David Rooke, Location Services Director at INVEST Essex in the UK, describes to Julia Lemagnen how his region is the proud lynchpin that connects London and Cambridge and links the South East of England to Europe and beyond.
If you’re considering investing in London or Cambridge, pause for a thought for Essex, the English county that links these two centres of commerce and excellence. With a population of nearly 1.8 million people, Essex is immediately north east of London, bordering the counties of Suffolk and Cambridgeshire to the north, Hertfordshire to the west, Kent and the River Thames to the south and London to the south west. The principal populations are the City of Chelmsford, (the main administrative centre), Harlow, Basildon, Southend and Colchester, and two London airports are also located in the county and its business activity is growing.
Essex: gateway to London and South East England consumers
Essex’s geographical location is one of its greatest assets, and the engine of the development of the London-Stansted-Cambridge corridor. It borders both London and Cambridge, houses two international airports (London Stansted and London Southend) and four ports, the Port of Tilbury, Port of Purfleet and the deep-sea container port DP World London Gateway all along the River Thames and less than 25 miles from the centre of London, with International Port of Harwich further east on the North Sea coast. There are already over 200 US companies located in Essex, and it’s no surprise that its unique position on the map has enabled it to develop as a major logistics and distribution sector for the UK.
Mr Rooke says: “Essex now has a significant offer to the logistics sector on a global scale. DP World has invested £1.5 billion in its London Gateway port and logistics centre, providing a key new part of the infrastructure needed to grow the market. The Port of Tilbury has also opened new facilities with plans to expand the port further still and there is a new one million square foot business park under construction immediately adjacent to London Southend Airport. International investors see the opportunity to access consumers and the retail supply chain for the lucrative London/South East of England marketplace. For example, Amazon has just invested in a 2.2 million square feet of multi-level fulfilment and office premises in the London Distribution Park at the Port of Tilbury. It will be the company’s biggest logistics facility in the UK, creating over 1,500 jobs1. UPS is currently completing a $US120 million project for a new fulfilment centre at London Gateway – its largest ever investment outside the US2.”
Essex has a strong US investment base. For example, leading US companies Raytheon and Arrow3 have both just opened new facilities in Harlow’s Enterprise Zone for their main UK operations, including R&D, technology design activities. Essex’s appeal to large and online businesses will increase with the construction of the London’s largest data centre facility, KAO Data, and the new half a million square feet of bespoke development at Harlow Science Park only a short distance from Public Health England’s new £350 million national science hub.
Developing the London-Stansted-Cambridge corridor
Essex’s position in the UK has allowed it to develop business in other sectors besides logistics. “Financial services and life sciences are very important to the region as we are adjacent to the centres of global excellence of London and Cambridge, and, on top of that, we have a strong technology base around manufacturing, from our long history in aerospace, automotive and defence. There is huge growth in Cambridge and we have a major motorway linking London with Cambridge along which there are key site development opportunities including those around London Stansted airport and Harlow Science Park,” Mr Rooke says.
Historically, Essex has not always capitalized on its many advantages, and the growth around the perimeter of London has pushed west along the M4 corridor, driven by the position of Heathrow Airport. “As that market starts to overheat, there is a natural view being taken on other opportunities, and Essex can provide this. In the past, Essex perhaps hasn’t had a wide recognition as a business location as it should have, however companies are now waking up to this high quality, high value opportunity. There are a lot of big companies here: Ford’s research centre is one of the biggest in the country, Konica Minolta and Olympus KeyMed are here along with numerous financial service and insurance companies including QBE, International Financial Data Services and Aegon.” In fact, Essex has been hiding its light under a bushel somewhat. It has a long history of developing sophisticated technology – for instance Marconi opened the world’s first radio factory in Chelmsford in 18984 and fibre optic communication was invented in at a research centre in Harlow5. The University of Essex was the birthplace of the ‘virtual world’, with the invention of the first text-based adventure game allowing the user to travel through a fantasy world and igniting the video game industry6.
Financial services sector is growing in Essex
There is increasing interest from financial services and insurance companies in moving their business operations from the City of London to Essex. They are attracted by the lower cost office accommodation on the periphery of London and are employing a hub and spoke model.
International insurance broker AON Risk Solutions operated from the City but they have gradually invested more and more in Chelmsford. They decreased their office costs from £80-100 per square foot to £20-25 per square foot, and benefitted from the direct rail connection from the City of London to Chelmsford. AON started with a small office with 8 staff, and over the last four to five years they have transferred their staff over to the Essex office, which is now home to 500 people. Mr Rooke points out that “The vast majority of their staff were already commuting from Essex anyway, so now the staff are getting a better quality of life, and AON are still expanding their operations here.”
Life science sector attractiveness
Harlow is a growth centre for another key sector specialism for Essex. Developers Wrenbridge in partnership with Harlow Enterprise Zone are building a science park in Harlow which will boost the county’s attractiveness to life science and medical technology companies, building upon the strong sector presence already in the area. This will provide a link for the Astra Zeneca supply chain to their new Cambridge facility. There are several specialist air cargo handlers servicing the life science and pharma sectors at London Stansted Airport as well.
“We work with many smaller companies in the life sciences sector as they tend to start small with their first presence in the UK market and grow,” Mr Rooke says. “We have companies such as Japanese medical device company Enplas at Chesterford Research Park, a science park on the edge of Cambridge. It is their first R&D facility outside Japan, currently fairly small with five or six people, but with the potential to grow significantly.”
The blurring of sector-specific definitions is increasing
But can we or should we continue to define businesses by their industry sector in the same way as in the past? “We have a substantial R&D base and many businesses are looking at transferable technologies into other industries. This is blurring the division between sectors and there is a lot of crossover, for example, from traditional engineering to advanced precision instrumentation.” Mr Rooke has seen a similar merging of the usual divisions between sectors, for instance there are companies in Essex whose descriptions can straddle three or four different definitions.
“Operationally we have sector champions who are from industry backgrounds. Our project manager for financial services has long history in insurance and professional services, our life sciences lead has worked for a number of major life science companies, similarly the logistics champion is a former shipping professional and we can utilise that first-hand private sector knowledge, experience and transferrable business skills for the benefit of our clients and business community. You can’t always pigeon hole businesses or projects – sometimes it is very difficult to do that. Deliveroo is another good example of this. Are they a home delivery company or a technology company? Either way, many of these types of companies are now occupying significant areas of office accommodation and workspace typically previously occupied by more traditional companies, the market and opportunity is changing and changing rapidly.”
Political and economic change is part of the wallpaper
Does INVEST Essex fear any impact on their pace of growth from the current changeable and unpredictable political and economic environment in the UK? Mr Rooke sees this as the inevitable wallpaper that is the backdrop to business life: “Brexit is an interesting one to see how it pans out. Talking to the business community, it’s business as usual and they will continue regardless. There may be bumps and ripples on the way but the businesses I have spoken to are dealing with it in the same ways as the other issues they are facing.”
“It will make some companies look more closely before investing, but we have had a number of overseas FDI projects that have been completed since the Brexit vote, and we have asked them the question and none of them see it as an issue. They just see it as something that is in their business environment that they have to deal with. They believe that all the other benefits of the UK far outweigh any negativity that may evolve from Brexit and that seems to be the consensus across the board.” Similarly, Mr Rooke says that he is not hearing concerns raised by US companies over the likely impact of the Trump Administration’s business policies: “They are obviously aware of it but the UK market and opportunity is the major attraction in the longer term.”
Sector expertise, infrastructure and proximity to customers
It seems clear that Essex will become a force to be reckoned with over the coming years. It offers lower operating costs than London, proximity to the R&D centre of Cambridge, an impressive array of sector skills, an expanding infrastructure and a unique position close to the most densely populated and highest spending sector of the UK consumer market. Certainly, Essex should give investors pause for thought.
David Rooke: Location Services Director, INVEST Essex
Julia Lemagnen, Co-Founder & Director, MCJ Lemagnen Associates Ltd
Julia Lemagnen has worked in international business for 25 years in both business-to-business and business-to-consumer market research. She is experienced in a wide range of industries and research methods and has been working in the field of economic development and foreign direct investment since 2002. Julia co-founded MCJ Lemagnen Associates in 2010. MCJ provides business development and research services for companies, government agencies and charities.
6 viii https://www.essex.ac.uk/about/university/facts_and_figures/