a joint venture between Yorkshire Forward and landowners UK Coal, has so far only attracted a handful of other research centres, not any of the promised private sector investment. For a development that's supposed to be bringing 7,000 hi-tech jobs to South Yorkshire, this is obviously a problem.

The park has not been short of interest - there's been plenty of inquiries from businesses wanting to move on, mostly from elsewhere in Yorkshire, but these have been judged to be not of the necessary technical calibre. In terms of Yorkshire Forward's long-term cluster development, that may well be the right strategy. But practically, it's risky - UK Coal will sooner or later want to realise the value of its land, whether or not it fits with the RDA's aims. That'll be a particular worry if Alchemy Partners succeed in their takeover approaches and set about maxing the group's bottom line.

Yorkshire's marketing efforts at the Air Show also featured a gourmet cruise along the Seine. A very pleasant time was had by all, but filling the AMP - and landing a slice of the aerospace pie - certainly won't be plain sailing.

Another day, another masterplan

The Northern Way, a joint project between the three RDAs covering the North of England, has just published its three-year masterplan. At first look, it's much what you'd expect - plans to promote innovation and enterprise in science and tech; improving transport infrastructure; marketing the region to grockles and investors - all under the seal of big John Prescott. The aim is, over the next 20 years, to narrow the estimated £30 billion output gap between the North and the average for England.
It's very easy to be cynical about all this, especially as Whitehall is already spending £60 billion in the North. This latest punnet of plans is backed by an extra £100 million growth fund, though of course it's difficult to say how new this new money really is.
One interesting feature is the focus on the North as a network of eight 'City Regions'. I think that's broadly a good approach, though some of these designated sub-regions (Leeds, Liverpool, Manchester, Sheffield) fit that title better than others (Central Lancashire, Tees Valley). Successful regeneration efforts elsewhere have seemed to have been focused on an urban core, with the benefits spreading out by degrees. It can also be important psychologically - people identify better with Liverpool or Newcastle than with compass-point regions like the North West or North East (Yorkshire being the exception as ever, even with the addition of the Humber). It's also good, of course, to see the development agencies in those three regions working together - the situation is often one of more or less friendly competition, especially when it comes to attracting the big inward investors.
Next step: action.

The impact of inequality

A new book from Prof. Richard Wilkinson, a social epidemiologist at the University of Nottingham, promises to introduce some new data into an old argument:

"Professor Wilkinson's research shows that if Britain changed from being one of the most unequal of European countries to being among the most equal, the result would be radical. Average life expectancy would increase, homicide rates and levels of violence would fall, people would trust each other more, and community life would be revitalised. As such, the benefits of greater equality would be seen across all sectors of society [...] Wider income differences lead to bigger social distances and increased discrimination. They lead to slower social mobility and increased residential segregation of rich and poor. People become less involved in community life, suffer more violence, and are much less likely to trust each other [...]
"Professor Wilkinson also looks at what nations, communities and employers can do to create a healthy social environment. He points out that because the data he uses comes primarily from existing market democracies, it shows that even the small differences in inequality between them matter, and that there are numerous practical policies that would improve the quality of life for all of us. As well as the more conventional methods of redistribution, he suggests extending democracy into economic institutions and workplaces."
Full press release here.

Hello

This is a test version of a new blog, to cover various stuff that I write about - economics, business, regional development (especially here in Yorkshire), science, technology, and anything else that catches my fancy. The title's borrowed from JK Galbraith's recent slim volume, 'The Economics of Innocent Fraud', and may well change.