Publications on the internet
CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 854-vi
HOUSE OF COMMONS
TAKEN BEFORE THE
Welsh Affairs Committee
Inward Investment in Wales
Thursday 30 June 2011
(glyndŴr university, st asaph)
Mr Steve Thomas, Ms Katherine Bennett OBE, Mr Leighton Davies and Mr Tim Wheeler
Professor Michael Scott, Mr Tony Hawkins, Mr Andrew Parry, Ms Karen Padmore and Mr James Goodman
Evidence heard in Public Questions 350 - 392
USE OF THE TRANSCRIPT
1. This is a corrected transcript of evidence taken in private and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2. The transcript is an approved formal record of these proceedings. It will be printed in due course.
Taken before the Welsh Affairs Committee
on Thursday 30 June 2011
David T C Davies (Chair)
Susan Elan Jones
Mr Mark Williams
Examination of Witnesses
Witnesses: Mr Steve Thomas, Government Affairs Executive, and Ms Katherine Bennett OBE, Vice President, Head of Political Affairs, Airbus, Mr Leighton Davies, Financial Director, GE Aviation, and Mr Tim Wheeler, Industrial Participation Specialist, Boeing, gave evidence.
Q350 Chair: Good afternoon, ladies and gentlemen. I thank you very much indeed for coming along and also for the courtesy that you have all extended to the Committee in different ways recently. This is not meant to be some sort of an interrogation. We are conducting an inquiry into inward investment in Wales and we are just looking to you to give us help, advice and suggestions on how we can increase inward investment, and what will keep you here and keep your companies and others like them developing and growing. If I can kick off with Airbus and GE, perhaps you could tell us what made you come to Wales in the first place and what is it about Wales that has worked particularly well for you as organisations?
Katherine Bennett: If I could kick off, we came to Wales back in 1939. There were obviously some events going on in Europe at the time so the factory was created for a particular reason with considerable investment by the Government at the time. You could say that was a good piece of Government support there.
The other reason for choosing that site was its location in terms of the airfield location and good all round flying facility and support, and essentially a local workforce who were happy to come in and work and support such an immediate start-up. That was the reason why we were founded and, of course, we had some celebrations recently on the milestone of that foundation.
It is a significant investment for Airbus in Broughton. Millions of pounds worth of cost goes into the capital investment and investment in our employees and, believe you me, Airbus does not spend money lightly. This continues. In the last few years we have spent £7.5 billion worth of work on the A380 facility across both sites and that is a significant investment. Why do we stay here? Well, the workforce is very supportive. We have spent a lot of money on training so they are there, they are trained up, and it is the kind of place to which people want to send their sons and daughters. It is a continuous project. Steve could confirm there are quite a lot of fathers, daughters, sons who have worked at the factory over the years, so that is a key thing. The other thing, which Steve can perhaps touch on a little bit more, is that the local supply chain has grown very strong and, of course, the supportive environment that we have found from the Welsh Government and, of course, the English regions nearby, because we are very close to the Cheshire area.
Q351 Chair: That happily leads me to my next question. Katherine, you and Leighton at GE have both worked very closely with the Welsh Assembly Government and been supported by them in different ways recently. I am not so sure about Boeing, but we will find out in a minute. Obviously, there are other things going on at a national level that will be affecting your organisations. This is a leading question, but you obviously would, I presume, think it important that the Welsh Assembly Government and national Government are working closely together. In your experience, is that actually happening at the moment?
Leighton Davies: In terms of the Welsh Government and the national Government working together, we have not really seen much evidence of that. On whether we are interested, I would say we are more focused on our relationship with the Welsh Government.
To go back to your question of why we came to Wales, GE came to Wales back in the early 1990s when we acquired the site from British Airways, which had also moved down from London to the Welsh Valleys around 1939 to avoid some activity around that area. Since then, it is important to say that we have invested nearly £200 million in the site with a lot of support and advice and guidance from the Welsh Assembly Government and previously the Welsh Office. Our salary bill every year is £70 million, which goes into the Welsh economy. There are 1,100 people working there. There are 1,000 highly skilled jobs on site. I think that has been built up over time with the good relationship that we have built with the Welsh Government. It is important to us that we have that avenue to interact with the Welsh Government effectively. From a national perspective, Mark Elborne, who is the President and CEO of GE UK, is engaging with Westminster on a national scale as well, so importance is placed on that, yes.
Tim Wheeler: Perhaps looking at the questions through the prism of an international business into the UK, I should explain that the UK market, the aerospace market, is one of the biggest international parts of the supply chain to Boeing, so there is lots of supply base in the UK. The interaction you are specifically asking about with the Welsh Government has been proactive. The Welsh Government has made sure it has understood what Boeing is doing and what its activities are in the UK, which are primarily supporting the aircraft platforms that the Government has bought: C17, Apache helicopters and Chinooks. Inevitably, where Boeing is gaining a footprint in the UK, the locations tend to be where those aircraft are operated and, therefore, where they need to be supported. Those locations mean that Boeing Defence UK Limited now, as a UK business, this morning actually was 686 people and there are about another 300 Boeing staff in the UK.
On the interaction with the Government, I was just looking at the job titles of some of the people who have come along and explained what was happening and, very importantly, listened to what Boeing was up to and explored opportunities. We have a chief executive for the Americas, of International Business Wales, a senior vice president who talks to us frequently-he spoke to me last week-an aerospace sector leader and a strategy and development manager for UAVs, talking about our proposed developments. In terms of an engagement there has been a structure in place that has kept Boeing very up to date with opportunities in Wales.
We have also attempted to represent where we could Welsh companies’ business interests in the US if those interests were not directly in Boeing or its supply chain. Probably one of the most recent events was something called "Washington 80", where 80 Welsh companies came to the States and visited various prospective US customers. The interaction, I would say, has been high and compared with any of the regional development efforts, has been pretty high.
Chair: I should have said at the start, by the way, that because of trains, we are rather short of time at the moment, so I am going to try and rattle through things a little bit more quickly than normal, if that is all right. I hope everyone will bear with me there.
Q352 Susan Elan Jones: If I could just ask this question to Mr Wheeler, please, from Boeing, I wonder what factors you took into account when looking where to base the company in the UK. For instance, did you consider establishing a subsidiary in Wales?
Tim Wheeler: Thank you for that question. The factors I guess can best be described by answering where the company is. The company is head-officed in Central London because its primary customer is the Government, so it is there. There is the Boeing Commercial Airplanes office in Heathrow that looks after UK and a lot of Europe from Heathrow and that is the central hub. When we look at the other operations, it is reflective of the point I was making about where those operations are. As with, indeed, GE taking on a BA business, our sites have generally been Government facilities, Government aircraft maintenance, so our single largest site is in Gosport where helicopters are maintained. We have just taken on a contract with 13 UK centres, an MoD contract, and TUPE transferred 230 staff into Boeing. Inevitably, their work and where they live and operate to some extent determines matters, so those are factors. Not surprisingly, you would find our operations in Brize Norton and Lakenheath and those sorts of location. The factors are whether it is really a new or established entity that you are taking on. Then for a new entity it would be the staff and infrastructure, communication links, transport links, but bear in mind pretty much anything that we would take from the UK will be exported to the US for further assembly on aircraft.
Wales is featuring in a couple of significant developments at the moment. We are looking at a combination of some of our operations and Wales is certainly one of the locations we are considering for that. It will then come down to affordability, economic factors, because they are Government contracts and you have to get best value. Those are the sort of factors and the sort of reasons that have drawn us to certain locations in the UK.
Q353 Susan Elan Jones: One of the things that very much featured in our informal discussions as we were going round Airbus this morning was the idea, the great benefit, of being a large fish in a smaller pond in Wales and the added incentives that would come from that. I wonder what you feel that the UK Government can do to make the UK, but also Wales in particular, a more attractive place in which to invest.
Tim Wheeler: I think when we look at the things Boeing takes from the UK as an international customer, I am pretty accurate in saying as an international customer Boeing is probably the biggest customer of the UK aerospace industry. What we take from it is high degrees of innovation in systems and sub-systems. The new electric wing on the 787 Dreamliner, the de-icing system for that, is made in the UK. It is this innovation. I think it is really important to keep a flow of that innovation and those ideas, the things that we seem very, very good at doing in the UK, because from an export point of view it will always be something that is then scooped up and put into an integration factory in the States. That would be the encouragement. We are not a low cost economy in most of Europe, certainly not in the UK, so you do not come here for the low cost economy. There is a great relationship, 70 years in Boeing’s case. It supplied Harvards into the UK. All those things are important, but what is really important is the great ideas, the design and the realisation of it that Boeing then takes from the UK.
Chair: I think Jonathan and Geraint might have very, very quick, brief questions.
Q354 Jonathan Edwards: Thank you, Chair, for indulging me. Just quickly, there is a big debate going on in the UK about empowering the different national Governments through corporation tax powers to levy different rates. What sort of effect do you think that would have in terms of-
Chair: Good or bad, from everyone. That would be an interesting question.
Katherine Bennett: Perhaps I could just say it is interesting to hear comments from my colleague at Boeing. We are very proud not only to be a customer of the UK aerospace industry but to be resident in terms of our business here. Corporation tax levels are an interesting factor. Airbus is obviously a global company so corporation tax is not something necessarily that is a big focus for us in deciding where to locate a facility. Other things-and you will come to this a bit later, I am sure, with your other questions-are important, for example, the economic climate, as to where a company would invest or invest more. I think we all want to talk more about investing more in this country. I understand there has been a lot of debate in Wales about enterprise zones and there are other attractive things like that that could be done. Whether stamp duty income goes to the local authority or the Welsh Government is another factor. Really, probably I would like to say this is something for the politicians to worry about-businesses like ours obviously are happy to be consulted but we would say maybe a better answer would be a good package of business support measures rather than just focusing on one tax versus another.
Q355 Chair: Any further thoughts on whether it is good or bad?
Leighton Davies: I concur with the views just provided by Katherine, really. I think corporation tax, while important, is not viewed as the be-all and end-all. I think there are more important aspects such as encouraging academia to invest in engineering, maybe encouraging industry to invest in apprenticeship schemes. We take on 25 apprentices every year and for those 25 jobs there are 500 applications. We go down to the local college; there are 26 in the class, 25 of which have come from GE. I think that that is a reflection on the amount of investment that goes into apprenticeship schemes in Wales or particularly Mid Glamorgan. So, while it is important, I do not think it is going to really make a big impact in terms of where they decide to invest.
Q356 Geraint Davies: Obviously Airbus and GE are now well established in the Welsh economy in ways I think we all understand. Mr Wheeler, can you foresee a situation where Boeing might join that very significant cluster in Wales? Under what circumstances you imagine that happening on a scale approaching what we enjoy from GE and Airbus, or don’t you think that is a possibility?
Tim Wheeler: The Airbus operation here is a manufacturing operation and GE is an aftermarket operation. We would be more synergistic, I think, with the aftermarket operation. That is why our operations are in the UK. I do not see any immediate move to put a European manufacturing base together. Evidence of that is that we have just put in place a new factory for one of the new aircraft in the US. But I would go to the programmes that are relevant for the UK and the employment that Boeing is generating in the UK, and there would be no reason whatsoever why that should not be based in Wales.
Q357 Guto Bebb: My first question really is to Airbus and GE Aviation about the training within your workforce. Quite clearly, from the visit this morning and from the evidence that we have already received, you invest heavily in training and you have a highly skilled workforce. That has been done, from what we saw this morning, in partnership with local higher and further education institutions. Could you expand upon that partnership that you have built?
Steve Thomas: Yes, we are very proud of our apprenticeship programme in particular. We have over 400 apprentices currently undergoing some form of training, whether that be craft or higher engineering apprenticeships. It is done in conjunction with our local further education college, Deeside College. I myself am the Vice Chair of the Governors of Deeside College and so we have strong links embedded in that relationship and also Glyndŵr University, the proprietors of this facility we are in. We were also fortunate this morning to go round our Composites Training and Development Centre, which is run in conjunction with Deeside College and Glyndŵr University. That for us was a real step forward in embracing further education, higher education and a mainstream employer. That combination enables our employees to embark on an apprenticeship or continue potentially a craft apprenticeship to a higher apprenticeship, foundation degree, master’s degree and even chartership. The complete spectrum is available should the employees and the business need to complement each other.
Also Wales has an added advantage from the Welsh Government in the allage apprenticeship scheme that is on offer whereby our employees who are not previously designated as apprentices can actually up-skill themselves by embarking on an apprenticeship scheme. That for us is a tremendous opportunity that is not available elsewhere in the UK.
Overall, we invest very significantly in our training programmes across the spectrum. Airbus spent last year, for example, £3.6 million on training and development of our 10,000 employees throughout the UK and the key to that clearly is the investment that we also spent at Broughton specifically.
Q358 Guto Bebb: Just on the work that went into that, was it difficult to build those partnerships? That is the first question. Secondly, do you think that the partnerships that you have developed could be replicated by other sectors of the Welsh economy?
Steve Thomas: Was it difficult? It was challenging at times, I have to say, particularly with the higher education side because it was our first foray into that arena. We have a longstanding relationship with further education. Our involvement with Glyndŵr University was a new venture for us, but can it be replicated? Certainly. We have learnt lessons and Glyndŵr University has clearly learnt lessons. It is definitely something that we are looking to build upon as we move forward, and as we want to expand our training facilities to embrace all the new technologies that we are looking to introduce to support our A350 programme.
Q359 Guto Bebb: Just a question to Mr Wheeler: does Boeing have any concerns about the skills level in the UK as a whole?
Tim Wheeler: No, I think there is a broader skills issue, but it is not just the UK that it affects measurably. At the moment, the average age of an engineer in Boeing is 47 and in the next five years 25% of the engineers could come up for retirement. Now, being newer in the UK our issue is not quite as pronounced. The average age is 36; they are babies, it is great. But that skills gap I think comes from a time when a lot of engineers were not trained. I am a time served apprentice who went on through higher education and a significant proportion of my counterparts at school left and pursued that route. There is a pent-up need to be able to replace some engineers, we recognise that. We contribute significantly to research and development because that is what we take from the UK through key university partnerships. I was looking, and found that there are 86 universities or entities, businesses or universities, or collaborative partnerships that we have worked with in the last three years, so a significant footprint. But our interest in those often is research, development, delivery, products and services perhaps more than the training of skills. As I say, certainly in the response concerning factors we would look at, you do have to have the right skills and they have to be in the right places.
Q360 Guto Bebb: A final point just to clarify, the figures you gave in terms of engineering and the age of engineers, was that a UK figure or is it just a Boeing figure?
Tim Wheeler: No, that is a Boeing figure.
Q361 Guto Bebb: That is a Boeing figure particularly?
Tim Wheeler: To qualify it a bit, there are 157,000 people across all disciplines in Boeing, and of the engineering community that average age is 47. I am told, and I believe, there is an ADS figure, which I do not have locked in my head, that actually the age is higher. It is north of 50, as I recall, about 51, 52, the average age of aerospace engineers in the UK.
Q362 Stuart Andrew: Can I ask all of you if you think that there are specific skill gaps in Wales and, if there are, how would you try to overcome them?
Leighton Davies: Well, if I can just talk about the recent recruitment that we have gone through, we announced at the Senedd earlier this year that we were going to take on 100 people, and 1,000 applications were received. We saw that there was not a surplus of the skills that we were looking for in qualified aircraft engineers. I think if there is an area that the Welsh Government could encourage industry to train people up on, it is around aircraft engineers because there certainly was not a surplus of the workforce available there.
Steve Thomas: I think from an Airbus perspective and just to build upon my previous response, certainly in terms of the money factor in engineering skills, we are investing heavily to overcome any potential skill shortages. That goes back to our initial links with the schools. For example, we have a full-time schools liaison officer; his prime role in life is to go out, share the message of what we are about in Airbus to primary schools and secondary schools-not just to extol the virtues of Airbus in the UK but of engineering in general. He emphasises that this is not a dark, dour organisation that most people could spend the rest of their lives in. It is quite the converse; it is quite an exciting opportunity, a career opportunity, for these people. We invest heavily in our people. We invest heavily in our links with schools and universities and FE colleges to overcome those skill gaps.
Q363 Stuart Andrew: When we went to Tata Steel they said exactly the same thing, that the reputation before among young people in the area was they did not want to work there, but the engagement changed perceptions. Are you saying that if more companies did that, the future for Wales could look an awful lot brighter?
Steve Thomas: I think there is a really exciting prospect of that and it was really brought home to me earlier this year when we held an open day in the West Factory where the wings for the A380 are assembled. We had an extensive advertising campaign and we invited along all potential recruits, whether they were interested in apprenticeships, direct entry graduates or internships-the whole spectrum-for an evening just to view what is on offer in Airbus in the UK. Four thousand people attended that event and from that we were able to select some real quality people to actually pursue their careers. It is a fantastic takeup and I am sure if that was replicated elsewhere, Wales as a whole would benefit.
Tim Wheeler: If could just come in on Steve’s point there, I think businesses are beholden to paint that picture and start engagement at that very young school age. Boeing runs something called "Build a Plane" where we take a kit for a three-axis microlight, give it to a school, they get to make it, then they have to sell it, then the money recycles into the scheme. Now, that is one business with 1,000 employees in the UK trying to engage and excite children about engineering at that early age. For the next stage, the university relationship with the Advanced Manufacturing Research Centre has a truck that comes out and opens out. It is a very attractive pantechnicon and shows a number of engineering experiences. Thousands upon thousands of youngsters have gone through that and seen the Mantra truck. Those are the practical things that organisations like ours can and do do, but somehow it needs more effort behind it and more businesses involved.
Q364 Geraint Davies: Many of our witnesses in the past have said there are low levels of business expenditure on research and development in Wales and I know, Steve, you mentioned I think that there was £367 million of research and development in Airbus in 2010 alone. How does the panel think that firms can be encouraged to invest in research and development?
Katherine Bennett: Well, I think it goes back to what I was saying earlier about the general supportive business climate provided by authorities or governments. The climate now for bidding for technology support across the UK is obviously to encourage partnerships, so university links and supplier links are absolutely key. You cannot get anywhere unless you are working. It would be dumb anyway not to because both Boeing and ourselves are extensively using the supply chain very, very early on in research and technology. We do engineering at Broughton as well as manufacturing, so a certain element of research and technology investment goes into Broughton. We obviously like to link in with universities across the UK, but we are strengthening our links a lot with local universities, too. Yes, we are one of the top 10 investors in R&D in this country and let us maintain that. You are asking me-I guess why the Committee is looking at this subject-what more governments can do, and really perhaps going back to the skills debate, rebalancing the economy. Don’t talk about the sector bankers and the service sector and the media companies. I am not an engineer, I did a history degree, but I find it fascinating to work in a company that produces things that can help develop the future and help develop young people in the future. We are seeing the Government, both the Welsh Government and, of course, the Government in Westminster, changing their dialogue with us. I have really noticed that in the last few months. Engineering is a big focus and I think that would also then create a climate where more research and technology is done because more ideas are developed as people see a supportive climate.
Q365 Geraint Davies: Is there a case for companies like your own, and we found this with Tata as well, perhaps to be more vocal about how exciting the R&D you are doing is and how it generates real change and a new future to excite the imagination of the public and prospective employees and whatever, children or anybody?
Katherine Bennett: You have asked me a perfect question. Just last week Airbus started a debate all about flying in the future-so what kind of cabins you could be flying in in the future in terms of different technology, whether new kinds of materials could be used that perhaps had not been thought of before for aircraft. Some of that technology is beginning and is happening in the UK. Composite technology for Boeing and ourselves obviously is absolutely key.
Q366 Chair: I feel I ought to bring Boeing in at this point just so that the score is even.
Katherine Bennett: Ten thousand employees versus 1,000.
Chair: Quite a task to umpire this.
Tim Wheeler: The excitement that you can generate and the interest is probably well articulated in that research and technology aim by the first of the TICs, the Technology and Innovation Centres. The policy was announced by David Cameron from the Boeing Advanced Manufacturing Research Centre at Sheffield University. What I think businesses can bring is their requirements, and I think they can say, "We need research a bit nearer 52 weeks a year. We need more office hours. We need things to be spun round very quickly". In the case of Boeing, we recognise the gap from great research and technology at the lower technological readiness levels to the ability to go into production. Do we make enough noise about it? Well, we try to.
Q367 Jonathan Edwards: Can I move to supply chains? Both Boeing and Airbus have given us some substantial evidence on this already in written form. Could Airbus expand perhaps about the clusters in northeast Wales based on your supply chain?
Steve Thomas: Yes, certainly. First, it is appropriate to say that we are a global company with a global supply chain, but nonetheless we really view any opportunities that arise as important. In some businesses it may be entirely appropriate for close proximity to our business. Indeed, we had the opportunity to see that this morning in terms of a local business park that is situated adjacent to our site where already three businesses have moved on to the site and are dedicated to the supply of components to our final assembly lines based at Broughton. Indeed, if you look at the local supply chain on or about our site, and many of our subcontractors are actually physically located on the 700acre site based at Broughton, over 2,000 employees are directly employed in our supply chain wholly and exclusively dedicated to supporting our business. That is 2,000 employees over and above the 6,100 employees of Airbus’ own employment base. It is vital for some industries but it is within the context of an overall global supply chain.
Q368 Jonathan Edwards: In terms of Boeing, your evidence was based on a UK outlook. Do you have any Welsh specifics?
Tim Wheeler: Yes, there are. I think in terms of a business that is going to export, unless there are synergies in businesses exporting together, the cluster probably is not quite so important as the benefits one gets from being in the supply chain close to your primary customer. I think sharing knowledge and information if there is a cluster of businesses and possibly, as we look at this area of SMEs, developing more business with larger organisations, the ability for them to work together and potentially come up with a more complete product or a higher tiering of product can be beneficial to clusters and the information that they exchange among themselves. However, from the prism of an exporter from the UK, I guess, it is less significant than being closer to the factory.
Q369 Mr Williams: I think the time is increasingly against us. You have already talked about the importance you attach to the links with the Assembly Government. First Airbus, in your written submission you made it known your extensive links with UKTI through trade missions, and you have had a great deal of success in the last week. What are your views, though, on the effectiveness of the Assembly Government’s activities overseas and the extent to which they are effectively embedded in UK marketing? I could summarise the question: how successful is the Assembly Government in promoting Wales abroad? What are your experiences of that?
Katherine Bennett: Well, there are two questions there, really. First, obviously Airbus orders of Airbus aircraft is a global sales issue. Thank you for mentioning it-yes, we had 730 orders at the Paris Air Show last week, which is a considerably nice thing for our employees up in Broughton to reflect on. Yes, I work very closely with the UKTI operation. I am a member of their Advanced Engineering Board. I am forever beating the drum here. I am forever nagging. I am probably a bit of a pain, because I want British Ministers to do more on this. Because in my role I can see what the French, German, Spanish Ministers do-the other three Airbus home countries in Europe.
Q370 Chair: In a nutshell, what are we not doing or what are British Ministers not doing?
Katherine Bennett: To be honest, the previous President of France used to describe himself as the biggest Airbus salesman, and I would like Lord Green and David Cameron to also become an Airbus salesman and promote our company abroad. Certainly, President Obama does that for Boeing. I would like my country to do that as well. UKTI have recently reformed the way they work, doing a lot of work with PA Consulting, and they have really focused on what needs to be done to help big companies like us with sales.
Q371 Mr Williams: Just carrying on very quickly from that, I think intimating from what you have just said, is it the case still that the UK Government can open doors and create opportunities that perhaps as yet-some of us are optimistic devolutionists-Wales Ministers cannot at this stage?
Katherine Bennett: I think that-and we were talking about this earlier-the First Minister of Wales has a very powerful position in terms of influencing the UK Government and then globally to maybe do a bit more. Maybe he should be banging on at Westminster a bit more to say, "Hey, come on, let’s support aerospace".
Chair: Our door is always open to him, I can assure you of that.
Katherine Bennett: I think that is a useful thing and I am trying not to support party politics here-we do not want to get caught up in that. But from the position I see it now, based in Airbus’ head office in Toulouse, I want Wales and I want the UK to fight harder and louder.
Leighton Davies: A question was asked earlier about R&D and what could we do to encourage more R&D. In GE in Wales we do not undertake that much R&D because most of it is done at the headquarters in Cincinnati. GE also has global research centres-there is one in Munich and I think there is one out in India as well. What can the Welsh Government do to attract more of that type of investment? I think they could engage with large companies’ headquarters. We are headquartered in Cincinnati. I do not think anybody from the Welsh Government has ever spoken to anybody in Cincinnati and I think maybe that would be a really powerful way of getting engaged with these companies and just advertising what Wales has to offer. We are constantly trying to do it in terms of attracting investment to our plant in Nantgarw and we are competing with GE sites around the world in so doing. We are helped by the Welsh Government when we have attracted investment, but I think if the Welsh Government could engage directly with these headquarters, it would be a really powerful message.
Q372 Mr Williams: In answer to my question, how successful is brand Wales abroad? What about the responsibility of the Assembly Government to promote it? That is not a partisan point. Has it not been effective to date in your view?
Leighton Davies: I think they could always do more and I think I would welcome that.
Tim Wheeler: I think generally from a UK point of view the UK is a great economy but there is a big world out there. Some of the parts should be greater than the sum of the whole. I think all of the reach that the United Kingdom has into global industries would give a lot more touch points if that were then brought back and viewed in a particular way. To a business in North America, it might or might not be important what part of the UK we are talking about, but start talking about the UK first of all. I echo the Airbus point on that. We have to sing the praises of the UK. Discrimination then between the different parts of it is the next level of conversation.
Chair: We have about two minutes left. Guto, you have a very, very quick question.
Q373 Guto Bebb: Just a quick clarification. Mr Davies, you said that nobody from Wales has been to Cincinnati. Have you had anybody from the UK Government or anybody representing the UK Government?
Leighton Davies: Not that I am aware of.
Guto Bebb: Not that you are aware of. Thank you very much.
Q374 Geraint Davies: In the written submissions there is concern expressed about the lack of an aerospace representative on sector panels. I think this is in the Welsh Assembly Government’s industrial sectors and did not seem to mention aerospace. Do you think they should?
Chair: Perhaps we can have a couple of quick-fire answers to that one.
Steve Thomas: I think from an Airbus perspective it is early days. From Airbus in the UK we have been designated anchor status. We have held initial discussions with the sector chair-very productive discussions they are, too. We are mindful of the fact there is no separate designation in terms of the aerospace sector and we are part of the advanced materials sector. We are hoping that will not dilute the focus that we previously enjoyed. I have to say there are no immediate signs of any such dilution but it is something that we are mindful of.
Q375 Chair: We should build on our strengths, basically?
Steve Thomas: Absolutely.
Tim Wheeler: I agree totally with Steve on that point.
Q376 Chair: Excellent. Thank you very much indeed. I am sorry it had to be very quick, but I am afraid we have another panel and we have discovered that we might need a little more time to get various people to trains. I do not have to rush off, though, so if anyone is here afterwards I shall be more than happy to stay behind for a few minutes.
Tim Wheeler: Thank you very much for having us.
Witnesses: Professor Michael Scott, Vice-Chancellor and Chief Executive, Mr Tony Hawkins, Managing Director, Glyndŵr Innovations and Mr Andrew Parry, Executive Adviser to the Vice-Chancellor and Head of Corporate Communications, Glyndŵr University, and Ms Karen Padmore, Business Development Manager and Mr James Goodman, Programme Development Manager, Bangor University, gave evidence.
Q377 Chair: Thank you very much indeed for allowing us to be here and coming to give evidence. If you do not mind, we are going to get straight into it because I am told we only have about 25 minutes. We will all try and be as quick as we can with the questions and the answers. Could I just start off by asking you, perhaps anyone who wants to speak, what links you have with inward investors in Wales, how you find inward investors, what you do to build up a relationship with them, if there is a quick answer to that?
Professor Michael Scott: Well, it is a huge question and a huge answer, really.
Chair: I was worried you might say that.
Professor Michael Scott: We are working all over the globe to try and bring investment back into Wales. I will just say straight away that I have been in Vietnam quite recently. We have gained a £5 million contract over five years to train technicians for the Vietnamese Television Corporation, but as I speak I still have a team out in Vietnam. Tony has just come back from Vietnam because we are talking with the Vietnamese Government and with the Vietnamese Media Corporation about extending that kind of work. It is all inward investment because we bring all that back. We bring back the expertise that we gain there to our new Creative Industry Centre in Wrexham, which we share now with the BBC. Of course, part of that was to link the BBC with the Vietnamese Television Corporation. Yes, that gives an example.
Karen Padmore: I would just add that we have had the Technium programme and obviously OpTIC, which came from that, and also CAST. Part of the work that we were doing there was actually about inward investment and using it as a catalyst to attract inward investment companies. We obviously have a natural link with anybody who is in the buildings and we currently have 20 tenants there.
Q378 Guto Bebb: A question to Bangor University. There is a question mark about whether there will be a second nuclear power station at Wylfa, but some of us are still hopeful. The question is what type of links would Bangor University try and develop in order to facilitate that development?
James Goodman: We are making extensive links with the Anglesey Energy Island project. In fact, in a previous role I was involved in looking at the different energy options for Anglesey, not just nuclear but, of course, wind, tidal, biomass and so on and so forth. There is quite a deep engagement. I think it is important also to state, in regard to engagement with the nuclear industry, that it is very easy to pigeonhole it and think that this is just about nuclear, but the opportunities around, for example, a company like Horizon coming into the area, which would bring something like 5,000 to 6,000 jobs over I believe a sixyear period and a project the size of around the Olympics but with a legacy of 60 to 100 years, are quite phenomenal. They include socioeconomic type studies, infrastructure studies, economics, grid type issues around distribution of energy and so on-there are many opportunities. Where we are looking at the moment is around the gap. As I am sure you know, there is decommissioning at the present Wylfa, and also staff are coming from Trawsfynydd. It was interesting that your previous correspondent mentioned the ageing workforce. One of the things that we are looking to do is provide an alternative means of delivery of accredited skills; for example, work-based learning type programmes that will actually help nuclearise people who are not in the industry so they can respond to the need and then we can keep some of the skills local.
Karen Padmore: There is a group that meets-it is a whole forum that is signed up to a constitution, which will meet tomorrow morning, and I sit on that forum as well as a couple of other members so that we are engaging with all the partners who have an interest in energy more generally than on Anglesey. I would just like to add that the other stuff about the work-based learning is that we are talking about skills that will be needed in 2020 or whenever and these kids are still in school, so there is a whole programme around STEM. Dudes, this idea of us promoting STEM to schoolchildren-those initiatives are under way.
Q379 Guto Bebb: Certainly the partnership approach, which has been played out in the Nantgarw project, was apparent when we went to Düsseldorf, where we saw all the names of the partners at the presentation. To what extent do you think that the fact that the catalyst for change might be the nuclear sector is creating problems for you in gaining support from various levels of Government?
Karen Padmore: I would say that there is an awful lot of local support for wind, so I see that in that sense it is not a problem. It is actually seen as an opportunity. Maybe I do not understand the question, but I do not see it as a political problem.
Q380 Guto Bebb: For example, my understanding is that the Energy Centre in Llangefni has been described as "energy" skills rather than "nuclear" skills because certain individuals in certain government agencies in this country have a problem with the word "nuclear".
Karen Padmore: I guess that there are elements of that, but if you look at Anglesey as an entity, you have tidal, wind and so on. It actually makes sense to look at it as a holistic issue, so I think that is very much the way of encompassing it. While it might actually have some political connotations, I think in practice it is probably a really good, sensible approach.
Chair: No doubt you will have been heartened by the Daily Mail this morning, which I am sure you have all read, and Chris Huhne telling us that we all need nuclear power stations, which I thought was a misprint, but I read it three times and it really was there.
Q381 Jonathan Edwards: I will move on to my questions. We are interested in how the universities work with companies on their research and development. Can you provide any examples of how your universities have transferred successfully knowledge to some companies in the surrounding area?
Tony Hawkins: Following on from the previous panel and the aerospace focus, it was interesting listening especially to Steve Thomas in the Airbus team, with whom we work closely. As you know, Deeside, ourselves and the Assembly have created a composite centre at Hawarden, which was a challenge, is now up and running and is great, with a mixture of skills training and research. Now, what we are bringing in addition to what we set up originally in that building is research from overseas. We have some very strong links in Russia with Bauman State Technical University. We had a conference recently on site that involved Airbus and some of the key supply chain. It was evident from that that there are a number of technologies that sit around the world and, if we pull together, they will make a big difference to the aerospace industry.
What we are doing at present is trying to move on from the first composite centre into a second generation centre, so that we work much closer-going back to what Steve was saying-with kids from a very, very early age. Engineering is seen as a career that is dirty, unpleasant and there are skill structures. What we want to do is create a pathway all the way from year seven right through to degree and masters, et cetera. At the moment we are working with the Assembly’s new Advanced Materials research team and with Flintshire County Council and with our Funding Council to create a new centre that will be innovation, knowledge transfer, skills, research, that will go all the way back through, from junior school, right through senior school through degrees.
Q382 Jonathan Edwards: Is there any evidence of companies locating now to be near to Glyndŵr?
Tony Hawkins: Not directly as a result of what we are doing, but I think Flintshire County Council-Steve was saying this-were trying to create a hub or a cluster of businesses around advanced manufacturing. Flintshire has 33% manufacturing. It is the highest density of manufacturing companies anywhere in the UK. Hawarden is the ideal venue for that around the Airbus site, so the more we do to help manufacturing in a broad sense, not just the Advanced Manufacturing Composites move, the better it is for the region and the economy and the skills.
Professor Michael Scott: There is evidence of spin-out, of course, with something like this building, so that two companies went out of this building just over the last month, actually on to this park here. So, there is that. We have not brought Toyota in but we are working with Toyota, obviously, and with Sharp, for example. You mentioned the TICs earlier. Sharp actually rang us up and asked whether we would be partners in a bid for a technology innovation centre because of the work that we are doing in this building on solar panels.
Q383 Geraint Davies: Innovation now in Airbus is around carbon wings and carbon planes and this sort of thing. The suggestion was made this morning that the power potential in Anglesey could be harnessed to have locally produced carbon material that would be lightweight both for aeroplanes and in the future for cars. How do you think we should take that forward?
Professor Michael Scott: I think there is an issue there in terms of us being behind in the game in the sense that, as far as Airbus is concerned, my understanding is that the majority of the research based on their carbon materials comes out of Germany. Airbus required us to give them solutions to the assembly of composite materials and also the repair of composite materials because you cannot repair a wing in the same way as in the past. If you got a wing in the past that was hit by a flock of birds, which takes a bite-sized chunk out of the wing, you just riveted another piece of metal on. But you cannot rivet with a composite material. Our concentration at the moment has been in the context of what is being asked by the industry-research into the repair of the composite. If there is a case that what is coming out of Anglesey is more revolutionary than their present supply chain, obviously then there has to be talk with the local universities, with the industry, and then pressure to try and ensure that Airbus changes its view as a global manufacturer about where the composite materials come from.
Susan Elan Jones: The development of Glyndŵr University over the last 10 or 15 years has been one of the massive successful stories of northeast Wales and I do not think you can ever say too much about that, to be honest.
Professor Michael Scott: Thank you very much.
Q384 Susan Elan Jones: If I could just ask a quick question of Glyndŵr and one of Bangor. Now, for Glyndŵr, your submission highlights the role of the universities in supporting high technology clusters such as OpTICs, advanced engineering and renewable. Could you expand on this a little bit?
Tony Hawkins: Well, the Vice-Chancellor took the decision to take on OpTIC a couple of years ago and it was obviously built around a successful OpTICs business around Pilkingtons originally. That has become a successful business now and we have developed a successful chain of companies coming through that are fledgling and then growing outside. We obviously have the huge research project here for the ESO telescope, which you may or may not have seen while you have been here. This is a very successful model that will continue to grow. I know there are aspirations to grow this centre to be more vibrant and to have a bigger role as a science park, if you like. I think this is very successful. I think the work we have done at Hawarden has been great so far, in the early stages. The composite centre is up and running. The next stage will be to continue to develop that, knowing how important manufacturing is in this part of the region.
Q385 Susan Elan Jones: A very, very quick question for Bangor. What special challenges does the university face in developing links with international firms by virtue of the location of Bangor, which clearly is not anyone’s fault?
James Goodman: Well, of course, it is pretty obvious that there are not that many largesized companies, and we mentioned earlier the engagement with the Energy Island. We have used pre-existing links to, if you like, strengthen links with, say, Horizon and open up those discussions. Our friends at Wylfa have been very helpful in helping us do that. Many of our engagements come through partnerships and we partner up with our Glyndŵr colleagues here in a number of initiatives-for example, the Low Carbon Research Institute, which gives us through some of our academics an input into companies like Tata on things like organic photovoltaics, which I guess you are familiar with. A lot of it comes through partnerships and some through overseas visits. Of course, we have just come back from a mission to China to increase our links there. Clearly, the Chinese market in terms of students is a key one for us, but we also use our alumni.
Karen Padmore: I think that a connection into London City Airport would be great. That sort of thing would actually help enormously if we can shorten the time on that international connection. I think that is one of the points we would make in terms of collaborating with overseas organisations; how they actually get to us and have that access. It is a challenge, but we have I think now nearly 2,000 overseas students so I guess that hopefully we are creating a market and a demand that will justify better transport links. Obviously, from Wales we all recognise that we want to be more successful in Framework 7 projects, so again if we can actually increase that activity, I think some of these transport links will perhaps become more economically viable.
Q386 Mr Williams: You have answered my question about the importance of renewed international activity. This is one for Glyndŵr. In your written submission, I was a bit concerned to read, in terms of the potential for more work for the national centre, it should be able to support such research activities, "It is concerned, therefore, at increased pressure applied on the university by the Funding Council to move away from research and concentrate solely on teaching". You have obviously identified a potential problem there and a potential role there for the Assembly in bridging this gap.
Professor Michael Scott: Well, it was not specifically the Assembly but it was just a disappointment with the Funding Council. For every pound that we receive from the Funding Council in terms of research, Glyndŵr University actually earns £11.50. The closest university to us in that, though it is in a different proportion, of course, is Cardiff. For every pound that Cardiff gained from the Funding Council, it actually made £3. We are making £11.50 and they are making £3. Perhaps that was seen to be to our disadvantage because they have now removed the pound.
To be fair to the Funding Council, it is saying that we really need not just to cluster our research together but focus it into one particular area. We believe that we have done that in advanced manufacturing. This advanced material manufacturing, this building, is all about materials, but so is the composite centre. Perhaps from our point of view, we should have said that it is the composite centre and this together in one research institute in order to get the money.
Having said that, I think that there is a problem related to applied research and pure research. All our research is applied research. All our research comes from the market. We go into companies and we do not say, "This is the research that we do. Here it is". We actually go into companies and say, "What do you want us to do or what is your problem? What is your difficulty?" If we cannot find an answer to it within our university, we will go to another university to do it. It is all applied. That is not to criticise our colleagues in any traditional university. Traditional universities do what they do and they do it very well. I think that we do something slightly different in the applied nature, although some of the traditionals are doing applied work, of course, as well, but we concentrate on that. I do not think that within the culture of the UK generally that has been recognised to the extent that it should be. The decisions about research funding are still on research assessment exercises, peer review in terms of research papers and all the rest of it. Very important, no doubt about it, but actually for the economy what is really important is that you actually get the research into the industry and get the solutions that get the product made, that get the product sold. That is what we are talking about.
Q387 Mr Williams: Presumably that is a debate you are still constantly having with the Funding Council?
Professor Michael Scott: Yes, they come in force to see us next Thursday and I look forward to it.
Mr Williams: Good luck.
Professor Michael Scott: Can I quote you on that, Mark?
Q388 Stuart Andrew: Do the Welsh Government and the local authorities actively make use of the location of universities in promoting the various potential places for inward investment?
Karen Padmore: I have an observation on that because I spoke to the Vice Chancellor, and he sadly cannot be here today in person, but he has just come from Ireland and he was saying that in his view Ireland tend to make more use of their universities and their research in the toolbox when they are promoting Ireland overseas. He thought that there may be the scope to do that better in the UK. He cites an example I think that he was personally involved in, which was with Intel. That was very much driven by the universities getting Intel into Ireland.
James Goodman: Can I add to that as well? Having come from a local authority background, of course, you probably should ask them the same question. But very often when we have had engagement it is quite a revelatory experience for the local authority to see what a university can do and has on its doorstep. For example, when CAST on Parc Menai opened up on the outskirts of Bangor and we had really the top level equipment for visualisation there, it was quite a revelation for the local authority to see that we had one of the top pieces of kit, certainly in the UK if not in the world, on the doorstep. I think perhaps more could be made of that. Saying that, we are regularly cited as an important element of the local economy; in fact, I would argue that we are a very, very important element of our local economy.
Q389 Chair: Is there any way of measuring the success of trade missions?
Karen Padmore: Industry presumably has a better answer to that just in terms of sales and the international-
Professor Michael Scott: I have to say that missions, not necessarily trade missions, but the fact that David Willetts went out to Russia and visited universities in Russia actually helped us when we followed on a bit later and started talking first to the British Ambassador, because the British Ambassador then knew that there was a-well, she would have known there was a policy, but was then enthusiastic for the policy to go forward and so helped us. Secondly, at the Bauman State Technical University in Moscow they knew that they had had the Minister there and that we were following on and that this was a policy that was being followed from Westminster. Therefore, we got a good reception. Actually, within three days of us getting back, talking particularly about OpTIC technologies out there, we had a phone call from them to say they had already been to the Russian Government and there was money available to enable some joint research. I think those kind of missions are good, but they cannot be in isolation. They have to be followed up.
Q390 Chair: The British Embassies abroad fulfil a different function from the Welsh Government, do they? Are they working well together, do you think?
Professor Michael Scott: I think the British Embassies, when we have been abroad, are actually representing the whole of the United Kingdom. Obviously, they are well aware of the Welsh Assembly Government, the Welsh Government’s agendas, as they are of the United Kingdom’s as a whole. We have not found any tensions there at all between the two. In fact, I cannot thank the British Embassy enough in Moscow for the work they have done for us.
Karen Padmore: If I could just add that Bangor has an internationalisation policy now and obviously, with this new Vice Chancellor, this is very much driven. They have just opened an office in Beijing to assist students and they are actually getting more and more presence in the international market. I think it is a real priority, and then we will be able to see where the trade benefits come on the back of that so there is more of a symbiotic relationship.
Q391 Geraint Davies: Following through on that, whose responsibility is it to, as it were, sell Welsh universities abroad and get inward investment and partnerships? Is it universities taking the initiative or the Welsh Government or the Wales Office in the UK Government? How do you think that should fit together?
Karen Padmore: I think that we have to bear in mind that the UK is more than Wales and that we are selling a UK product out there through the British Council and other things when it comes to education. We need to be selling at different levels, and I think that universities are not going to sit and wait to see if the Government can do something for them. I think that you actually all have to work at the different levels. I think the most important part is that there is some coherence to it and that there is some consistency so that we know what is going on in each of the different areas and that we are presenting a common face. I think that is the real challenge. I think that the Vice-Chancellor was invited recently to-was this the Vietnam one that David Cameron was heading up? I think that there is that level of engagement.
Q392 Geraint Davies: The Beijing visit, was that successful in promoting inward investment or students?
Karen Padmore: Over 50% of our overseas students are from China and we are looking to increase that, so I think that it has been very successful.
Professor Michael Scott: When the Vietnamese Government was over in North Wales, the First Minister met them. The very fact that he met them and talked about the university and the backing that the Welsh Government was giving to the projects that we had with them was very, very important. Consequently, when we went over there, we had Ministers and a message from the Prime Minister in Vietnam and so on and so forth. But also the equivalent to a Select Committee in the House of Commons was in touch with us to ask how they could support the work that we are doing in Vietnam. I believe that there is a mission that is going down from that Select Committee to Vietnam, and part of the evidence is to do with us, to do with the development of our projects out there. I think it is trying to line up the two Governments irrespective of their political-
Chair: We completely agree with that, Professor Scott. I am so sorry to cut this short, but I know that there is a train that all the other Members, or many of them, have to catch. I thank the university for having us here and all of you for coming along and giving us that evidence, which was most helpful. Thank you very much.
Professor Michael Scott: Thank you for asking us. Certainly, if anybody is not going straight away and wants to see the telescope-
Chair: I am not going straight away so I will volunteer.