JOHN FORKIN (JF): Is it right to promote Derby as a hi-tech city?
The numbers from the Government are stunning. They show that 12% of the
Derby workforce are involved in hi-tech functions – four times the national
average.
Derby's economy has shifted up the technology ladder in the last five to 10 years, driven by areas such as aerospace, nuclear, rail and software development.
We have something in Derby that is different. I don't know if any of you
caught a special report on Radio 4 earlier this month about Derby, which said
that we need more cities like Derby if UK Plc is to grow?
The city is attracting a lot of national interest. People are thinking how
the future of UK Plc should shape up and Derby appears to offer some clues.
I believe Derby has always been a hi-tech city. The Roundhouse was the NASA
of its time, as was the Silk Mill. It's always been in our DNA. Maybe it's in
the culture.
The other week we showed an inward investor from Aberdeen, involved in the
oil and gas industry, around the city. They have chosen to come to Derby
because of its culture and because it has the right staff and right attitude.
They picked up on that heritage.
The people sitting around this table are all in slightly different sectors.
I'd like to start with you Rob (Johnson) at Rolls-Royce. I don't want to turn
this into a discussion about Rolls-Royce but the fact is the company is very
important to Derby.
The image people have of Rolls-Royce is a more traditional image – lots of
people in blue uniforms and a tool box working on an engine. Of course, we know
there's a lot more to it than that. Where is Rolls-Royce at in terms of
research and development?
ROB JOHNSON (RJ): Well, there is a lot of debate about rebalancing the
economy and I believe hi-tech companies are key to that. It isn't really
sector-specific. There are a number of sectors that have got hi-tech elements.
Rolls-Royce is no different than hi-tech companies operating in other
sectors. Technology is just one of the key ingredients.
These companies put great emphasis on investing in research and development,
making sure they build the market place they are selling into. For example, we
spend £1 billion a year on it.
Hi-tech firms place great importance on skills, education and training. They
are characterised by high skills bases, which enable them to add value to
products and services.
Another characteristic of Derby companies is their access to global markets
– a capability to sell around the world.
Exporting is another key ingredient. At Rolls-Royce, three-quarters of sales
achieved by teams in the UK are through exports.
BRETT CRITCHLEY (BC): Derby is a hi-tech area but isn't that just simply
down to the fact that Rolls-Royce is here? Doesn't it falsify things?
JF: In terms of the 12% of the workforce involved in hi-tech industries, I
believe half of that is made up by Rolls-Royce. But much of the remainder is
made up of rail technology companies, nuclear and software.
Maybe 10 to 20 years ago Derby was probably more dependent on Rolls-Royce.
Now, other clusters are developing.
STEVE HALL (SH): But I don't think there is a perception that Derby is a
hi-tech city, either internally or externally.
BC: We've got 230 clients and only a proportion of these embrace technology
– the others use it because they've got to. So, can we really say we are
hi-tech?
ANDY WHITTLE (AW): Most hi-tech companies will have their own in-house IT
team.
BC: Yes, but not all companies are big enough to do that.
AW: Well, we've got nine people and we do 90% of our IT in-house. We use specialist
computer-aided design software. The IT companies don't have the resources to
support such specialist software.
JF: So, what you're getting at, Brett, is what do we mean when we say
hi-tech?
BC: Well, compared to Rolls-Royce, are we hi-tech?
ANDREW GILBERT (AG): There's a lot of technology companies, certainly on
Pride Park. You have firms like Commontime that develop software for mobile
devices and Prevex, which develops anti-virus software.
In Derby, there are a number of firms you would not necessarily classify as
hi-tech. I didn't know what Interfleet Technology did. I thought they were just
another rail firm, but they develop innovative software for the rail industry.
JF: I believe that perception always lags behind reality. There has been a
negative perception of manufacturing.
Take Interfleet as an example. It's a rail company. To some this sounds a
bit bland and conjures up images of blue-collar guys banging something.
Interfleet spun out of the privatisation of the rail industry. Today, it
employs 600 people globally, including 300 in Derby. Every single one of them
are graduates and above.
By hi-tech we don't mean IT, although IT is one the things needed to be a
hi-tech company. I've driven past places like Interfleet and never knew what
happens behind those doors.
SH: But we still need to do more to challenge Derby's reputation as a
blue-collar city. The world has woken up to the fact that, to have a
sustainable economy, we've got to invent, make and sell things. That's a golden
opportunity for Derby.
AG: You've got things like the Tomb Raider video game franchise that was
developed in Derby.
MARTIN JINKS (MJ): Derby has moved from being a rail city, involved in heavy
engineering.
Because we had the railways here, Rolls-Royce decided to come in. These
businesses have moved on from banging metal to being very hi-tech producers.
Because the skills were here they decided to come here but the challenge is
how we keep this going.
One of the major challenges is staff. Every employer I talk to say that the
orders are coming in but they are continuing to have problems recruiting staff,
particularly in the hi-tech industries.
Derby is becoming more attractive as a place to live and work. The real
challenge is how do we get the flow of youngsters coming through? I believe
this is a job for the university and business leaders.
LIZ FOTHERGILL (LF): I'd like to approach this from a different angle. We're
in manufacturing. Are we a hi-tech company? No. We make basic products. But
would we be able to manufacture these products if we didn't have hi-tech
processes? No. We have engineers building the equipment to make these goods and
IT technicians.
JF: I think that's an important point. If we didn't use hi-tech processes
then we couldn't compete with the likes of China in terms of production.
RJ: It's a good point. We think about hi-tech as being the product – but
it's also how its applied to the process of making things.
It's thinking about how technology can be applied to the manufacturing
process that can allow us to compete on a global basis.
Derby can compete on that basis.
IAN COTTER (IC): I don't think it's sustainable to have a completely
hi-tech-based economy in Derby. At the top end, we've got some excellent
companies. At the other end, we have a skills gap. Businesses won't come to
Derby if there's a shortage of skilled manpower.
ROB CRAWFORD (RC): There is a staff issue. We find it very difficult to
attract the right staff. We've been working with universities to get students
with the right skills, but they don't want to come to Derby.
LF: What kind of roles are you looking to fill?
RC: Mainly management roles. I know we're not the only ones having this
problem.
AW: It comes back to perception. We try to recruit electronics engineers
from Cambridge but it just isn't happening. We need more locally trained
people.
ANGELA DEAN (AD): Derby University has got quite a good reputation in
engineering. I go all around the world and everyone knows Derby as a hi-tech
city. It has an international reputation that is probably stronger than it is
in the UK.
We're on the radar but I do think we've got a perception in other areas that
we're not like Nottingham and we're more a blue-collar city.
SH: You said the university has a good reputation as far as engineering is
concerned but I would question that. I sit on the advisory panel to the
business faculty. Lots of good things happen but not enough of them are
engineering-specific.
AD: Why do you say that when we have accredited degrees and more students in
business technology? We're trying to evolve what we do and involve companies
but it's difficult to set up.
We want to work with a set of employers that come together as a group for
training opportunities but there is a reluctance among companies to be involved
with the university.
Why is that? In Northampton they join together to do that. It's difficult to
do this in Derby when companies are competing with the firm next door.
LF: If you put it into perspective, 20 to 30 years ago the technical college
was seen as the epitome of engineering. I think the university lost its way in
the 1990s. Now there is a concerted effort to put more emphasis on engineering
but we're not there yet.
AD: It's really moved forward in the last four years on the engineering
side. We've taken tremendous steps. In the 1990s and early-21st-century Derby
University had difficulties in engineering. That's behind us now.
JF: If I could just broaden the debate out: as, I said before, perception
lags behind reality.
When I was showing the investor from Aberdeen around Derby, and another from
Monaco, they were stunned. We want to come to Derby, they said. They look
around somewhere like Pride Park and see the names that are already here like
Tracsis, Handelsbanken and Rolls-Royce.
LF: Does seeing these names persuade them?
JF: Yes, they see the businesses that are already here and they start to see
themselves here. I know that they have to work out a business case but I also
think there is often an emotional decision that's made.
People's perception of Derby may be so low that when they actually come to
the city they are surprised.
Developers can see the potential. They see the names here and think it would
be worth building London-standard offices in the city centre as these
businesses grow.
ANDREW MURFIN (AM): It's about perception and self-belief. The outside
perception won't change until the self-belief changes.
We have got tremendous companies but we have to change the deprecation that
the people of Derby have towards the city.
We've always been a modest city. We're not ones to shout about our
achievements. We need a stronger feeling of self-belief and self-worth.
And it's not about the people around this table. It's a 1,000-piece jigsaw.
What we can do as business leaders is share the achievements of our companies
with our staff and get them talking about it.
MJ: The city is doing really well in the present climate. We've got good
companies with good skills. We've also been boosted by the news that the city
has won £40 million of the £54 million it applied for from the Regional Growth
Fund. Some of this is going to be used for the infrastructure on a new business
park to the south of the city.
AG: Can some of it be used for a new junction on to Pride Park?
JF: One thing we like to tell staff is the fact that we're exporting. We
tell them we are making products that can be used in any hospital it the world.
It's something to be proud of.
JF: It's a long process changing perception. There's no silver bullet.
That's why we need to use government facts and figures which show how important
Derby is to the economy.
Its productivity and GVA is the best outside the city of London. People say,
well, this wouldn't be the case if we didn't have Rolls-Royce – well we have,
just as London has the City of London.
In terms of the skills issue, when inward investors look at Derby they're
not bothered too much about it. Derby has 2.1 million people in commutable
distance, which is a big pond. There are 15 universities within an hour of the
city.
BC: Around 10 of my staff actually commute from Birmingham.
JF: In the city there are some challenges and I think they start with the
education system. It hasn't got up to speed with things.
Our primary schools system is one of the worst in the country. Our secondary
schools system is average. But we have a college that is really starting to
cook and the Roundhouse is world-class.
We've got a university that is changing and trying to have more relevance. I
think there is an opportunity for the city if we could reform the education
system from the age of five. That way we could produce more home-grown talent.
AD: The Government is looking at what we want in the workforce, certainly in
engineering. It's looking to change the university and college system. It is
pushing for higher apprenticeships and advanced apprenticeships up to
foundation degree level.
RJ: Derby has a much larger proportion of its employees in the production
rather than the service side. It would be interesting to know whether we are a
net importer of skilled graduates.
JF: Our economy is certainly very graduate-hungry.
AD: We can get graduates coming in but they don't stay. Derby has to think
about how it retains its graduates.
AW: The employees companies really want are ones with industrial experience
but there is a lot of competition for those.
JF: I think the challenge now for the city is attracting people in.
Rolls-Royce has recruited hundreds of people for its civil nuclear division,
from all over the globe. How do we develop our own talent? Should this start
before college or university?
MJ: I think we need a centre of excellence in Derby to attract the best
people. They must be able to see us as the place to come and get their
education.
SH: This is massively frustrating. We have talked about this for years but
we don't seem to have got very far on this.
RJ: Maybe other cities are further ahead in terms of the university being
linked in with business. Employers have got to take the lead in forging those
links with education.
JF: So, if I could just draw this to a conclusion. There's three or four
points to make.
The first is about the difference of definition of what is hi-tech. It's not
only about the product but also the process, with Liz's company being a good
example.
Definitions apart, 12% of Derby's workforce are involved in hi-tech
industries – compared to 6% in Cambridge and 1.2% in Nottingham.
The perception of Derby is behind the reality. The British are frightened to
acknowledge anything to do with blue-collar working but you have the likes of
France, Singapore and Germany who embrace it. UK Plc needs to grow up and get
over it.
The city has changed a lot over the last 15 years and it is about to change
again.
Hi-tech requires the right skills – it is talent-thirsty. Derby has shown
for 250 years that it can attract the right kind of talent.
The big challenge is how we can develop local talent so we can serve those
sectors better. It's a gap that needs closing. As Steve says, we need to get to
grips with this.
Hi-tech is the only way forward for UK Plc if it wants to grow its economy
in the global market.
The country needs more Derbys. Westfield would not have invested £340
million at the beginning of the recession if it wasn't for Derby's hi-tech
companies.
Westfield is an Australian company – it didn't have the perception block
that others have. Now it has the busiest shopping centre in the East Midlands.
