Examination of Witnesses (Questions 720
- 739)
MONDAY 10 MAY 2004
PROFESSOR MOHAMMED
WAHAB
Q720 Dr Francis: How does that compare
with other divisions of DELTA like the microelectronics division?
Professor Wahab: DELTA Microelectronics
is the UK company, and it is also a division of the whole organisation.
In Denmark they have much stronger links with universities. There
is a great deal of funding to establish these things and support
them from the Danish Government. Companies like this are viewed
to have an additional mission, to bring technologies to support
the needs of society. Sometimes they can be funding, to establish
these links, just to explore new technologies and for no other
end, because in 10-20 years Denmark may need this technology.
There is a great deal of interaction in Denmark, much more than
here.
Q721 Dr Francis: Can you describe
your relationship with Glamorgan? Would you say this would be
a model other universities could adopt in addition to business?
Professor Wahab: Glamorgan, in
my area, the centre that I run for about 10 years, was unusual
in the sense that if you look at the history of Glamorgan, its
origin was the Polytechnic of Wales. It is not a research university.
We looked at the market and at the needs of the market and discovered
that there is a huge gap in helping industry realise and develop
new products and processes, and in helping them innovate. There
is a great deal of research work going on in excellent universities
in and outside Wales, but there is a deficiency in bringing knowledge
and the results of research into the level that industry can benefit
from and create new products. We pitched our centre at that level.
That helped us move forward, and we became quite unique in the
UK, to the extent that we were recognised in our technology transfer
links by the European Commission, and I was appointed personally
to run their biggest microelectronic electronics transfer technology
programme for six years. I had 30 European centres to look after,
some 550 companies which are funded in the programme, with 3,000
companies applying for that programme; so it was a huge success.
Why Glamorgan? It is simply because we found a model that was
unusual for the public sector organisations. In universities you
also reach the stage where you feel that you are so involved with
industry and committed to it that you want to do it yourself,
and I believe I had to do it this way. Perhaps, if the system
allowed me to do it in a different way, I would have chosen a
different approach, but, as I said in my paper, the system in
universities does not allow for different types of joint venture,
for academics to be involved in a more flexible manner. Really,
it was a decision for me to risk my perhaps job for life and go
out and do it in the difficult commercial world; or stay and carry
on with a purely academic career. It is an interesting example.
Q722 Dr Francis: Is your company
one of the best examples of Glamorgan working in the region to
transform and regenerate the economy, particularly in the valleys?
Professor Wahab: As far as I am
concerned, yes. It was well recognised nationally and at European
level, not only in Wales. That centre has always been a centre
of excellence in product engineering. Our recognition from the
European Commission was well documented in report after report.
We were part of a network in that project which included organisations
such as the Fraunhöfer Institute that Professor Pham referred
to, and large organisations such as IMEC in Belgium. At the same
time, those organisations did not find a model to work with smaller
companies. There is a danger—and we still have it—that
although technology is something that you need to proactively
promote—and I believe in that—you have to find solutions
that match the needs of companies, rather than push the technology
to these companies. If you do that, you lose them.
Q723 Dr Francis: Can you tell us
about the company in Hengoed? How many employees are there and
what is the staff profile? How many would be graduates?
Professor Wahab: At the moment
we are at an early stage of developing this company. There are
three of us. We aim to have six in a year or 18 months. Apart
from an office administrator, they are all qualified to at least
degree level and several have experience in designing custom chips.
They will be highly paid, highly qualified jobs. We do not expect
to employ staff at a lower level because we do not need them here.
However, in the industry, of course, technicians and lower levels
of staff are employed, but not in our set-up.
Q724 Chairman: In your written evidence
you implied that entrepreneurial skills are lacking in the university
environment.
Professor Wahab: Yes, that is
my experience.
Q725 Chairman: That is probably true.
Have you any suggestions of how that could be improved?
Professor Wahab: A great deal
of it is to do with culture. In the university in particular—and
I can be controversial now—I am not 100% in the university
system so it should not worry me a great deal—the system
is focused on teaching and research, and the rewards are related
to those to, and in particular research. A career path would be
very difficult if you were to go outside those two areas. If you
were to go after knowledge transfer and after entrepreneurial
activities, which will generate wealth directly today rather than
in 10 years' time, then people will probably view this as something
you have to do without any rewards. I believe firmly that the
Government has to look at this point. We are looking at wealth
creation, which is necessary in a university environment, especially
in the immediate surroundings of the university and further afield.
Without a clear reward system that will reward those who are successful
at least, you will find very few academics will venture there.
It has been said that the Government is recognising venture activities,
but we have to be very clear about those activities because sometimes
they are just a different name for poor research activities. I
would like to see those activities quantified commercially in
economic terms and in terms of the capabilities of companies,
as well as their innovation potential. A clear measure is new
products created by a company, new processes developed in a company
as a result of engagement with academics. It is also possible
to look at increase in turnover in a company as a result of this
interaction or as a result of innovating products and processes.
At the end of the day, it was recognised by the European Commission,
and even by the European Council of Ministers in 2000 in Lisbon,
that without addressing the innovation deficit in Europe, we will
have a serious problem. We can do all the research we want, but
we will not solve the problem of commercialising products.
Q726 Albert Owen: You mentioned the
difficulty in quantifying work that has been done. Is there any
data available for the public sector initiatives?
Professor Wahab: Definitely. All
the public sector initiatives relating to technology transfer
will have data. If you look at them, they are not the type of
results that will enable us in Wales at least to go for a step-change
or quantum. We have a number of economic figures or targets that
we can go after, from an increase in GDP to an increase in employment.
If you want to increase GDP and achieve these targets, we need
a step-change, and that can only happen with addressing the innovation
agenda very strongly indeed.
Q727 Mr Edwards: In relation to Government
assistance, how important are EU and UK grants in investment or
re-investment decisions compared to other factors?
Professor Wahab: They are quite
important. A lot of companies will not necessarily tell you this,
but they help, if you like, persuade senior management in companies
abroad when they are investing in the UK to make a decision, because
normally there is competition from a number of regions. Having
said that, the economic driver is not only about funds, and there
are a number of other drivers. In my company's case the market
was not right. There was a good reason for a company to set up
in Wales, to address the UK market. So whilst grants are important,
we need also to be careful because we do not want to tempt people
to come here because we give them grants; that is very wrong.
It is not enough. There should be other reasons for them to come
here, but the grants could help. If it is purely on a grants basis,
you may find people given grants, and then after two or three
years they go away somewhere else. There are reasons we need to
look at.
Q728 Mr Edwards: How do you find
your relationship with the UK Government, Whitehall and the DTI,
and how do you find your relationship with the Assembly here in
Wales? Has devolution helped or hindered what you are involved
in?
Professor Wahab: I do not have
much relationship with the UK Government. I have been involved
with the DTI in one programme, but at government level I do not
have a great deal of interaction, apart from the odd conversation
you have with ministers, et cetera. Within Wales the situation
is totally the opposite. One of the reasons why perhaps companies
would like to come to Wales is that you have accessibility to
the highest level of government. You can access ministers very
easily at all levels, and your Assembly members. You can access
different parts of the Assembly government machine. It is very
important. Personally, I am involved in one of the Assembly's
sponsored bodies, which is the Welsh Development Agency. I am
a board member of the WDA. I am also a member of other panels.
If I need to get a message to a minister, I would not hesitate
to pick up the phone to do that. That is a very, very big plus.
I think devolution has helped bring government closer to business
and all other stakeholders.
Q729 Mr Edwards: Do you think business
would support the Assembly having its powers strengthened?
Professor Wahab: I believe so.
Q730 Mr Edwards: Into further law-making
powers?
Professor Wahab: I believe so—in
certain areas, definitely. There is a case for regional policy
development in certain areas that cannot be done now, and having
these powers may help.
Q731 Mr Edwards: Is this not rather
ironic because a lot of people in business were opposed to devolution
before we had it? From your experience, it has been quite beneficial.
Professor Wahab: I believe so.
People in business are always worried about an additional layer
of bureaucracy, it is true; but it is what you make of devolution
that matters. If this proves to be not just bureaucracy but adding
benefit and value to the services of government, then that is
supported. You may find a lot of people in business have similar
views. My experience has been very interesting and helpful.
Q732 Albert Owen: We are talking
about devolution and purely about Whitehall to Cardiff. Real devolution
is throughout the Welsh economy and different parts of Wales.
Do you see there being an improvement to companies outside the
south-east of Wales?
Professor Wahab: Yes, definitely.
The issue of the north/south divide was always there, but certainly
there is more accessibility to government. There is more attention
paid to all parts of Wales. There is recognition that the south-east
on its own will not produce the required change. I am on the board
of one of the Assembly sponsored bodies and I know that at least
once a month I will be in different parts of Wales, listening
to people from business and listening to what they need, asking
them to be very critical indeed, because at the end of the day
the WDA takes a leading role in economic development in the region.
We do it on an almost monthly basis, but when I started just over
three years ago with the WDA, we were holding all meetings in
Cardiff. Now we go everywhere.
Q733 Mr Edwards: What priorities
would you have for the UK Government to help the sector that you
represent become more competitive?
Professor Wahab: The difficulty
with this is that there are so many things that can be done, and
you need to focus on those that are just related to the UK rather
than those which are devolved to Wales. I think that regional
selective assistance is one of the areas where the UK Government
could lobby in Europe. The traditional view of regional assistance,
which favours capital expenditure and job creation only, needs
to be re-evaluated in favour of intellectual property in support
of companies at an early stage to develop and commercialise intellectual
property, and then generate very high value-added products and
processes. Another area which I would like you to help us lobby
for, as Members of Parliament for Wales, is to give Wales a fair
share of the bidding for national funding programmes. As Professor
Pham said, and it is very true; when it comes to creating a national
centre in support of a specific industry or technology—and
in this instance we are talking about micro-systems. Wales does
not have its fair share. It is always the typical regions that
always would be favoured like Cambridge and Oxford, because those
regions obviously have the biggest concentration of industries
and universities that are active in these fields. Wales has a
lot of advantages when it comes to bidding for these programmes
because we have a regional policy that can support a national
centre programme. We have a number of industries that are overlooked.
The other important point is that Government should help us address
deficiencies in engagement between universities and industry.
That can partially be addressed here, and the Assembly government
is doing its best to address it. The other part, relating to the
national structure of higher education, needs to be touched on.
If possible, I would like you to help us lobby for more recognition
for innovation and work-creation activities. Doing research and
basic research and advanced research is very important; but at
the same time we should not really think that this is the only
solution for generating wealth because it is not. We need to address
this at contract employment level for academics, so that they
have the level of freedom to engage in these activities, so that
there is a level of freedom for institutions to engage in joint
venture activities rather than just licensing, or the spin-out
of a company, and there are a number of models that they can help
with. The final thing I would like you take up is this. National
programmes that support technology transfer have been happening
for many years with the DTI and European Union. I have mentioned
some of the problems I have been involved with. The problem is
that now we are seeing a decline in these programmes. The EU and
the UK Government are moving back to funding more research at
the expense of knowledge transfer.
Q734 Mr Caton: You told us that your
company was set up because DELTA wanted to home in on the UK market.
Does that mean your main competitors would also have to be based
in the UK?
Professor Wahab: Some are, but
they are all over the world. Most of our customers are in Europe.
We address primarily the UK market and have some customers in
the United States, but we have a few competitors in the UK—not
in all our services. We provide a wide range of services over
the whole supply chain of microelectronic components from design,
all the way to test and providing the components. In England you
will find a number of design houses designing silicon chips. Those
are our competitors in design, but they come to us to produce
the components, so they are our customers as well. With all our
customers, there is an opportunity to use this competitive factor
and to generate different business.
Q735 Mr Caton: Do you face any competition
from outside the EU from lower wage economies, or are you at that
hi-tech level where that is not a factor?
Professor Wahab: At the moment
we do not have any serious competition from lower wage economies,
and I must point out that Taiwan for instance is not a low wage
economy, nor is Korea. They are involved in these activities,
part of the supply chain which is basically a production of silicon
wafers that would be transformed into components. We go to Taiwan
and to Korea and places like that, simply because that is where
everybody goes. There, it is interesting how this industry developed
because you just asked what the Government can do to help. The
Taiwanese microelectronics industry was developed on the back
of public support, on the back of one major institution that split
out into several companies. Now, if you look at companies like
Taiwan Silicon Manufacturing Conductor Company, it is the biggest
in the world. Everybody from all over the world goes there to
manufacture their state-of-the-art silicon, but when you think
about it, it came from the public sector, which is very interesting.
To summarise, the competition from those economies is not there,
but that will not last because, for example, India may catch up
in designer activities because the labour force is there and the
workforce is highly qualified. It will not be long before they
compete.
Q736 Mr Caton: Are you in favour
of the UK joining Europe?
Professor Wahab: Yes. I think
you would not be surprised, being part of a European company.
We will have to converge with the euro and will not have changes
and fluctuations in currency. Businesses like stability, and joining
the euro will give us the stability we would like.
Q737 Mr Caton: Do you think there
are any benefits in the present Government's position of remaining
for the moment outside the eurozone?
Professor Wahab: I personally
favour the UK joining Europe today if possible, or at least having
some kind of linkage between the pound and the euro. In Denmark
they are not part of the euro, but there is a mechanism where
the Danish economy is linked to the euro within 2-3%, and this
is very useful because it is very difficult to quote customers
all over the world in pounds these days. You do not know what
is going to happen. At the moment it is okay for us to buy using
the pound, but to quote using the pound is a strong disadvantage.
This instability does not help. At the end of the day, you are
only looking at some 10% variation that could destroy our position,
so it is very, very difficult.
Q738 Albert Owen: I will just take
you back to the point you made about Oxford and Cambridge getting
a lot of research, and Wales losing out. Scotland has done very
well out of its percentage against Wales. Why do you think Scotland
has been able to compete better and been able to get a larger
share than Wales?
Professor Wahab: I was not referring
to research money going to universities. At the end of the day,
that is dependent on the performance of universities. I am looking
at money going to established institutions to run major programmes.
You are right: Scotland is doing better than Wales. There are
examples of centres like the Alba Centre. Perhaps the regional
policy there was more advanced. Perhaps there were universities
with a bigger reach and a more commercial outlook to help them
do this. Edinburgh is well known for that, and even Glasgow University.
One of the problems that we need to address is that our universities
must interact with the commercial world in a stronger way. I have
had a lot of feedback from industry in Wales, at least in microelectronics,
which is my field, which shows poor R&D resources because
companies cannot afford to do that. It is very expensive in certain
areas. Immediately, my answer was, "let us do it"; and
the universities said: "we do not think any single university
has enough critical mass to help us do that". We would like
to have institutions, and I think Professor Pham was right about
his wish to move his institution and to model the Fraunhöfer
Centres in Germany. There are many models. Some part of industry
would like to have institutions that can be R&D where universities
are associated with and subscribed to, but not controlled by universities.
At the end of the day, universities have a different agenda, which
is not necessarily the agenda of industry. Having institutions
helps in two ways: good R&D, attracting the best in the world,
and becoming anchor institutions to attract companies from all
over the world. We do not have this. That was even recognised
by nations which are very new in this kind of technology area.
I was called once by a British company to advise on a very ambitious
project in Dubai called the Dubai Silicon Oasis. The British company
was trying to bid for the master plan and they needed somebody
who could supply them with microelectronics. Dubai had six square
kilometres of Silicon Oasis, bringing all the supply chain and
components; but they recognised one thing: Nobody will come if
there is not an anchor institution, so part of the plan is to
have this anchor institution or institutions. In Wales we need
to do the same thing. If we cannot get national UK Government
support, we should do it on a regional basis and try and attract
support, but I do not see why we cannot host some national centres.
In Scotland they recognised this fact.
Q739 Albert Owen: Do you think we
have a lot to learn from Scotland?
Professor Wahab: I believe so.
In certain areas we can probably perform better. In Wales we are
more dynamic in many areas, and I believe even our industries
are more dynamic.
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