Europe’s chemicals industry calls for cluster lifebuoy

 

Much of industrialized Europe owes its success to the dynamic growth of its chemicals companies, especially in the post-war period.

As Europe moves inexorably into a major recession, it is interesting to note that networks and clusters are being recommended by key EU agency.

The European chemicals industry employs 1.2 million people and is a world trade leader. In February 2009, the High Level Group on the Competitiveness of the European Chemicals Industry tabled its final report. It analyses the industry’s key challenges and makes 40 recommendations to this end.

 The key challenges for the industry are:

 The increasingly difficult energy and feedstock situation with a high impact on costs.

 Climate change, and global environmental challenges.

  Strong competition from emerging countries and barriers to market access in these countries.

The HLG highlighted three key factors for the continuing success of the chemical industry:

1. More innovation and research and strengthening networks and clusters to secure its competitiveness and sustainability. More innovation needs greater private commitment and a favourable policy framework.

2. Responsible use of natural resources and a level playing field for sourcing energy and feedstock. Constant efforts to improve efficiency and to provide innovative solutions to energy saving targets

3. Open world markets with fair competition to fully unlock its potential.

See: Pressemitteilung / Press release / Communiqué de presse

Infrastructure Australia’s audit – complex but timely

 

The announcement (3 February) of an extra $500 million to expand the Regional and Local Community Infrastructure Program was welcome. It was especially so for councils that had made submissions on 23 December for the $50 million then on offer, because they are first in the queue. The rest will miss out.

But the main game has been largely forgotten – Infrastructure Australia is to sign off next month on its final listings from the 94 initial priorities, although Rudd’s $42 billion expenditure package has complicated things.

Infrastructure Minister Albanese says it’s ‘an historic opportunity for the Australian Government to play a much more hands on role in infrastructure investment’. But the process is going to bumpy. First, some state governments have put forward some real try-ons. We estimate that one third of the projects would fail any financial viability test e.g. the Very Fast Train (Sydney-Canberra-Melbourne) has been dusted off, but wise heads in Canberra say it’s 30 years away.

Secondly, the recession means that most of the cost-benefit analyses supporting the 94 projects are out of date.

 

Thirdly, the projects involving big expenditure raise tricky policy issues. Where to start in evaluating the Pilbara Housing & Indigenous Infrastructure ($2.1 billion) and Broadband for Remote Communities ($200 million) projects? Similarly the Oakagee Port, WA ($3.5 billion) calls on the WA Government and the feds for $339m each at a time of plummeting iron ore sales and finances. And a Road Tunnel alternative to the West Gate Bridge ($3.5 billion) – whatever happened to rail transport?? And Canberra’s Light Rail ($2.95 billion) – a sheer waste unless the Stanhope Government agrees to some serious in-fill and urban consolidation.

 

Best approach – firstly run with those projects where there are demonstrable public benefits e.g. Pacific Highway upgrades and F3-M2 ring-road link in Sydney ($4.75 billion). And let’s not forget Greater Brisbane. Also needed is a better way of measuring public benefits, so that PPPs have a sounder future. The Eddington report gives a great overview.

 

Go to http://www.infrastructureaustralia.gov.au/publications.aspx

 

In support of regional cities

Geoff Kirton, a director of Agribusiness Gippsland Inc., has penned some thoughts for Cockatoo readers.

 

Brian Clancy (Weekly Times Dec. 31, 2008) has written about the size of cities/towns and decentralization.

 

He basically said that 64% of Australia’s population lives in the capital cities, and urbanization rates are double that of the US, with only nine cities with more than 1 million people. The largest city is New York with 8.4 million, second is LA with 3.8 million, compared to Sydney with 4.3 million, Melbourne close to 4 million.

 

Clancy says it’s too late to change this because the votes are now firmly entrenched in the capital cities and therefore the money will be spent there, even though the same amount of money would be better spent developing regional cities where the government and the people would get far greater “bang for their buck”.

 

I am a firm believer in decentralization and the lack of it is a major impediment for future development. The lack of a decentralization policy is draining regional areas of their youth. Where do they head? Capital cities! Do they return? Very few do. What we get is a movement of retirees to regional areas, as they sell off their homes in the capital cities for big money, and buy in at a much lower rate in regional areas.

 

Access Economics did a study about 7 years ago which showed the employment generator effect of age demographics. People under 35 create something like 3.9 jobs (school teachers, child care workers, orthodontists, specialist medical providers, hospitality industry etc, etc). By the time they reach 50 years of age it is down to about 0.9 jobs, by age 70 it is down to a net job loss in an area of about 1.4. Regional areas are dying at an accelerated rate and these figures help to show why.

 

Building regional cities spreads the population, services become more widely available, SMEs thrive servicing the population. There is not the drain of young people, families are not as dislocated and valuable agricultural land on the fringes of capital cities is not swallowed up by concrete.

 

Geoff can be contacted at geoffk@sannong.com.au

Creative Industries BOILOVER in Australia

 

A boilover has occurred. The successful tenderer for the $17 million Creative Industries Innovation Centre (funded by the federal government) is University of Technology, Sydney.

 

This hotly contested centre promises to provide a boost in view of the rising importance of the creative industries in the 21^st Century.

 

The absolute front—runners were the Queensland Univerdtiy of Technology(QUT)-Victoria University of Technology (VUT) joint bid, but they simply missed out to the UTS bid that included MacBank.

 

We understand that the success factors were a group of like-minded academics at UTS with very strong credentials and links to the UK scene. The fact that 60% of Australia’s creative industry is within 1 km of UTS was also a factor.

 

The launch of the Centre is on 17 February 2008 at UTS in the Sydney CBD. Ministers Carr and Garrett are featuring. UTS wants to collaborate with other agencies. We can make some enquiries if you wish.  

 

Barcelona Cultural Industries Cluster

 

The Interarts Foundation in Spain has engineered local policy support for creative industries as a viable alternative to traditional models of job creation and as a potential engine for growth.

 

The Foundation develops cluster projects based on the idea that the creative industries are a good source of jobs when the manufacturing base is being eroded.

 

It is also consistent with the policy trend towards creativity and innovation. This project has demonstrated the importance of creating spaces in which creative activities can develop in an indigenous way, and to nurture the networks by which the cluster can become sustainable.

 

The project has changed local stakeholder mentality i.e. to appreciate the potential of the creative industries.

 

Go to Developing clusters for the creative industries in Barcelona

Czechs move on clusters

 

The Czech Republic’s first biotech cluster, CzechBio, was formed in December 2008 - involves 20 private companies and research institutions, including the Czech Academy of Sciences.

A goal is to build a National Centre for Biotechnological Production.

‘In the whole of Europe there are only a handful of these centres and construction of one here would substantially accelerate research and sales,” says Marek Moša, chairman of CzechBio.

More details at First cluster of biotechnology firms established in the Czech Republic

W2W channels Kiwi tech innovation (BEST PRACTICE)

Paul Spence (Cockatoo member) is a Wellington based technology blogger (http://www.genius.net.nz), management consultant and CEO of ideegeo Group Limited a web software developer.

 

Unlimited Potential is a Wellington-based volunteer managed networking community for ICT professionals and entrepreneurs.

 

UP puts on monthly events supported by local sponsors and invites anyone interested in IT to turn up for after work beer and pizza plus a themed presentation. The group is co-sponsored by Grow Wellington, the regional economic development agency.

 

In November 2008 I managed an event called “Wellington to the World” (W2W) – a half day program of talks on emerging technology plus presentations from technology entrepreneurs with recently launched ventures.

 

In the evening we hosted a networking session for all attendees. Members of a local angel investors group participated and mingled with guests and presenters. The idea for the event sprung from a realisation that, despite a wealth of ideas and talent, New Zealand’s isolation from the major consumer and financial markets makes it difficult for small or start-up tech businesses to compete offshore. 

Smart companies from NZ (and Australia) need to find networks and bridge-builders to help pave the way for access overseas. Consequently W2W partnered with the KEA Global Mentors program to match the young tech firms with people offshore who could help. KEA is a global network of over 25,000 New Zealanders living abroad.

 

Presenters at W2W were selected through an intense interview process to ensure quality pitches and a variety of products. After the live event we deployed the entrepreneur presentations on Youtube.

 

NZ Trade and Enterprise then shared the video content around its global trade missions. It was a natural progression to use a video site given that many businesses are enthusiastically adopting social media to share their sales message. Because of time zone differences and local bandwidth constraints we decided on an asynchronous rebroadcast and avoided the cost of live video content streaming.

 

Around 80 guests attended the event and hundreds visited the video channel and viewed content.

 

We later heard that one tech entrepreneur received an approach from a U.S. venture capital firm within 24 hours of posting the video content online. Angel investors were excited by the emerging technologies and approached the local university for further talks.  Subject to securing sponsorship, the event will be repeated in 2009. We hope to extend the scope by inviting participation from across NZ.

 

Weblinks: http://up.org.nz – http://www.youtube.com/UPW2W – http://www.keanewzealand.com/

 

Lessons from past recessions…McKinsey

 

McKinsey & Co. have looked at the performance of US companies during the four recent recessions – they analyzed sector-level returns to shareholders (TRS), revenue growth and earnings before interest, taxes, and amortization (EBITA). Conclusion – the current recession seems to be following certain patterns.

 

§ The four most recent recessions began with a core underlying shock that then spread through the economy in a fairly predictable way. All began with falling sales and EBITA in the consumer discretionary sector – three began with similar declines in IT sector. Energy is usually the last to be hit. Consumer staples & healthcare are fairly resistant to recessions.

§  Sectors contracted much more quickly than they recovered. Typically, 6-8 quarters for a sector’s EBITA to bottom out. Recovery from early 80s recession took the better part of a decade.

§  Share prices tend to decline either before or just as a recession starts – rarely does a sector’s TRS begin to decline much later. Share prices also tend to rise in step near the end of a recession, in marked contrast to revenues and EBITA, which often lag behind significantly.

§  The impact of recessions on share prices has varied. During the 1973–75 downturn (and to a lesser extent, the 2001 one), share prices fell steeply, with many sectors suffering large losses. In 1973–75, all sectors but materials lost more than a third of their value. In the 2001 recession, seven out of ten sectors lost more than 20 percent of their value. Sectors affected by “shocks” can fare even worse: IT and telecommunications each lost more than 75% of their value in 2001.

§  The consumer discretionary sector has led in all of the past four recessions.

§  In 2008, TRS fell significantly in nearly every sector, with all but consumer staples losing t least 20%. Revenues and EBITA expected to fall in most other sectors as the recession continues.

§  History suggests the beginning of a recovery is led by higher consumer discretionary and IT spending.  TRS generally stops declining near the end of a recession.

 

Go to Mapping decline and recovery across sectors

UK universities take lead in recession retraining (BEST PRACTICE)

 The Higher Education Funding Council for England is set to approve a £50m rescue package to help businesses and the unemployed retrain at universities during the recession.

The HEFC proposal is for universities to bid for up to £500,000 to run training and skills programs for business and unemployed people – involves £25m from its strategic development fund, while universities would match it.

The projects would focus on short-term skills training. Practical skills training would not have to be accredited – thus cutting the time it would take universities to deliver programs.

Universities would have to propose ways of working either with employers, or with those who have been made redundant to give them the skills they will need to help them find other jobs.

For instance, redundant financial services workers with science degrees could be retrained to pursue careers in sciences instead.

Via Professor Roy Green (Cockatoo member) – Dean, Faculty of Business, UTS, Sydney