cluster studies: recommendations -...

Cluster Studies: Recommendations

For Hertfordshire County Council

Cluster Studies: Recommendations

For Hertfordshire County Council

Prepared by TBR’s Economic Research Team in partnership with:

The Centre of Excellence for Life Sciences (Cels) Tom Fleming Creative Consultancy Tony Elliot, Specialist consultant

Enquiries about this report can be addressed to:

Fiona Dodd, Head of Research

Andrew Graves, Managing Director

24 September 2012 Suite One Top Floor, Burgess House, 93-105 St James Boulevard, Newcastle upon Tyne, NE1 4BW Telephone: +44 (0) 191 279 0900 Fax: +44 (0) 191 221 2220 Email: [email protected] www.tbr.co.uk

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Document Information

© TBR

Document Information

Project Reference Number PN00611R

File Name PN00611R_Recommendations_v4_Final.doc

Title Cluster studies: Recommendations

Version number V4

Last update 14th December 2011

Name of Author Fiona Dodd, Philip Aldridge, Tracey Gregory, Tony Elliot

Name of Reviewer Andrew Graves, Martin Houghton

Document Status Confidential

Review Status Complete

Approval Status Final

Table of Contents

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Table of Contents

1. INTRODUCTION.....................................................................................................1

2. OVERARCHING RESEARCH FINDINGS..................................................................2

2.2 WEAKNESSES............................................................................................................2

2.3 OPPORTUNITIES ........................................................................................................3

2.4 THREATS .................................................................................................................4

3. CROSS CUTTING THEMES......................................................................................5

3.1 SOFTWARE...............................................................................................................8

4. RECOMMENDATIONS...........................................................................................11

4.1 LIFE SCIENCES........................................................................................................ 11

4.2 DIGITAL AND CREATIVE MEDIA ................................................................................... 14

4.3 ADVANCED ENGINEERING........................................................................................... 17

Introduction

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1. Introduction

This recommendations report contains a summary of findings and recommendations for a study carried out on behalf of Hertfordshire County Council (HCC). It is intended to be read alongside the main Evidence Report. This study has been delivered in order to develop HCC’s understanding of the Advanced Engineering, Life Sciences and Digital Creativity and Media ‘clusters’ with a view to developing policy interventions in furtherance of the Hertfordshire Works Economic Strategy in which these clusters are prioritised.

This report begins by assessing the overarching findings in relation to these ‘clusters’ within the county in terms of Strengths, Weaknesses, Opportunities and Threats (SWOT). It then goes on to explore cross cutting themes that impact upon all three identified ‘clusters’ before detailing findings and recommendations within each of the three ‘clusters’.

Overarching research findings

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2. Overarching research findings

This section presents some headline research findings in the form of a SWOT analysis. Note that this is a summary of strengths, weaknesses, opportunities and threats rather than a comprehensive exploration of these characteristics, as they have been examined in the research study. The reader is referred to the evidence report to access the full SWOT.

2.1.1 Strengths

• Location and transport links:

o Hertfordshire’s close proximity to London and other key locations (e.g. Cambridge) is a particular strength that contributes to all three clusters examined by this study. This has advantages for businesses located in Hertfordshire because it creates proximity to clients, technology, skilled staff, trade bodies, research and funding organisations, whilst at the same time allowing businesses to benefit from the reduced costs and overheads when compared to London itself.

o Related to this is the availability of good transport links, both to and across the UK via the road and rail network and also globally via the numerous airports that are proximate to Hertfordshire (Heathrow as well as Luton and Stansted).

o Specifically in the context of Life Sciences, Hertfordshire is very well located in the heart of what is often referred to as the ‘golden triangle’ stretching between Oxford, London and Cambridge. Hertfordshire is home to numerous pharmaceuticals firms of global significance, and the county – and the pharmaceuticals firms it contains - is fundamental to the overall strength of the ‘golden triangle’.

• The workforce:

o In the Advanced Engineering and Life Sciences clusters, access to available skilled labour is a key strength of the area. The consultation exercise which formed one important element of the research which underpins this document has demonstrated that Advanced Engineering and Life Sciences employers are looking for new employees but that they seek to attract staff with experience. The evidence is that this is proving to be a challenge and this proviso should be taken into account when considering the development challenges of these sectors. Whilst Hertfordshire has numerous attractive characteristics as a location to live and work, certain aspects also reduce the overall quality of the offer, and this will in turn impact on the ability of local companies to attract the right staff, and this problem becomes more acute as technologies become more specialised.

• Assets:

o Significant physical assets exist within the Digital and Creative Media and Life Science clusters that mean the county has significant advantage over other competing locations. These include Leavesden and Elstree studios in the Film and TV sub-cluster and the Bioscience Catalyst in the Life Sciences ‘cluster’.

2.2 Weaknesses

• Skills:

o Although the nature and quality of the Hertfordshire workforce is perceived to be a strength, there is concern about the potential damage being caused by emerging skills issues. This is particularly an issue in the Digital and Creative Media cluster, where companies report challenges in finding people with ‘niche’ skills. As such, the workforce is highlighted as a weakness in the Digital and Creative Media cluster. Digital and Creative Media employers are more often looking for fresh new talent, suggesting that the


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weaknesses within this cluster may be caused by younger, talented employees being more likely to be drawn to London in search of work.

o In Life Sciences there are skills shortages reported in specific occupations such as software engineers and senior managers. It was indicated that the quality of the physical environment in certain urban locations is perceived as a negative characteristic of the county.

o In addition, companies in Advanced Engineering cited problems in recruiting experienced professional engineers.

• Cost of living:

o The high cost of living and house prices within Hertfordshire are noted as a contributory challenge related to retention and attraction of the workforce. Related to this is the challenge of the workforce being drawn to potentially higher salaries in nearby London.

• Dominance of the defence industry:

o Hertfordshire’s Advanced Engineering cluster comprises a strong defence equipment grouping, with links to aerospace. Outside of this specialism, the Advanced Engineering cluster consists of a collection of generic engineering businesses with little evidence of linkage to defence or aerospace, little commonality and a minimal basis for collaboration. It is a conclusion of this study that due to the nature and structure of this cluster in Hertfordshire, it is not well suited to local support initiatives beyond more generic interventions associated with skills, premises and so on.

2.3 Opportunities

• Building better linkages with academia:

o All sectors noted the need for better linkages to academia (albeit in various forms). Whilst there are some good programmes in place which bring the academic community together with businesses, activity tends to occur in small pockets and there is further opportunity to create appropriate and effective linkages.

o Whilst The University of Hertfordshire (UH) has a strong reputation across Hertfordshire the extent and depth of impact, in terms of the three clusters studied here, could be considerably greater. In general, many businesses do not know what the University (or others) could offer them whilst at the same time they are displaying greater collaboration tendencies (e.g. the Bioscience Catalyst). There exists an opportunity for businesses to work more closely with universities, sharing learning and knowledge and capitalising on intellectual capital and assets.

o This issue isn’t limited to higher education; there are also opportunities for linkages to further education. This is perhaps especially true within the Digital and Creative Media sector, where opportunities may exist to retain new and emerging talent within the Hertfordshire cluster and to tailor the local offer to the specific skills and training needs of key firms and sub-clusters (such as Film and TV).

• Networking and collaboration:

o In Advanced Engineering and Digital and Creative Media, businesses identified the need for support to promote local partnering and collaboration. This is particularly the case for small businesses and micro businesses.

o Whilst there is evidence of global collaboration from businesses in all three sectors, there seems to be a limit to the extent to which local organisations look to the local area to source goods and services. However, Consultation found that large pharmaceutical businesses located in Hertfordshire are more likely to use local services where they can. GSK is particularly keen to support the local economy in this way, and is beginning to


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create a role for itself, through the Bioscience Catalyst, as an important magnet for new firms and new economic activity.

o A need was identified to support new life science start ups in order to develop this cluster within Hertfordshire.

• Promotion of Hertfordshire:

o An opportunity was identified to promote Hertfordshire as an excellent location for high tech business, with the aim of attracting investment into Hertfordshire and the further development of a strong, highly skilled workforce.

2.4 Threats

• Funding and investment:

o Within the Advanced engineering cluster, there is a threat that cuts in defence spending will negatively impact the small number of large firms that Hertfordshire is home to, leading to a continuing downward trend in employment and the shrinking of the cluster. However, the long term nature of defence contracts is likely to protect the cluster somewhat, and over the medium term. The long-term future is perhaps more uncertain.

o There is a risk that a lack of funding and investment in biotechnology businesses in Hertfordshire could threaten the development of the Life Sciences cluster.

o A lack of support and investment in super fast broadband across Hertfordshire could threaten the development of the Digital and Creative Media cluster as business may re-locate to areas with faster broadband and new start up businesses may also choose to locate outside of the area. Such infrastructure is particularly important to Film and TV and the range of digital businesses that support this sub-cluster.

• Corporate decision making and the importance of cluster depth and strength.

o The global nature of the pharmaceuticals industry, which is the key local strength in Life Sciences, leads to increased risk that significant employers will take decisions that negatively affect local operations (e.g. consolidation, scaling back or closure of local subsidiaries or plants etc.). This means that initiatives to support the strength and depth of the cluster, and to increase the benefits of Hertfordshire as a location for life sciences businesses, are very important.

o The Warner Bros. project at Leavesden is very much in its early phases, and therefore this is some risk that the vision which is currently being worked towards is not met, which would reduce the value of the studio as an asset to the county.

• Skills gaps

o Failure to address skills gaps where they do exist is likely to present a challenge to businesses that may choose to locate elsewhere, where labour market conditions are more favourable.

Cross cutting themes

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3. Cross cutting themes

All three ‘clusters’ involve businesses that face similar challenges and which are likely to benefit from a number of support activities that Hertfordshire County Council, or the new Local Enterprise Partnership may be able to coordinate. Consideration should be given within each of the recommendations below as to whether specific cluster focus should be applied to each, and these recommendations might also provide the infrastructure through which cluster-focused recommendations, reviewed later in this document, might be delivered.

Table 1: Cross-cutting recommendations

Theme Research finding Recommendation Lead organisation

Investment Timescale Potential partners

Business support UKTI seminars and events have proved useful in the past in enabling local businesses to access new global markets. With the increasingly global nature of business, targeted support should be provided for Hertfordshire businesses to access global markets

Facilitate more exchange trips and seminars on foreign markets

HCC Medium Short to medium

UKTI, University of Hertfordshire (UH)

Business support Some national programmes have been well received but take-up is limited or there are insufficient resources available.

Support and enhance national programmes such as KTPs, MAS or the Coaching for High Growth programme.

LEP Low to Medium Short to medium

Delivery agencies such as UH, MAS and EEF.

Business support Latent demand for business start up support

Provision of support to entrepreneurs

Hertfordshire CC

Medium Short Business Link, local enterprise agencies

Business support Businesses reported a lack of ‘connectivity with the area and the support services’.

Put in place an account management function for large employers and other strategically important businesses. Use this to signpost businesses to appropriate assistance (where relevant), lobby for specific facilities, e.g. super fast broadband and hotel development and so ‘tie’ them to the location.

LEP Low Short Delivery agencies for referrals and specific support.


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Business support Potential for greater collaboration between the clusters

A programme or voucher scheme to support collaboration and cross commissioning of services across different business sectors, particularly to encourage companies to work innovatively with creative sector business (such as in the NESTA Creative Credit Scheme in Manchester)

HCC Medium to High Medium to long term

Business Link, Creative England, NESTA, UH

R&D/innovation Businesses not accessing R&D opportunities through universities – national issue.

Build stronger links between colleges/universities and businesses to maximise R&D opportunities

UH, West Hertfordshire College

Low to medium Short to long term

HCC

Networking Lack of local business networks Development and promotion of events and activities to encourage networking and local sourcing initiatives, development of local partnering and collaboration

LEP Low Short to medium term

Chamber of commerce, HCC, Borough and District Councils e.g. Watford Borough Council has established a Creative Industries Network Group

Networking Evidence of some Digital and Creative Media sub sectors developing products and services and for Life Sciences and Advanced engineering sectors. Potential to further develop the opportunities.

Build from the local network development (above) to develop relationships between clusters especially Life Sciences and Digital and Creative Media

HCC/Chamber of Commerce

Low Medium to long term

Chamber of Commerce,


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Skills The apparent low status and take up of apprenticeships. This area needs also to recognise the positive things that are occurring in this arena and build on these.

Further investigate with education and enterprise organisations.

HCC

No cost to low

Short

Enterprise and training agencies, educational establishments e.g. UH and businesses who run or could run apprenticeship schemes

Skills Universities not providing a suitably skilled workforce – skills mismatch with locally available jobs

Build a suitably skilled local workforce, collaboration between colleges, University and business e.g. West Hertfordshire College, UH and Leavesden partnership

UH, West Hertfordshire College

Low to medium Short to medium

Sector skills agencies (Skillset for film), businesses

Skills Lack of specialist technical skills; a national issue

Support business to link with relevant Universities in the county and surrounding area to develop specialist talent pool

UH and others Low Short to medium

Universities, Sector Skills Councils, professional and trade organisations

Skills Technically qualified staff may lack leadership and managerial skills along with aging SME management and technical staff in engineering.

Encourage delivery agencies and technical bodies, e.g. ABP, EEF etc to collaborate in developing suitable courses that may be accredited by the UH. Specific effort will need to be placed on the marketing messages and promotion.

UH Medium Short to medium

UH and technical/trade organisations.


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3.1 Software

Software has been identified as a potential opportunity for Hertfordshire to demonstrate a capability as a software centre of excellence that would sustain and enhance the local economy. As such, at the outset of this project software was explored as part of the Advanced Engineering cluster in order to understand any specific ties between the two activities. However, the research has not identified critical linkages between Advanced Engineering and software, though they do exist (see below). Given this finding, and the nature of software as a specialist service into a range of sectors and clusters, it is more pertinent to consider it as a ‘cross cutting’ activity, playing a part in each of the three clusters to a greater or lesser extent.

The biggest opportunities to work across clusters or to create a software cluster would appear to currently lie with Digital and Creative Media activity as this cluster possesses the characteristics most likely to be attractive to new customers. It is recommended that a further study could be undertaken to examine in more detail the current software skills in Hertfordshire and to look at what new markets could be available – one such example is the requirement for “total immersion” simulation for training for military or dangerous environments. This would allow the skills already available in applications such as film special effects to be re-used in new applications.

3.1.1 Advanced engineering

Software covers a multitude of applications, development environments and customers with very diverse requirements.

Companies such as MBDA and Astrium design systems and “systems of systems” which need to satisfy complex requirements from intelligent customers. These are usually designed “top down” through processes of decomposition to determine which of the systems elements will be implemented in software. The software that results is often unique to the system in terms of its functionality and the hardware it runs on (although not necessarily in terms of languages/development tools) and also has to meet demanding non-functional requirements such as configuration control, integrity and safety. Additionally customers are demanding and want complete visibility of the development process and will often require that independent validation and verification of the software is performed by specialists before accepting delivery of the product. Such software typically takes several years to develop and often remains in service with customers for 20+ years. This places demands on documentation and support over long periods as many different engineers will maintain the software over its lifecycle. Such systems are not sold in large numbers. Astrium have a capacity of 6 or so spacecraft a year.

Conversely, software written for games or film special effects is characterised by mass market and/or timescale driven forces. Customers are undemanding in terms of how the software is written, but require the latest and greatest functionality as soon as possible. Non-functional requirements are less demanding or non-existent. The growth in capability is driven by the rapidly increasing hardware performance in turn driven by US and Far East investment which needs a mass market to make this investment affordable.

In terms of supply chain, primes such as Astrium and MBDA will always want to control the software architecture in-house as this protects their intellectual property rights (IPR) and prevents any potential sub-contractor in the supply chain becoming a competitor by gaining an understanding of the system design. Modules of software are often written by an in-house team or are placed with sub-contractors, but usually those with experience in this type of software, such as Logica. MBDA commented very favourably on the quality of graduates from UH that they recruit into their software team. MBDA also commented that the


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presence of a pool of software engineers in the locality made it easier to recruit contract engineers into their team to match resourcing issues. Astrium commented that they had worked with a software house in Hertfordshire but generally used specialist companies such as Logica.

3.1.2 Life sciences

Software across the different economic sectors has been suggested as a potential opportunity for Hertfordshire to show a capability as a software centre of excellence that could be developed as a specific attractor. The bioscience world in general is a massive user of computing power related to various forms of bioinformatics (genomics, proteomics, etc). However there are no companies developing such software in the county. Companies involved in drug discovery research, such as GSK Stevenage, will have bioinformatics systems and experts. These people will have bioinformatics expertise that will be very much a fusion of computing and bioscience and will probably not enter the general software market.

Another area where software expertise is needed will be in various aspects of device and process control. This will apply to both the pharmaceutical manufacturing and medical technology sectors. Again this shows the need for, and presence of, software expertise within these sectors but does not indicate companies writing and selling software.

Given the ubiquity of need for software expertise within the life science sector, it was not surprising that related labour shortages were flagged up in this area. Addressing this labour market deficiency would make sense in attracting future regional company investment.

3.1.3 Digital creativity and media

Looking at the only software category included in the original definition of the Digital and Creative Media cluster (SIC 62011) this is no evidence of interactive leisure software companies currently in Hertfordshire. With the development of Warner Bros. (at Leavesden) and the presence of Elstree this may change with the close supply chain and skills sharing between the games and film industry. Pinewood Studios digital content facilities supply both film and games sectors and there are a number of games developers based on site at Pinewood studios. There is active collaboration between the studios and games sector with a trade event on audio crossover in film and games jointly hosted by Pinewood and Tiga (the UK’s games association) held in February 2011.

The extended definition of the Digital and Creative Media cluster includes SIC 62011 – Business and domestic software development and SIC 58290 – Other software. These represent a significant software sector developing and supplying software products to all other market sectors. Companies range from sole trader web developers to multi-national companies such as Northgate Information Systems, a market leader in providing specialist software, outsourcing and information technology (IT) services to the human resources, local government, education and public safety markets. The company started in Hertfordshire and now employs 12,000 people in 46 countries.

Other sizeable business software employers in Hertfordshire include: Rebus (who merged with Northgate in 2003); Steria, one of Northgate’s main competitors; Emtex Ltd, mailroom document management software suppliers; Redsky IT, the largest UK supplier of accounts software to the construction industry; Isoft Business Solutions, financial and procurement software suppliers; and Pitney Bowes Europe. The location of head offices such as Dixons in Hertfordshire and availability of a locally skilled workforce, that have the opportunity to move from company to company, are two of the factors that has made Hertfordshire


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attractive to large business product software developers. Location is becoming less important to these companies as technology advances and they increasingly work in a global market. There is a move to consolidate their office portfolios and increase remote working for their workforce. Northgate are using the experience of increased home-working, which was first trialled after the Bunsfield oil depot explosion destroyed their office, to develop remote working products and services for clients.

There is some evidence of supply chain relationships with the wider Digital and Creative Media, Advanced Engineering or Life Sciences clusters, though as the evidence summarised above indicates, these are relatively narrow and in many cases highly specific. For example, Steria supply the ‘media’ companies and FFEI supplying Life Sciences companies and the digital and creative sector. The wide scope of public, private and third sector clients that many of the business software companies are supplying mean they are in a strong position to respond to specific needs and develop bespoke projects for particular sectors.

Recommendations

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4. Recommendations

4.1 Life Sciences

Before introducing the key recommendations for this cluster, it should be stated that the research has indicated strongly that Hertfordshire’s strength in the Life Science cluster is in fact specifically in the area of Pharmaceuticals. This should be seen as a truly nationally significant strength and key cornerstone for the Hertfordshire economy moving forward.

4.1.1 Cluster development

Research finding

It is clear that there are many strengths in Hertfordshire but these are poorly communicated within the county and to the wider world. The lack of appreciation of what the University of Hertfordshire has to offer Life Sciences companies in the region is a good example of this.

Recommendation

Establishing a new life science network would not be the most cost-effective way of achieving the aim of developing the Hertfordshire cluster. This is because it would compete with ONE Nucleus and would be expensive to create and maintain. We suggest the council engages with existing organisations such as UKTI, Business Link, the HealthTech and Medicines KTN and ONE Nucleus in order to promote the county. All these organisations would be interested in organising events in the county; events that could be hosted by the major pharmaceutical companies, research institutes and bioparks. This strategy would lever existing organisations expertise to coordinate and promote the county’s life science strengths within the county, the UK and internationally. This strategy also acknowledges that the county doesn’t have a cluster in its own right but has major components of a world class pan-regional cluster.

Consideration should also be given to a low cost web-based resource providing information on the county’s life science assets and an on-line forum.

4.1.2 Business start ups

Research finding

The feedback obtained suggested that there are a number of skilled people who have been displaced from the county’s pharmaceutical industry who would be keen to start their own businesses. Looking further a field, there will likely be people in the same position currently at Pfizer’s Sandwich facility. However, having a business idea and making it happen are two different things.

Recommendations

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Recommendation

Entrepreneurs need support both in terms of advice and money. With the scaling back of Business Link, there will be less personal and sector specific advice available. We recommend that the County Council applies to the current RGF for a programme grant which would provide funds in order to:

• Promote Hertfordshire as a Life Sciences business location • Provide specific sector advice to entrepreneurs as to how to start up companies • Provide Proof of Concept (POC) grants to entrepreneurs to facilitate company start up • Fund a virtual office for start ups, probably in the Welwyn Garden City BioPark

4.1.3 GSK Stevenage

Research finding

The Bioscience Catalyst at GSK’s Stevenage site is a major undertaking with the potential for significant economic growth.

Recommendations

The County Council must keep a close watch on this development in order do all it can to aid its success.

The development of the “Catalyst” gives rise to the opportunity to promote Stevenage as a world class location for high technology in the broadest sense.

The government announcement of the “Patent Box” and GSK’s positive noises regarding building a major, £500m biopharmaceutical manufacturing facility in the UK present an obvious opportunity for Hertfordshire. A logical location for this facility would be at Stevenage, co-locating with the GSK’s global biopharmaceutical research group. The county council should engage with GSK, Stevenage to see what it can do in order to help the site win this project.

Recommendations

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Table 2: Life sciences recommendations



Networking and Business Support

Poor intra county coordination

Cluster Development

Hertfordshire CC

Low to Medium Medium UH, GSK, Biopark

R&D/innovation The economic potential of the Bioscience Catalyst at GSK’s Stevenage

Work Closely with GSK, Stevenage to support the “Catalyst” and to attract a biopharmaceutical manufacturing facility.

Hertfordshire CC

Low Short GSK

Recommendations

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4.2 Digital and Creative Media

4.2.1 Film and TV production as a separate cluster

There is a strong case to suggest Film and TV production should be considered as its own cluster, separate to the rest of the Digital and Creative Media cluster. This is for three main reasons:

1. Locational issues: The strength of film and TV production in the County is largely based on the existence of studio facilities in Leavesden and Elstree. BBC Elstree, the home of Eastenders and other successful long running programmes since being acquired in 1983, has led to Borehamwood becoming a mini-hotspot for TV production companies. Elstree studios, which is currently experiencing a strong renaissance with bookings for three $100 million dollar films1, is home to 36 companies in the production village. Warner Bros Leavesden, once the investment is complete, will be home to Europe’s largest studio but also with expansion should become a magnet for production companies. While other factors, such as proximity to London, availability of skilled workers and ease of access to the airports are important, without the unique presence of the studios there would be a much more limited film and TV production activity in the County.

2. Sector dynamics: There is limited cross-over between the Film and TV production and other sectors in the Digital and Creative Media cluster. The only exception comes at the edges in terms of specialised animation, titles and web development. Equally the complexities of film financing and the international nature of the film business mean that the critical axis for the film studios in Hertfordshire is with Los Angeles not London. While some suppliers of specialist equipment (such as lighting) do have secondary markets outside of film (in concert productions for instance), this is as a result partly of studios renting their spaces to artists in rehearsal phase for tours. In many ways the film production sector exists in a ‘bubble’, with little spill over to other sectors in the area.

3. Special needs: The existence of tax breaks for film production is one example of the way that film needs and receives different support from other Digital and Creative Media sectors. The support structure for film in the UK is strong in its own right with Skillset, Creative England, and the BFI providing a framework covering skills, training, funding and more nationally. Locally the existence of Film Link, as a successor to part of the Screen East service, shows the vital importance of location services for the industry (Screen South and EM Media are temporarily making Grant in Aid and Lottery finance and film support services available throughout the former Screen East area until structures and delivery of the new the hubs start in October 2011). The studios in Hertfordshire directly benefit from the range of locations that Hertfordshire has to offer and which are marketed effectively by Film Link.

While film and TV production is vital to the Digital and Creative Media sector in Hertfordshire for these three reasons it makes most sense to conceptualise and consider the support it requires to grow and flourish separately to that of the rest of the sector. While there will be points of crossover of course, particularly in terms of FE and HE provision, the existence of a strong national framework of support, the unique dynamics of the sector and its relative insularity from the rest of the Digital and Creative Media cluster mark it out as requiring different support.

1 Observer article ‘The King's Speech puts Elstree Studios back on the map for Hollywood moguls’ 01/05/2011

Recommendations

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In practice this means ensuring that barriers to growth at the studio sites are removed where possible – something that the recently announced presumption for growth on existing sites should help facilitate. Also, working with the National providers of support to make sure that provision for skills, training and funding is as strong as it can be in the County. Recognising and supporting the vital role that Film Link plays in attracting film production and location shooting across the region.

4.2.2 The broader digital creativity and media cluster

Skills and training

The single biggest barrier to growth for businesses in the Digital and Creative Media cluster, as stated in the qualitative phase of this study, is the difficulty in finding highly-skilled staff. While in no way a problem unique to Hertfordshire, or to the Digital and Creative Media sector - rather one shared by most areas in the UK outside of the core cities - it is an area that needs addressing. Because the skills needs of businesses vary so greatly there is no one single solution. The Government announcement of greater funding for apprenticeships was welcomed by many businesses, though the fact that many companies had tried apprenticeship schemes in the past with limited success indicates some of the challenges that the scheme faces.

Whilst ensuring that businesses, through existing networks, are made aware of national support schemes, there is still more that could be developed at a County level. Developing greater links between business, HE and FE is critical. While links do exist, a more strategic approach would see stronger forums developing to ensure that local businesses from across the Digital and Creative Media sector are connected to course provision and graduate opportunities. The model being developed in Watford between Warner Bros Leavesden, West Hertfordshire College and other cultural providers should see the town recognised as a real centre of excellence for skills and training in the creative economy. The possibility of expanding (or replicating) this model into other locations in the County should be explored.

Innovation and cross-over

Encouraging even greater cross-over between the Digital and Creative Media cluster, Life sciences and Advanced Engineering would be hugely beneficial. The type of project that NESTA has been pioneering in Manchester and the South West, could be considered. Such Creative Credit schemes encourage non-creative businesses to commission and work with creative businesses. In the West Midlands an Innovation Voucher scheme connected SMEs and Universities, where £3,000 vouchers were given to businesses to spend with any of the Universities in the region. The initiative successfully developed innovative new products and services in areas as diverse as healthcare, leisure and telecommunications. A similar scheme with businesses given a voucher to spend on creative services with small creative businesses would be beneficial in generating new relationships and greater cross-over. The existence of the three cluster areas which would benefit from this cross-over in the county means that developing a programme which explores the added value of greater connectivity and cross-over needs to be explored.

Creative Workspace

Exploiting the county’s excellent connectivity through the provision of specialist workspace for creative businesses in select locations should be explored. This should include the provision of flexible desk and touchdown space for freelancers. Small and start-up creative businesses benefit hugely from the informal

Recommendations

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knowledge exchange that shared workspace can offer. From the qualitative phase of this study small creative businesses reported that they used the networks that develop from proximity to pitch jointly for work through complementary offers. The benefits of dedicated creative workspace extend beyond networking and encouragement to start-up businesses, to raising the profile of the sector as a whole. This builds on the work of Hertfordshire County Council Property team, working with Accenture on mapping current property portfolio and planning for future use of properties.

Table 3: Film and TV recommendations



Business support Film and media companies need to think globally and export. The sector is global market place.

Film and media business support with exporting products and services

Creative England Low Short to medium

UH, Leavesden, Elstree

Business support/planning

Lack of creative business density – sector not reaching full potential. Need to support start-ups and smaller scale businesses to generate high value knowledge intensive businesses

Encourage greater density of creative businesses. Potential use of empty building for creative business workspace

HCC Low to medium

Medium to long term

Boroughs and districts, SME and creative sector workspace managers e.g. ACAVA

Recommendations

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4.3 Advanced Engineering

Our approach to this cluster, within the context of this document, departs from that used previously. The text below is focused on describing the key characteristics and justifying the recommendation made.

The Advanced Engineering cluster in Hertfordshire is a misnomer as it is a collection of businesses and related activities that utilise a wide range of disparate technologies that service multiple markets. Clusters are usually defined by common marketplaces, products or processes. The broad grouping of Advanced Engineering businesses does not meet this definition. However, the research did identify a relatively small group of activities that did meet the cluster criteria:

• Manufacture of weapons and ammunition • Manufacture of air & spacecraft & related machinery • Manufacture of military fighting vehicles • Manufacture of instruments and appliances for measuring, testing and navigation

These businesses and their operations are related through the supply chain; use of precision engineering and engagement, to a greater or lesser degree, in defence.

Thus the broad category of Advanced Engineering is best described as comprising:

• Manufacturers of defence equipment - that is part of a much larger UK defence cluster. • Businesses involved in manufacturing engineering related products.

4.3.1 The defence equipment cluster

The presence of businesses involved in the manufacture of defence and related equipment in Hertfordshire is largely historic and a consequence of the two World Wars. There are no compelling reasons for its current location in the county, such as the presence of large testing facilities, major military bases or MOD procurement office. Proximity to London was cited as the key positive attribute for being based in the county.

Procurement and industry structure: The MOD is the key driver of the defence equipment market in the UK, which operates as an effective monopsony (i.e one source of demand). However, the overall market is global and UK-based businesses are well represented. Defence equipment is becoming increasingly sophisticated and expensive. This has resulted in the industry being characterised by a relatively small number of major organisations operating as consortia and incorporating a large number of sub-contractors and suppliers. This is reflected in Hertfordshire through the presence of MBDA, which manufactures missiles and Astrium, which is part of EADS parent to Airbus and incorporates Paradigm Secure Communications. Both operations house over 1000 staff on site.

Although UK Defence spending is declining, the demand for defence related products will continue. MBDA Stevenage (through membership of Team Complex Weapons) and Astrium Stevenage (through the increasing importance of Satellites for both UK and foreign customers) expect a long period of stability, albeit

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with limited growth opportunities. Both companies will therefore continue to be a focus for Advanced Engineering and will continue to generate a demand for skilled staff over the next 10 – 20 years in Hertfordshire.

That said, the nature of the industry means opportunities for Hertfordshire County Council to influence prime contractors or the market would appear limited.

Security and secrecy: The nature of the defence industry and the intense rivalry engendered by monopsony conditions and the small number of very large contracts, mean that opportunities for collaboration are limited. Thus traditional cluster interventions based on networking and information sharing are unlikely to prove effective under current conditions.

As a consequence of the above, the study does not feel there is justification for proposing a cluster specific initiative or set of initiatives. The need to retain businesses, especially large employers, is addressed under cross cutting themes.

4.3.1.1 Other manufacturing of engineering related products

The wider manufacturing sector is characterised by a mix of businesses including large numbers of SMEs. The research indicated that while some were prospering, many were facing strong competition and difficult trading conditions.

Innovation and productivity: In common with manufacturing businesses across the UK, manufacturers are required to innovate constantly in order to create new products and services that are attractive to buyers and to achieve major productivity improvements. Over the last 25 years government has funded a range of initiatives to support businesses to innovate. This has included schemes such as the Manufacturing Advisory Service, Knowledge Transfer Partnerships as well as regional and local schemes run through the University of Hertfordshire and the Business and Technology Centre in Stevenage. However, take up of support by businesses is invariably less than either expected or hoped for, suggesting that more effective marketing is required. Moreover, where schemes are well subscribed, funding tends to be a limiting factor.

Management capabilities: Many engineering SMEs are run by those nearing retirement. This problem is exacerbated by the dramatic fall in recruitment to the sector since the mid 1980s. As a result, there is a lack of trained and experienced personnel able to take over the running of these businesses giving rise to a problem of succession. This is a UK phenomenon and not limited to Hertfordshire.

While issues of management capability and innovation may be particularly acute within the engineering sector they also affect Life Sciences and Digital and Creative Media. Thus the recommendations set out are presented as cross cutting initiatives.

There is no recommendation for any action within the Advanced Engineering cluster.

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