Scottish Enterprise: Working for Scotland

If you want to punch above your weight, play to your strengths. In the past, Scotland’s ability to dominate sectors like ship-building, engineering, locomotive construction and shipping were based on its advantages – easy access to raw materials like coal and iron ore, a long tradition of heavy industry, a skilled and educated workforce and a strong vein of entrepreneurial flair.

“It’s about playing to our strengths, seeking out sectors where Scotland already has a competitive advantage – then finding ways of helping that sector grow to world-class standards,” says Stephen Gallagher, Scottish Enterprise’s senior director for business infrastructure.

Until relatively recently, providing an ‘infrastructure’ for Scottish businesses tended to mean the creation of industrial estates, the purchase and servicing of strategic sites that might attract massive manufacturers from the USA, Japan or Germany. Special incentives and a more relaxed planning regime were another part of the mix.

In their day, these things worked – Scotland successfully competed against the rest of Europe and the Far East to win inward investment in manufacturing sectors such as electronics, television tubes and computer assembly. During the second half of the 20th century, many world-famous companies were attracted by Scotland’s competitive advantage – among them Chunghwa, IBM, NCR, OKI, Motorola, NEC, Sun Microsystems, National Semiconductor and Cadence.

But when the plug was pulled on Silicon Glen, it was time for a re-think. Scottish Enterprise took a long, hard look at itself and changed its structure and priorities to ensure that its support for economic growth was focussed on Scotland’s new high-growth sectors. The agency’s infrastructure role has become much more sophisticated, focussed on creating a clutch of world-class business clusters in sectors where Scotland already has a competitive advantage.

Stephen Gallagher says: “There are around 60 of us working on infrastructure projects, with a small team looking after the agency’s portfolio of property and landholdings, while the rest of us focus on developing and managing policy on areas such as transport, life sciences, digital media etc and with a definite focus on implementation. We have some legacy space which we have sold and continue to sell to companies who are growing. Recent examples include a property sale to global life sciences firm Invitrogen, allowing the company to expand its European headquarters in Scotland, and a proposed sale of our former office in Queens Road Aberdeen. These sales allow us to refresh our land portfolio.”
 
With a budget of £60-70m per year, the infrastructure team oversees a series of projects across five regions – Tayside, Grampian and East, West and South. These projects cover a wide range of potentially high value sectors and activities, including: life sciences, digital media, offshore renewables, delivery of development solutions for decommissioning of North Sea oil and gas structures, specialist tourism, transport, hi-tech manufacturing, waterfront development opportunities, and marketing Scotland’s offshore energy expertise around the globe.

Some of these projects will breathe new life into existing infrastructure, such as Energetica at Aberdeen and Peterhead, or the Fife Energy Park at the former Kvaerner oilrig yard in Methil. In other cases, specialist commercial property developments will be required to attract high calibre players in high-growth sectors – such as the Digital Media Quarter at Glasgow’s Pacific Quay.

Sometimes international business knowledge and the ability to ‘sell’ Scotland to potential inward investors is the key to new projects, for example Scottish Enterprise helped to persuade Norfolkline to take on the Rosyth-Zeebrugge ferry route when SuperFast ferries pulled out.

“A judicious investment in infrastructure can make all the difference in getting high value projects off the ground,” says Stephen Gallagher. “In deciding where to assist with infrastructure improvements we will focus only on those sectors where there are real growth prospects – the strategy is totally industry-driven.”

As an example he cites the £4.9m which Scottish Enterprise contributed (in addition to a substantial capital contribution) to help commercialise the work being done at Edinburgh University’s £42m School of Informatics, recognised as being one of the world’s top five centres for computing science and R&D into information processing.

“They do tremendous work there and we wanted to ensure that, wherever possible, the results of their research could be commercialised. So we invested heavily in developing ‘incubation’ facilities where research results can be turned into products and services via companies spun out from University departments, or by existing commercial companies in the field.”

That campaign is being led by Dr. Colin Adams, who has been appointed director of commercialisation at the School of Informatics. Previously, he was vice president and general manager of Cadence Design Systems in Scotland.
Since Scotland’s GDP lags the rest of the UK, Scottish Enterprise’s aim is to focus its infrastructure provision on projects that will boost the growth of sectors where Scotland is already punching above its weight.

“Our first move is to check whether an infrastructure investment fits with our industry strategy and we determine how much value the project will deliver to the Scottish economy,” says Stephen Gallagher. “We also make it our business to add leverage to our investment by finding private sector partners who will co-invest with us. There’s not much leverage on investment if all of the funding comes from the public sector.”

He cites Glasgow’s International Financial Services district as a good example of leverage, where a relatively modest investment in place development coupled with branding the city centre and waterfront as good locations for the financial sector led to more than £1bn of private sector investment. “The Edinburgh BioQuarter also has great potential to maximise leverage on our investment. The idea is to create one of the world’s top ten centres for biomedical research and development, on a greenfield site beside the new Royal Infirmary of Edinburgh.”

Unique to the UK, Edinburgh BioQuarter is the only location to offer a large state-of-the-art teaching hospital, the University of Edinburgh’s world-renowned medical school and bespoke biomedical research and development facilities – all on one site. Already, the BioQuarter site is home to a community of over 1,200 dedicated researchers.

“When complete, the 100-acre site will provide more than 500,000 sq ft of further academic research space and an additional 900,000 sq ft of accommodation for commercial research-based companies. We have no doubt that the BioQuarter is a world-class project on a world-class site. Our key objective is to commercialise the research being carried out by life scientists in Scotland. It’s about encouraging entrepreneurship in the academic and medical sectors.”

When considering an infrastructure project that could create a step-change in one of Scotland’s business sectors, Scottish Enterprise’s first consideration is the practicalities of the proposal.

Stephen Gallagher asks himself and his team a range of questions: “Are the planning consents in place? What is it about the location that will attract specialist companies to locate there? Is the transport system adequate? Are all of the necessary utilities and services in place – and if not, what will it take to install them? These are all vital questions, some of which may not have been fully considered in the past.

“We also challenge any esoteric predictions as to ‘value add’ on proposed projects; we need to be certain that every project will make a real economic difference to Scotland. One of the most successful of our infrastructure projects is at Fife Energy Park in Methil, where a relatively small investment in improving site infrastructure is paving the way for a major engineering facility for handling offshore renewables and the decommissioning of North Sea oil and gas structures.”

Once a priority project has been agreed, such as the Edinburgh BioQuarter or Energetica in the North East, Stephen Gallagher’s team works closely with Scottish Development International (SDI) in finding potential inward investors who may be interested in getting involved.

Further information can be found at www.scottish-enterprise.com.

Scottish Development International (SDI), part of Scotland’s economic development agency Scottish Enterprise, it the country’s inward investment and international trade organisation. For more information, please visit: www.sdi.co.uk

‘Originally published in Scottish Business Insider, February 2009’.