Business Insight

Tuesday January 31 2012

WindowshoppingCR Smith’s Gerard Eadie on taking the long view

Building bridgesFife enhances its offering to companies

looking for the best business location

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 20122 3

with the launch of the UN campaign.There is official government support

and goodwill in Scotland. Co-operative Development Scotland, a wing of the Scottish Enterprise state development agency, provides advice for: setting up and running consortium co-operatives collaborating with other business; transferring part or all of a business to employee ownership; community co-operatives for services such as shops and utilities; and mutualisation.

There is an established connection between greater employee ownership and business performance, particularly when everyone involves is working toward a common social goal.

When Clansman Dynamics, the East Kilbride robotics specialist, recently won a prestige award for productivity and per-formance, it credited its employee buyout in 2009 for a strong turnover, profits and employment record since then.

The surest guarantee that the recent announcements are not just window dressing will be if the Law Commission completes its work quickly and legisla-tion is fast-tracked thereafter.

Co-operatives are a patient lot with a mindset often geared towards long-term, sustainable success rather than quick returns and big bonuses. Time is of the essence in a crisis though, and it is surely high time to throw open the gates to new ways of generating wealth and jobs in a financial system that is creaking and unsupportive of the needs of small and medium-sized businesses.

The co-operative agenda also speaks to the spirit of an age when many people look askance at the greed and conspicu-ous consumption still on display in a nation in which more than one in five young adults are unemployed, the dole queues are lengthening and thousands of SMEs stand on the brink of insolvency. What is there to lose in encouraging people with a commitment to share in the success and aims of a business?

Welcome

Co-operatives are flavour of the month in these strange times when the Conservatives, the natural party of capitalism, are unnatural bedfellows with

Liberal Democrat dirigistes in a UK coalition Government.

To recap: the UK Government has announced that 17 pieces of fragmented legislation governing co-operatives and mutuals will be scrutinised by the Law Commission with a view to consolidating this jumble into a single act that will apply throughout the UK.

Tax changes and less red tape are also in the offing to encourage greater employee share ownership in a drive to encourage what deputy prime minister Nick Clegg has called a ‘John Lewis economy’ in reference to the stores group that is owned by its employees who enjoy payouts from profits.

Politically, or cynically if you like, it looks good to be encouraging co-ops and employee ownership when the Conserva-tives are being forced, against many of their natural instincts, to castigate big bonuses in the banking sector. It also ticks a box for UK engagement with the United Nations (UN) International Year of Co-operatives.

It seems more than window dress-ing though. The announcements have received an unequivocal welcome from lobbying and support organisation for co-operatives in Scotland and the UK as a whole. They see this paving the way to make setting up a co-operative or mutual as simple as establishing any type of business. They believe this would help to popularise these models and should cut start-up costs, including fees for professional advisers.

There is acknowledgement at West-minster that co-operatives have a reputa-tion for ethical business, that they employ more than 235,000 people, turn over more than £33 billion annually, and have grown strongly — 20 per cent according to trade association Co-operatives UK — during and beyond the credit crunch.

The model, of course, is hardly exotic. Members of co-ops outnumber share-holders three to one globally, according to Global Business Ownership 2012, a Co-operatives UK report timed to coincide

It’s everything to gain in the age of co-operation

RobStokes

Independence has a lure for some in business because of the pros-pect that Scotland might become a low-tax business-friendly econ-omy. This begs two questions: whether political promises can be believed, and whether the fiscal position will permit it.

Assuming, for the moment (and it is a highly questionable assump-

tion), that the answer to these questions is “yes”, would there really be the business growth that some assume? The answer, looking at the evidence from Ireland, is that there might not be, and there could be some surprising losers, the biggest be-ing manufacturing.

Ireland, pre-financial crisis, was ex-

tolled by many, led by Alex Salmond, Scotland’s nationalist first minister, as the shining exemplar of what could be done to make a small economy like Scotland’s boom. Annual average growth rates of between 5-6 per cent, apparently fuelled by a corporate tax rate of 12.5 per cent, put Scotland’s trend growth rate of just under 2 per cent in the shade.

Since then, we have learned that this growth had a lot to do with a property bubble causing a construction boom which has spectacularly collapsed, leav-ing Ireland in a dreadful mess. Irish econ-omists have been taking a much more careful look at what was going on pre-crisis, and some surprising lessons have been learned.

Thomas Conefrey and John Fitzgerald, of the Economic and Social Research In-stitute, Dublin, have examined what hap-pened to the Irish economy as a result of cutting the corporation tax rate.

The history is complex. From the late 1950s, Ireland had a corporation tax rate of between 40-50 per cent for all busi-nesses, apart from manufacturing export-ers, who paid less thanks to a tax relief on exports. Then in 1980, the tax rate on all manufacturers was reduced to 10 per cent, a rate which was extended in 1987 to any financial firm establishing itself in Dublin’s financial services centre. From

the tax cuts began, the level of GNP rose by 87 per cent. On this calculation, it means that tax cuts account for only about a twentieth of Irish growth be-tween 1955-2005. “Thus,” they conclude, “while the increase in output arising from the change in the corporation tax regime was significant, it was not the main factor driving increased output in Ireland over that period.”

I confess I am sceptical of this con-clusion, not least because Confrey and Fitzgerald do not list what were the main factors. But even if you are sceptical, their evidence points to two alternative policy lessons for Scotland.

The first is that cutting business taxes does not necessarily produce an accelera-tion in economic growth. But if you think it will produce growth, this may have ef-fects on the labour market which have damaging effects on some parts of the economy with manufacturing being the most likely sector to suffer.

Either way, it seems to me that politi-cal and business faith in low taxes being a magic bullet which will fix Scotland’s economy is misplaced.

Once held up as an exemplar of the benefits of low corporation tax, Dublin’s approach may not be the magic bullet for Scotland

Ireland’s cutting of business taxes shows that this does not necessarily produce accelerated growth

A tough debate sparks compelling argumentsWelcome to the latest edition of Business Insight, which looks at the implica-tions for business of the political debate currently engulfing Scotland. Peter Jones assesses the conflicting evidence on lower rates of corporation tax, which is held out as a potential benefit of inde-pendence; Ben Thomson analyses the options on offer in the forthcoming referendum and argues the case for looking more closely at Devo Plus, which could be included as an alternative question; and

Rob Stokes examines co-operatives in business, currently in line for a boost from tax as the UK govern-ment seeks to encourage greater employee ownership of companies. He assesses how far this could go and what Scottish companies might do to benefit.

Our profile is Gerard Eadie, whose double-glazing business is a UK leader but whose headquar-ters remain firmly in Fife, a region which is the subject of our special report.

Welcome

Peter Jonesat large

1996 to 2003, to comply with EU rules, the tax rate on all businesses gradually converged on 12.5 per cent.

The hard statistical facts say that this did not produce benefits right across the whole economy. Manufacturing output peaked in 2002, thereafter falling until it rose again in 2007, after which reces-sion caused, as with the rest of the world, manufacturing decline.

Even more surprisingly, given that Ire-land continued to draw in job-creating foreign investment, employment in man-ufacturing peaked in 2000 and has since fallen by about 30 per cent with some 75,000 manufacturing jobs disappearing. Even before the recession, manufacturing employment was down by some 28,000 jobs (see chart).

Why? The evidence suggest that it is not because manufacturers faced an in-crease in the corporation tax rate from 10 to 12.5 per cent. Even the higher rate was still nearly two-thirds lower than the av-erage 31 per cent rate in OECD countries in 2003.

Instead it seems that the decline was caused by a boom in business and finan-cial services which sucked in labour and pushed up wage rates, crowding out man-ufacturing. Manufacturers both struggled to find the employees they needed and faced a loss of competitiveness in their overseas markets as their costs rose.

Much more surprising is Conefrey and Fitzgerald’s conclusion, after running the tax changes through a model of the Irish economy, that while the overall reduc-tion in corporation tax did boost the Irish economy, the effect is much less than is generally assumed.

They write: “Even when the loss of output in the manufacturing sector is taken into account, the reduction in cor-poration tax rates is estimated to have in-creased the level of GNP (gross national product) by over 3.7 per cent compared to the base case [of no tax reduction].”

But they point out, in the period since

300

250

200

150

100

50

0

40000

35000

30000

2000 2002 2004 2006 2008 2010

Ireland Manufacturing Industry GVA €m

Ireland: No. of people employed, Manufacturing Industry

hu

nd

red

th

ou

san

ds

€ m

illio

n

Irish lesson might yet prove salutary

Source: central StatiStical office, ireland

Haydn weSt/rex featureS

Nick Clegg has applauded the ‘John Lewis’ model of a co-operative business

matt lloyd for tHe timeS, Pa

cover image by jameS gloSSoP for tHe timeS

Even before the recession, manufacturing employment had declined

Business Insightthe times | Xxx Xxx XX 2012 3

The right to claim damages for personal injury was defined by the Scottish case of Dono-ghue v Stevenson in 1932, where Lord Atkin clarified the defendant’s duty of care,

saying “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour”.

In order to bring a successful claim for damages, an injured claimant must establish that the other party owed them a duty of care, breached that duty of care, and the subsequent in-jury was a reasonably foreseeable con-sequence of that breach.

Catastrophic injuries - What can be claimed?Solatium (or General Damages) for “pain and suffering and any loss of amenity” is the only element of com-pensation not designed to compensate for a specific financial loss. In prac-tice, claimants often use these funds to subsidise shortfalls that arise due to under-compensation in other areas.

The bulk of the award is referred to as Special Damages and generally cat-egorised as either past or future losses. Past Losses are losses incurred up to the date of trial or earlier settlement.

They include anything from the cost of clothing destroyed in the accident to money spent on carer’s wages.

Future losses are losses that will arise after the date of trial or earlier settlement and often continue for the rest of the claimant’s life. They in-clude cost of care, loss of earnings, additional transport costs, etc. In England, Wales and Northern Ireland, recurring future losses are increasing-ly compensated by way of “periodical payments”, rather than a one off lump sum. However, there is no legislative basis for the courts to order this type of award in Scotland so, unless both sides agree to such a settlement, the claim-ant’s compensation takes the form of a heavily discounted lump sum.

It is assumed that by receiving all of the money now, the claimant will be able to invest it and will benefit from net investment returns equal to infla-tion, plus a factor of growth, known as the Discount Rate.

The Discount Rate is set and re-viewed periodically by the Lord Chan-cellor. The current Discount Rate is 2.5% which effectively means that a claimant is expected to be able to invest his award and achieve annual growth of 2.5% plus inflation, net of tax and charges. In our experience we find that claimants frequently require

investment returns in excess of 8% per annum; year in, year out.

Investment optionsClaimants can invest their lump sum as they choose. However, no invest-ment vehicle can guarantee long term investment returns at the required level which means that claimants are faced with two choices: spend less or run out of money.

Spending less usually means cut-ting down on recommended care and therapies; running out of money ulti-mately results in reliance on (already stretched) state funding. Claimants who receive the right financial advice at an early stage can try to manage the shortfall.

So, what can a claimant do to make the most of their award? The first and most important step is to evaluate im-mediate and future needs and draw up a lifetime ‘financial plan’. This starts by identifying a realistic budget. It is vitally important that all available benefits and allowances are claimed, including VAT exemptions, HMRC al-lowances and relevant benefits for the claimant and their carers.

Historically, claimants were able to secure ‘top-up’ funding but many of these opportunities are disappearing.

Many claimants and their families are therefore faced with some difficult decisions. They may have to remain in unsuitable accommodation, rely on family members to provide care or cut back on important treatments and therapies. They may need to forgo the protection afforded by having a pro-fessional guardian or trustee, leaving them vulnerable to financial abuse. Some are simply forced to accept that they will run out of money, at which time they will be reliant on whatever help their local authority can afford to provide.

A company with the right experi-ence will understand these options and will guide a claimant towards a

solution that enables them to keep funding their needs for the rest of their lives. As well as helping their clients remain as independent as pos-sible, this could also help reduce the drain on diminishing public resources.

Towry offers fee based, independ-ent financial advice and independent investment management services, specialising in personal injury and clinical negligence. Our national team includes APIL listed expert witnesses who support claimants and their legal representatives both pre and post set-tlement.

For more information on Towry, visit www.towry.com or email info@towry.com.

Personal InjuryFinancial solutions for high-value claims

CommerCial report

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 20122 3

with the launch of the UN campaign.There is official government support

and goodwill in Scotland. Co-operative Development Scotland, a wing of the Scottish Enterprise state development agency, provides advice for: setting up and running consortium co-operatives collaborating with other business; transferring part or all of a business to employee ownership; community co-operatives for services such as shops and utilities; and mutualisation.

There is an established connection between greater employee ownership and business performance, particularly when everyone involves is working toward a common social goal.

When Clansman Dynamics, the East Kilbride robotics specialist, recently won a prestige award for productivity and per-formance, it credited its employee buyout in 2009 for a strong turnover, profits and employment record since then.

The surest guarantee that the recent announcements are not just window dressing will be if the Law Commission completes its work quickly and legisla-tion is fast-tracked thereafter.

Co-operatives are a patient lot with a mindset often geared towards long-term, sustainable success rather than quick returns and big bonuses. Time is of the essence in a crisis though, and it is surely high time to throw open the gates to new ways of generating wealth and jobs in a financial system that is creaking and unsupportive of the needs of small and medium-sized businesses.

The co-operative agenda also speaks to the spirit of an age when many people look askance at the greed and conspicu-ous consumption still on display in a nation in which more than one in five young adults are unemployed, the dole queues are lengthening and thousands of SMEs stand on the brink of insolvency. What is there to lose in encouraging people with a commitment to share in the success and aims of a business?

Welcome

Co-operatives are flavour of the month in these strange times when the Conservatives, the natural party of capitalism, are unnatural bedfellows with

Liberal Democrat dirigistes in a UK coalition Government.

To recap: the UK Government has announced that 17 pieces of fragmented legislation governing co-operatives and mutuals will be scrutinised by the Law Commission with a view to consolidating this jumble into a single act that will apply throughout the UK.

Tax changes and less red tape are also in the offing to encourage greater employee share ownership in a drive to encourage what deputy prime minister Nick Clegg has called a ‘John Lewis economy’ in reference to the stores group that is owned by its employees who enjoy payouts from profits.

Politically, or cynically if you like, it looks good to be encouraging co-ops and employee ownership when the Conserva-tives are being forced, against many of their natural instincts, to castigate big bonuses in the banking sector. It also ticks a box for UK engagement with the United Nations (UN) International Year of Co-operatives.

It seems more than window dress-ing though. The announcements have received an unequivocal welcome from lobbying and support organisation for co-operatives in Scotland and the UK as a whole. They see this paving the way to make setting up a co-operative or mutual as simple as establishing any type of business. They believe this would help to popularise these models and should cut start-up costs, including fees for professional advisers.

There is acknowledgement at West-minster that co-operatives have a reputa-tion for ethical business, that they employ more than 235,000 people, turn over more than £33 billion annually, and have grown strongly — 20 per cent according to trade association Co-operatives UK — during and beyond the credit crunch.

The model, of course, is hardly exotic. Members of co-ops outnumber share-holders three to one globally, according to Global Business Ownership 2012, a Co-operatives UK report timed to coincide

It’s everything to gain in the age of co-operation

RobStokes

Independence has a lure for some in business because of the pros-pect that Scotland might become a low-tax business-friendly econ-omy. This begs two questions: whether political promises can be believed, and whether the fiscal position will permit it.

Assuming, for the moment (and it is a highly questionable assump-

tion), that the answer to these questions is “yes”, would there really be the business growth that some assume? The answer, looking at the evidence from Ireland, is that there might not be, and there could be some surprising losers, the biggest be-ing manufacturing.

Ireland, pre-financial crisis, was ex-

tolled by many, led by Alex Salmond, Scotland’s nationalist first minister, as the shining exemplar of what could be done to make a small economy like Scotland’s boom. Annual average growth rates of between 5-6 per cent, apparently fuelled by a corporate tax rate of 12.5 per cent, put Scotland’s trend growth rate of just under 2 per cent in the shade.

Since then, we have learned that this growth had a lot to do with a property bubble causing a construction boom which has spectacularly collapsed, leav-ing Ireland in a dreadful mess. Irish econ-omists have been taking a much more careful look at what was going on pre-crisis, and some surprising lessons have been learned.

Thomas Conefrey and John Fitzgerald, of the Economic and Social Research In-stitute, Dublin, have examined what hap-pened to the Irish economy as a result of cutting the corporation tax rate.

The history is complex. From the late 1950s, Ireland had a corporation tax rate of between 40-50 per cent for all busi-nesses, apart from manufacturing export-ers, who paid less thanks to a tax relief on exports. Then in 1980, the tax rate on all manufacturers was reduced to 10 per cent, a rate which was extended in 1987 to any financial firm establishing itself in Dublin’s financial services centre. From

the tax cuts began, the level of GNP rose by 87 per cent. On this calculation, it means that tax cuts account for only about a twentieth of Irish growth be-tween 1955-2005. “Thus,” they conclude, “while the increase in output arising from the change in the corporation tax regime was significant, it was not the main factor driving increased output in Ireland over that period.”

I confess I am sceptical of this con-clusion, not least because Confrey and Fitzgerald do not list what were the main factors. But even if you are sceptical, their evidence points to two alternative policy lessons for Scotland.

The first is that cutting business taxes does not necessarily produce an accelera-tion in economic growth. But if you think it will produce growth, this may have ef-fects on the labour market which have damaging effects on some parts of the economy with manufacturing being the most likely sector to suffer.

Either way, it seems to me that politi-cal and business faith in low taxes being a magic bullet which will fix Scotland’s economy is misplaced.

Once held up as an exemplar of the benefits of low corporation tax, Dublin’s approach may not be the magic bullet for Scotland

Ireland’s cutting of business taxes shows that this does not necessarily produce accelerated growth

A tough debate sparks compelling argumentsWelcome to the latest edition of Business Insight, which looks at the implica-tions for business of the political debate currently engulfing Scotland. Peter Jones assesses the conflicting evidence on lower rates of corporation tax, which is held out as a potential benefit of inde-pendence; Ben Thomson analyses the options on offer in the forthcoming referendum and argues the case for looking more closely at Devo Plus, which could be included as an alternative question; and

Rob Stokes examines co-operatives in business, currently in line for a boost from tax as the UK govern-ment seeks to encourage greater employee ownership of companies. He assesses how far this could go and what Scottish companies might do to benefit.

Our profile is Gerard Eadie, whose double-glazing business is a UK leader but whose headquar-ters remain firmly in Fife, a region which is the subject of our special report.

Welcome

Peter Jonesat large

1996 to 2003, to comply with EU rules, the tax rate on all businesses gradually converged on 12.5 per cent.

The hard statistical facts say that this did not produce benefits right across the whole economy. Manufacturing output peaked in 2002, thereafter falling until it rose again in 2007, after which reces-sion caused, as with the rest of the world, manufacturing decline.

Even more surprisingly, given that Ire-land continued to draw in job-creating foreign investment, employment in man-ufacturing peaked in 2000 and has since fallen by about 30 per cent with some 75,000 manufacturing jobs disappearing. Even before the recession, manufacturing employment was down by some 28,000 jobs (see chart).

Why? The evidence suggest that it is not because manufacturers faced an in-crease in the corporation tax rate from 10 to 12.5 per cent. Even the higher rate was still nearly two-thirds lower than the av-erage 31 per cent rate in OECD countries in 2003.

Instead it seems that the decline was caused by a boom in business and finan-cial services which sucked in labour and pushed up wage rates, crowding out man-ufacturing. Manufacturers both struggled to find the employees they needed and faced a loss of competitiveness in their overseas markets as their costs rose.

Much more surprising is Conefrey and Fitzgerald’s conclusion, after running the tax changes through a model of the Irish economy, that while the overall reduc-tion in corporation tax did boost the Irish economy, the effect is much less than is generally assumed.

They write: “Even when the loss of output in the manufacturing sector is taken into account, the reduction in cor-poration tax rates is estimated to have in-creased the level of GNP (gross national product) by over 3.7 per cent compared to the base case [of no tax reduction].”

But they point out, in the period since

300

250

200

150

100

50

0

40000

35000

30000

2000 2002 2004 2006 2008 2010

Ireland Manufacturing Industry GVA €m

Ireland: No. of people employed, Manufacturing Industry

hu

nd

red

th

ou

san

ds

€ m

illio

n

Irish lesson might yet prove salutary

Source: central StatiStical office, ireland

Haydn weSt/rex featureS

Nick Clegg has applauded the ‘John Lewis’ model of a co-operative business

matt lloyd for tHe timeS, Pa

cover image by jameS gloSSoP for tHe timeS

Even before the recession, manufacturing employment had declined

Business Insightthe times | Xxx Xxx XX 2012 3

The right to claim damages for personal injury was defined by the Scottish case of Dono-ghue v Stevenson in 1932, where Lord Atkin clarified the defendant’s duty of care,

saying “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour”.

In order to bring a successful claim for damages, an injured claimant must establish that the other party owed them a duty of care, breached that duty of care, and the subsequent in-jury was a reasonably foreseeable con-sequence of that breach.

Catastrophic injuries - What can be claimed?Solatium (or General Damages) for “pain and suffering and any loss of amenity” is the only element of com-pensation not designed to compensate for a specific financial loss. In prac-tice, claimants often use these funds to subsidise shortfalls that arise due to under-compensation in other areas.

The bulk of the award is referred to as Special Damages and generally cat-egorised as either past or future losses. Past Losses are losses incurred up to the date of trial or earlier settlement.

They include anything from the cost of clothing destroyed in the accident to money spent on carer’s wages.

Future losses are losses that will arise after the date of trial or earlier settlement and often continue for the rest of the claimant’s life. They in-clude cost of care, loss of earnings, additional transport costs, etc. In England, Wales and Northern Ireland, recurring future losses are increasing-ly compensated by way of “periodical payments”, rather than a one off lump sum. However, there is no legislative basis for the courts to order this type of award in Scotland so, unless both sides agree to such a settlement, the claim-ant’s compensation takes the form of a heavily discounted lump sum.

It is assumed that by receiving all of the money now, the claimant will be able to invest it and will benefit from net investment returns equal to infla-tion, plus a factor of growth, known as the Discount Rate.

The Discount Rate is set and re-viewed periodically by the Lord Chan-cellor. The current Discount Rate is 2.5% which effectively means that a claimant is expected to be able to invest his award and achieve annual growth of 2.5% plus inflation, net of tax and charges. In our experience we find that claimants frequently require

investment returns in excess of 8% per annum; year in, year out.

Investment optionsClaimants can invest their lump sum as they choose. However, no invest-ment vehicle can guarantee long term investment returns at the required level which means that claimants are faced with two choices: spend less or run out of money.

Spending less usually means cut-ting down on recommended care and therapies; running out of money ulti-mately results in reliance on (already stretched) state funding. Claimants who receive the right financial advice at an early stage can try to manage the shortfall.

So, what can a claimant do to make the most of their award? The first and most important step is to evaluate im-mediate and future needs and draw up a lifetime ‘financial plan’. This starts by identifying a realistic budget. It is vitally important that all available benefits and allowances are claimed, including VAT exemptions, HMRC al-lowances and relevant benefits for the claimant and their carers.

Historically, claimants were able to secure ‘top-up’ funding but many of these opportunities are disappearing.

Many claimants and their families are therefore faced with some difficult decisions. They may have to remain in unsuitable accommodation, rely on family members to provide care or cut back on important treatments and therapies. They may need to forgo the protection afforded by having a pro-fessional guardian or trustee, leaving them vulnerable to financial abuse. Some are simply forced to accept that they will run out of money, at which time they will be reliant on whatever help their local authority can afford to provide.

A company with the right experi-ence will understand these options and will guide a claimant towards a

solution that enables them to keep funding their needs for the rest of their lives. As well as helping their clients remain as independent as pos-sible, this could also help reduce the drain on diminishing public resources.

Towry offers fee based, independ-ent financial advice and independent investment management services, specialising in personal injury and clinical negligence. Our national team includes APIL listed expert witnesses who support claimants and their legal representatives both pre and post set-tlement.

For more information on Towry, visit www.towry.com or email info@towry.com.

Personal InjuryFinancial solutions for high-value claims

CommerCial report

Tuesday January 31 2012 | the times

4

Business Insightthe times | Tuesday January 31 2012 5

We seem to be having the current debate on Scotland’s constitutional future in completely the wrong order. Any sensi-

ble debate would start with a discussion on what sort of Scotland we want, setting out a vision of Scotland’s potential. Next, one would look at the powers needed by each level of government to deliver those visions and then finally one would decide on how the process would work to choose between the different visions. Instead, politicians have spent the last few months almost entirely worked up about the process of the legalities of a referendum and whether there should be one question or two.

So let’s look at it in the right order. What does Scotland need to achieve its potential? Here are four vital ingredi-ents:n Scotland needs to maintain a healthy relationship with the rest of the UK. We share the same island, the rest of the UK is Scotland’s largest trading partner and all political parties including the SNP have proposed we remain in Sterling and have a monetary union, therefore in any constitutional change good relations with the rest of the UK is vital.

n We need to reduce the dependence culture in Scotland. At present, the UK has the most centralised revenue-raising system in the EU with over 90 per cent of all public revenues set and collected by Westminster and passed backed to the constituent parts of the UK through grants.n We must ensure that politicians at all levels of government are properly responsible for efficient public services and an environment to grow the economy. This is particularly important at a time when the economy in the UK has got itself in a mess and the Govern-ment is spending 20 per cent more than it raises in revenues.n We need to have a system that is flexible and recognises that Scotland has a different economy and industries than other parts of the UK as well as a different approach to issues.

Now, let’s turn to the powers that could enable politicians to create policies to achieve Scotland’s potential. If a system is going to last, it must be based on a simple underlying philosophy. There are four broad approaches to constitutional change in Scotland.n That all, or the vast majority, of revenue is raised by Westminster and

then a grant is passed down to Holyrood to pay for the devolved areas it is respon-sible for. This is the “Status Quo” and the new powers proposed in the Scotland Bill don’t fundamentally change this with most of Holyrood’s income still coming from a grant from Westminster.n Each level of government is respon-sible for raising the money they spend. This is called “Devo Plus”. This would result in Westminster having control over sufficient taxes to meet the spending it incurs in and on behalf of Scotland and passes down all other taxes and some borrowing powers to enable Scotland to

pay for its own devolved spending.n Scotland becomes responsible for raising all its revenues and borrowing and pays Westminster a grant for UK public services such as defence and foreign affairs. This is called “Devo Max”.n Lastly, Scotland becomes responsible for not only all revenues and borrowing but also all areas of Government. This is “Independence”.

Three years ago, I helped set up Reform Scotland, a think-tank to promote policy change in Scotland that would help improve public services and provide a better environment to grow the economy.

In September last year we set out a detailed proposal of how Devo Plus would work in practice with certain taxes reserved by Westminster while all others are devolved to Scotland. This would give Holyrood real flexibility to create a package of taxes structured to grow the Scottish economy, provide public services tailored for Scotland’s needs, and create welfare that is better suited to Scotland’s particular social challenges. Recent polls would seem to suggest that the majority of the general public would support such an alterna-tive option to either the Status Quo or Independence.

So let’s not get so het up about the process of how we get to the right struc-ture and rather start talking about what is the best vision for Scotland and which structure of Government can deliver a prosperous Scotland in the 21st century.Ben Thomson is an investment banker and chairman of think-tank Reform Scotland

Politicians at all levels must be responsible for efficient public services

Ben ThomsonThe process, powers and new potential for Scotland’s future

james glossop for the times

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30,000sqftupto800,000sqft• Suitableformanufacturinganddistributionuses

Contact:DavidFraserTel:01314733273Email:david.fraser@ryden.co.ukOntheinstructionsofScottishEnterpriseandFifeCouncil

Feature ProPerty Project For sale/ToLet23,611sqftOffice,JSbp3,Kirkcaldy

Situatedinahigh-profilelocationjustofftheA92onthenorthernedgesofKirkcaldy,JohnSmithBusinessParkisoneofFife’spremierbusinessparks.

Followingthesuccessofthefirsttwophasesofofficedevelopmentonthepart,thethirdphase,JSbp3,iscompleteandavailableforlease.ThebuildingoccupiesatwoacreplotonthewestofJSbpandisadjacenttoFifeCentralRetailPark,oneofFife’smostpopularretaildestinations.Thepropertyprovidesthreefloorsofmodernopenplanofficeaccommodationandisfinishedtoaveryhighqualityspecification.

Contact:NadirKhan-Juhoor/MarcusWeurmanTel:01312229600Email:nadir.khan-juhoor@knightfrank.commarcus.weurman@knightfrank.com

www.investinfife.co.uk

Invest in Fife is Fife

council’s inward

invest team. We work

closely with Scottish

enterprise and

Scottish development

International to offer

a ‘one-stop-shop’

service

Business Insightthe times | Xxx Xxx XX 2012 3

Since 2010, the Converge Chal-lenge Business Competition has been seeking out fresh new entrepreneurial talent in Scottish Universities. With an already respected reputation

at discovering innovative ideas to take forward into business, 2012 will see the Converge Challenge become truly national when it is opened up to all Higher Education Institutions and Research Institutes in Scotland.

The winner of the challenge, which is run by Heriot-Watt University, will walk away with a cheque for £25,000, business support worth £20,000 and a ready-made network of experts and investors who will be on hand to support the aim of incorporating the company within twelve months.

Encouraging the convergence of academia with industry is the driving force behind the competition. Focus-ing on market engagement and skills development, Converge Challenge offers advice and support to research-ers throughout Scotland to commer-cialise their ideas and build profitable companies as this encourages eco-

nomic growth and brings novel tech-nologies to the open market.

2010 Converge Challenge prize-winners BryoActives incorporated at the end of 2011. Working in the field of life sciences, they aim to make an impact in the £42bn worldwide anti-infectives market. Their innovative idea to develop novel antibiotics from the microorganisms isolated from marine organisms required guidance and a cash injection in order to make it a viable business. Their success in the Converge Challenge meant that founders Dr Joanne Porter and Dr Mike Winson could focus more of their time and energy on the busi-ness, and on the marketing of the concept.

The winner of the 2011 Converge Challenge, Bellrock Technology, is a company now well on its way to changing the way utilities companies monitor and upgrade the lifespan of their equipment. Using intelligent software, industries including those in the energy sectors can now en-sure that they are working to peak efficiency, reducing emergency re-

pair costs and so ensuring these costs are kept at a minimum for consum-ers. After winning the competition, Bellrock Technology founder, Adam Brown from The University of Strath-clyde, has been involved in business development courses run by the Con-verge Challenge team, with mentor-ing and guidance from a range of business start-up experts. “Winning the competition has meant that I can take Bellrock Technology to the next level, and develop the business into a successful and profitable enterprise. Converge Challenge provided a very timely catalyst to this process.”

The Converge Challenge is about supporting ideas which have com-mercialisation potential, even if it is not ready to spin out just yet. One such example is from St. Andrews University in Fife, where two stu-dents came together to form Share-Sci, a new breed of news portal being developed to help encourage inter-action between scientific research groups and the public. This strong idea won founders Alex Gibberd and Tim Oliver £1,000 from Heriot-Watt’s

Principal’s Enterprise Award to fur-ther develop the concept into a com-mercial business. The money is avail-able for a variety of uses, including marketing, attending conferences or website development. It is hoped that they, along with the other award win-ners, will re-apply in the future to the Converge Challenge where their idea could be the next big thing.

With the upcoming launch of Con-verge Challenge 2012, “Converge Roadshows” will be hitting the Uni-versities of Scotland to promote the

fantastic opportunities available to all researchers wishing to take their work and commercialise it. The road-shows ensure that Converge Chal-lenge can reach as wide an audience as possible, meaning people at any stage of their research career from fourth year undergraduates to pro-fessors can drop by with questions. Dates and times of each roadshow, as well as well as further information about the competition, can be found on the Converge Challenge webpage, www.hw.ac.uk/convergechallenge

Professor Steve Chapman (left) handing the 2011 Converge Challenge trophy to winner Adam Brown of Bellrock Technology

Converge Challenge:Creating Scottish Entrepreneurs

CommerCial report

Tuesday January 31 2012 | the times

4

Business Insightthe times | Tuesday January 31 2012 5

We seem to be having the current debate on Scotland’s constitutional future in completely the wrong order. Any sensi-

ble debate would start with a discussion on what sort of Scotland we want, setting out a vision of Scotland’s potential. Next, one would look at the powers needed by each level of government to deliver those visions and then finally one would decide on how the process would work to choose between the different visions. Instead, politicians have spent the last few months almost entirely worked up about the process of the legalities of a referendum and whether there should be one question or two.

So let’s look at it in the right order. What does Scotland need to achieve its potential? Here are four vital ingredi-ents:n Scotland needs to maintain a healthy relationship with the rest of the UK. We share the same island, the rest of the UK is Scotland’s largest trading partner and all political parties including the SNP have proposed we remain in Sterling and have a monetary union, therefore in any constitutional change good relations with the rest of the UK is vital.

n We need to reduce the dependence culture in Scotland. At present, the UK has the most centralised revenue-raising system in the EU with over 90 per cent of all public revenues set and collected by Westminster and passed backed to the constituent parts of the UK through grants.n We must ensure that politicians at all levels of government are properly responsible for efficient public services and an environment to grow the economy. This is particularly important at a time when the economy in the UK has got itself in a mess and the Govern-ment is spending 20 per cent more than it raises in revenues.n We need to have a system that is flexible and recognises that Scotland has a different economy and industries than other parts of the UK as well as a different approach to issues.

Now, let’s turn to the powers that could enable politicians to create policies to achieve Scotland’s potential. If a system is going to last, it must be based on a simple underlying philosophy. There are four broad approaches to constitutional change in Scotland.n That all, or the vast majority, of revenue is raised by Westminster and

then a grant is passed down to Holyrood to pay for the devolved areas it is respon-sible for. This is the “Status Quo” and the new powers proposed in the Scotland Bill don’t fundamentally change this with most of Holyrood’s income still coming from a grant from Westminster.n Each level of government is respon-sible for raising the money they spend. This is called “Devo Plus”. This would result in Westminster having control over sufficient taxes to meet the spending it incurs in and on behalf of Scotland and passes down all other taxes and some borrowing powers to enable Scotland to

pay for its own devolved spending.n Scotland becomes responsible for raising all its revenues and borrowing and pays Westminster a grant for UK public services such as defence and foreign affairs. This is called “Devo Max”.n Lastly, Scotland becomes responsible for not only all revenues and borrowing but also all areas of Government. This is “Independence”.

Three years ago, I helped set up Reform Scotland, a think-tank to promote policy change in Scotland that would help improve public services and provide a better environment to grow the economy.

In September last year we set out a detailed proposal of how Devo Plus would work in practice with certain taxes reserved by Westminster while all others are devolved to Scotland. This would give Holyrood real flexibility to create a package of taxes structured to grow the Scottish economy, provide public services tailored for Scotland’s needs, and create welfare that is better suited to Scotland’s particular social challenges. Recent polls would seem to suggest that the majority of the general public would support such an alterna-tive option to either the Status Quo or Independence.

So let’s not get so het up about the process of how we get to the right struc-ture and rather start talking about what is the best vision for Scotland and which structure of Government can deliver a prosperous Scotland in the 21st century.Ben Thomson is an investment banker and chairman of think-tank Reform Scotland

Politicians at all levels must be responsible for efficient public services

Ben ThomsonThe process, powers and new potential for Scotland’s future

james glossop for the times

We can help you with:

• PropertyandLandsearches• Detailedlocalinformation,suchaslocalworkforce&transportation• Familiarisationtrips• Adviceonfinancialassistance• SettingupdiscussionswithotherFifeCouncildepartmentsi.e.planning• Providingcontactswithinexternalorganisations• Engagementwithlocalcommunities

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Ifyou’relookingforaneasyplacetodobusiness,contactRossMackenzie:ross.mackenzie@fife.gov.ukortelephone08451555555ext492178.

FifeCouncilcanofferavarietyofdevelopmentopportunitiesrangingfromfullyservicedsitesonestablishedbusinessparkstolargersingleoccupiermajordevelopmentopportunities.Findyouridealsiteatwww.investinfife.co.uk/propertysearch.

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• Locatedapprox1.5milessouthofJunction3ofM90• AdjacenttonewAmazon.co.uk1msqftfulfilment

centre• Approx3milesnorthofForthRoadBridge• Siteavailabletoaccommodatebuildingsfrom

30,000sqftupto800,000sqft• Suitableformanufacturinganddistributionuses

Contact:DavidFraserTel:01314733273Email:david.fraser@ryden.co.ukOntheinstructionsofScottishEnterpriseandFifeCouncil

Feature ProPerty Project For sale/ToLet23,611sqftOffice,JSbp3,Kirkcaldy

Situatedinahigh-profilelocationjustofftheA92onthenorthernedgesofKirkcaldy,JohnSmithBusinessParkisoneofFife’spremierbusinessparks.

Followingthesuccessofthefirsttwophasesofofficedevelopmentonthepart,thethirdphase,JSbp3,iscompleteandavailableforlease.ThebuildingoccupiesatwoacreplotonthewestofJSbpandisadjacenttoFifeCentralRetailPark,oneofFife’smostpopularretaildestinations.Thepropertyprovidesthreefloorsofmodernopenplanofficeaccommodationandisfinishedtoaveryhighqualityspecification.

Contact:NadirKhan-Juhoor/MarcusWeurmanTel:01312229600Email:nadir.khan-juhoor@knightfrank.commarcus.weurman@knightfrank.com

www.investinfife.co.uk

Invest in Fife is Fife

council’s inward

invest team. We work

closely with Scottish

enterprise and

Scottish development

International to offer

a ‘one-stop-shop’

service

Business Insightthe times | Xxx Xxx XX 2012 3

Since 2010, the Converge Chal-lenge Business Competition has been seeking out fresh new entrepreneurial talent in Scottish Universities. With an already respected reputation

at discovering innovative ideas to take forward into business, 2012 will see the Converge Challenge become truly national when it is opened up to all Higher Education Institutions and Research Institutes in Scotland.

The winner of the challenge, which is run by Heriot-Watt University, will walk away with a cheque for £25,000, business support worth £20,000 and a ready-made network of experts and investors who will be on hand to support the aim of incorporating the company within twelve months.

Encouraging the convergence of academia with industry is the driving force behind the competition. Focus-ing on market engagement and skills development, Converge Challenge offers advice and support to research-ers throughout Scotland to commer-cialise their ideas and build profitable companies as this encourages eco-

nomic growth and brings novel tech-nologies to the open market.

2010 Converge Challenge prize-winners BryoActives incorporated at the end of 2011. Working in the field of life sciences, they aim to make an impact in the £42bn worldwide anti-infectives market. Their innovative idea to develop novel antibiotics from the microorganisms isolated from marine organisms required guidance and a cash injection in order to make it a viable business. Their success in the Converge Challenge meant that founders Dr Joanne Porter and Dr Mike Winson could focus more of their time and energy on the busi-ness, and on the marketing of the concept.

The winner of the 2011 Converge Challenge, Bellrock Technology, is a company now well on its way to changing the way utilities companies monitor and upgrade the lifespan of their equipment. Using intelligent software, industries including those in the energy sectors can now en-sure that they are working to peak efficiency, reducing emergency re-

pair costs and so ensuring these costs are kept at a minimum for consum-ers. After winning the competition, Bellrock Technology founder, Adam Brown from The University of Strath-clyde, has been involved in business development courses run by the Con-verge Challenge team, with mentor-ing and guidance from a range of business start-up experts. “Winning the competition has meant that I can take Bellrock Technology to the next level, and develop the business into a successful and profitable enterprise. Converge Challenge provided a very timely catalyst to this process.”

The Converge Challenge is about supporting ideas which have com-mercialisation potential, even if it is not ready to spin out just yet. One such example is from St. Andrews University in Fife, where two stu-dents came together to form Share-Sci, a new breed of news portal being developed to help encourage inter-action between scientific research groups and the public. This strong idea won founders Alex Gibberd and Tim Oliver £1,000 from Heriot-Watt’s

Principal’s Enterprise Award to fur-ther develop the concept into a com-mercial business. The money is avail-able for a variety of uses, including marketing, attending conferences or website development. It is hoped that they, along with the other award win-ners, will re-apply in the future to the Converge Challenge where their idea could be the next big thing.

With the upcoming launch of Con-verge Challenge 2012, “Converge Roadshows” will be hitting the Uni-versities of Scotland to promote the

fantastic opportunities available to all researchers wishing to take their work and commercialise it. The road-shows ensure that Converge Chal-lenge can reach as wide an audience as possible, meaning people at any stage of their research career from fourth year undergraduates to pro-fessors can drop by with questions. Dates and times of each roadshow, as well as well as further information about the competition, can be found on the Converge Challenge webpage, www.hw.ac.uk/convergechallenge

Professor Steve Chapman (left) handing the 2011 Converge Challenge trophy to winner Adam Brown of Bellrock Technology

Converge Challenge:Creating Scottish Entrepreneurs

CommerCial report

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 20126 7

Cover story

business flourishing, CR Smith moved into the next decade with a workforce that had grown to 1400 people. Despite the success, Eadie has never considered basing his operations anywhere other than in Fife.

“The business has grown up around Dunfermline and our factory is in Cowdenbeath, so there are very strong ties here,” he says. “I have found there is a very distinct and impressive work ethic in Fife, and I think that it has a lot to do with the fact that most people have a mining background. Mining communi-ties understood what it meant to work hard and there were no hiding places. You worked and lived together. You had to work hard to earn your place in that community.

“If you also go back one or two gen-erations, there were no such convenient transport routes to Edinburgh or across the Tay, and I think being such a con-tained community also had an impact on our attitude to work: if there was work you were there to do it.”

There is still work to do for CR Smith, but with the boom years behind them, that workforce is now reduced to 300. Yet Eadie believes the experience built in the good years has given him the tools to cope with the current challenges and any more tough times ahead. He says his op-eration is leaner, but sharper too.

“I’m more optimistic now than ever,” he says. “We have a better structure than we’ve ever had, a really good mix of peo-

“Virtually the day I finished at the council, I started doing jobs, so I sold my car and bought a van at an auction, and I had a thriving business aged 20. I used to buy glass and bits and pieces from Bert Smith, who ran CR Smith, and after a few years he asked if I wanted to take the business over. By this time I employed 13 people, and he employed four, but their name had been around for 60 years. So having bought CR Smith, I eventually got rid of my own company name and made it the one business.

“I didn’t imagine then that it would be anything more than a local business, but 18 months later I had 50 people working for me. I remember talking to someone who had a smaller but well-established surveyors firm in the town, and he asked me: ‘Did you ever think you would get as big?’ I said: ‘No I didn’t — but now I can tell you where I’ll be in 10 years’. Because by then I understood it. I had learned how to run a business. I was always ask-ing people questions, learning from what other businessmen were doing.

“If I was to look back to when I first started out, I’d be kidding myself if I was to say I had this big idea. It’s been 40 years and it’s not been a straightforward route — there’s been a fair amount of fly-ing by the seat of the pants, reacting to situations that occur that would take you on a path that might be right or wrong. There have been as many wrong.”

It was one “right” decision that Eadie made in 1984, however, that was to be the

making of CR Smith, turning what was then a local double-glazing firm in Fife into one of Scotland’s highest-profile or-ganisations. A three-year, £500,000 spon-sorship of the country’s biggest football clubs, Celtic and Rangers, thrust Eadie into the spotlight, and he later went on to continue the football association through a deal with the Parkhead side that lasted a further nine years.

“I had started advertising on television, but a survey showed awareness of the CR Smith brand was still around 19 per cent in Dunfermline and virtually zero elsewhere,” says Eadie. “Six months after our name started appearing on the Old firm jerseys we repeated the survey, and it showed our brand awareness at 90 per cent across Scotland.

“It was something that captured the imagination, but yes, it was a bit of a gamble. Half a million for three years — I didn’t have that money, but it was paid monthly and I was confident that would work out. You can’t develop as a company unless you take a gamble, unless you take a chance.”

If the sponsorship deal was a risk, it was certainly one of the calculated va-riety. Eadie was demonstrating a flair for marketing, something that was also evident in his decision to cover all

the company vehicles in the distinctive blue and white CR Smith livery, a com-monplace form of branding today, but a creative move back in the 1980s. With the

Veteran isstill seizing window of opportunity

ple. There are young, ambitious, well- educated people and a lot of staff who have been here for 25 or even 30 years. They are smart too, but they have that valuable experience, and you get the two working together. You need that dynam-ic. If you allow the business to be domi-nated by the old guard you end up, not intentionally, but with blockers.

“I was helped early on by the fact that, most of the time, in a growth market you can make a few mistakes and get away with quite a lot. Now, in a time where markets have levelled out, like most busi-

Gerard Eadie, despite having become a grandfather, has no intention of walking away from the rigours of daily business

nesses we’re now in that position where you need to be better organised. You can’t afford mistakes; you don’t have the leeway.

Some things have not changed though. “We know how to deal with private cus-tomers, that’s always been our speciality over the years. We sell to householders in their house — people still need to buy windows, people still want to buy conservatories. It’s more of a lifestyle purchase, but rather than give up on con-servatories, we looked at the margins, at how we described the product, and we improved it — and December was our best month for sales last year.

“As for renewables, well, we’ve always been in the business of conserving ener-gy with double glazing, so solar panels fit what we’ve been doing for so long. Rather than simply concentrate on the product, we decided to build up engineering ex-pertise. Structural engineers are needed to assess projects, as some modern homes are not designed to take solar panels. It’s all about quality controls and the right people — it’s the essence of our business.

“When I meet customers, I always ex-pect to get a good response. That’s how I feel: I will be surprised to hear about a problem or bad service. I’m not saying it doesn’t happen, but if it does we respond in the right way. First and foremost we want to do a job properly, we operate on a personal basis with our customers and if we don’t get it right we can’t make any money. So we take the view we have one chance, and do it right first time. What has also stood us in good stead is our 10-year guarantee, now into a fourth dec-ade — if a handle comes loose after nine years, we don’t argue, even if it’s not strict-ly our fault. That gets you business over and over, and with the next generation.”

Eadie now has another grand plan, and this one also features the next generation, and the fu-ture of the company he has built.

“My ambition is to get back to the 1400-strong workforce,” he says. “Not because it sounds good, but because it would mean the business is growing at the rate it should be. We’ve so many younger members of staff now taking the lead, whereas before, it was all my ideas, my direction, and my vision. Now I’m encouraging vision from others, they’ve a better chance of seeing it through.

“We’re the same business, but we have a different outlook and feel. We still work with private householders, and we’ll still be fitting windows, conservatories, re-newable energy and insulation. We also have a repairs company, Fix. Most people want to improve their home, and we have the expertise.

“That’s why we’re still busy when things are tough. Purchases are more considered, people are less likely to take a chance, and choose to deal with a com-pany or with people they can rely on.”

He might be loosening his grip on the reins ever so slightly, but Eadie, approach-ing 60 and having recently become a grandfather, is not ready to walk away. He may have moved his family from a mining town to rural Kinross-shire, and enjoy the gentrified pursuits of fishing, shooting and breeding hunting dogs, but Eadie still feels the weight of responsibility; those people he believes are still relying upon him.

“I still get the daily figures every night, I know what we sold and the number of enquiries we had. It’s not just about the business, the finance, it’s the people here — I feel an obligation, a responsibility to them. Keeping tabs on the business is part of that. There are stacks of people that have been here 25 years or more. I like that, and I still enjoy chatting with them.”

Gerard Eadie likes to chat. He’ll move on quickly from the usual niceties, however, and will very soon want to know all about you. He’ll want to know about your fam-ily, where you are

from, your thoughts on the youth of today. He’ll even try to encourage you to com-pare the qualities of the newspaper you are writing for to those of another title.

Eadie could talk for Scotland, but can he sell double-glazing? As the chairman of CR Smith, of course, that’s precisely what he has been doing since buying the business in 1977. CR Smith became a Scottish household name in the early 1980s, the result of a neat piece of busi-ness by Eadie that proved to be a market-ing coup — more of which later.

However, the past couple of years have not been easy for the business that just edged into profit over the 12 months to last March. Eadie is not fazed. He recently announced a programme of investment, as the producer and installer of windows, doors and conservatories made the natu-ral transition into renewable energy with the launch of a solar energy division.

There’s plenty of grit about this busi-nessman. In fact, scratch the surface, and you’ll find some coal dust.

Eadie grew up with two brothers and a sister in Cowdenbeath, a mining com-munity, the industry having drawn his parents from the west of Scotland to settle in Fife, his father a safety train-ing officer for the pits, and his mother a teacher. The CR Smith chairman has not moved too far from his roots, as his busi-ness remains headquartered in the heart of Dunfermline, and the factory is just a short hop away, in his hometown.

The story of Eadie’s rise from appren-tice glazier with Fife’s council to running

Business is true to its rootsGerard Eadie, chairman of CR Smith and Prince’s Trust stal-wart, was last year made a CBE for his services to the glazing industry and to the Scottish voluntary sector.

Eadie readily admits it’s been a tough spell for the business. Profits have tumbled in the past two years, down from £672,000 in 2009 to £135,000 in 2010 — and to £41,000 for the year end to last March. Yet since then, Eadie has dug into the the company’s coffers to fund an £800,000 fleet of Mercedes vans. Along with his brother George, CR Smith’s finance

director, Eadie has pledged to continue investment this year into the Cowdenbeath factory.

CR Smith was founded in 1917 by Charles Robertson Smith as a picture-framing shop in Alloa, with a glazing workshop in Dunfermline.

Eadie set up his own glazing company with a £50 loan from his mother, and then in 1977, after building a strong working relationship with Bert Smith, Charles Smith’s grandson, he bought the business for £2200.

Half of that was for the busi-ness, he explains, and half for the Olivetti cash machine.

one of Scotland’s best-known and suc-cessful companies clearly has a touch of the ‘rags to riches’, ‘working lad made good’ about it. Timing, as ever, was cru-cial to Eadie’s gameplan, as he took ad-vantage of the growing shift to property ownership and the ongoing demand for home improvement. However, it’s too simple to sum up his evident business acumen as being grounded in an ability to recognise an opportunity and his hav-ing a sharp eye for a deal, though this is part of his strength. What has really been crucial to Eadie’s achievement is his interest in people.

He does like to talk, but he listens too.“My father worked at Fordell pit and

my Uncle John was the manager at the Kelty pit; the old boys round here, they’ll remember all that,” he says. “We were brought up listening to pit stories, there was not much else to talk about. Mining is about your whole life in a pit commu-nity, it’s not like going to do a job in a fac-tory and then coming home and forget-ting about it.

“There was a great camaraderie and some great characters too. On the one hand, as small children, we loved listen-ing to the stories and the names. Yet there was never any question of us going to the pits.

“My brother George worked at the pit-head during his holidays when he was at university, and that was the closest any of us got. All of my friends back then thought apprenticeships were the thing, at the dockyards or with a building firm. I think my mother thought we’d all be going to university, but I decided I wasn’t interested.”

Eadie ended up as a 16-year-old ap-prentice glazier. It was, he says, just by chance. However, he was determined this would be a stepping stone. Eadie already had a grand plan.

“My sport was cycling, so all the four years I was an apprentice, I had the idea that when I finished my apprenticeship I’d take my bike and go road racing in Eu-rope,” he says. “The aim was to come back when I was 30, and start working for my-self. So at 20 I was still planning to go, but I needed money for the road tax on my car to get me to Europe, so I did a few homers. These jobs went so well that I thought I’d forget the bike for the time being, resign from the council and work for myself .

james glossop for the times

Virtually the day I left the council I bought a van and aged 20 I had a thriving business

The chairman of CR Smith bought the business in 1977 but remains firmly focused on its success. Ginny Clark discovers what drives Gerard Eadie

The Government’s Economic Strategy sets a direction for sustainable economic development for Scotland and

aims to build a more dynamic and faster growing economy to increase prosperity.

Fife welcomes this. We’re excited as this is exactly what we are working to achieve. Working closely with our city planning region authorities together with Fife’s strong business partnerships is helping us become more resilient and responsive to changes in the local, national and global economies. One certainty about the future is that it will not see us going back to the way things were before the recent unprecedented global economic crisis.

The economic strategy for Fife is private sector driven with a strategic aspiration

of making Fife the ‘easiest place to do business’. This focuses on all ways in which we do business and challenges how joined up, effective and business friendly Fife and Fife Council are, and not just in terms of economic d e v e l o p m e n t activities.

In keeping with the Government’s strategy, Fife has an ongoing commitment to a low carbon economy. Biomass energy developments include a £200m combined heat and power system at Tullis Russell as well as Diageo’s £65m generation plant. This shows that Fife located companies have the confi dence to invest in new technologies and remain competitive.

Renewable energy is a huge opportunity for Fife. Over 1500 people already work in the industry. We have 150 companies involved in manufacturing able to supply components to the renewables industry, and our colleges have invested heavily in their facilities to deliver training in the skills required to meet the demands of the sector.

Fife’s external image has been under scrutiny for the last four months as the Fife Perception Study conducted UK wide research to get an understanding of how the public perceive Fife. Findings from this Study will be used to enhance the area’s economic competitiveness and position it nationally and globally as a great place to live, work, visit and invest.

PROFESSIONAL BRIEF

Fife: An easy place to do business

Keith Winter, Head of Enterprise, Planning & Protective Services

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 20126 7

Cover story

business flourishing, CR Smith moved into the next decade with a workforce that had grown to 1400 people. Despite the success, Eadie has never considered basing his operations anywhere other than in Fife.

“The business has grown up around Dunfermline and our factory is in Cowdenbeath, so there are very strong ties here,” he says. “I have found there is a very distinct and impressive work ethic in Fife, and I think that it has a lot to do with the fact that most people have a mining background. Mining communi-ties understood what it meant to work hard and there were no hiding places. You worked and lived together. You had to work hard to earn your place in that community.

“If you also go back one or two gen-erations, there were no such convenient transport routes to Edinburgh or across the Tay, and I think being such a con-tained community also had an impact on our attitude to work: if there was work you were there to do it.”

There is still work to do for CR Smith, but with the boom years behind them, that workforce is now reduced to 300. Yet Eadie believes the experience built in the good years has given him the tools to cope with the current challenges and any more tough times ahead. He says his op-eration is leaner, but sharper too.

“I’m more optimistic now than ever,” he says. “We have a better structure than we’ve ever had, a really good mix of peo-

“Virtually the day I finished at the council, I started doing jobs, so I sold my car and bought a van at an auction, and I had a thriving business aged 20. I used to buy glass and bits and pieces from Bert Smith, who ran CR Smith, and after a few years he asked if I wanted to take the business over. By this time I employed 13 people, and he employed four, but their name had been around for 60 years. So having bought CR Smith, I eventually got rid of my own company name and made it the one business.

“I didn’t imagine then that it would be anything more than a local business, but 18 months later I had 50 people working for me. I remember talking to someone who had a smaller but well-established surveyors firm in the town, and he asked me: ‘Did you ever think you would get as big?’ I said: ‘No I didn’t — but now I can tell you where I’ll be in 10 years’. Because by then I understood it. I had learned how to run a business. I was always ask-ing people questions, learning from what other businessmen were doing.

“If I was to look back to when I first started out, I’d be kidding myself if I was to say I had this big idea. It’s been 40 years and it’s not been a straightforward route — there’s been a fair amount of fly-ing by the seat of the pants, reacting to situations that occur that would take you on a path that might be right or wrong. There have been as many wrong.”

It was one “right” decision that Eadie made in 1984, however, that was to be the

making of CR Smith, turning what was then a local double-glazing firm in Fife into one of Scotland’s highest-profile or-ganisations. A three-year, £500,000 spon-sorship of the country’s biggest football clubs, Celtic and Rangers, thrust Eadie into the spotlight, and he later went on to continue the football association through a deal with the Parkhead side that lasted a further nine years.

“I had started advertising on television, but a survey showed awareness of the CR Smith brand was still around 19 per cent in Dunfermline and virtually zero elsewhere,” says Eadie. “Six months after our name started appearing on the Old firm jerseys we repeated the survey, and it showed our brand awareness at 90 per cent across Scotland.

“It was something that captured the imagination, but yes, it was a bit of a gamble. Half a million for three years — I didn’t have that money, but it was paid monthly and I was confident that would work out. You can’t develop as a company unless you take a gamble, unless you take a chance.”

If the sponsorship deal was a risk, it was certainly one of the calculated va-riety. Eadie was demonstrating a flair for marketing, something that was also evident in his decision to cover all

the company vehicles in the distinctive blue and white CR Smith livery, a com-monplace form of branding today, but a creative move back in the 1980s. With the

Veteran isstill seizing window of opportunity

ple. There are young, ambitious, well- educated people and a lot of staff who have been here for 25 or even 30 years. They are smart too, but they have that valuable experience, and you get the two working together. You need that dynam-ic. If you allow the business to be domi-nated by the old guard you end up, not intentionally, but with blockers.

“I was helped early on by the fact that, most of the time, in a growth market you can make a few mistakes and get away with quite a lot. Now, in a time where markets have levelled out, like most busi-

Gerard Eadie, despite having become a grandfather, has no intention of walking away from the rigours of daily business

nesses we’re now in that position where you need to be better organised. You can’t afford mistakes; you don’t have the leeway.

Some things have not changed though. “We know how to deal with private cus-tomers, that’s always been our speciality over the years. We sell to householders in their house — people still need to buy windows, people still want to buy conservatories. It’s more of a lifestyle purchase, but rather than give up on con-servatories, we looked at the margins, at how we described the product, and we improved it — and December was our best month for sales last year.

“As for renewables, well, we’ve always been in the business of conserving ener-gy with double glazing, so solar panels fit what we’ve been doing for so long. Rather than simply concentrate on the product, we decided to build up engineering ex-pertise. Structural engineers are needed to assess projects, as some modern homes are not designed to take solar panels. It’s all about quality controls and the right people — it’s the essence of our business.

“When I meet customers, I always ex-pect to get a good response. That’s how I feel: I will be surprised to hear about a problem or bad service. I’m not saying it doesn’t happen, but if it does we respond in the right way. First and foremost we want to do a job properly, we operate on a personal basis with our customers and if we don’t get it right we can’t make any money. So we take the view we have one chance, and do it right first time. What has also stood us in good stead is our 10-year guarantee, now into a fourth dec-ade — if a handle comes loose after nine years, we don’t argue, even if it’s not strict-ly our fault. That gets you business over and over, and with the next generation.”

Eadie now has another grand plan, and this one also features the next generation, and the fu-ture of the company he has built.

“My ambition is to get back to the 1400-strong workforce,” he says. “Not because it sounds good, but because it would mean the business is growing at the rate it should be. We’ve so many younger members of staff now taking the lead, whereas before, it was all my ideas, my direction, and my vision. Now I’m encouraging vision from others, they’ve a better chance of seeing it through.

“We’re the same business, but we have a different outlook and feel. We still work with private householders, and we’ll still be fitting windows, conservatories, re-newable energy and insulation. We also have a repairs company, Fix. Most people want to improve their home, and we have the expertise.

“That’s why we’re still busy when things are tough. Purchases are more considered, people are less likely to take a chance, and choose to deal with a com-pany or with people they can rely on.”

He might be loosening his grip on the reins ever so slightly, but Eadie, approach-ing 60 and having recently become a grandfather, is not ready to walk away. He may have moved his family from a mining town to rural Kinross-shire, and enjoy the gentrified pursuits of fishing, shooting and breeding hunting dogs, but Eadie still feels the weight of responsibility; those people he believes are still relying upon him.

“I still get the daily figures every night, I know what we sold and the number of enquiries we had. It’s not just about the business, the finance, it’s the people here — I feel an obligation, a responsibility to them. Keeping tabs on the business is part of that. There are stacks of people that have been here 25 years or more. I like that, and I still enjoy chatting with them.”

Gerard Eadie likes to chat. He’ll move on quickly from the usual niceties, however, and will very soon want to know all about you. He’ll want to know about your fam-ily, where you are

from, your thoughts on the youth of today. He’ll even try to encourage you to com-pare the qualities of the newspaper you are writing for to those of another title.

Eadie could talk for Scotland, but can he sell double-glazing? As the chairman of CR Smith, of course, that’s precisely what he has been doing since buying the business in 1977. CR Smith became a Scottish household name in the early 1980s, the result of a neat piece of busi-ness by Eadie that proved to be a market-ing coup — more of which later.

However, the past couple of years have not been easy for the business that just edged into profit over the 12 months to last March. Eadie is not fazed. He recently announced a programme of investment, as the producer and installer of windows, doors and conservatories made the natu-ral transition into renewable energy with the launch of a solar energy division.

There’s plenty of grit about this busi-nessman. In fact, scratch the surface, and you’ll find some coal dust.

Eadie grew up with two brothers and a sister in Cowdenbeath, a mining com-munity, the industry having drawn his parents from the west of Scotland to settle in Fife, his father a safety train-ing officer for the pits, and his mother a teacher. The CR Smith chairman has not moved too far from his roots, as his busi-ness remains headquartered in the heart of Dunfermline, and the factory is just a short hop away, in his hometown.

The story of Eadie’s rise from appren-tice glazier with Fife’s council to running

Business is true to its rootsGerard Eadie, chairman of CR Smith and Prince’s Trust stal-wart, was last year made a CBE for his services to the glazing industry and to the Scottish voluntary sector.

Eadie readily admits it’s been a tough spell for the business. Profits have tumbled in the past two years, down from £672,000 in 2009 to £135,000 in 2010 — and to £41,000 for the year end to last March. Yet since then, Eadie has dug into the the company’s coffers to fund an £800,000 fleet of Mercedes vans. Along with his brother George, CR Smith’s finance

director, Eadie has pledged to continue investment this year into the Cowdenbeath factory.

CR Smith was founded in 1917 by Charles Robertson Smith as a picture-framing shop in Alloa, with a glazing workshop in Dunfermline.

Eadie set up his own glazing company with a £50 loan from his mother, and then in 1977, after building a strong working relationship with Bert Smith, Charles Smith’s grandson, he bought the business for £2200.

Half of that was for the busi-ness, he explains, and half for the Olivetti cash machine.

one of Scotland’s best-known and suc-cessful companies clearly has a touch of the ‘rags to riches’, ‘working lad made good’ about it. Timing, as ever, was cru-cial to Eadie’s gameplan, as he took ad-vantage of the growing shift to property ownership and the ongoing demand for home improvement. However, it’s too simple to sum up his evident business acumen as being grounded in an ability to recognise an opportunity and his hav-ing a sharp eye for a deal, though this is part of his strength. What has really been crucial to Eadie’s achievement is his interest in people.

He does like to talk, but he listens too.“My father worked at Fordell pit and

my Uncle John was the manager at the Kelty pit; the old boys round here, they’ll remember all that,” he says. “We were brought up listening to pit stories, there was not much else to talk about. Mining is about your whole life in a pit commu-nity, it’s not like going to do a job in a fac-tory and then coming home and forget-ting about it.

“There was a great camaraderie and some great characters too. On the one hand, as small children, we loved listen-ing to the stories and the names. Yet there was never any question of us going to the pits.

“My brother George worked at the pit-head during his holidays when he was at university, and that was the closest any of us got. All of my friends back then thought apprenticeships were the thing, at the dockyards or with a building firm. I think my mother thought we’d all be going to university, but I decided I wasn’t interested.”

Eadie ended up as a 16-year-old ap-prentice glazier. It was, he says, just by chance. However, he was determined this would be a stepping stone. Eadie already had a grand plan.

“My sport was cycling, so all the four years I was an apprentice, I had the idea that when I finished my apprenticeship I’d take my bike and go road racing in Eu-rope,” he says. “The aim was to come back when I was 30, and start working for my-self. So at 20 I was still planning to go, but I needed money for the road tax on my car to get me to Europe, so I did a few homers. These jobs went so well that I thought I’d forget the bike for the time being, resign from the council and work for myself .

james glossop for the times

Virtually the day I left the council I bought a van and aged 20 I had a thriving business

The chairman of CR Smith bought the business in 1977 but remains firmly focused on its success. Ginny Clark discovers what drives Gerard Eadie

The Government’s Economic Strategy sets a direction for sustainable economic development for Scotland and

aims to build a more dynamic and faster growing economy to increase prosperity.

Fife welcomes this. We’re excited as this is exactly what we are working to achieve. Working closely with our city planning region authorities together with Fife’s strong business partnerships is helping us become more resilient and responsive to changes in the local, national and global economies. One certainty about the future is that it will not see us going back to the way things were before the recent unprecedented global economic crisis.

The economic strategy for Fife is private sector driven with a strategic aspiration

of making Fife the ‘easiest place to do business’. This focuses on all ways in which we do business and challenges how joined up, effective and business friendly Fife and Fife Council are, and not just in terms of economic d e v e l o p m e n t activities.

In keeping with the Government’s strategy, Fife has an ongoing commitment to a low carbon economy. Biomass energy developments include a £200m combined heat and power system at Tullis Russell as well as Diageo’s £65m generation plant. This shows that Fife located companies have the confi dence to invest in new technologies and remain competitive.

Renewable energy is a huge opportunity for Fife. Over 1500 people already work in the industry. We have 150 companies involved in manufacturing able to supply components to the renewables industry, and our colleges have invested heavily in their facilities to deliver training in the skills required to meet the demands of the sector.

Fife’s external image has been under scrutiny for the last four months as the Fife Perception Study conducted UK wide research to get an understanding of how the public perceive Fife. Findings from this Study will be used to enhance the area’s economic competitiveness and position it nationally and globally as a great place to live, work, visit and invest.

PROFESSIONAL BRIEF

Fife: An easy place to do business

Keith Winter, Head of Enterprise, Planning & Protective Services

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 20128 9

Special report: Fife

approaches for external funding.The council has set a target for every

community of more than 5,000 — or clusters of communities of up to 5,000 — to have a seven year land supply based on current demand but with provision to in-crease targets. These now cover 22 settle-ments and work is being commissioned to bring more sites forward to a serviced state so investors will have a wider range of options at the point of their invest-ment decision-making.

“This way, we get a better capital receipt because we remove some of the risk for the company, and we can hope to recycle that money into keeping the servic-ing arrangement going,” Mr Winter said.

Innovative ways of approaching infra-structure provision include a Tax Incre-ment Financing (TIF) scheme to under-pin a proposed £17 million expansion of land and quayside infrastructure at En-ergy Park Fife. This would allow the site to pitch to the largest potential offshore wind projects. The TIF proposal envis-ages Fife being able to generate income from additional Non-Domestic Rates as new companies are attracted to the park, with income being ploughed back into expansion and improved transport links. The Scottish government recently ap-proved Fife Council’s fi rst phase bid for the TIF and consultants are to be hired to help develop a business plan based on it.

In line with Fife Council’s agenda to make doing business easier Invest in Fife (www.investinfi fe.co.uk) was established as a one-stop shop for services covering inward investment, start up, grants and funding, property and land selection. It works very closely with Opportunities Fife (www.opportunitiesfi fe.org) on re-cruiting, training and developing staff, and support for employees facing redundancy.

Its approach has been validated by in-ward investors. “Amazon told us that their experience of recruiting here has been easier than elsewhere,” said Chris Parr.

Central control of recruitment data for Opportunities Fife meant it was able to track which applicants for Amazon jobs had been successful and to provide unsuccessful candidates with targeted training that allowed them to re-present themselves to the company.

“Amazon said that using us in this way had been leap of faith on their part, so it’s been a good endorsement of our genuinely innovative employer engagement model,” Mr Parr said.

He added that the one-stop approach was arguably even more signifi cant for small busi-nesses that could ill afford to waste time dealing with a profu-sion of agencies to try to recruit. “The feedback that we’re getting on this is excellent. We’re mak-ing a difference to businesses of all sizes.”

Testimony from investors also endorses key elements of the sales pitches made by Fife Council. With a ready made site, utilities, planning and transpor-tation pre-packaged by Fife Council and its partners, Amazon took only eight months to get its Dunfermline operation up and running on November 15 last year. The company predicts it will eventually create 750 new permanent jobs and up to 1,500 temporary jobs during peak Christ-mas periods.

The fenders currently being attached to the long wall of a quay at Methil docks in Fife are a modest symbol of a region that has withstood the buf-feting of long-term restructuring and global economic ills

better than might once have been hoped.Fife, once a focus for heavy engineer-

ing and coal mining could have been crushed these past years by the surge of economic forces beyond its control, but has fended off this fate through a combi-nation of grit, strong partnerships, good location, and a revamped and joined-up development strategy.

One example: Methil, across the Forth from Edinburgh, is the epicentre of the gradually emerging Energy Park Fife, a multi-site development servicing ex-isting North Sea oil and gas clients but also intent on capturing a large tranche of renewables work expected when Scot-land’s offshore wind farm developments get into full swing from the middle of this decade. Renewable energy is one of the priority sectors within a strategy being pursued by Fife Council alongside other public sector and private sector players.

“We’re bucking the trend on attracting investment using a proper strategy based on key strengths,” said Keith Winter, Head of Enterprise, Planning & Protec-tive Services for Fife Council. “And we’re putting resources behind marketing to let relevant companies know that we want them here.”

Strong relationships between the coun-cil and the state agencies Scottish Enter-prise and Scottish Development Interna-tional have helped, he added. “It means we’re seen as a seamless team that can respond quickly to investor requests for information.” One outward sign of this is Invest in Fife (www.investinfi fe.co.uk), a one-stop shop for investors looking to locate or expand in Fife.

Recent headline investments include: Amazon UK’s one million sq ft order ful-fi lment centre at Dunfermline, the com-pany’s largest such facility in the United Kingdom; Meridian Salmon Group’s choice of Rosyth as a UK and interna-tional base for salmon processing; and property developer Shepherd Offshore’s speculative purchase and ambitious plans for an industrial site mothballed for more than a decade near Dunfermline. Existing investor Burntisland Fabrications (BiFab) has meanwhile been ramping up offshore wind farm and tidal work from its previ-ous roots in the oil and gas sector. This diversifi cation has seen the establishment of a new facility at the Energy Park Fife in Methil, and Arnish in Stornoway in ad-dition to its home in Burntisland.

“Fife’s innovative and creative and there’s a ‘can do’ attitude from the pub-lic sector,” said Chris Parr, Group Chief Executive of papermakers Tullis Russell

Group and Chair of Fife Economy Part-nership, a group of businesses and pub-lic sector organisations seeking ways to grow the local economy.

The planning and economic develop-ment functions at Fife Council are linked strongly to minimise tensions that can oc-casionally arise in local government when a growth agenda rubs up against governance issues. Fife has one common policy team.

“It means our economic development teams can respond with much greater agil-ity when opportunities arise while still ob-serving governance issues such as proper planning procedure,” Mr Winter said. The Scottish government’s recent streamlining and clarifi cation of planning guidelines has also encouraged fl eetness of foot.

Fife Council identifi ed a ‘Top 100’ list of companies in its area as a prelude to building better business relationships with these to supplement ongoing sup-port work being delivered across Fife by Scottish Enterprise.

Parts of Fife still qualify for Regional Selective Assistance, the only parts of any local authority area bordering the city of Edinburgh that do so. RSA was a factor in winning the Amazon and Meridian in-vestments.

Fife is also able to tap into a new £50 million regeneration fund estab-lished by the Scottish government alongside the European Regional Development Fund as part of the

European Commission and European In-vestment Bank’s Joint European Support for Sustainable Investment in City Areas (JESSICA) and recently launched in Scot-land as the SPRUCE initiative.

Publicly-owned land can be put in to make deals work through fl exible sup-port packages that may include selling or renting sites to investors. Lower down the funding scale, the council has so far won nearly £4 million of Scottish govern-ment funding for businesses as part of a town centres regeneration drive. Where it owns premises, it has sometimes been prepared to fi nance expansion and refur-bishment costs to be reclaimed through rent over an agreed period.

A £5 million East of Scotland Invest-ment Fund (ESIF) offers loans up to £50,000 to new and growing, small and medium sized enterprises in ten local au-thority areas including Fife. The council and its partners are now actively promot-ing this facility to businesses.

Fife has a varied land and property portfolio in public ownership. Greenfi eld and coastal land dominates the tourism areas of North-east Fife. There is a sur-plus in mid Fife with much of it brown-fi eld. West Fife, including Dunfermline, has a mix of brown and greenfi eld land.

A detailed review of land preceded the new structure plan for the area, which has now been approved, ending uncer-tainty for developers. It increasingly al-lows planners to use site characteristics and their degree of readiness to play into

The completion of painting the Forth Bridge last month was a signifi cant development, while big companies such as Amazon, below, are increasingly making tracks for Fife

Fife is successfully transforming its image with strong partnerships, an ideal location and a joined-up development strategy. Rob Stokes discovers what is on offer

DAVID MOIR/REUTERS

gemouth, we can look further afi eld to the USA and the BRIC economies as well.”

While many UK retailers have distri-bution depots along the M8 motorway between Glasgow and Edinburgh, Merid-ian is content to be 25 minutes further away from the rest of the UK by road in return for having close access to interna-tional markets, he added.

These links will also make it easier for product to fl ow between Rosyth and Mor-pol’s operation in Poland through which distribution is piggybacked into Germany, where the company has a 70 per cent mar-ket share for smoked salmon products.

Being at Rosyth allows the fi rm to recruit more easily from Edinburgh and Glasgow as well as from Fife. “So we can pull from a good pool from senior management through to processing,” Mr Cormack said.

He praised the “consistency and ef-fectiveness” of Scottish Development International in its dealings with Morpol and welcomed help received from Fife Council, which sent offi cials to Poland to advise on meeting the planning and environmental health requirements that would apply in Scotland.

In the commercial property sector, Maxine Nathan, PR and Marketing Man-ager for Evans Easy Space, which has three business centres in its UK-wide portfolio located in Fife, is very positive about the volume of enquiries that they are receiving. “Fife has consistently per-formed well but in recent months we have seen an increase in enquiries with most of them coming from new starts”.

Despite a market that requires short term fl exible leases being buoyant,

Nadir Khan-Juhoor, partner at Knight Frank LLP, the letting agents for John Smith Business Park in Kirkcaldy, sees the Fife market for large-scale corporate relocations as being slow in the same way as the national market currently is.

However, he does believe that the locating of Amazon and Shepherd Off-Shore in the region has defi nitely put the region on the map and will encourage other organisations to consider locating into the area.

Niall Gunn, partner at J&E Shepherd Chartered Surveyors, who has recently been appointed by Fife Council to man-age a disposal contract for around 100 properties has also been brought on in an advisory capacity to consider the coun-cil’s strategy for all its development land suitable for Class 4 (Business), Class 5 (General Industrial) and Class 6 (Storage & Distribution) uses. He said: “There are a number of reasons why businesses are looking to locate in Fife, including the fact that there is presently a lack of suit-able opportunities available in Edinburgh — and the fact that commercial property is comparatively inexpensive in Fife than in and around the capital.”

“When you consider, too, the ready availability of a skilled workforce and just how easily accessible Fife is, with the M90 motorway and A92, together with the tremendous potential that the new Forth Bridge Replacement Crossing rep-resents to stimulate the market, it is not too diffi cult to determine why its com-mercial property sector has remained relatively buoyant throughout the chal-lenges of the current economic climate.

The quays to a renewables boomExpansion and improvements at Energy Park Fife are creating a stage on which Scottish Enterprise (SE) and Fife Council hope a new industry based around renewables will strut. They have jointly invested £17 million on the 135 acre site at Levenmouth on the Firth of Forth since SE bought it from rig fabricators Kvaerner in 2005.

The site is buzzing. An access road was recently opened by Scottish energy minister Fergus Ewing. Improvements at Methil docks Quay 1 are almost finished. Upgrading utility works and a new elec-tricity supply are underway while Quay 2 should be refurbished by November. Major earthworks regrading, additional access routes, and coastal projection works are being surveyed, designed and modelled. 40 acres are available now for development at this strategic location for servicing o� shore wind farms to be developed in the Firth of Forth and other waters o� East of Scotland.

Scottish Enter-prise is confident that hopes will materialise. “The park is already home to leading renewa-bles companies such as BiFab thanks to its deep quayside and large industrial space

and we are confident it will continue to attract key players as the industry develops,” said Paul Lewis, managing director of industries at SE.

“The amount of real estate for storage and the quay upgrades make it one of the best facilities in Scotland at this time,” said John Robertson, manag-ing director of BiFab. He shares SE’s confidence that the remaining area of the park will be taken up my major sub-component suppliers - many of them international - for renewables.

“The reality is that large scale devel-opment of UK o� shore wind farms won’t commence until 2015. But new factories have to be built ahead of that and my guess is that announcements should be getting made in late 2012 or early 2013 at the very latest.”

An Amazon spokesman said it already had a great workforce at its Glenrothes fulfi lment centre and wanted the new site to be as close to that to ensure continuity of employment.

“These experienced employees are now joined by hundreds of talented and hard-working associates from the local area which we see as an excellent source of talent. The location is ideal alongside the M90 motorway, from which we are able to distribute a wide range of items to Amazon customers all over the UK, Europe and the world. This new centre works in tandem with our other six sites situated across the UK.”

Buying a quality building with good infrastructure and excellent location for serving Scottish, UK and international markets persuaded fi sh processors Me-ridian Salmon Group to buy the former Lexmark printer factory at Rosyth.

Empty since 2006, the facility and as-sociated utilities saved Meridian an eight fi gure sum compared with building from scratch, said Geoff Cormack, Marketing and Export Director for Meridian Salm-on Group, the UK subsidiary of Norwe-gian multinational Morpol, the world’s leading processor of salmon.

All Morpol’s value-added salmon prod-ucts based on Scottish salmon will be han-dled by Meridian Rosyth, which is sched-uled to open in the second half of 2012 and to employ up to 350 within a year.

“Our key markets are the UK, France and Italy,” said Mr Cormack. “But one of the benefi ts of Rosyth is that with its freight ferry links to Zeebrugge, and with the nearby container port at Gran-

The feedback we’re getting is excellent. We’re making a difference to businesses of all sizes

been a good endorsement of our genuinely innovative employer

approach was arguably even more signifi cant for small busi-nesses that could ill afford to waste time dealing with a profu-sion of agencies to try to recruit. “The feedback that we’re getting on this is excellent. We’re mak-ing a difference to businesses of

Testimony from investors also endorses key elements of the sales pitches made by Fife Council. With a ready made site, utilities, planning and transpor-tation pre-packaged by Fife Council and its partners, Amazon took only eight months to get its Dunfermline operation up and running on November 15 last year. The company predicts it will eventually create 750 new permanent jobs and up to 1,500 temporary jobs during peak Christ-

works in tandem with our other six sites situated across the UK.”

Buying a quality building with good infrastructure and excellent location for serving Scottish, UK and international markets persuaded fi sh processors Me-ridian Salmon Group to buy the former Lexmark printer factory at Rosyth.

Empty since 2006, the facility and as-sociated utilities saved Meridian an eight fi gure sum compared with building from scratch, said Geoff Cormack, Marketing and Export Director for Meridian Salm-on Group, the UK subsidiary of Norwe-gian multinational Morpol, the world’s leading processor of salmon.

All Morpol’s value-added salmon prod-ucts based on Scottish salmon will be han-dled by Meridian Rosyth, which is sched-uled to open in the second half of 2012 and to employ up to 350 within a year.

“Our key markets are the UK, France and Italy,” said Mr Cormack. “But one of the benefi ts of Rosyth is that with its freight ferry links to Zeebrugge, and with the nearby container port at Gran-

Methil is now a centre for servicing offshore wind farms

CHRISTOPHER FURLONG/GETTY IMAGES

Cross the bridge to fresh opportunities

In the current economic climate it’s vital to exploit all possible businesses opportunities. Exhibitions although daunting and expensive can be a very effective way to market goods and services, raise your company’s profile and meet existing customers while targeting new ones.

Fife Council’s Market Development Programme offers a practical and effective way for Fife companies to easily participate on group stands, visits or learning journeys to major national and international events.

Benefits include: • Supportandorganisationleavingyoutofocuson

your business and your customers.

• Accesstodesignandmarketingexpertise.

• Significantsavingsoncostsandtime.

• Professionalexhibitionworkshopscoveringeverythingyouneedtoknowfrompre-eventplanningtopostshowevaluation.

The2012-13Programmeincludeseventsinmanufacturing, renewable energy, construction, environmentalandothersectors.

FIFE COUNCIL’S MARKET DEVELOPMENT PROGRAMME -

ACCESS NEW MARKETS

For full details or further information about the Programme contact:AlanMcKayon08451555555ext492180oremail:alan.mckay@fife.gov.uk

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 20128 9

Special report: Fife

approaches for external funding.The council has set a target for every

community of more than 5,000 — or clusters of communities of up to 5,000 — to have a seven year land supply based on current demand but with provision to in-crease targets. These now cover 22 settle-ments and work is being commissioned to bring more sites forward to a serviced state so investors will have a wider range of options at the point of their invest-ment decision-making.

“This way, we get a better capital receipt because we remove some of the risk for the company, and we can hope to recycle that money into keeping the servic-ing arrangement going,” Mr Winter said.

Innovative ways of approaching infra-structure provision include a Tax Incre-ment Financing (TIF) scheme to under-pin a proposed £17 million expansion of land and quayside infrastructure at En-ergy Park Fife. This would allow the site to pitch to the largest potential offshore wind projects. The TIF proposal envis-ages Fife being able to generate income from additional Non-Domestic Rates as new companies are attracted to the park, with income being ploughed back into expansion and improved transport links. The Scottish government recently ap-proved Fife Council’s fi rst phase bid for the TIF and consultants are to be hired to help develop a business plan based on it.

In line with Fife Council’s agenda to make doing business easier Invest in Fife (www.investinfi fe.co.uk) was established as a one-stop shop for services covering inward investment, start up, grants and funding, property and land selection. It works very closely with Opportunities Fife (www.opportunitiesfi fe.org) on re-cruiting, training and developing staff, and support for employees facing redundancy.

Its approach has been validated by in-ward investors. “Amazon told us that their experience of recruiting here has been easier than elsewhere,” said Chris Parr.

Central control of recruitment data for Opportunities Fife meant it was able to track which applicants for Amazon jobs had been successful and to provide unsuccessful candidates with targeted training that allowed them to re-present themselves to the company.

“Amazon said that using us in this way had been leap of faith on their part, so it’s been a good endorsement of our genuinely innovative employer engagement model,” Mr Parr said.

He added that the one-stop approach was arguably even more signifi cant for small busi-nesses that could ill afford to waste time dealing with a profu-sion of agencies to try to recruit. “The feedback that we’re getting on this is excellent. We’re mak-ing a difference to businesses of all sizes.”

Testimony from investors also endorses key elements of the sales pitches made by Fife Council. With a ready made site, utilities, planning and transpor-tation pre-packaged by Fife Council and its partners, Amazon took only eight months to get its Dunfermline operation up and running on November 15 last year. The company predicts it will eventually create 750 new permanent jobs and up to 1,500 temporary jobs during peak Christ-mas periods.

The fenders currently being attached to the long wall of a quay at Methil docks in Fife are a modest symbol of a region that has withstood the buf-feting of long-term restructuring and global economic ills

better than might once have been hoped.Fife, once a focus for heavy engineer-

ing and coal mining could have been crushed these past years by the surge of economic forces beyond its control, but has fended off this fate through a combi-nation of grit, strong partnerships, good location, and a revamped and joined-up development strategy.

One example: Methil, across the Forth from Edinburgh, is the epicentre of the gradually emerging Energy Park Fife, a multi-site development servicing ex-isting North Sea oil and gas clients but also intent on capturing a large tranche of renewables work expected when Scot-land’s offshore wind farm developments get into full swing from the middle of this decade. Renewable energy is one of the priority sectors within a strategy being pursued by Fife Council alongside other public sector and private sector players.

“We’re bucking the trend on attracting investment using a proper strategy based on key strengths,” said Keith Winter, Head of Enterprise, Planning & Protec-tive Services for Fife Council. “And we’re putting resources behind marketing to let relevant companies know that we want them here.”

Strong relationships between the coun-cil and the state agencies Scottish Enter-prise and Scottish Development Interna-tional have helped, he added. “It means we’re seen as a seamless team that can respond quickly to investor requests for information.” One outward sign of this is Invest in Fife (www.investinfi fe.co.uk), a one-stop shop for investors looking to locate or expand in Fife.

Recent headline investments include: Amazon UK’s one million sq ft order ful-fi lment centre at Dunfermline, the com-pany’s largest such facility in the United Kingdom; Meridian Salmon Group’s choice of Rosyth as a UK and interna-tional base for salmon processing; and property developer Shepherd Offshore’s speculative purchase and ambitious plans for an industrial site mothballed for more than a decade near Dunfermline. Existing investor Burntisland Fabrications (BiFab) has meanwhile been ramping up offshore wind farm and tidal work from its previ-ous roots in the oil and gas sector. This diversifi cation has seen the establishment of a new facility at the Energy Park Fife in Methil, and Arnish in Stornoway in ad-dition to its home in Burntisland.

“Fife’s innovative and creative and there’s a ‘can do’ attitude from the pub-lic sector,” said Chris Parr, Group Chief Executive of papermakers Tullis Russell

Group and Chair of Fife Economy Part-nership, a group of businesses and pub-lic sector organisations seeking ways to grow the local economy.

The planning and economic develop-ment functions at Fife Council are linked strongly to minimise tensions that can oc-casionally arise in local government when a growth agenda rubs up against governance issues. Fife has one common policy team.

“It means our economic development teams can respond with much greater agil-ity when opportunities arise while still ob-serving governance issues such as proper planning procedure,” Mr Winter said. The Scottish government’s recent streamlining and clarifi cation of planning guidelines has also encouraged fl eetness of foot.

Fife Council identifi ed a ‘Top 100’ list of companies in its area as a prelude to building better business relationships with these to supplement ongoing sup-port work being delivered across Fife by Scottish Enterprise.

Parts of Fife still qualify for Regional Selective Assistance, the only parts of any local authority area bordering the city of Edinburgh that do so. RSA was a factor in winning the Amazon and Meridian in-vestments.

Fife is also able to tap into a new £50 million regeneration fund estab-lished by the Scottish government alongside the European Regional Development Fund as part of the

European Commission and European In-vestment Bank’s Joint European Support for Sustainable Investment in City Areas (JESSICA) and recently launched in Scot-land as the SPRUCE initiative.

Publicly-owned land can be put in to make deals work through fl exible sup-port packages that may include selling or renting sites to investors. Lower down the funding scale, the council has so far won nearly £4 million of Scottish govern-ment funding for businesses as part of a town centres regeneration drive. Where it owns premises, it has sometimes been prepared to fi nance expansion and refur-bishment costs to be reclaimed through rent over an agreed period.

A £5 million East of Scotland Invest-ment Fund (ESIF) offers loans up to £50,000 to new and growing, small and medium sized enterprises in ten local au-thority areas including Fife. The council and its partners are now actively promot-ing this facility to businesses.

Fife has a varied land and property portfolio in public ownership. Greenfi eld and coastal land dominates the tourism areas of North-east Fife. There is a sur-plus in mid Fife with much of it brown-fi eld. West Fife, including Dunfermline, has a mix of brown and greenfi eld land.

A detailed review of land preceded the new structure plan for the area, which has now been approved, ending uncer-tainty for developers. It increasingly al-lows planners to use site characteristics and their degree of readiness to play into

The completion of painting the Forth Bridge last month was a signifi cant development, while big companies such as Amazon, below, are increasingly making tracks for Fife

Fife is successfully transforming its image with strong partnerships, an ideal location and a joined-up development strategy. Rob Stokes discovers what is on offer

DAVID MOIR/REUTERS

gemouth, we can look further afi eld to the USA and the BRIC economies as well.”

While many UK retailers have distri-bution depots along the M8 motorway between Glasgow and Edinburgh, Merid-ian is content to be 25 minutes further away from the rest of the UK by road in return for having close access to interna-tional markets, he added.

These links will also make it easier for product to fl ow between Rosyth and Mor-pol’s operation in Poland through which distribution is piggybacked into Germany, where the company has a 70 per cent mar-ket share for smoked salmon products.

Being at Rosyth allows the fi rm to recruit more easily from Edinburgh and Glasgow as well as from Fife. “So we can pull from a good pool from senior management through to processing,” Mr Cormack said.

He praised the “consistency and ef-fectiveness” of Scottish Development International in its dealings with Morpol and welcomed help received from Fife Council, which sent offi cials to Poland to advise on meeting the planning and environmental health requirements that would apply in Scotland.

In the commercial property sector, Maxine Nathan, PR and Marketing Man-ager for Evans Easy Space, which has three business centres in its UK-wide portfolio located in Fife, is very positive about the volume of enquiries that they are receiving. “Fife has consistently per-formed well but in recent months we have seen an increase in enquiries with most of them coming from new starts”.

Despite a market that requires short term fl exible leases being buoyant,

Nadir Khan-Juhoor, partner at Knight Frank LLP, the letting agents for John Smith Business Park in Kirkcaldy, sees the Fife market for large-scale corporate relocations as being slow in the same way as the national market currently is.

However, he does believe that the locating of Amazon and Shepherd Off-Shore in the region has defi nitely put the region on the map and will encourage other organisations to consider locating into the area.

Niall Gunn, partner at J&E Shepherd Chartered Surveyors, who has recently been appointed by Fife Council to man-age a disposal contract for around 100 properties has also been brought on in an advisory capacity to consider the coun-cil’s strategy for all its development land suitable for Class 4 (Business), Class 5 (General Industrial) and Class 6 (Storage & Distribution) uses. He said: “There are a number of reasons why businesses are looking to locate in Fife, including the fact that there is presently a lack of suit-able opportunities available in Edinburgh — and the fact that commercial property is comparatively inexpensive in Fife than in and around the capital.”

“When you consider, too, the ready availability of a skilled workforce and just how easily accessible Fife is, with the M90 motorway and A92, together with the tremendous potential that the new Forth Bridge Replacement Crossing rep-resents to stimulate the market, it is not too diffi cult to determine why its com-mercial property sector has remained relatively buoyant throughout the chal-lenges of the current economic climate.

The quays to a renewables boomExpansion and improvements at Energy Park Fife are creating a stage on which Scottish Enterprise (SE) and Fife Council hope a new industry based around renewables will strut. They have jointly invested £17 million on the 135 acre site at Levenmouth on the Firth of Forth since SE bought it from rig fabricators Kvaerner in 2005.

The site is buzzing. An access road was recently opened by Scottish energy minister Fergus Ewing. Improvements at Methil docks Quay 1 are almost finished. Upgrading utility works and a new elec-tricity supply are underway while Quay 2 should be refurbished by November. Major earthworks regrading, additional access routes, and coastal projection works are being surveyed, designed and modelled. 40 acres are available now for development at this strategic location for servicing o� shore wind farms to be developed in the Firth of Forth and other waters o� East of Scotland.

Scottish Enter-prise is confident that hopes will materialise. “The park is already home to leading renewa-bles companies such as BiFab thanks to its deep quayside and large industrial space

and we are confident it will continue to attract key players as the industry develops,” said Paul Lewis, managing director of industries at SE.

“The amount of real estate for storage and the quay upgrades make it one of the best facilities in Scotland at this time,” said John Robertson, manag-ing director of BiFab. He shares SE’s confidence that the remaining area of the park will be taken up my major sub-component suppliers - many of them international - for renewables.

“The reality is that large scale devel-opment of UK o� shore wind farms won’t commence until 2015. But new factories have to be built ahead of that and my guess is that announcements should be getting made in late 2012 or early 2013 at the very latest.”

An Amazon spokesman said it already had a great workforce at its Glenrothes fulfi lment centre and wanted the new site to be as close to that to ensure continuity of employment.

“These experienced employees are now joined by hundreds of talented and hard-working associates from the local area which we see as an excellent source of talent. The location is ideal alongside the M90 motorway, from which we are able to distribute a wide range of items to Amazon customers all over the UK, Europe and the world. This new centre works in tandem with our other six sites situated across the UK.”

Buying a quality building with good infrastructure and excellent location for serving Scottish, UK and international markets persuaded fi sh processors Me-ridian Salmon Group to buy the former Lexmark printer factory at Rosyth.

Empty since 2006, the facility and as-sociated utilities saved Meridian an eight fi gure sum compared with building from scratch, said Geoff Cormack, Marketing and Export Director for Meridian Salm-on Group, the UK subsidiary of Norwe-gian multinational Morpol, the world’s leading processor of salmon.

All Morpol’s value-added salmon prod-ucts based on Scottish salmon will be han-dled by Meridian Rosyth, which is sched-uled to open in the second half of 2012 and to employ up to 350 within a year.

“Our key markets are the UK, France and Italy,” said Mr Cormack. “But one of the benefi ts of Rosyth is that with its freight ferry links to Zeebrugge, and with the nearby container port at Gran-

The feedback we’re getting is excellent. We’re making a difference to businesses of all sizes

been a good endorsement of our genuinely innovative employer

approach was arguably even more signifi cant for small busi-nesses that could ill afford to waste time dealing with a profu-sion of agencies to try to recruit. “The feedback that we’re getting on this is excellent. We’re mak-ing a difference to businesses of

Testimony from investors also endorses key elements of the sales pitches made by Fife Council. With a ready made site, utilities, planning and transpor-tation pre-packaged by Fife Council and its partners, Amazon took only eight months to get its Dunfermline operation up and running on November 15 last year. The company predicts it will eventually create 750 new permanent jobs and up to 1,500 temporary jobs during peak Christ-

works in tandem with our other six sites situated across the UK.”

Buying a quality building with good infrastructure and excellent location for serving Scottish, UK and international markets persuaded fi sh processors Me-ridian Salmon Group to buy the former Lexmark printer factory at Rosyth.

Empty since 2006, the facility and as-sociated utilities saved Meridian an eight fi gure sum compared with building from scratch, said Geoff Cormack, Marketing and Export Director for Meridian Salm-on Group, the UK subsidiary of Norwe-gian multinational Morpol, the world’s leading processor of salmon.

All Morpol’s value-added salmon prod-ucts based on Scottish salmon will be han-dled by Meridian Rosyth, which is sched-uled to open in the second half of 2012 and to employ up to 350 within a year.

“Our key markets are the UK, France and Italy,” said Mr Cormack. “But one of the benefi ts of Rosyth is that with its freight ferry links to Zeebrugge, and with the nearby container port at Gran-

Methil is now a centre for servicing offshore wind farms

CHRISTOPHER FURLONG/GETTY IMAGES

Cross the bridge to fresh opportunities

In the current economic climate it’s vital to exploit all possible businesses opportunities. Exhibitions although daunting and expensive can be a very effective way to market goods and services, raise your company’s profile and meet existing customers while targeting new ones.

Fife Council’s Market Development Programme offers a practical and effective way for Fife companies to easily participate on group stands, visits or learning journeys to major national and international events.

Benefits include: • Supportandorganisationleavingyoutofocuson

your business and your customers.

• Accesstodesignandmarketingexpertise.

• Significantsavingsoncostsandtime.

• Professionalexhibitionworkshopscoveringeverythingyouneedtoknowfrompre-eventplanningtopostshowevaluation.

The2012-13Programmeincludeseventsinmanufacturing, renewable energy, construction, environmentalandothersectors.

FIFE COUNCIL’S MARKET DEVELOPMENT PROGRAMME -

ACCESS NEW MARKETS

For full details or further information about the Programme contact:AlanMcKayon08451555555ext492180oremail:alan.mckay@fife.gov.uk

the times | Tuesday January 31 2012 11Tuesday January 31 2012 | the times

Business Insight10

New transport projects are proving a major boost for Fife

The new road bridge being built across the River Forth from Fife to Edinburgh at a budgeted cost of £1.45 billion to £1.6

billion is a major strategic invest-ment by the Scottish government.

“Its impact cannot be underes-timated,” said Keith Winter, Head of Enterprise, Planning & Protec-tive Services for Fife Council. “It removes uncertainty over what happens when the current Forth Road Bridge is closed. It addresses the issue of the existing crossing having to be restricted or closed periodically because of high winds and of frequent resurfacing because of the toll that 44 tonne heavy vehicles take on the surface of its narrow deck.”

Avoiding delays will be a bonus for tourism, one of Fife’s key economic priorities, Mr Winter added. This would be particularly welcome over weekends when Fife is a popular getaway destination. “We know from disruption over the past two years that interruptions do have an impact on people’s decisions to visit attractions.”

A new crossing could also resolve

issues about the development of the approaches to the new bridge just to the west of the existing one. “There may be further development opportunities out of that on both the north and south sides of the bridge,” he said.

In an attempt to ease motorway congestion, a park-and-ride at Halbeath near Dunfermline is to provide 1,000 parking spaces for people travelling by public transport across the existing bridge to and from Edinburgh.

Local companies are looking forward to the new crossing. “It will make a significant difference to supply chain companies supplying our site,” said John Robertson, man-aging director of BiFab, the offshore energy fabricators at Methil.

In another boost to Fife’s transport links, Kirkcaldy Harbour has reopened to commercial freight after nearly 20 years. Grain ships use it to offload supplies for local flour mills, removing heavy traffic from roads.

There has never been a better time to locate to Fife,” said Mr Gunn.

“Fife Council has a wide range of com-mercial property and land within its portfolio encompassing everything from business centres and small workshops to modern business parks and development opportunities.

“There have been a number of major transactions in Fife over the course of the last year, including Amazon, Shepherd Offshore and Morpol, at the former Lex-mark factory, totalling in the region of some 200,000 sq metres of new develop-ment, suggesting that Fife’s commercial property market compares favourably with anywhere in Scotland.”

Shepherd Offshore, the Newcastle based offshore services and land and property developer has big aspirations for the empty offices and manufacturing facilities that it purchased at Halbeath near Dunfermline. The 150-acre, serviced site, vacant since 1998, is just off the M90 motorway that links to the national mo-torway network and offers easy access to national and international communica-tions via road, rail, air and sea.

“It is a prime location with excellent infrastructure and transport links”, said Andy Williamson, Director of Business Development at Shepherd Offshore. “We see it having a long term future particu-larly in development for the energy sec-tor but also in others such as heavy engi-neering in general.” said Mr Williamson, who added that Fife Council had been very proactive in providing support.

Fife Council’s economic strategy sees renewables as having the potential to cre-

ate at least 2,000 jobs in Fife by 2020.With more than 20 years experience of

North Sea oil and gas fabrication, BiFab was ideally fitted to move into offshore wind, wave and tidal energy work. It proved its mettle by constructing the towers for the offshore wind turbines for the Beatrice demonstrator project and has £60 million of contracts as the UK’s leading fabricator of jacket sub-structures for offshore wind. It will likely be producing at least 50 to a 100 towers annually for offshore wind by 2020. It also built a new generation, pro-totype wave energy device, Oyster 2, for Aquamarine Power, Edinburgh.

In biomass energy, Tullis Russell is working with utility company RWE npower renewables toward the comple-tion later this year of a £200 million, 50 Megawatt biomasss plant to supply the papermaker’s Markinch plant with steam and electricity and sell surplus power into the electricity grid for local consumption. 50 direct jobs are forecast.

Drinks giant Diageo’s £65 million bio-energy plant at its Cameronbridge dis-tillery in Fife is thought to be the largest single renewables investment in the UK by a non-utility company and is expected to generate 20 direct jobs.

Fife initiated and collaborates with other local authorities through an alli-ance called East Coast Renewables which promotes the Eastern seaboard as a loca-tion for investments by the industry. The alliance partners with Scottish Enterprise and Scottish Development International.

“Personally, I think 2,000 jobs by 2020 is a conservative estimate for renewables in Fife,” Mr Winter said.

katie lee

The additional road link will be a welcome relief from congestion

Business Insightthe times | Xxx Xxx XX 2012 3

Glenrothes-based Raytheon UK, a subsidiary of US-based Raytheon Company, who employ 560 people were anticipating a down-turn in the semiconduc-

tor sector they operate in following the global downturn. To counter the anticipated fall in sales the company developed a new, groundbreaking silicon carbide (SiC) to access emerging markets.

To reach new markets the Fife plant sought the help of Scottish Develop-ment International (SDI) and Scottish Enterprise (SE).

“When we began working along-side Raytheon, it was in the process of developing a new product: Silicon Carbide” commented John Penman, account manager, Scottish Enterprise. However, without updating the or-ganisation’s marketing material it was believed it would be difficult to reach a new customer base. “We looked at Raytheon’s existing marketing mate-

rial for its basic product and it was too technical,” John explains. “So we worked closely with the company to revisit it, rebrand it, and included Scot-tish Development International (SDI) and Enterprise Europe Scotland in the process. We wanted to define clearly the key benefits of Raytheon in Glen-rothes, what the company’s uniqueness was and what the offer was to potential customers across the world.”

Through SDI, focus was given to exporting to China, India and North America. The assistance provided by SDI created a lot of interest and gen-erated solid leads and ultimately new customers.

“We’re confident that, seeing the level of customer interest, our new strategy is going to be a success,” stated Paul D’Arcy, Business Unit Manager, Raytheon UK.

“We definitely put a lot of this down to SDI’s and SE’s input, which has pro-vided opportunities we were unaware of and are now capitalising on.”

THE IMPACTThe help provided by SDI and SE

has resulted in forecasts for Raytheon UK’s turnover for the semiconductor unit to be maintained, and possibly even increase, over the next three to five years. SDI has created links with contacts in Scandinavia, Japan, and North America on behalf of the com-pany. Commenting on this Paul D’Arcy said, “We now have several customers under contract and a new customer base we hope we can grow. There has been further North American and Jap-anese customer interest, and further funded development within the UK sector is pending.”

“We initially underestimated the value of the contacts and access to net-works that SDI can provide, and would encourage other businesses not to be shy in asking for help. Their easy acces-sibility has been of great value to us and their account managers are always just a phone call away.”

To contact SDI call 0800 917 9534.

Turning Fortunes Around With Scottish Development International

CommerCial report

A FREE EVENT TO HELP YOU UNDERSTAND GLOBAL TRADE AND CUSTOMS COMPLIANCEGLASGOW, GRAND CENTRAL HOTEL, THURSDAY 2ND FEBRUARY 2012

Aimed at new and experienced exporters this forum is designed to help you navigate through global trade and customs compliance and mitigate risk.

YOU’LL GAIN AN IN-DEPTH UNDERSTANDING OF:

• Customs compliance - identifying risks of non-compliance as well as duty saving opportunities• Export control requirements – insights into dual-use goods, embargoes countries and license

requirements• The UK Bribery Act - the impact on international transactions and how businesses need to

change their working practices

This event will also be delivered in Aberdeen in February (date is yet to be confi rmed).

To book your place or fi nd out more about our forthcoming Aberdeen event call0800 019 1953 or email enquiries@smartexporter.co.uk

This event is brought to you by Smart Exporter; an international trade skills development initiative which aims to up skill and improve the exporting performance of Scottish businesses. The Smart Exporter programme is created through investment by Scottish Development International (SDI), Scottish Chambers of Commerce (SCC) and the European Social Fund.

Business Insightthe times | Xxx Xxx XX 2012 3

With the potential to generate enough power to supply more than 325,000 Scottish homes – equivalent to the number of

households in Edinburgh - the major offshore wind farm project Neart na Gaoithe takes another important step forward over the next three months.

Neart na Gaoithe, a Gaelic phrase meaning “strength of the wind”, is planned for a site 15km off Fife Ness in the Outer Forth Estuary, and around 28km from the East Lothian coast.

Global renewable energy developer Mainstream Renewable Power has now completed the consultation and development stage for the £1.2 billion project, and is beginning the process of seeking formal planning consents from both Marine Scotland and East Lothian Council.

Once Neart na Gaoithe has the approvals, a two-year programme of work is due to get underway in 2015 - with the very first of those mighty

turbines likely to start turning in 2016.This is an exciting time for Neart na

Gaoithe, and for Scotland’s flourishing renewable energy industry. Last week it was that announced Ofgem are to fast-track the wide-ranging proposals by Scottish Power and SSE to upgrade high-voltage power cabling through-out Scotland to help meet renewable energy targets. A key element of the £3.7 billion-plus plans is the connec-tion of offshore and onshore wind gen-eration. Scottish Power said it would be “the most significant investment in electricity infrastructure to have taken place in the last 60 years”, and the SSE said it was a major step forward in plans “that will facilitate the expected growth in renewable generation over the next decade”.

The aim is to connect around 11 GW (enough to power over 6 mil-lion homes) of offshore and onshore wind generation in Scotland, and to increase export capacity from Scot-land to England from 3.3GW to nearer 7GW by 2021.

Once fully operational, Neart na Gaoithe will generate up to 450MW of renewable energy, delivering around 4% of Scotland’s electricity demand. It will offset over 500,000 tonnes of CO2 per year when complete, and will also make a significant contribution to the UK’s share of the European Union tar-get of 20% renewable energy by 2020.

In addition to these benefits, how-ever, the creation of this wind farm will provide a significant economic boost to the Scottish economy, par-ticularly in terms of local employment and the supply chain opportunities in Fife and the Lothians.

Like the energy this offshore wind farm will generate, many of these jobs will be sustainable too, as Scotland will benefit from the skilled and last-ing employment that the renewable energy sector also generates.

Jobs are not only being created in development and manufacturing in this vibrant industry, but that knowl-edge and expertise can also be ex-ported - along with the energy and

equipment - throughout the UK and the rest of the world.

David Sweenie, Mainstream Renew-able Power’s Offshore Manager for Scotland, explains that local procure-ment is central to their development strategy. “We are actively working with the Scottish government, local suppliers, potential manufacturers and other parties to maximise the eco-nomic benefit Scotland, and to help position the region to benefit from longer term UK and international op-portunities,” he said.

The plan is for Neart na Gaoithe to site up to 125 wind turbines in an area of around 105km2 in the Outer Forth Estuary. The grid connection point will be a new sub-station next to an existing sub-station at Crystal Rig II onshore wind farm in the Lammer-muir Hills. The cable will come ashore at Thorntonloch beach, near Dun-bar, and join the onshore cable in the neighbouring field. This cable will then cross the A1, the east coast train line and a stretch of farmland before going

into the ac-cess road to the Crystal Rig sub -sta-tion. None of this will be visible, how-ever, as the cable will be buried and any land that is disturbed will be re-stored, with the new sub-station the only aspect of the development visible above ground.

Once established, Neart na Gao-ithe will not only provide sustainable energy for Scotland, but create Scot-tish jobs and help stimulate a wider energy export market. The consumer, of course, will also benefit, as adding significant amounts of wind capacity to the UK’s generation portfolio will ultimately lead to lower overall costs – by reducing our dependency on fos-sil fuels and the risk of price volatility.

David Sweenie

Going from strength to strength

CommerCial report

the times | Tuesday January 31 2012 11Tuesday January 31 2012 | the times

Business Insight10

New transport projects are proving a major boost for Fife

The new road bridge being built across the River Forth from Fife to Edinburgh at a budgeted cost of £1.45 billion to £1.6

billion is a major strategic invest-ment by the Scottish government.

“Its impact cannot be underes-timated,” said Keith Winter, Head of Enterprise, Planning & Protec-tive Services for Fife Council. “It removes uncertainty over what happens when the current Forth Road Bridge is closed. It addresses the issue of the existing crossing having to be restricted or closed periodically because of high winds and of frequent resurfacing because of the toll that 44 tonne heavy vehicles take on the surface of its narrow deck.”

Avoiding delays will be a bonus for tourism, one of Fife’s key economic priorities, Mr Winter added. This would be particularly welcome over weekends when Fife is a popular getaway destination. “We know from disruption over the past two years that interruptions do have an impact on people’s decisions to visit attractions.”

A new crossing could also resolve

issues about the development of the approaches to the new bridge just to the west of the existing one. “There may be further development opportunities out of that on both the north and south sides of the bridge,” he said.

In an attempt to ease motorway congestion, a park-and-ride at Halbeath near Dunfermline is to provide 1,000 parking spaces for people travelling by public transport across the existing bridge to and from Edinburgh.

Local companies are looking forward to the new crossing. “It will make a significant difference to supply chain companies supplying our site,” said John Robertson, man-aging director of BiFab, the offshore energy fabricators at Methil.

In another boost to Fife’s transport links, Kirkcaldy Harbour has reopened to commercial freight after nearly 20 years. Grain ships use it to offload supplies for local flour mills, removing heavy traffic from roads.

There has never been a better time to locate to Fife,” said Mr Gunn.

“Fife Council has a wide range of com-mercial property and land within its portfolio encompassing everything from business centres and small workshops to modern business parks and development opportunities.

“There have been a number of major transactions in Fife over the course of the last year, including Amazon, Shepherd Offshore and Morpol, at the former Lex-mark factory, totalling in the region of some 200,000 sq metres of new develop-ment, suggesting that Fife’s commercial property market compares favourably with anywhere in Scotland.”

Shepherd Offshore, the Newcastle based offshore services and land and property developer has big aspirations for the empty offices and manufacturing facilities that it purchased at Halbeath near Dunfermline. The 150-acre, serviced site, vacant since 1998, is just off the M90 motorway that links to the national mo-torway network and offers easy access to national and international communica-tions via road, rail, air and sea.

“It is a prime location with excellent infrastructure and transport links”, said Andy Williamson, Director of Business Development at Shepherd Offshore. “We see it having a long term future particu-larly in development for the energy sec-tor but also in others such as heavy engi-neering in general.” said Mr Williamson, who added that Fife Council had been very proactive in providing support.

Fife Council’s economic strategy sees renewables as having the potential to cre-

ate at least 2,000 jobs in Fife by 2020.With more than 20 years experience of

North Sea oil and gas fabrication, BiFab was ideally fitted to move into offshore wind, wave and tidal energy work. It proved its mettle by constructing the towers for the offshore wind turbines for the Beatrice demonstrator project and has £60 million of contracts as the UK’s leading fabricator of jacket sub-structures for offshore wind. It will likely be producing at least 50 to a 100 towers annually for offshore wind by 2020. It also built a new generation, pro-totype wave energy device, Oyster 2, for Aquamarine Power, Edinburgh.

In biomass energy, Tullis Russell is working with utility company RWE npower renewables toward the comple-tion later this year of a £200 million, 50 Megawatt biomasss plant to supply the papermaker’s Markinch plant with steam and electricity and sell surplus power into the electricity grid for local consumption. 50 direct jobs are forecast.

Drinks giant Diageo’s £65 million bio-energy plant at its Cameronbridge dis-tillery in Fife is thought to be the largest single renewables investment in the UK by a non-utility company and is expected to generate 20 direct jobs.

Fife initiated and collaborates with other local authorities through an alli-ance called East Coast Renewables which promotes the Eastern seaboard as a loca-tion for investments by the industry. The alliance partners with Scottish Enterprise and Scottish Development International.

“Personally, I think 2,000 jobs by 2020 is a conservative estimate for renewables in Fife,” Mr Winter said.

katie lee

The additional road link will be a welcome relief from congestion

Business Insightthe times | Xxx Xxx XX 2012 3

Glenrothes-based Raytheon UK, a subsidiary of US-based Raytheon Company, who employ 560 people were anticipating a down-turn in the semiconduc-

tor sector they operate in following the global downturn. To counter the anticipated fall in sales the company developed a new, groundbreaking silicon carbide (SiC) to access emerging markets.

To reach new markets the Fife plant sought the help of Scottish Develop-ment International (SDI) and Scottish Enterprise (SE).

“When we began working along-side Raytheon, it was in the process of developing a new product: Silicon Carbide” commented John Penman, account manager, Scottish Enterprise. However, without updating the or-ganisation’s marketing material it was believed it would be difficult to reach a new customer base. “We looked at Raytheon’s existing marketing mate-

rial for its basic product and it was too technical,” John explains. “So we worked closely with the company to revisit it, rebrand it, and included Scot-tish Development International (SDI) and Enterprise Europe Scotland in the process. We wanted to define clearly the key benefits of Raytheon in Glen-rothes, what the company’s uniqueness was and what the offer was to potential customers across the world.”

Through SDI, focus was given to exporting to China, India and North America. The assistance provided by SDI created a lot of interest and gen-erated solid leads and ultimately new customers.

“We’re confident that, seeing the level of customer interest, our new strategy is going to be a success,” stated Paul D’Arcy, Business Unit Manager, Raytheon UK.

“We definitely put a lot of this down to SDI’s and SE’s input, which has pro-vided opportunities we were unaware of and are now capitalising on.”

THE IMPACTThe help provided by SDI and SE

has resulted in forecasts for Raytheon UK’s turnover for the semiconductor unit to be maintained, and possibly even increase, over the next three to five years. SDI has created links with contacts in Scandinavia, Japan, and North America on behalf of the com-pany. Commenting on this Paul D’Arcy said, “We now have several customers under contract and a new customer base we hope we can grow. There has been further North American and Jap-anese customer interest, and further funded development within the UK sector is pending.”

“We initially underestimated the value of the contacts and access to net-works that SDI can provide, and would encourage other businesses not to be shy in asking for help. Their easy acces-sibility has been of great value to us and their account managers are always just a phone call away.”

To contact SDI call 0800 917 9534.

Turning Fortunes Around With Scottish Development International

CommerCial report

A FREE EVENT TO HELP YOU UNDERSTAND GLOBAL TRADE AND CUSTOMS COMPLIANCEGLASGOW, GRAND CENTRAL HOTEL, THURSDAY 2ND FEBRUARY 2012

Aimed at new and experienced exporters this forum is designed to help you navigate through global trade and customs compliance and mitigate risk.

YOU’LL GAIN AN IN-DEPTH UNDERSTANDING OF:

• Customs compliance - identifying risks of non-compliance as well as duty saving opportunities• Export control requirements – insights into dual-use goods, embargoes countries and license

requirements• The UK Bribery Act - the impact on international transactions and how businesses need to

change their working practices

This event will also be delivered in Aberdeen in February (date is yet to be confi rmed).

To book your place or fi nd out more about our forthcoming Aberdeen event call0800 019 1953 or email enquiries@smartexporter.co.uk

This event is brought to you by Smart Exporter; an international trade skills development initiative which aims to up skill and improve the exporting performance of Scottish businesses. The Smart Exporter programme is created through investment by Scottish Development International (SDI), Scottish Chambers of Commerce (SCC) and the European Social Fund.

Business Insightthe times | Xxx Xxx XX 2012 3

With the potential to generate enough power to supply more than 325,000 Scottish homes – equivalent to the number of

households in Edinburgh - the major offshore wind farm project Neart na Gaoithe takes another important step forward over the next three months.

Neart na Gaoithe, a Gaelic phrase meaning “strength of the wind”, is planned for a site 15km off Fife Ness in the Outer Forth Estuary, and around 28km from the East Lothian coast.

Global renewable energy developer Mainstream Renewable Power has now completed the consultation and development stage for the £1.2 billion project, and is beginning the process of seeking formal planning consents from both Marine Scotland and East Lothian Council.

Once Neart na Gaoithe has the approvals, a two-year programme of work is due to get underway in 2015 - with the very first of those mighty

turbines likely to start turning in 2016.This is an exciting time for Neart na

Gaoithe, and for Scotland’s flourishing renewable energy industry. Last week it was that announced Ofgem are to fast-track the wide-ranging proposals by Scottish Power and SSE to upgrade high-voltage power cabling through-out Scotland to help meet renewable energy targets. A key element of the £3.7 billion-plus plans is the connec-tion of offshore and onshore wind gen-eration. Scottish Power said it would be “the most significant investment in electricity infrastructure to have taken place in the last 60 years”, and the SSE said it was a major step forward in plans “that will facilitate the expected growth in renewable generation over the next decade”.

The aim is to connect around 11 GW (enough to power over 6 mil-lion homes) of offshore and onshore wind generation in Scotland, and to increase export capacity from Scot-land to England from 3.3GW to nearer 7GW by 2021.

Once fully operational, Neart na Gaoithe will generate up to 450MW of renewable energy, delivering around 4% of Scotland’s electricity demand. It will offset over 500,000 tonnes of CO2 per year when complete, and will also make a significant contribution to the UK’s share of the European Union tar-get of 20% renewable energy by 2020.

In addition to these benefits, how-ever, the creation of this wind farm will provide a significant economic boost to the Scottish economy, par-ticularly in terms of local employment and the supply chain opportunities in Fife and the Lothians.

Like the energy this offshore wind farm will generate, many of these jobs will be sustainable too, as Scotland will benefit from the skilled and last-ing employment that the renewable energy sector also generates.

Jobs are not only being created in development and manufacturing in this vibrant industry, but that knowl-edge and expertise can also be ex-ported - along with the energy and

equipment - throughout the UK and the rest of the world.

David Sweenie, Mainstream Renew-able Power’s Offshore Manager for Scotland, explains that local procure-ment is central to their development strategy. “We are actively working with the Scottish government, local suppliers, potential manufacturers and other parties to maximise the eco-nomic benefit Scotland, and to help position the region to benefit from longer term UK and international op-portunities,” he said.

The plan is for Neart na Gaoithe to site up to 125 wind turbines in an area of around 105km2 in the Outer Forth Estuary. The grid connection point will be a new sub-station next to an existing sub-station at Crystal Rig II onshore wind farm in the Lammer-muir Hills. The cable will come ashore at Thorntonloch beach, near Dun-bar, and join the onshore cable in the neighbouring field. This cable will then cross the A1, the east coast train line and a stretch of farmland before going

into the ac-cess road to the Crystal Rig sub -sta-tion. None of this will be visible, how-ever, as the cable will be buried and any land that is disturbed will be re-stored, with the new sub-station the only aspect of the development visible above ground.

Once established, Neart na Gao-ithe will not only provide sustainable energy for Scotland, but create Scot-tish jobs and help stimulate a wider energy export market. The consumer, of course, will also benefit, as adding significant amounts of wind capacity to the UK’s generation portfolio will ultimately lead to lower overall costs – by reducing our dependency on fos-sil fuels and the risk of price volatility.

David Sweenie

Going from strength to strength

CommerCial report

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 201212 13

anaerobic digestion commercial report: envirolink

In just under two years, anaerobic digestion (AD) has gone from a lit-tle heard of technology used mostly by farmers and the waste-water treatment industry to being one of the most talked about renew-

able technologies around, with Coalition Government support for a huge increase in AD capacity across the UK.

Why all the hype now? There are vari-ous factors driving this trend. AD often uses waste feedstocks, such as food and green wastes, to produce biogas and a nutrient rich digestate. Increasing landfill tax is therefore undoubtedly a driver on the economic side, with businesses keen to divert their wastes from landfill when possible.

However, it is Scotland’s ambitious Zero Waste policy that will introduce a ban on landfilling food waste from 2020, recognising the need to divert biodegradable wastes away from landfill and maximise their value in terms of energy and nutrient content. This policy recognises the flexible benefits of AD, in terms of producing both renewable energy and high-quality fertilisers, and aims to achieve a significant increase in AD uptake throughout Scotland.

The real opportunity for AD lies in the various incentives available for the gen-eration and use of renewable energy, and it is this that is making many larger scale industrials sit up and take note. There is now support for the generation of electric-ity and heat from anaerobic digestion at all levels. The feed-in tariff provides sup-port for facilities under five MW (mega-watts), giving smaller scale operators a guaranteed price for the electricity they generate plus an additional guaranteed price for any surplus exported to the grid. The Renewables Obligation currently allows generators of 5MW or over to earn Renewables Obligation Certificates (ROCs) for the electricity they generate, though this is to be replaced by a larger scale feed-in tariff under the ongoing Electricity Market Reform.

The new Renewable Heat Incentive (RHI) also supports the generation and use of renewable heat from AD, though, controversially, it provides a tariff for the generation and use of renewable heat only for very small scale facilities of 200kWth (kilowatt thermal) or under.

There is also support for more novel ways of using the biogas produced in the AD process. The RHI also provides support for the injection of biogas into the gas grid, for use directly in homes and businesses. This is lauded as one of the most energy efficient ways of using biogas, but currently involves enormous upfront capital costs and still needs further deregulation in order to become truly commercially viable.

There is even support for the use of biogas as a transport fuel, with the Renew-able Transport Fuels Obligation driving the uptake of renewable and bio-based transport fuels.

The multiple benefits of AD in terms of waste treatment, flexible renewable energy and fuel generation and produc-tion of high quality fertiliser make it ideal for industries such as food and drink and distilling, as well as more traditional and smaller on-farm applications. The Gov-ernment is looking to drive both large and small scales of AD in these sectors, which present clear benefits in terms of proximity to waste feedstocks as well as to outlets for fertiliser materials.

While the desire to increase the uptake of AD is clear, it is not all plain sailing. The Renewables Obligation has been around for a decade, and the feed-in tariff was introduced in 2010 with clear policy support for AD. Yet there remains limited uptake of AD in Scotland (and indeed the rest of the UK) — why is this?

The ongoing Electricity Market Reform has created an air of uncertainty and caused many developers to pause and re-flect on the incoming framework and how it affects their projects. Daniel Borisewitz, Bioenergy Policy Manager at Scottish Renewables, says: “Electricity market reform is casting a shadow of uncer-tainty over the whole renewable energy industry. This is particularly troublesome for bioenergy due to the need to project future fuel prices, establish long term sup-ply contracts and secure finance.”

The perennial issue of planning can still rear its ugly head in the context of AD, despite the clear role planning au-thorities are given under the Zero Waste policy to change public perceptions of waste, highlight its value, and create a planning and policy framework which is supportive of AD as a dual waste treat-

Opportunities for business-es to benefit from envi-ronmental technologies are expanding rapidly. Technologies that only a few years ago many busi-

nesses regarded as experimental options for niche applications are now maturing and becoming increasingly mainstream.

Wind, biomass and solar photovoltaic energy have broken new ground in gen-erating renewable energy, with Scotland leading the way. By comparison, anaero-bic digestion (AD) is a relative newcomer.

Although less well known, AD is grow-ing rapidly, offering a reliable source of renewable energy while also cutting the amount of organic waste businesses send to landfill. The result is a saving on both energy costs and Landfill Tax.

Such benefits are seeing Scotland’s AD market expand at pace, with construction, operation and maintenance sales expected to hit over £20 million for 2010-11.

Katherine Burden, principal consultant at Envirolink, said: “Anaerobic Digestion

is an established technology with a bright future. It’s flexible enough to be used as both a way to dispose of waste and a source of renewable energy, and it can be tailored to almost every requirement, large or small.

“We’re seeing a big increase in interest in AD, with huge potential in Scotland in particular. Farmers, food producers, distilleries, waste management companies and renewable energy producers are all investing heavily in the technology.”

The tomatoes on a farm in Cheshire are already benefiting from a state-of-the-art AD system. The farm’s crop waste is used to feed the system, which in turn produces renewable biogas that warms the green-houses in which more tomatoes flourish.

Installed by Biotech Services, the multi-stage system ensures optimum con-ditions throughout the process, making it highly efficient compared to larger, single digester systems.

Through our Envirolink Northwest programme, Envirolink was able to support the project from start to finish,

providing help with business planning, obtaining patents and promoting the suc-cess of the project.

Behind the growing interest in renew-able energy technologies such as AD are several imperatives. Steadily rising energy prices are encouraging businesses to explore renewable energy generation as a way to cut their energy costs. Tougher environmental legislation, such as EU Di-rectives on waste and energy, require com-panies to meet ever stricter standards. And the rise of corporate responsibility means companies are increasingly expected to demonstrate their green credentials.

The Government has also recognised the potential for AD and is support-ing the technology through a variety of initiatives. The recently published Anaerobic Digestion Strategy and Action Plan was produced jointly with industry and sets out a vision for AD development in the UK.

With our expertise in helping compa-nies develop renewable energy projects of all kinds, Envirolink has identified anaerobic digestion as a technology set for significant growth. We believe there is huge potential for AD in Scotland and, alongside Envirolink member Sem-ple Fraser, we’re working to bring the benefits to businesses.Matthew Sutcliffe is Membership Manager at Envirolink

new argument to digest

turning waste into energyWith Government support and forthcoming legislation, anaerobic digestion has become a hot topic in the alternative generation of energy, writes Frank Simpson

Envirolink believes there is great potential for companies to make significant savings with a tried and trusted green technology, says Matthew Sutcliffe

Fiona ross, environmental lawyer at semple Fraser llp

With extensive experience in AD and our in-depth market and sector intelligence, Envirolink can help you to identify and develop opportunities for your AD project. We can assist at every stage along the way to successful project.

We offer help to overcome many of the barriers to developing AD projects, including support and advice on:n planning issuesn environmental and waste permitting

n finding the right technologiesn connecting to the electricity networkn securing suitable feedstocks

Envirolink can also help you to find the right organisations to supply your AD technologies.

If you are a supplier looking to diversify into AD, we have experience in helping supply chain companies to find the right partners, as well as sourcing and securing investment and funding.

The fruits of experience

ad helps a cheshire farm grow greenhouse tomatoes

ment and renewable energy technology. “The public’s limited understanding

of AD can be a problem” says specialist planning lawyer, Sarah Baillie, at Semple Fraser LLP. “This often leads to negative perceptions and sustained public objection, causing barriers throughout the planning process, even where there is planning policy or officer support. Most people think renewable energy is a good idea but this does not necessary translate into accept-ance or support for a local AD project.”

A key issue affecting the bankability of projects is feedstock supply, and the problems associated with

securing long-term supply contracts at predictable prices. Fiona Ross, specialist environmental lawyer at Semple Fraser LLP, says that “this is particularly the case against a backdrop of increasing concern about and tightening regulation of the sustainability of non-waste feedstocks, such as energy crops, as well as competi-tion for biomass resources from other bioenergy technologies and the panel-board industry. It has been suggested that the Green Investment Bank has a role here to help generators manage long term feedstock price risk, but concerns about the level of initial capitalisation of the Bank are well documented, and, given the timescale for its launch, it is unlikely to make much impact in the shorter term.”

So how can developers navigate this maze of barriers and get their projects off the ground? “In terms of planning, there is no single magic bullet that secures acceptance,” Baillie says. “Nothing can ever guarantee a planning application approval but there are a number of steps

which can aid acceptability of proposals and therefore lower the risk of a refusal, save time and money, and avoid resub-missions and appeals. Many developers of successful AD projects ensure they engage with the planning authority and the local community at feasibility stage. Like most renewable developers, they are very proactive with community engagement, explaining the advantage of AD backed by robust information and evidence. It is all about gaining trust and establishing re-lationships from the outset, which will aid the progress of any application through the planning system.”

According to Fiona Ross, “it is worth taking strategic advice at the outset, developing projects with bankability and funder requirements in mind”. She advises giving full consideration to all potential opportunities, whether in terms of renewable energy generation from the biogas or development of non-waste fertiliser products from the digestate by-product. This way, she says, residual waste can be almost eliminated, and all process outputs can be turned into revenue streams.

In any event, with ever-rising energy prices and increasing costs for landfill and waste disposal, the opportunity is clear. Borisewitz says: “The Scottish govern-ment has established a world leading program in the Zero Waste Plan that will greatly boost recycling rates and provide uncontaminated streams of organic mate-rial ideal for Anaerobic Digestion. Every effort must be made to ensure that the prohibitive barriers are addressed and the necessary facilities are built to deliver the full benefit of this resource in Scotland.”

local councillor sam Harcus tends cows, whose waste is processed and converted into methane which is then used to fuel an engine on the the orkney island of Westray

james glossop for the times

Be part of a growing industry

By joining Envirolink as a member you can enjoy discounts on all our services, plus benefits that are exclusively available to members.

Get discounts on: • Eventsandtraining• Technicalconsultancy• Findingandsecuringfinanceandfunding• Marketintelligence• Procurementadvice

Exclusive to members:• Accesstothousandsoftendernotices• DiscountsonmajorexhibitionslikeEcobuildand

Greenbuild• ListingonourFindaSupplierservice• Newsupdates• Accesstopublicationsandguidance• Membershipofspecialinterestgroups

Standardmembership:£750peryearSmallbusinessmembership:£500peryear

Formoreinformationvisitwww.envirolink.co.ukorcontactMatthewSutcliffeatm.sutcliffe@envirolink.co.ukor01925 855 771.

If you produce, provide or use environmental products or services, Envirolink can help.

Anaerobic digestion (AD) can help your company save money on both energy and waste costs. There are also a wide range of opportunities in supplying and installing AD systems.

This event will explore the opportunities in Scotland from the development of AD and showcase a range of industries that can benefit from this expanding sector.

Distillers, food and drink manufacturers, farmers and others would benefit from the event.

Topics include:• ADcasestudies• Scotland’scompetitiveadvantages• RenewableHeatIncentiveanditsimpact

on businesses• Financeandfunding

Day 1: Conference and exhibitionSpeakers include: Natural Power, Scottish Renewables,Diageo,NNFCC,Cleurfleu,Envirolink,SempleFraserDay 2: Site visits to two AD facilities

Date: 20-21 March, 2012Venue: PerthRacecourse,PH26BBPrices: Standard-£65.00 Envirolinkmembers-£55.00

AnAerobic Digestion event

Findouthowtheorganicwasteyourcompanyproduces can generate renewable energy

Toregister,visitwww.envirolink.co.ukorcall01925813200

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 201212 13

anaerobic digestion commercial report: envirolink

In just under two years, anaerobic digestion (AD) has gone from a lit-tle heard of technology used mostly by farmers and the waste-water treatment industry to being one of the most talked about renew-

able technologies around, with Coalition Government support for a huge increase in AD capacity across the UK.

Why all the hype now? There are vari-ous factors driving this trend. AD often uses waste feedstocks, such as food and green wastes, to produce biogas and a nutrient rich digestate. Increasing landfill tax is therefore undoubtedly a driver on the economic side, with businesses keen to divert their wastes from landfill when possible.

However, it is Scotland’s ambitious Zero Waste policy that will introduce a ban on landfilling food waste from 2020, recognising the need to divert biodegradable wastes away from landfill and maximise their value in terms of energy and nutrient content. This policy recognises the flexible benefits of AD, in terms of producing both renewable energy and high-quality fertilisers, and aims to achieve a significant increase in AD uptake throughout Scotland.

The real opportunity for AD lies in the various incentives available for the gen-eration and use of renewable energy, and it is this that is making many larger scale industrials sit up and take note. There is now support for the generation of electric-ity and heat from anaerobic digestion at all levels. The feed-in tariff provides sup-port for facilities under five MW (mega-watts), giving smaller scale operators a guaranteed price for the electricity they generate plus an additional guaranteed price for any surplus exported to the grid. The Renewables Obligation currently allows generators of 5MW or over to earn Renewables Obligation Certificates (ROCs) for the electricity they generate, though this is to be replaced by a larger scale feed-in tariff under the ongoing Electricity Market Reform.

The new Renewable Heat Incentive (RHI) also supports the generation and use of renewable heat from AD, though, controversially, it provides a tariff for the generation and use of renewable heat only for very small scale facilities of 200kWth (kilowatt thermal) or under.

There is also support for more novel ways of using the biogas produced in the AD process. The RHI also provides support for the injection of biogas into the gas grid, for use directly in homes and businesses. This is lauded as one of the most energy efficient ways of using biogas, but currently involves enormous upfront capital costs and still needs further deregulation in order to become truly commercially viable.

There is even support for the use of biogas as a transport fuel, with the Renew-able Transport Fuels Obligation driving the uptake of renewable and bio-based transport fuels.

The multiple benefits of AD in terms of waste treatment, flexible renewable energy and fuel generation and produc-tion of high quality fertiliser make it ideal for industries such as food and drink and distilling, as well as more traditional and smaller on-farm applications. The Gov-ernment is looking to drive both large and small scales of AD in these sectors, which present clear benefits in terms of proximity to waste feedstocks as well as to outlets for fertiliser materials.

While the desire to increase the uptake of AD is clear, it is not all plain sailing. The Renewables Obligation has been around for a decade, and the feed-in tariff was introduced in 2010 with clear policy support for AD. Yet there remains limited uptake of AD in Scotland (and indeed the rest of the UK) — why is this?

The ongoing Electricity Market Reform has created an air of uncertainty and caused many developers to pause and re-flect on the incoming framework and how it affects their projects. Daniel Borisewitz, Bioenergy Policy Manager at Scottish Renewables, says: “Electricity market reform is casting a shadow of uncer-tainty over the whole renewable energy industry. This is particularly troublesome for bioenergy due to the need to project future fuel prices, establish long term sup-ply contracts and secure finance.”

The perennial issue of planning can still rear its ugly head in the context of AD, despite the clear role planning au-thorities are given under the Zero Waste policy to change public perceptions of waste, highlight its value, and create a planning and policy framework which is supportive of AD as a dual waste treat-

Opportunities for business-es to benefit from envi-ronmental technologies are expanding rapidly. Technologies that only a few years ago many busi-

nesses regarded as experimental options for niche applications are now maturing and becoming increasingly mainstream.

Wind, biomass and solar photovoltaic energy have broken new ground in gen-erating renewable energy, with Scotland leading the way. By comparison, anaero-bic digestion (AD) is a relative newcomer.

Although less well known, AD is grow-ing rapidly, offering a reliable source of renewable energy while also cutting the amount of organic waste businesses send to landfill. The result is a saving on both energy costs and Landfill Tax.

Such benefits are seeing Scotland’s AD market expand at pace, with construction, operation and maintenance sales expected to hit over £20 million for 2010-11.

Katherine Burden, principal consultant at Envirolink, said: “Anaerobic Digestion

is an established technology with a bright future. It’s flexible enough to be used as both a way to dispose of waste and a source of renewable energy, and it can be tailored to almost every requirement, large or small.

“We’re seeing a big increase in interest in AD, with huge potential in Scotland in particular. Farmers, food producers, distilleries, waste management companies and renewable energy producers are all investing heavily in the technology.”

The tomatoes on a farm in Cheshire are already benefiting from a state-of-the-art AD system. The farm’s crop waste is used to feed the system, which in turn produces renewable biogas that warms the green-houses in which more tomatoes flourish.

Installed by Biotech Services, the multi-stage system ensures optimum con-ditions throughout the process, making it highly efficient compared to larger, single digester systems.

Through our Envirolink Northwest programme, Envirolink was able to support the project from start to finish,

providing help with business planning, obtaining patents and promoting the suc-cess of the project.

Behind the growing interest in renew-able energy technologies such as AD are several imperatives. Steadily rising energy prices are encouraging businesses to explore renewable energy generation as a way to cut their energy costs. Tougher environmental legislation, such as EU Di-rectives on waste and energy, require com-panies to meet ever stricter standards. And the rise of corporate responsibility means companies are increasingly expected to demonstrate their green credentials.

The Government has also recognised the potential for AD and is support-ing the technology through a variety of initiatives. The recently published Anaerobic Digestion Strategy and Action Plan was produced jointly with industry and sets out a vision for AD development in the UK.

With our expertise in helping compa-nies develop renewable energy projects of all kinds, Envirolink has identified anaerobic digestion as a technology set for significant growth. We believe there is huge potential for AD in Scotland and, alongside Envirolink member Sem-ple Fraser, we’re working to bring the benefits to businesses.Matthew Sutcliffe is Membership Manager at Envirolink

new argument to digest

turning waste into energyWith Government support and forthcoming legislation, anaerobic digestion has become a hot topic in the alternative generation of energy, writes Frank Simpson

Envirolink believes there is great potential for companies to make significant savings with a tried and trusted green technology, says Matthew Sutcliffe

Fiona ross, environmental lawyer at semple Fraser llp

With extensive experience in AD and our in-depth market and sector intelligence, Envirolink can help you to identify and develop opportunities for your AD project. We can assist at every stage along the way to successful project.

We offer help to overcome many of the barriers to developing AD projects, including support and advice on:n planning issuesn environmental and waste permitting

n finding the right technologiesn connecting to the electricity networkn securing suitable feedstocks

Envirolink can also help you to find the right organisations to supply your AD technologies.

If you are a supplier looking to diversify into AD, we have experience in helping supply chain companies to find the right partners, as well as sourcing and securing investment and funding.

The fruits of experience

ad helps a cheshire farm grow greenhouse tomatoes

ment and renewable energy technology. “The public’s limited understanding

of AD can be a problem” says specialist planning lawyer, Sarah Baillie, at Semple Fraser LLP. “This often leads to negative perceptions and sustained public objection, causing barriers throughout the planning process, even where there is planning policy or officer support. Most people think renewable energy is a good idea but this does not necessary translate into accept-ance or support for a local AD project.”

A key issue affecting the bankability of projects is feedstock supply, and the problems associated with

securing long-term supply contracts at predictable prices. Fiona Ross, specialist environmental lawyer at Semple Fraser LLP, says that “this is particularly the case against a backdrop of increasing concern about and tightening regulation of the sustainability of non-waste feedstocks, such as energy crops, as well as competi-tion for biomass resources from other bioenergy technologies and the panel-board industry. It has been suggested that the Green Investment Bank has a role here to help generators manage long term feedstock price risk, but concerns about the level of initial capitalisation of the Bank are well documented, and, given the timescale for its launch, it is unlikely to make much impact in the shorter term.”

So how can developers navigate this maze of barriers and get their projects off the ground? “In terms of planning, there is no single magic bullet that secures acceptance,” Baillie says. “Nothing can ever guarantee a planning application approval but there are a number of steps

which can aid acceptability of proposals and therefore lower the risk of a refusal, save time and money, and avoid resub-missions and appeals. Many developers of successful AD projects ensure they engage with the planning authority and the local community at feasibility stage. Like most renewable developers, they are very proactive with community engagement, explaining the advantage of AD backed by robust information and evidence. It is all about gaining trust and establishing re-lationships from the outset, which will aid the progress of any application through the planning system.”

According to Fiona Ross, “it is worth taking strategic advice at the outset, developing projects with bankability and funder requirements in mind”. She advises giving full consideration to all potential opportunities, whether in terms of renewable energy generation from the biogas or development of non-waste fertiliser products from the digestate by-product. This way, she says, residual waste can be almost eliminated, and all process outputs can be turned into revenue streams.

In any event, with ever-rising energy prices and increasing costs for landfill and waste disposal, the opportunity is clear. Borisewitz says: “The Scottish govern-ment has established a world leading program in the Zero Waste Plan that will greatly boost recycling rates and provide uncontaminated streams of organic mate-rial ideal for Anaerobic Digestion. Every effort must be made to ensure that the prohibitive barriers are addressed and the necessary facilities are built to deliver the full benefit of this resource in Scotland.”

local councillor sam Harcus tends cows, whose waste is processed and converted into methane which is then used to fuel an engine on the the orkney island of Westray

james glossop for the times

Be part of a growing industry

By joining Envirolink as a member you can enjoy discounts on all our services, plus benefits that are exclusively available to members.

Get discounts on: • Eventsandtraining• Technicalconsultancy• Findingandsecuringfinanceandfunding• Marketintelligence• Procurementadvice

Exclusive to members:• Accesstothousandsoftendernotices• DiscountsonmajorexhibitionslikeEcobuildand

Greenbuild• ListingonourFindaSupplierservice• Newsupdates• Accesstopublicationsandguidance• Membershipofspecialinterestgroups

Standardmembership:£750peryearSmallbusinessmembership:£500peryear

Formoreinformationvisitwww.envirolink.co.ukorcontactMatthewSutcliffeatm.sutcliffe@envirolink.co.ukor01925 855 771.

If you produce, provide or use environmental products or services, Envirolink can help.

Anaerobic digestion (AD) can help your company save money on both energy and waste costs. There are also a wide range of opportunities in supplying and installing AD systems.

This event will explore the opportunities in Scotland from the development of AD and showcase a range of industries that can benefit from this expanding sector.

Distillers, food and drink manufacturers, farmers and others would benefit from the event.

Topics include:• ADcasestudies• Scotland’scompetitiveadvantages• RenewableHeatIncentiveanditsimpact

on businesses• Financeandfunding

Day 1: Conference and exhibitionSpeakers include: Natural Power, Scottish Renewables,Diageo,NNFCC,Cleurfleu,Envirolink,SempleFraserDay 2: Site visits to two AD facilities

Date: 20-21 March, 2012Venue: PerthRacecourse,PH26BBPrices: Standard-£65.00 Envirolinkmembers-£55.00

AnAerobic Digestion event

Findouthowtheorganicwasteyourcompanyproduces can generate renewable energy

Toregister,visitwww.envirolink.co.ukorcall01925813200

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 201214 15

commercial report: accenture

Fast factIt’s estimated that around 800 megabits of recorded informa-tion is produced per person, per year and that number is grow-ing. Managing this is fundamental to an organisation’s suc-cess, says Accenture. Predictive analytics are now being used by organisations to trans-late this proliferation of data to a micro lev-el, such as to launch low-cost promotional offers that counter the changeability of buying patterns.

Commuters who crowd the Seonreung subway in downtown Seoul no longer have to fret about evening forays to the shops for the family dinner, last-minute

snacks for the children’s packed lunches the following day – or even a packet of fish food.

A virtual Tesco Homeplus store flashes images of more than 500 popular products on to the South Korean capital’s subway’s walls and screen doors, with barcodes that customers can scan using a special app on their smartphones as they race past on their way to work in the morning – and the items are then delivered to their home that same evening.

Sci-fi shopping is now a reality. This store, having gained a British Design of the Year nomination for Tesco Home-plus, offers a neat snapshot of just how profoundly, and quickly, the business landscape is changing.

For many in the retail and service industries who are still reeling from an austere Christmas and lacklustre January sales, the prospect of this future-is-here-today type technology must seem like a double whammy.

While others may already have em-braced the fact the days of a ‘pile them high and sell them cheap’ approach are numbered, forging new relationships with customers might not turn out to be as straightforward as the social media hype appeared to promise.

Les Bayne, UK customer relationship management partner at global manage-ment consultants Accenture, believes the balance of retail power is shifting, and that it is the consumer who will increas-ingly be pulling the strings.

This shift is already under way, driven by technology, data availability and con-sumers’ carefully considered spending in the continuing tough economic climate. Bayne argues that businesses are going to have to change their attitude to sales – and fast.

“The consumer is changing the rules of engagement,” he says. “They are defining how we do business, what we sell, when, where and for how much – not the other way round – and it is something we are all going to have to get used to.

“I think we would all agree that it’s better for the customer to be at the table when dealing with issues. But how many of us would know quite who to have at the table, how to get them there, or even what to serve should they show up?

“By next Christmas the consumer-business relationship will be radically dif-ferent. Consumers will have less money, but higher expectations. They will know more about a business through social media and digital technology, and be more willing to use that information to switch suppliers. Above all this, they will want to be treated as individuals, and feel their voice is being heard, and have this reflected in the design and provision of their product or service.

“This new consumer will transform business on an unprecedented scale over the next months and years.”

Bayne points to four “tipping points” that are fuelling this consumer revolution. The first is technology, which is clearly enabling and empowering people on a massive scale. It is easier to shop from your living room than venturing out on to the high street, and as that has changed the speed of interaction between business and consumer, it has also created a prolif-eration of data and information.

This data has a two-way effect, provid-ing companies with a picture of their cus-tomers’ shopping and lifestyle habits, but it is also driving new levels of corporate and commercial transparency, giving con-sumers the power to act together. Even, says Bayne, “to make, break or reinvent industries”.

Convergence is another example of this type of change. In order to keep pace and to stay relevant, some businesses are offering more to provide consumers with a greater choice. Banks might give film club subscriptions with their current accounts and supermarkets are selling car insurance. However, this produces greater pressure on price, product development and accessibility.

All this is against a backdrop of shifting demographics, the third “tipping point”, which makes it harder for organisations to identify and target core customers. At one end of the scale affluent – and not so affluent – retirees are making their money go further as life expectancy continues to

grow, while at the other end, a younger and more digitally-savvy generation are carrying student debt but have fewer job opportunities.

Finally, of course, these are tough times. Bayne’s point is that consumers will be forced into making even more difficult purchasing choices, and so “long-held assumptions about loyalty and buying behaviours need to be thrown out of the nearest window”.

“In an Accenture study, New Waves of Growth, we concluded that one of the principal opportunities for both businesses and government exists around the ‘silver generation’, those staying at work longer,” says Bayne.

“In another, we found that companies that are more conscious of their sustain-able practice build stronger brands with their consumers. With these shifting demographics and new consumer values, ‘one size fits all’ simply does not work any longer.

“When we looked at innovation, it is the companies that engage their consum-ers in product development and testing that are taking the lead: take the Fiat 500, which was designed through a public competition launched on facebook; or Spain’s Telefónica which has established customer labs in its R&D area – bringing customers in to interact with researchers during product development.”

While there is clear evidence that this

consumer shift is already under way, is it a step too far to say it is the consumer who will be in control?

John Dawson, Professor Emeritus at the Universities of Edinburgh and Stirling, agrees the nature in the relationship be-tween the company and the consumer is changing. However, he argues that, even though businesses are becoming more responsive to consumers, they must still have a role in influencing how consumers behave.

“The idea that businesses respond to and seek the view of consumers is at the heart of modern marketing,” says Professor Dawson, who holds the chair of marketing at Edinburgh. “Usually this is termed as being consumer-centric. As consumers become more ‘marketing literate’, understanding more about what business do and how they operate, so consumers wish to become more involved in the relationship between the consumer and the company.

“This can be good news for the com-pany as it allows them to explore all sorts of consumer cooperation, but perhaps more importantly for the company, for it to build a genuine loyalty with customers. This can involve different types of co-creation of activity – even the co-creation of new products where consumer and company are jointly involved in exploring new product ideas. This happens in IKEA and in Muji, where ideas from consumers

activity. These media are still in an early stage of development, so companies and consumers are still feeling their way on how they can be used.”

As companies and consumers undergo this process of “feeling their way”, there have already been casualties – and there have also been some exciting develop-ments.

Patsy Perry, a management lecturer at Heriot-Watt University’s George Davies Centre for Retail Excellence, specialises in fashion marketing, and also agrees that companies will still drive the market. However, she says, they ignore the poten-tial of the consumer at their peril.

“I think companies are recognising the increasing power consumers wield, as we have clearly seen how they vote with their feet and their wallets if a retailer is no longer relevant to them, given the swathe of high-profile high street closures in recent times,” says Perry.

“Companies that survive and prosper are providing greater variety, and more op-tions, to increasingly savvy and impatient consumers. It’s all about improving cus-tomer service, and moving with the times, by applying new technological advances to the retail context, and bringing your customers new experiences and solutions.

“House of Fraser recently launched new ‘click and collect’ web-only stores (Aberdeen and Liverpool) in addition to investing in more banks of instore touch

screens, bringing the online experience instore. This effectively makes every store a digital flagship where the consumer can choose from the retailer’s whole range, regardless of where they live, and store space constraints. They then receive the product in the way that best suits them, whether delivered directly to their home or picked up from the store.

“Customers have higher expectations, they are empowered with more knowledge and information at their fingertips than ever before, thanks to the internet and the rising penetration of smartphones. Price transparency is a given now, so com-panies need to compete on exclusivity of product, and quality of customer service, to maintain footfall. For example, ladies footwear retailer Shhh... is pioneering exclusivity of product in a unique retail environment with high levels of service (evening appointments on demand), but democratises its offer by stocking a range of price points from £70 to more than £500. In the past, this type of business model would have only been available to the affluent.

It has seen increasing interest from its brands to open more outlets both in the UK and overseas so we can see there is a demand for a more unique and satisfying retail experience.

“Technology and social media also fa-cilitate the idea of ‘having your customers at the table’ – we are seeing more busi-

nesses harnessing the power of the web for co-development of products with their consumers, especially in fashion where trends are so difficult to predict with any certainty. “This allows consumers to have a role in the product development process. Niche websites such as Thread-less crowdsource the design for their T-shirts which helps to engage consumers with the company on a deeper level. We are also now seeing larger players such as ASOS and BrandAlley encouraging con-sumers to provide feedback on emerging designers and products to reduce the risk of producing a range that isn’t quite what the marketplace wants.”

Bayne believes business organisations who are not already building these kinds of relationships with their customers can-not afford to wait any longer.

“It’s not just about the big corporates, and it’s not just about technology,” he insists. “This is about a change in mind-set. Whether we are talking about the citizen, the customer, employee, patient or even student, today’s consumer has high expectations, is demanding and is less loyal. “They want an experience that is seamless whether online or offline, and personalised to their needs.

“The successful businesses of 2012 and beyond will be those who have the ability to interpret, understand, and ultimately embrace the new emboldened and power-ful consumer.”

Companies must swiftly reshape their attitude to sales, take advantage of rapidly-evolving technology and recognise that the rules of engagement are changing, says Claire Mackay

The balance of retail power is shifting and the customer is pulling the strings

With such high levels of complex-ity and change, trying to second guess your customer is harder than ever. These key strategies can give you a fighting chance.

Think about how you can digit-ise your value chain from supplier through to consumer.

Web, mobile, and machine-to-machine are the new channels for consumer commerce which will become central to your opera-tions. Looking for ways to digitise your operational processes also creates a flexible and transparent differentiator for your business, providing the clarity to make informed decisions, reduce bottle-necks and identify spare capacity.

Invest in analytical people, pro-cesses and tools to harness the mass of internal and external data available today. Look for opportu-nities to focus on both the “big” aggregated data for strategic decisions about products, profits and investments. And use “small” individual customer data to sup-port a more personalised and responsive customer experience.

Be prepared to innovate by breaking down traditional busi-ness models and boundaries. Today’s consumer is pressuris-ing prices and margins with their ability to move fast, and their de-mands for convenience, relevance and innovative value.

So it’s a commercial necessity to explore new opportunities to share operational capabilities, brand, sales channels, and infra-structure with partners in different industries. It can help you both to create new growth as well as save costs.

Give your business a consumer-

Key strategies that add real value to business

les Bayne says that consumerising your workforce will allow more agility

on how they use and adapt are taken up by the company to change the products that are sold.

“This feedback from customers is important as one of the ways that com-panies ‘sense’ the changes in a market. The social media provide another way of sensing the market while fashion retailers are always alert to what is happening in the fashion schools. In effect, companies wish to draw ideas from as many sources as possible.

“But while responding to the consumer and working with them is gaining in importance, many companies still shape and drive the market, and ultimately are responsible for the relationship with customers. While the company draws ideas from many sources, the market risk remains with the company, and so they have to make the decisions on what to sell and how to sell it.

“Therefore the company not only responds to the market, as do all the com-petitors of the company, but also in order to compete by being different, the success of a company also depends on shaping the market and influencing the consumer in what they want and how they behave as consumers.

“The balance between responding to the market and shaping the market is a delicate and complex one for companies. Certainly new media play an important role in these responding and shaping

james glossop for the times

Keeping pace with the ever changing face of the consumer

centric view by allowing your employees to have the same freedom at work that they do at home. Why should your employ-ees be inhibited with rules and technologies that are no longer reflective of their daily lives? “Consumerising your workforce” will give your business a new per-spective and agility in terms of understanding the new consumer.

Finally, you need to move at consumer speed. There is no point in being consumer centric but being the last to market. This means breaking down the inter-nal cultural and process barriers that restrict agility.

Be both open and lean. “Wow” your customers with your ability to listen, act and innovate in step with, or faster than their changing world. This is what will separate winners from losers in the next five years.Les Bayne is a partner in Accenture’s CRM practice

as people are forced into more difficult purchasing choices, assumptions about customer loyalty will be challenged

Tuesday January 31 2012 | the times

Business Insight Business Insightthe times | Tuesday January 31 201214 15

commercial report: accenture

Fast factIt’s estimated that around 800 megabits of recorded informa-tion is produced per person, per year and that number is grow-ing. Managing this is fundamental to an organisation’s suc-cess, says Accenture. Predictive analytics are now being used by organisations to trans-late this proliferation of data to a micro lev-el, such as to launch low-cost promotional offers that counter the changeability of buying patterns.

Commuters who crowd the Seonreung subway in downtown Seoul no longer have to fret about evening forays to the shops for the family dinner, last-minute

snacks for the children’s packed lunches the following day – or even a packet of fish food.

A virtual Tesco Homeplus store flashes images of more than 500 popular products on to the South Korean capital’s subway’s walls and screen doors, with barcodes that customers can scan using a special app on their smartphones as they race past on their way to work in the morning – and the items are then delivered to their home that same evening.

Sci-fi shopping is now a reality. This store, having gained a British Design of the Year nomination for Tesco Home-plus, offers a neat snapshot of just how profoundly, and quickly, the business landscape is changing.

For many in the retail and service industries who are still reeling from an austere Christmas and lacklustre January sales, the prospect of this future-is-here-today type technology must seem like a double whammy.

While others may already have em-braced the fact the days of a ‘pile them high and sell them cheap’ approach are numbered, forging new relationships with customers might not turn out to be as straightforward as the social media hype appeared to promise.

Les Bayne, UK customer relationship management partner at global manage-ment consultants Accenture, believes the balance of retail power is shifting, and that it is the consumer who will increas-ingly be pulling the strings.

This shift is already under way, driven by technology, data availability and con-sumers’ carefully considered spending in the continuing tough economic climate. Bayne argues that businesses are going to have to change their attitude to sales – and fast.

“The consumer is changing the rules of engagement,” he says. “They are defining how we do business, what we sell, when, where and for how much – not the other way round – and it is something we are all going to have to get used to.

“I think we would all agree that it’s better for the customer to be at the table when dealing with issues. But how many of us would know quite who to have at the table, how to get them there, or even what to serve should they show up?

“By next Christmas the consumer-business relationship will be radically dif-ferent. Consumers will have less money, but higher expectations. They will know more about a business through social media and digital technology, and be more willing to use that information to switch suppliers. Above all this, they will want to be treated as individuals, and feel their voice is being heard, and have this reflected in the design and provision of their product or service.

“This new consumer will transform business on an unprecedented scale over the next months and years.”

Bayne points to four “tipping points” that are fuelling this consumer revolution. The first is technology, which is clearly enabling and empowering people on a massive scale. It is easier to shop from your living room than venturing out on to the high street, and as that has changed the speed of interaction between business and consumer, it has also created a prolif-eration of data and information.

This data has a two-way effect, provid-ing companies with a picture of their cus-tomers’ shopping and lifestyle habits, but it is also driving new levels of corporate and commercial transparency, giving con-sumers the power to act together. Even, says Bayne, “to make, break or reinvent industries”.

Convergence is another example of this type of change. In order to keep pace and to stay relevant, some businesses are offering more to provide consumers with a greater choice. Banks might give film club subscriptions with their current accounts and supermarkets are selling car insurance. However, this produces greater pressure on price, product development and accessibility.

All this is against a backdrop of shifting demographics, the third “tipping point”, which makes it harder for organisations to identify and target core customers. At one end of the scale affluent – and not so affluent – retirees are making their money go further as life expectancy continues to

grow, while at the other end, a younger and more digitally-savvy generation are carrying student debt but have fewer job opportunities.

Finally, of course, these are tough times. Bayne’s point is that consumers will be forced into making even more difficult purchasing choices, and so “long-held assumptions about loyalty and buying behaviours need to be thrown out of the nearest window”.

“In an Accenture study, New Waves of Growth, we concluded that one of the principal opportunities for both businesses and government exists around the ‘silver generation’, those staying at work longer,” says Bayne.

“In another, we found that companies that are more conscious of their sustain-able practice build stronger brands with their consumers. With these shifting demographics and new consumer values, ‘one size fits all’ simply does not work any longer.

“When we looked at innovation, it is the companies that engage their consum-ers in product development and testing that are taking the lead: take the Fiat 500, which was designed through a public competition launched on facebook; or Spain’s Telefónica which has established customer labs in its R&D area – bringing customers in to interact with researchers during product development.”

While there is clear evidence that this

consumer shift is already under way, is it a step too far to say it is the consumer who will be in control?

John Dawson, Professor Emeritus at the Universities of Edinburgh and Stirling, agrees the nature in the relationship be-tween the company and the consumer is changing. However, he argues that, even though businesses are becoming more responsive to consumers, they must still have a role in influencing how consumers behave.

“The idea that businesses respond to and seek the view of consumers is at the heart of modern marketing,” says Professor Dawson, who holds the chair of marketing at Edinburgh. “Usually this is termed as being consumer-centric. As consumers become more ‘marketing literate’, understanding more about what business do and how they operate, so consumers wish to become more involved in the relationship between the consumer and the company.

“This can be good news for the com-pany as it allows them to explore all sorts of consumer cooperation, but perhaps more importantly for the company, for it to build a genuine loyalty with customers. This can involve different types of co-creation of activity – even the co-creation of new products where consumer and company are jointly involved in exploring new product ideas. This happens in IKEA and in Muji, where ideas from consumers

activity. These media are still in an early stage of development, so companies and consumers are still feeling their way on how they can be used.”

As companies and consumers undergo this process of “feeling their way”, there have already been casualties – and there have also been some exciting develop-ments.

Patsy Perry, a management lecturer at Heriot-Watt University’s George Davies Centre for Retail Excellence, specialises in fashion marketing, and also agrees that companies will still drive the market. However, she says, they ignore the poten-tial of the consumer at their peril.

“I think companies are recognising the increasing power consumers wield, as we have clearly seen how they vote with their feet and their wallets if a retailer is no longer relevant to them, given the swathe of high-profile high street closures in recent times,” says Perry.

“Companies that survive and prosper are providing greater variety, and more op-tions, to increasingly savvy and impatient consumers. It’s all about improving cus-tomer service, and moving with the times, by applying new technological advances to the retail context, and bringing your customers new experiences and solutions.

“House of Fraser recently launched new ‘click and collect’ web-only stores (Aberdeen and Liverpool) in addition to investing in more banks of instore touch

screens, bringing the online experience instore. This effectively makes every store a digital flagship where the consumer can choose from the retailer’s whole range, regardless of where they live, and store space constraints. They then receive the product in the way that best suits them, whether delivered directly to their home or picked up from the store.

“Customers have higher expectations, they are empowered with more knowledge and information at their fingertips than ever before, thanks to the internet and the rising penetration of smartphones. Price transparency is a given now, so com-panies need to compete on exclusivity of product, and quality of customer service, to maintain footfall. For example, ladies footwear retailer Shhh... is pioneering exclusivity of product in a unique retail environment with high levels of service (evening appointments on demand), but democratises its offer by stocking a range of price points from £70 to more than £500. In the past, this type of business model would have only been available to the affluent.

It has seen increasing interest from its brands to open more outlets both in the UK and overseas so we can see there is a demand for a more unique and satisfying retail experience.

“Technology and social media also fa-cilitate the idea of ‘having your customers at the table’ – we are seeing more busi-

nesses harnessing the power of the web for co-development of products with their consumers, especially in fashion where trends are so difficult to predict with any certainty. “This allows consumers to have a role in the product development process. Niche websites such as Thread-less crowdsource the design for their T-shirts which helps to engage consumers with the company on a deeper level. We are also now seeing larger players such as ASOS and BrandAlley encouraging con-sumers to provide feedback on emerging designers and products to reduce the risk of producing a range that isn’t quite what the marketplace wants.”

Bayne believes business organisations who are not already building these kinds of relationships with their customers can-not afford to wait any longer.

“It’s not just about the big corporates, and it’s not just about technology,” he insists. “This is about a change in mind-set. Whether we are talking about the citizen, the customer, employee, patient or even student, today’s consumer has high expectations, is demanding and is less loyal. “They want an experience that is seamless whether online or offline, and personalised to their needs.

“The successful businesses of 2012 and beyond will be those who have the ability to interpret, understand, and ultimately embrace the new emboldened and power-ful consumer.”

Companies must swiftly reshape their attitude to sales, take advantage of rapidly-evolving technology and recognise that the rules of engagement are changing, says Claire Mackay

The balance of retail power is shifting and the customer is pulling the strings

With such high levels of complex-ity and change, trying to second guess your customer is harder than ever. These key strategies can give you a fighting chance.

Think about how you can digit-ise your value chain from supplier through to consumer.

Web, mobile, and machine-to-machine are the new channels for consumer commerce which will become central to your opera-tions. Looking for ways to digitise your operational processes also creates a flexible and transparent differentiator for your business, providing the clarity to make informed decisions, reduce bottle-necks and identify spare capacity.

Invest in analytical people, pro-cesses and tools to harness the mass of internal and external data available today. Look for opportu-nities to focus on both the “big” aggregated data for strategic decisions about products, profits and investments. And use “small” individual customer data to sup-port a more personalised and responsive customer experience.

Be prepared to innovate by breaking down traditional busi-ness models and boundaries. Today’s consumer is pressuris-ing prices and margins with their ability to move fast, and their de-mands for convenience, relevance and innovative value.

So it’s a commercial necessity to explore new opportunities to share operational capabilities, brand, sales channels, and infra-structure with partners in different industries. It can help you both to create new growth as well as save costs.

Give your business a consumer-

Key strategies that add real value to business

les Bayne says that consumerising your workforce will allow more agility

on how they use and adapt are taken up by the company to change the products that are sold.

“This feedback from customers is important as one of the ways that com-panies ‘sense’ the changes in a market. The social media provide another way of sensing the market while fashion retailers are always alert to what is happening in the fashion schools. In effect, companies wish to draw ideas from as many sources as possible.

“But while responding to the consumer and working with them is gaining in importance, many companies still shape and drive the market, and ultimately are responsible for the relationship with customers. While the company draws ideas from many sources, the market risk remains with the company, and so they have to make the decisions on what to sell and how to sell it.

“Therefore the company not only responds to the market, as do all the com-petitors of the company, but also in order to compete by being different, the success of a company also depends on shaping the market and influencing the consumer in what they want and how they behave as consumers.

“The balance between responding to the market and shaping the market is a delicate and complex one for companies. Certainly new media play an important role in these responding and shaping

james glossop for the times

Keeping pace with the ever changing face of the consumer

centric view by allowing your employees to have the same freedom at work that they do at home. Why should your employ-ees be inhibited with rules and technologies that are no longer reflective of their daily lives? “Consumerising your workforce” will give your business a new per-spective and agility in terms of understanding the new consumer.

Finally, you need to move at consumer speed. There is no point in being consumer centric but being the last to market. This means breaking down the inter-nal cultural and process barriers that restrict agility.

Be both open and lean. “Wow” your customers with your ability to listen, act and innovate in step with, or faster than their changing world. This is what will separate winners from losers in the next five years.Les Bayne is a partner in Accenture’s CRM practice

as people are forced into more difficult purchasing choices, assumptions about customer loyalty will be challenged