PRESS RELEASE
1st April 2008
Worcester's biggest brand may be its famous sauce but, as Andy Coyne discovers, the town is also becoming an unexpected hub for the power supply industry.
One of the big debates among economic development types is whether a regional economy should be allowed to grow naturally.
All regional development authorities - including Advantage West Midlands (AWM) - follow the 'cluster' theory which states that the sectors that are prioritised, invested in, incubated and linked together by a local self-sustaining support network thrive.
However, many regional development agencies (RDAs) are trying to develop the same clusters, notably high-tech and bio-tech. This is a major concern for Worcester because AWM's Central Technology Belt runs right through it.
This corridor runs from central Birmingham to north Worcestershire and follows the A38 to the former Defence Evaluation and Research Agency, now the privatised Qinetiq, in Malvern.
Identified areas of expertise being focused on include medical sciences, materials engineering and environmental technologies.
AWM is also backing the £120m development of the University of Worcestershire's proposed new campus on the former Worcester Royal Infirmary site, which would include business incubator facilities.
But in the meantime there are signs that a Worcester cluster may be growing up, without any government agency backing, in the power sector, Energy giant Npower is already well established in Worcester, while one of the fastest growing local businesses is BizzEnergy.
Based in the Whittington Hall development (more of which later), BizzEnergy was co-founded in 2000 by former Eastern Electrcity chairman John Devaney.
Some eight years later it employs 160 people, had a turnover of £175m in 2007 and is considering the possibility of floating the business on the AIM market.
The energy retailer has a very interesting story to tell. It sells to small businesses via the internet and buys much of its power wholesale through a deal with mining giant BHP Billiton.
James Constant, BizzEnergy's chief operating officer, confirms that one of the attractions of Worcester as a base is the fact there is a "real rich seam of talent in the Midlands around the power industry".
As well as Npower, he mentions other locally-based suppliers such as Eon and the National Grid.
"It's a strong power base in the Midlands," he says.
BizzEnergy services the SME - small and medium-sized enterprises - sector and Constant suggests it wins business through offering a hassle free, competitively-priced service with aspects of it being online.
"Back in 2000 one of our founders saw a different way of thinking in the energy services market. He saw a different way of serving the small business market," he says.
"The way of leveraging this best is an e-commerce platform." Constant admits, though, that - unlike in the consumer market - SMEs are sometimes hesitant to switch energy providers.
"One of the barriers to switching in the SME market is uncertainty surrounding cash flow. We want to create a step by step calendar that takes them through the whole process," he says.
"From us people get bespoke service based on prices that day, not a generic tariff. There are perhaps a lack of trust out there at the moment about whether the prices are justified. We are focused on fixed term, fixed price contracts. Customers are not subject to fluctuations. This is a very different style of doing things."
"There are six big players in the market. The general perception among customers is that they are all much of a muchness. We want to show them there is another way."
BizzEnergy is likely to become a more widely recognisable brand over the next year or so. It has until now focused on using third party 'brokers' or specialist call centres to help it win business, but a new marketing initiative will see it target customers directly.
BizzEnergy's base - Whittington Hall - has been one of the commercial property success stories in Worcester. Developer Pemberstone has let 21,000 sq ft of space to the likes of the Royal Bank of Scotland and the Learning and Skills Council at the site formerly owned, ironically enough, by the Midlands Electricity Board.
Some 21,000 sq ft is available in the Teme House part of the development, which is off the A4440 dual carriageway, half a mile from junction 7 of the M5.
David Clark, senior estate surveyor at Pemberstone, told Insider: "The USP here is that it is quality, grade A office accommodation in an out-of-town location. There's also a very generous car parking ratio. That's become an increasingly important factor and city centre locations in Worcester can't offer that."
However, despite the success of filling the first building on the scheme - Brook Court - Teme House is proving trickier to shift.
"It would be an ideal headquarters building," says Clark. "We are advertising locally, but I wouldn't rule out a larger company moving into the area."
The local commercial property market is likely to become even more competitive now that developer A&J Mucklow is redeveloping the former Cosworth Technology factory site off junction 6 of the M5.
The site, comprising 116,000 sq ft of manufacturing space on 5.5 acres of land, is likely to become a mixed-use warehouse and office facility.
And the former home of Kays, the catalogue giant, in St John's is also under discussion nearly a year after the factory closed. The local council is keen to keep the land for employment use - with offices and light industrial units being the favoured choice for the ten acre site.
Any larger scale office moves could well involve financial and professional service sector firms which appear to be thriving in Worcester, the aforementioned Royal Bank of Scotland being one of them.
RBS partly puts its Worcester growth down to the vibrancy of the local mixed economy.
Phil Dutton, RBS' director of commercial banking in Herefordshire & Worcestershire, says: "Worcester is vibrant community which has benefited from the influx of a number of corporate professionals over the last few years."
Nor are locally born professional services firms pessimistic about market conditions, although they have seen their market become more competitive.
Christopher Brickell, a director at Worcester accountancy firm Kendall Wadley, says: "We have seen more and more accountancy firms from Birmingham coming into this area looking for business."
"Some people want the imprimatur of the Big Four to make the banks happy. The consequence is we have to struggle harder to get our fees. But that's ok."
Robert Capper, director and head of the commercial department at Worcester legal firm Harrison Clark is also relatively optimistic about the local economic outlook.
He says: "I deal with clients day in and day out and I think as a rule Worcester doesn't experience the great peaks and troughs. The strength of the Worcestershire economy is its diversity. It's a fairly rough spread."
