Tees Valley: The Live Debate

Tees Valley: The Live Debate

The issue: “What are the key issues and opportunities for businesses across the Tees Valley and what practical things can the Combined Authority do to support.”

Taking partTeesside was the engine of the industrial revolution 200 years ago and is now pushing to be at the heart of the fourth industrial revolution – with a high concentration of innovative digital companies already growing alongside world class firms in areas such as bio-science.

The wider Tees Valley has the opportunity to be at the forefront of global opportunities. One of the institutions at the heart of this ambition is Teesside University, which has launched a programme of investment for its campus to undergo a £300m transformation over the next 10 years. Building on its impressive recent growth. Phase 1 includes a new home for the Teesside University Business School, and a biomedical research facility.

The University has also received a quarter of a million pounds funding boost to help support a range of Degree Apprenticeships in science, technology, engineering and maths (STEM) subjects.

The formation of the Tees Valley Combined Authority as a result of the five local authorities coming together for the greater good, is another opportunity for the region to shape its own destiny.

A group of innovative and ambitious businesses gathered at the Crathorne Hotel to debate the key issues and opportunities for businesses across the Tees Valley and what practical things the newly-formed Combined Authority could do to support them.
The debate, attended by Tees Valley’s Conservative Elected Mayor Ben Houchen, was lively, with infrastructure, simplifying access to funding, skills, more effective communication, talking up the area and an even more joined up approach between the public and private sector all being raised.

Organised by BQ Live in association with the Endeavour Partnership, chair Caroline Theobald opened proceedings by inviting guests to introduce themselves, their company and to highlight the areas they felt were most important to debate.

The first participant was Ian Cornwell from Kraken IM, which builds data exchange platforms for engineering and construction projects, where the teams that design, build, and operate assets of all types can work together in one place to help to improve their information. Based in Middlesbrough, the business was launched last year. “We are trying to solve a trillion-dollar problem,” he said. “Teesside is one of the leading clusters in the world for engineering information. Within 20 miles of our office there are billion-pound companies who have chosen to be in Teesside because the skills are here, but unless you are from the industry no-one knows that.”

Dominic Lusardi from Animmersion, an interactive digital media company, based around animation including holograms, virtual reality – “we are about the visualisation of data,” focused on the industrial and commercial sector rather than entertainment” - explained the company had been going 11 years, starting as a graduate incubation unit at Teesside University and has grown the workforce from two to 20.

He said he sat on several boards so had a good insight into some of the issues faced by those in the sector. “I can see some great work going ahead but not in as coordinated a fashion as it should be,” he said. “The first issue is space – businesses don’t have a space to scale up into. We have poor transport links and it is particularly challenging to bring customers up here.

"As the business grows, we struggle to attract people into the sector. There are really some fantastic funding opportunities but there is so much noise around to access them that I feel a single point of contact for funding is one of the key points to support growth.”

Paul Bury, managing partner for business lawyers Endeavour Partnership, based in Thornaby, which employs 50 people, described how the company was trying to enhance its client offering through artificial intelligence, embracing technology and the effect it will have on their jobs.

“Two of our values are to look after our people and to achieve to seek excellence in all that we do by embracing technology,” he said. “We look to hold those potentially competing values in harmony which isn’t always easy.

“We don’t always recognise the quality of businesses based in Teesside and we are slow at blowing our own trumpet. We often expect to have to go out of the area to find a product or service which meets our needs without looking at the near horizon.”

Another issue Bury highlighted was skills, particularly around the education and training of young people. “We have quite a dilemma in Tees Valley, we have a high number of unemployed and some secondary schools failing to achieve in their Ofsted reports. There are 6.7% 18-24 year olds unemployed, compared to the national average of 2.9% so we are failing our young people. On the other hand, it is estimated by 2022 there will be 127,000 jobs in the region held by people due to retire and there aren’t the people to replace those jobs, many of which are highly skilled.”

Bury concluded his introduction by urging continued cross-party support for the Tees Valley Combined Authority (TVCA) so it did not become a political animal.

Simon Allen, manages service and investment solutions for businesses at BE Group, including the Tees Valley Business Compass programme. He said his role at the debate was to listen. “The TVCA is pretty new and therefore its schemes of support are also new. We deliver support and grants and I am keen to learn what is working and what could work better.”

Next up was Kevin Mireee, from Hobgoblin 3-D, which create 3-D modelling for the tabletop games market. Selling files in the US and abroad from Middlesbrough, he said the company was looking to expand having been set up a year ago. He agreed with all the issues raised so far and added: “There needs to be some connectivity between the support that is available and funding which simplifies it.”

He said there needed to be a innovative new ways to care for those whose jobs might be displaced by automation, with incentives to inspire those to progress.

imageBillingham-based Kate Baucherel of Galia Digital works with businesses using or developing emerging technologies and digital skills. “We must shout louder about what we do because there are some extraordinary businesses and skills in the Tees Valley that need to be broadcast,” she said.

Andrea Freeman, from the Beehive Brand in Darlington, which has created a range of vintage inspired knitwear, said threads, on which the fibre optics which carry telecommunications today are based, began life in the region through the brand she has resurrected and the Patons and Baldwin knitting factory. “The thread from Beehive was originally used in Edison’s lightbulb experiments,” she said.

“One of the things researching Beehive has taught me is that the sustainability and corporate social responsibility back then was immense. Everything was sourced within a 30-mile radius of Darlington – the coal from Newcastle, the sheep from Yorkshire and everything in terms of lean manufacturing was from the region. It would be really good to do a bit of that now rather than sourcing things from all over the world.”

She added one of her main issues is finding versatile premises which are not out of town– she has exported to Japan from her own house.

David Wrigley, from the Yorkshire Gelato Company, based in Redcar said he had been business for 16 years and over the past three years they had developed “the UK’s first complete nutritional ice cream”. The company is looking to get to market through sports clubs, care homes and schools, claiming the gelato is as healthy as a breast of chicken, low in fat and with as much sugar as an apple. He returned to the theme of funding, saying it had been a real problem.

“Getting people to part with their money and invest in smaller companies that have got huge potential – a lot of people don’t seem to want to understand the product or envisage selling it,” he said.

Funding was also a topic which troubled Joanna Wake, director of Raw Digital training, which is delivering digital skills training to businesses of all sizes and stages of development as well as to hundreds of young people, from its base in Stockton. They are also supporting non-digital businesses with digital skills to help them in export markets.

One of the issues facing the region, she said, is what will happen to European funding when the UK leaves the EU as Teesside has been heavily reliant on it. “Where we have devolution, and know that it is coming, what can we do to mobilise ourselves to replace European funding with our own small, innovative programmes which we could then scale up?” she said.  Any new arrangements should not just be focused on job creation within a particular firm. “Could we look in the future at things which are a positive economic gain, supporting sectors like ours, rather than just jobs.”

Peter Lillie of GRN Sportswear in Middlesbrough, explained how his firm makes sportswear from recycled material. They make sustainable skin suits for cyclists, the top from recycled bottles and the bottom from recycled fishing nets – the only company doing this in the world. He agreed with Wake saying “In Teesside we need to think more about people coming through as employers rather than employees. If we can get three or four businesses creating 10 jobs net, rather than a single firm creating a single job it will make a big difference – we need to provide a joint approach as the Tees Valley and not as a single entity.”

Vikki Jackson-Smith CEO of J&B Recycling, with two sites at Hartlepool and one at Middlesbrough, said the company was now the largest independent recycling and waste company in the North East, employing over 200 people.

She said the company was looking to grow by developing sites and acquisitions. It hopes to create 26 jobs at Middlesbrough. Identifying new sites, getting planning and permits, minimising delay is key to growth. “Sometimes there have been problems with external government agencies and local authorities so there is a need for better co-ordination,” she said. “The economic generation teams and planning in local authorities need to be aligned and understand what the businesses are trying to achieve.”

Responding to fellow participants, Mayor Ben Houchen outlined his role as head of TVCA saying it could be summed up in “where can I add value to achieve economic growth?” He said while there were distinctions between the conurbations it made sense as a strategic economic area to create one body.

He talked about the importance of the new Tees crossing and plans for the Darlington bypass to create opportunities for businesses to grow, with the power of coordinated funding. “When I walked into office (May 2017) I had £453m to spend – that has been increased by £200m because we have done a deal with Teesside Pension Fund for projects within Tees Valley,” he said. “We are speaking with other pension funds as well as local authorities sat on large surpluses that they are not using, asking them to release them and get a better return on strategic development.

“From my experience, the Tees Valley has advanced significantly since the time of regional development agency One North East because a lot of the funds and controls were based and sucked up to Newcastle and we missed out for a lot of years.”

He said TVCA was a young organisation and he encouraged people around the table to continue feeding in their ideas and suggestions both through the debate and afterwards.

The Mayor said they were looking at priority sectors to support, digitising all sectors, including bio-technics, chemicals, clean power, oil and gas, advanced manufacturing “all of these things are what we are going to support. We are trying to create 20,000 jobs over the next 10 years – the applications will not be a tick-box exercise but looking at how to support businesses to grow.”

Joanna Wake said she was leading a board looking at uniting the region in its approach to digital skills. “There are some fantastic primary schools changing the way they are teaching but there are others that are struggling,” she said. “There is a fund in one place where after school clubs can get free code clubs but none of the schools know about it. We are going to get all the education institutes around the table.”

Peter Lillie said everything discussed so far had been about a joined-approach. He told the story of how his company had been set to move to Sunderland because the person he dealt with made it easy – a single point of contact who explained what needed to happen, where he could locate and the support available.

He said it was only by default, after ranting to a business friend that he was pointed in the right direction and able to access Teesside Launchpad, which provides support, space and advice for Teesside University graduates, students and staff looking to start a new high impact venture. “There is an amazing amount of energy in that building but without understanding how to get to it I would never have found it.”

Another Launchpad client, Ian Cornwell said: “That energy is because there is a team there to make it all happen. We barely scraped the criteria to get into there and I don’t know what we would have done if we hadn’t got in.”

“The launchpad is great if you are associated with the university,” said Kate Baucherel, “but if you are in any other city in the North East there are multiple options. There is nothing else here.”

imageDominic Lusardi said there needed to be more launchpads as it created ongoing relationships to do business with fellow entrepreneurs from different sectors adding to the point Freeman made earlier about clusters – where businesses could “cross-pollinate”.

Responding, the Mayor outlined some of the support which would be available and said there had been agreement to replace the net £25m the region currently gets from Europe after Brexit. “We will be arguing to give us a fund with no strings but we won’t know how much until after our exit.”

Nicki Clark, chief executive of the BE Group, said there was a challenge to energise the private sector to co-fund alongside the public sector and commented Tees Valley had the foresight to join the business bank funds. She invited David Wrigley from Yorkshire Gelato to recall his experience.

“We have been established for 16 years and a limited company since 2011,” he said. “We were in retail, with a shop and in wholesale. When the lease came to an end we thought we would get out of the shop, take two industrial units to help get our new product to market but we got treated like a start-up.

“When we went to the big investors they wouldn’t deal with us – they did it over the phone or by email and wouldn’t even discuss plans or try to understand the business. We have had to split the company. Proteina Gelato is going to become a start-up so I can now access a start-up loan to grow the company. A private investor is coming on board because he could see the potential in the product. We need companies and individuals with a pot of money who understand small businesses and help them to grow. We can grow into retail again and create jobs.”

Dominic Lusardi said they had taken on private investment four years ago – approaching the usual funding sources such as the JEREMIE Funds. “What was really scary was that we were made an offer, for more than what we wanted and they wanted a mix of equity and loan which is not what we wanted,” he said. “It felt like they were saying ‘give it two years and if we are not happy with it we will shut you down’. How is that going to grow businesses in the North East?”

Ian Cornwell said they had to go out of the region to get private funding, as did Lusardi. “Our business angels are from the North West and London; our funds are national but has no Teesside presence – we had no interest from North East investors at all. My criticism of investors in the North East is that they say, ‘come back when you are a sure thing’ when you have got loads of staff we’ll be interested,” a point acknowledged around the table.

“We don’t need them then,” said Cornwell. “We have been successful but to get the angels we had to hit the road,” adding that he had been accused of being too ambitious when approaching an investor on Teesside.

Nicki Clark said the eco-system of finance was lacking and it was important to look at how energy in young companies and risk can be better backed in the region.

“What is required is a single point of contact that is not only cognisant of the government and European funding but also what private funding is available,” said Paul Bury.

The Mayor said the TVCA is the mechanism. He believes one of the barriers to funding has been the lack of positive promotion of the area. “People are starting to now but before some businesses, stakeholders and people in Teesside have been quite happy to talk the area down. We have to change our perception to get others to want to be part of it. We all need to be champions of the Tees Valley and shout about all the wonderful things that are happening.”

Joanne Wake said businesses were trying but didn’t always know how. She pointed to Digital Union in Newcastle which has a PR specialist to help get the stories out from all the businesses within it. “It takes all the hassle out of it for those businesses.”

Peter Lillie talked about the positive impact of being part of Venturefest which led to publicity – “it’s not the will it’s the way.” He said of his dealings with the press, the finance company they had worked with – everything had been very positive.

“I think start-ups, especially young start-ups, do not understand the ways they can market the business,” said Kevin Miree. “Many of those I know are from Teesside University who have only ever been in education and when they get out of the system they sometimes struggle to navigate that professional field. One of the positives of launchpad is the mentorship – that advice and guidance for a new start up is just as valuable as the capital itself. I have been working closely with the Department of International trade helping us to understand the markets we can approach and how to get in. That understanding could help others.”

Lusardi returned to the subject of how the region is perceived. “One of the things I don’t understand is why as an area we don’t have a presence in London. That’s where it is happening – companies could operate in a hotdesking space to spread the knowledge about Tees Valley.”

Caroline Theobald said Big Up Tees Valley had been a strong campaign and suggested it was something the TVCA could resurrect. The Mayor said work was going on to define how the Tees Valley should be portrayed – Wake said it was about time. “It is Teesside with Darlington and Hartlepool bolted on and people just moan about it so much. This is a bigger area which can gets us more money to create infrastructure for our future – so stop moaning about it.”

Theobald suggested there should be lobbying and collaboration to get companies based in the Tees Valley to understand what each other can do so they can work together. The Mayor said work was going on in this area and pointed to plans to give Tees Valley more of a part in international trade missions along with other areas covered by the Northern Powerhouse.

He talked about South Korea and Japan as being among the first for trade missions as they are the two biggest nations trading with Tees Valley companies where there is two-way trips and communication. They are looking for a third country, possibly an emerging nation, to strengthen ties – and he asked for suggestions outside of the debate.

image 04Simon Allen said there were some really good ideas from the debate which can be delivered and would help shape the Business Compass funding service. “A single point of contact for accessing finance is something we can do more of as well as being more visible, shouting about the success of businesses through their own merits and with support is another thing as are the idea of cluster champions and more launchpads.”

Ian Cornwell said what was great about Launchpad was mixing with people who didn’t do anything similar but it created a community of people who could help with social media and other skills.

“It is not the support or the space per se, it is how it all works together,” said Allen.

Nicki Clark talked about Rocket Space in London, which was born out of Silicon Valley in the United States, and the partnership with RBS and NatWest. “It is the only one in the UK and it is an absolutely awesome space. I have never seen one work so well. They create an atmosphere where they genuinely introduce businesses to other businesses, that trade with a huge network of global investors interacting with Rocket Space. Wouldn’t it be great if the next conversation was we will de-risk it for you, use some of that investment if you come and build a Rocket Space in Tees Valley.”

Andrea Freeman said somewhere like the old Northern Echo offices in Darlington would be amazing for it due to its size, heritage and location.

Theobald moved the debate on by asking what about people, with the figures quoted earlier suggesting there is both a challenge and opportunity around skills.

Paul Bury said there needed to be a much better link between education and business. He recalled how Teesside was once the “El Dorado” with some of the best paid jobs around ICI and steel followed by the collapse of those industries. “We have this legacy of second and third generation families who have not known work within the family,” he said. “So we have disengagement, lack of aspiration, lack of ambition. We have a real problem of filling the jobs of the people who will retire in the next 10 years. We just don’t have the skills.

“We have the raw materials in children and young people who we can educate and train, we’ve got the jobs but we are just not joining up the two.”

Peter Lillie said he had a positive experience of taking on three interns whose input had been fantastic but outside his company he said people were often more worried about what the job will take from them rather than they will get from it. “Things aren’t going to be the same as they were. Young people have to understand the workplace and be educated in the skills required and that will make the difference.”

The disconnect, said Paul Bury, was shown in the fact 88% of primary schools in the Tees Valley were rated as good or outstanding, but only 50% of secondary schools – Clark said it was a challenge not just for this region but across the country.

Kevin Miree said he had attended the festival of ingenuity at Darlington and had been struck by the passion and drive of young people for the creative industries. “As soon as they start thinking what they can do with the technology and can start a business quite easily without many overheads, the drive is there but schools are not getting the time to use these technologies,” he said. “There is not one school we spoke with which knows how to teach 3-D modelling, 3-D printing or has time to create projects - if it is not being taught early enough the skills gap will persist through generations. I know they are doing some work around STEM subjects, which is great, but they need to be more involved with the technologies because it is the creative industries where most of the jobs are.

“We also need to look at the service jobs and areas like that. Median incomes have come down as productivity has risen and yet there is no incentive for people to go off and do the jobs that are there when they feel like they are being downtrodden. We need to value the jobs they are doing as well.”

Vicki Jackson-Smith said her son has just got an apprenticeship but a lot of his friends didn’t know what they wanted to do when they left school so they went into sixth form. Being aware that Teesside is crying out for a future “skilled workforce” she could guide her son but said the school did not cover engineering as an option which put him at a disadvantage.

“He was fortunate we had a business using new technologies and I was able to bring him in to give him that experience so he knew what he was talking about at interview,” she said. “There was a gap with the careers advice.”

Andrea said it was almost as if some kids were being trained to move away because the perception is the jobs aren’t here – “we need to align some courses and sector specific education so that people like me can recruit from Tees Valley rather than London.”

Joanna Wake says the education system had been set for another era with terms and holidays still based around the requirements of the past. She said lecturers and teachers were often left to do their own personal development and there was an opportunity for Tees Valley to be bold and come up with funding to support those in education to keep up with new skills.
“I think in the last year of university, 50% of the course should be taught by industry, which should be paid for,” she said.

“Teesside University, as fantastic as they are, do encourage us to come in and teach skills for free. We have delivered a programme to young people as a specialist provider for one delivery partner.

“What we delivered in terms of 100% retention and transforming lives of people who had degrees and couldn’t get a job and to people who got addicted to gaming and became socially isolated, was humbling.”

She said there was one case where the job centre advised a graduate to remove their degree from their CV they had worked so hard for, because the rules were they had to apply for x number of jobs a day and not just their specialist area. When they did they were not getting anywhere because they were over qualified. “All these young people were desperate for a chance,” she said. “They came to us for two weeks of training. They were keen to do unpaid work experience – we had a Redcar lad who got three trains to Newcastle every single day for four weeks to get the work experience. The hunger is there.

“We could only touch a small number of people but I do believe we have an opportunity in the Tees Valley to do more sector related training.”

Paul Bury said education and training was important but is also about empowering young people “giving them a sense of worth.” He talked about the Princes Trust where his experience was all young people were after is a helping hand.

Peter Lillie said: “At the moment we are brilliant at knocking ourselves down but atrocious at talking ourselves up. We need to say what makes us special – there has to be a culture that we in business understand what it is so when we are promoting the area to other people they understand it as well.”

Kate Baucherel added “It is true our workplace is changing and there are still those basic jobs but there appears to be a national problem, highlighted by the Brexit debate, which is ‘why can’t we get the local people to do the jobs?’ Are the careers services in secondary school looking at these 127,000 potential vacancies and telling the young people they live near this place, go and work there? Why isn’t that happening?”

The Mayor said the skills challenge was the talking point for every business. The days when ICI threw money at the issue and bussed loads of youngsters on to their sites had long gone. “They had three full-time staff just developing future engineers,” he said. “We don’t have that to rely on any more so the challenge is to business – what are you doing about careers?”

He said again he wanted to pull all the organisations together to deliver work experience to every child in the Tees Valley on multi-year programmes – interacting through an app to give them the pathways to the jobs as well as practical hands-on experience and support. He said it was important for all businesses to come forward and offer work experience.

The group plan to meet again to discuss some of the issues such as skills, funding, communication, advice and space in more detail.

Closing the debate Paul Bury thanked everyone for giving up their time. “What we have lacked in recent years is an effective network. We didn’t need one with ICI or British Steel because they looked after us all. With the lack of a combined authority we became ever more disparate in our efforts to pull ourselves up. There is a huge energy and sense of goodwill and wanting to contribute. If we don’t engage with the authority who will and if we don’t we deserve to fail.”

Tees Valley Business Compass Growth Service

Tees Valley Business Compass Growth Service works with businesses to understand the barriers that are currently preventing growth and identify opportunities to improve performance.
Support is available to apply for:

  • Growth Fund: Grants to support business growth to create jobs;.
  • Energy Efficiency Fund: Grants towards external energy/low carbon audits & investments in a new product or process;
  • Innovation Vouchers: Grants towards R&D activity and to access innovation facilities, tech specialists, equipment, product, process or service design consultancy;.
  • Broadband Vouchers: Grants towards the upfront installation cost of increasing broadband speeds, supporting infrastructure and associated business support.

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