Special Report on Company Relocation: Regions have more to offer than simple finance grants: Martin Whitfield finds that labour supply and infrastructure are vital factors in attracting business

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The Independent Online
GORDON RAMSAY, director of finance and business development of the Tyne and Wear Development Board, has what appears to be an unambitious target for his company relocation marketing teams - 'get me fourth on the shortlist'.

Experience has shown that large manufacturers and service companies will have already pencilled in Scotland, Wales and Ireland. The initial competition is with the other English regions to be the one considered in the first place. 'If you don't get on the shortlist, you don't stand a chance. All the development corporations do have the ability to offer an attractive financial package,' he said.

'Grants run out in a relatively short time. But they may make the difference between being considered on the shortlist or not.'

Tyne and Wear is able to offer manufacturing companies - service firms are treated differently - grants of up to 50 per cent of the capital cost. The total is made up of a number of special allowances, including the Department of Trade and Industry's Regional Selective Assistance, which can provide up to 30 per cent of fixed asset costs.

The package is designed to be as flexible as possible and can consist of rent relief of up to two years, interest relief on borrowing and amenity grants to cover the cost of providing road access, car parking and environmental improvements. Staff of the Development Corporation help companies put their grant bids together or pay for outside consultants. A Japanese inward investor recently had grants approved for a pounds 10m manufacturing investment of pounds 3.2m from the DTI, and pounds 500,000 from Tyne and Wear.

Service companies are treated differently by the DTI as it believes that by definition they are serving the home market and so Britain is not in competition with locations elsewhere in Europe.

Even so, Tyne and Wear Development Corporation can assist by helping meet staff relocation costs, training and other grants. British Airways, which took more than 140,000 sq ft of space for an international sales and software centre, is believed to have received incentives worth less than 3 per cent of its pounds 36m investment. BA's move has created more than 750 jobs.

Such talk of grants and allowances is a strange language to Bill Williams, chief executive of Milton Keynes Marketing, the organisation which took over from the Milton Keynes Development Corporation on 1 April.

Milton Keynes boasts that it has never paid a penny in direct incentives to any of the 2,500 companies which have moved to the city over the past 25 years. The city's mix of firms is impressive and results from a deliberate past policy of avoiding attracting just a few large employers.

Abbey National is the largest employer, with 3,500 workers, after its first relocation from London in the early 1980s. Only 15 employers in the city have more than 500 staff.

Mr Williams does not see himself in the same market sector as Mr Ramsay. Manufacturing in Milton Keynes is welcome, but it is more likely to be associated with distribution or in a high technology sector.

He has set his sights on firms involved in health care and pharmaceuticals, food products and packaging, and the information industries of computing, publishing and telecommunications.

Companies such as Mercedes and VW/Audi use Milton Keynes as their British parts centre, exploiting what Mr Williams sees as one of the city's main attractions - its location. Easy access to London - Euston is a 45-minute train ride - and a position adjacent to the M1 are vital to the city's success. It also believes its well planned, congestion-free layout has proved popular with both companies and their staff.

What unites Tyne and Wear and Milton Keynes is that the most important factors to any firm wishing to locate will be the skills and supply of the labour available, the infrastructure and the ability to serve the company's market at the best price.

Links with universities and polytechnics are emphasised, as are the opportunities to recruit skilled workers from wide journey to work catchment areas. Public investment in roads, buildings and the environment are seen as important catalysts to show investors the quality of life available.

To exploit the potential effectively, both organisations co-operate with developers, who are said to be able to identify what employers are seeking in terms of buildings and facilities. Mr Ramsay said: 'The intention is to produce product variety which can be mixed in digestible chunks according to demand.'

Newcastle Business Park, for example, provides companies such as British Airways, AA Insurance Services, Cellnet and Allied Dunbar with office space near the centre of the city. The Tyne and Wear Development Corporation has spent pounds 12.5m on the project in an alliance with Dysart Developments, attracting private investment of pounds 140m with the potential for 4,500 jobs.

The Viking Industrial Park, Jarrow, however, is a mixed industrial venture where 15 acres were reclaimed and road access constructed. The overall project has a value of pounds 20m with the potential for 1,500 jobs.

Milton Keynes has also strong links with private sector developers, with investment at pounds 374m last year. About 3,500 acres are available for development, owned by the public sector in the shape of the Commission for New Towns.

The final ingredient is the extent of the welcome itself. Tours of the region for company executives and their families are the norm. Once a decision is made, assistance will take the form of full visits for all people likely to be relocated. Help is often available to sort out difficulties from finding membership of the right club to placing a teenager in the school of their choice.

(Photograph omitted)

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