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Hethel Advanced Manufacturing Centre ECONOMIC STATEMENT HETHEL ENGINEERING CENTRE NEW ADVANCED ENGINEERING FACILITY CD10588 - P1 ECONOMIC ASSESSMENT OF NEED FOR HEC PHASE 3 DEVELOPMENT: HETHEL ADVANCED MANUFACTURING CENTRE Providing „BREEAM Excellent‟ low carbon manufacturing grow on space for the advanced engineering businesses currently incubated in Hethel Engineering Centre This development will build on the achievements of Hethel Engineering Centre Phases 1 and 2: Incubated 55 hi tech startups Created over 190 high skilled jobs Supported over 5700 businesses delivering over £3.5M in added value Engaged over 11,000 students Delivered over 9000 training man days Facilitated the further strengthening of the supply chain of engineering and manufacturing businesses Grown the advanced engineering and manufacturing cluster in Norfolk and the East of England HEC Phase 3 development will deliver: A Low Carbon Advanced Manufacturing Facility, adding much needed grow on space and building another key component of the Lotus Technology Park Creating 18 hi tech startups and 220 high skilled jobs Growing the clean tech clusters in Norfolk, building on the established advanced engineering and manufacturing sectors and supply chains Confidential (Jan 12) 1 of 111 Summary Justification for the growth of Hethel Engineering Centre 1 Introduction 1.1 This document is provided in support of the full Planning Application submitted to Norfolk County Council in October 2011 for the further extension of the existing Engineering Centre to provide eight new, larger units to provide move-on accommodation for several of the existing tenants as well as to provide space for 2-3 exciting investments that we are dealing with 1.2 Appendix 1 provides an overview of a selection criteria assessing the proposed development against other possible locations 1.3 Appendix 2 provides a detailed economic assessment of the potential benefits of the proposed development 2 Background 2.1 Hethel Engineering Centre (HEC) opened in 2006 and has been widely celebrated as a highly successful, exemplar enterprise hub supporting the engineering sector. HEC supports a substantial cluster of businesses across Norfolk, Suffolk and beyond, many of which are at the forefront of technology in their respective fields - particularly automotive, advanced engineering and manufacturing and the developing area of clean technology. 2.2 It has achieved the following in the past 5 years… Over 55 new hi tech business startups, of which only 2 have so far failed. An extraordinary achievement given the average survival rate in Norfolk is around 70% after 3 years – which in turn, is above the national average Those businesses incubated at HEC have created over 190 high skilled jobs – some that have moved on elsewhere have continued to grow further There are currently 20 businesses based at Hethel, so over 30 businesses have expanded and moved elsewhere. The vast majority of startups were local, indigenous entrepreneurs. In fact, only 1 business has so far been attracted to setup from outside the UK HEC has supported over 5700 businesses, resulting in businesses benefitting through measurable value of over £3.5m. HEC has delivered over 80 conferences, real advice workshops, exhibitions providing opportunities for sharing best practice, networking and showcasing the very best products and services In the past two years, more than 10 winners of the EDP‘s Future 50 programme were incubated at HEC. These are entrepreneurs across a wide range of sectors, adjudged by an independent panel to have the most growth potential. HEC has delivered over 9000 training man days Engaged with over 11,000 students 2.3 It is widely acknowledged as making a significant impact on the engineering and advanced manufacturing sectors of Norfolk and the East of England, but probably the best accolade was the recent award of Best Economic Development project at the 2011 Local Government Chronicle Awards. Confidential (Jan 12) 2 of 111 3 History Why is there a Hethel Engineering Centre? 3.1 Approximately 10 years ago, the Local Economic Partnership, Shaping Norfolk‘s Future was concerned at the state of the engineering and manufacturing sector in Norfolk. There had been a number of high profile closures at the time and there was concern that more would follow unless action was taken. There was a lack of new businesses starting up, and most notably those that were, were tending not to exploit innovation and intellectual property There was a lack of high quality training facilities, particularly those needed to support the dissemination of advanced techniques. That which was available locally was perceived to be of poor quality, or not available at all. There was a lack of access to the latest technology There was minimal collaboration and networking within and outside of the sector The local university, U.E.A., was withdrawing support for electrical, electronics and mechanical engineering courses and their support for postgraduate research. This coincided with a progressive reduction in the emphasis placed on apprenticeships and part-time training on offer from local colleges of Further Education as a result of greatly reduced funding streams. Finally, there was no local focus for the sector 3.2 The response was to conceive the Hethel Engineering Centre – and the concept was supported by a substantial business plan which looked at need, demand, feasibility, operating models etc. This led to the project being led by the County Council and supported with grant funding from EEDA, Business Link (Norfolk), South Norfolk Council, LSC and the land was provided by Lotus at nominal cost. Cabinet agreed to support the project directly with a capital grant of £250,000, and a further contribution of £3.25m through Prudential Borrowing. The Council took the decision to own and run the centre, employing all staff and undertaking all activity within it. Why Hethel? 3.3 The project was also supported by a careful appraisal of options for the location of the centre. Ideally, it would have been in the centre of Norwich, but the project also needed to satisfy EEDA‘s definition of an Enterprise Hub in order to access funding. In the event, locations considered in and around the city had few attributes on which to build an iconic project, with all the right linkages. Other locations considered were Snetterton (because of the Motorsports link), Attleborough and Thetford. All 3 sites would have qualified for EU funding support and they were/are on the A11 Corridor, which was heavily promoted as an ―arm‖ of Motorsport Valley at the time. However, they were discounted because of a combination of landowner issues and lack of positive attributes. 3.4 The 52-acre site owned by Group Lotus between the Lotus factory, Potash Lane and the B1135 road to Wymondham in Hethel was selected as the best location and with support from both Lotus and South Norfolk Council partners set out to justify the location in business and planning terms. Appendix 1 shows a table, produced at the time that assesses the relative merits of each site, and clearly places the Lotus site at the top of the list. 3.5 Although not allocated formally in the local plan, planning permission pre-existed for the development of buildings and other facilities for occupation by Lotus on the whole site. The permission had been implemented thanks to the construction of the access road. Since the change of ownership in the 1990s, the proposals were not being pursued and subsequently, Lotus was prepared to provide the Confidential (Jan 12) 3 of 111 Council with 3 acres of land to accommodate the Centre. At the time Lotus stated: ―demand from suppliers wishing to be located close to Lotus is so strong that they could fill all the units (with suppliers)‖; this lent confidence to the successful commercial outcome of the project. 3.6 Other advantages for choosing this location included: Lotus is an advanced engineering company renowned for innovation and very high engineering standards Lotus parent Proton wished to become involved in the East Anglian business community Lotus engineering contracts extend world-wide; 10% of all vehicles have Lotus designs incorporated in engine, power train, suspension or body parts Lotus has many small high-tech suppliers and understands the needs and rationale of the project Lotus were committed to use the training and advanced machining capacity that the Centre will provide Lotus will add credibility to the aims of the Centre and its ability to provide benchmarks and networking with a world class organisation. (Subsequently, many people and businesses still assume the Centre belongs to Lotus) Access to Hethel is excellent with fast roads to other parts of the County and East Anglia Lotus has a motor test track, engine test and design resources that it was prepared to allow to be used by tenants, subject to negotiation Hethel is in the Norwich travel to work area and not far from the University of East Anglia Hethel and the Centre will be at the eastern end of what had then been conceived as the ―Motor Sport Valley‖ – a somewhat contrived marketing initiative that was successful in demonstrating the highly successful motorsports industry in the UK. Norfolk, particularly the A11 corridor was acknowledged as contributing significantly to this. The centre‘s presence would help anchor the concept. Lotus is committed to having follow-on units on the site and wishes to see a ―Lotus Technology Park‖ evolve on the site; this had, and still has the encouragement and support of South Norfolk Council and more latterly the Greater Norwich Development Partnership which has incorporated the concept into the Joint Core Strategy. 3.7 Finally, as the primary focus for engineering in Norfolk, Lotus support, endorsement and active involvement in this project was extremely important. In the past there were a number of occasions when the long term future of Lotus in Norfolk has appeared less than secure.
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