Inward Investment in Wales

Written evidence submitted by Swansea University

1 Introduction

Wales has 4.9% of the UK population, but only 1.6% of UK industrial R&D. To improve this key performance indicator for a Knowledge Economy, it is essential to attract large companies to Wales: 97.5% of industrial R&D is in large companies, which also tend to pay higher wages than SMEs, and will therefore help to tackle Wales’ low wage economy problems.

High-tech clusters tend to include a range of different sized companies operating in symbiotic relationship with each other. Larger companies cascade quality standards and high value-added activities down supply chains. To create high-tech clusters, it is important for the Higher Education and Public sectors to engage proactively in the development of supply chains, and to attract investment from large companies.

Swansea University is engaging with this process and specifically positions itself as a research intensive university promoting the region’s, and more generally the Welsh, economy through taking a lead in stimulating investment and within the context of developing a Knowledge Economy.

1.1 Context

Cities Outlook 2011, published by the Centre for Cities in January 2011, identifies "five vulnerable cities which may not feel the full benefit of national economic recovery for some time", due to their reliance on public sector employment and consequent susceptibility to Government spending cuts.

The report includes Swansea as one of the five vulnerable cities:

· Claimant count Nov 2010: 3.2% (17/64)

· Employment rate Jul 2009 – Jun 2010: 64.8% (58/63)

· Potential job losses in public sector by 2014/15: 2.9% (2/63)

· Residents with no qualifications 2009: 16.1% (51/63)

· Business stock per 10,000 population 2009: 249.2 (44.64)

There is clearly an urgent need for Swansea to provide employment opportunities outside the public sector. This can in large part be achieved through the development of high-tech and high-value added, skills-based jobs alongside the creation of a vibrant, knowledge-based local economy.

The No City Left Behind report by The Work Foundation (July 2010) notes that:

"The government faces the challenge of reducing public sector spending while stimulating growth in the private sector. As it does this, it needs to address the structural challenge of replacing the UK’s overdependence on debt, financial services, the City and the public sector with a private sector driven, technology led recovery."

The report subsequently notes that "Growth over the next ten years will be driven by knowledge-based industries and jobs will increasingly demand high level skills. This means universities and the further education sector will play a crucial role in the recovery."

In particular, the document highlights that low carbon industries and high-tech and high-value added networked services will be two of the sectors crucial for economic growth over the next decade, and it identifies universities as "a valuable source of knowledge and innovation which can benefit start-ups and existing local businesses, whilst close linkages with businesses are also very valuable to universities."

The Impact of Higher Education Institutions on Regional Economies research brief series produced by the IMPACT initiative (supported by the Economic and Social Research Council in partnership with the Scottish Funding Council, Department for Employment and Learning in Northern Ireland, the Higher Education Funding Council for England, and the Higher Education Funding Council for Wales) notes that:

1) There is evidence that firms locate their R&D facilities close to world-class rated university departments, and that innovative firms located nearer to university departments are more likely to engage with higher education institutions

2) Firms are six times more likely to produce innovative products if they collaborate with an HEI

3) Firms are five times more likely to produce innovative processes if they collaborate with an HEI

4) Collaboration between universities and firms has a significant positive effect on organisational innovation

5) Wales has the lowest levels of knowledge interaction in general but when Welsh firms use universities and other types of collaborative partner, they seem to value them more, even if their actual impact is more marginal

6) HEIs are still considered poor collaborative partners for firms and poor providers of information. However, when collaboration occurs, the university has a significant influence on the firm’s innovative performance

The IMPACT briefing document further notes that Wales has been less successful in the establishment of networks and that university commercialisation income and activity is less well distributed. (Cardiff and Swansea Universities received more than two-thirds of total income.)

The report shows that Wales ranks lowest in the UK in terms of HEIs sourcing their commercialisation income from within the region, has the lowest proportion of firms engaged in knowledge-based activities, and has relatively low levels of investment in research and innovation – which restricts economic growth.

Whilst not dissenting from this evidence, in recent years Swansea University has made exceptional progress in addressing this historic deficit through progressing quantum leap projects, and refreshing and reviewing its strategy for developing and delivering a broad range of knowledge transfer activities. At the same time the University has employed all the conventional HE mechanisms for supporting a Knowledge Economy:

· providing skilled graduates

· undertaking collaborative research with industry

· supporting existing companies and businesses through consultancy and skills development

· teaching entrepreneurship and innovation skills

· generating spin-out companies to exploit university IP, and

· encouraging graduates to create start-up companies.

1.2 Swansea University strengths and strategic directions

There are five universities and two other higher education institutions in the West Wales and the Valleys Convergence region, but more than 50% of the world-leading and internationally excellent Science, Technology, Engineering, and Mathematics (STEM) research activity is concentrated in Swansea University (2008 Research Assessment Exercise (RAE2008)).

The results of the RAE2008 demonstrate unequivocally that Swansea University is fast achieving its ambition to be a world-class, research-led university. The quality of its Civil Engineering research ranked second in the UK; Engineering as a whole is eighth. Computer Science and Medicine performed well, and there were successes in many other areas, including Business, Law, Economics, Social Sciences, and the Arts and Humanities. Overall, Swansea enjoyed the largest increase in internationally excellent research in the whole of the UK. Swansea University’s research income has grown significantly in recent years, and the University attracted a record £65 million in research grants awarded in the 2009/2010 academic year. The University’s research base is now a significant driver of Knowledge Economy activity, and is supported by an ambitious "Strategic Directions" strategy that focuses on

· incremental growth, investing against business plans and diverting resources to the most successful areas

· strategic ("quantum leap") initiatives, attracting external funding for large new

academic developments with the critical mass and level of funding to have a

significant impact on the University's profile.

There is ample evidence that world-class and world-leading research has more potential for creating wealth than work which aspires to more modest, national, levels of excellence. For example:

"Unsurprisingly, R&D-based and venture-backed companies locate around high-quality research universities to a far greater extent than around lower-quality research universities." (The Race to the Top, A Review of Government’s Science and Innovation Policies, Lord Sainsbury, October 2007).

"European growth has been disappointing for the last 30 years but policymakers have only recently started to realise that Europe's growth performance is intimately linked with the research performance of its universities" (Why reform Europe's universities? Bruegelpolicybrief 2007/04).

This is entirely consistent with the emphasis placed upon research in the University's Mission Statement, and is the focus which underpins the University’s commitment to strengthening and growing the Knowledge Economy.

2 Swansea University’s strategy in growing a Knowledge Economy.

Swansea University is a research-led university of international quality, with a clear commitment to using its strengths to make a substantial and positive impact regionally. It is a powerhouse for growth in the regional economy, which stems from its historic strengths in science and technology and the fact that, from its foundation in 1920, the University has enjoyed close collaboration with industry.

The University has been a significant recipient of EU Structural Funds, which have been deployed to support major research projects and to ensure that the University uses its research and teaching strengths, and its mature industrial links, to support the economy of the region.

The primary aim of EU Structural Funds has been to help create vibrant, self-sustaining, knowledge-led economies in the less prosperous regions of Europe and thereby reduce spatial inequalities. The focus is upon R&D, innovation, and high-level skills underpinning an effective, wealth-creating private sector. There is overwhelming evidence that Wales has not yet achieved this transformation and might be eligible for a fourth round of Structural Funding from 2013.

2.1 High-tech cluster development

The University has adopted an holistic approach to knowledge transfer activities, with greater strategic focus and ambition. It is working to become a European exemplar of good practice for HE driving the development of a modern knowledge economy, and is implementing strategies that will strengthen significantly the economy of South West Wales through applying research to three broad academic areas: Engineering, Computer Science and Telecommunications, and Life Science and Medicine.

These areas offer real potential for supporting cluster development of high-technology companies. It is estimated that more than 75% of industrial R&D in the UK is in industrial sectors which link directly to these three areas.

The University’s Knowledge Economy strategy focuses explicitly upon promoting the development of these high-technology clusters. This is the ‘market standard’ approach to promoting the development of a modern knowledge economy. For example, it is a key feature of the acclaimed Barcelona economic renewal strategy; it is an approach adopted by the Welsh Assembly Government; it was recommended to the City and County of Swansea by consultants SQW, and is included in the Swansea 2020 Economic Regeneration Strategy.

The University’s research strengths in these areas will lead to the development of a portfolio of postgraduate, high-level skills courses, many developed and taught in collaboration with partner companies, that address the skills needs of the corresponding industrial sectors and provide 'fast-stream' routes to leadership positions. They will also attract industrial R&D to the region through targeting of large companies which already work with the University or which might derive significant advantages by working with the University.

An essential complementary development is the further strengthening of the School of Business and Economics, creating a thriving, 'full service' management school. Knowledge Economy companies will not derive full market benefit from scientific and technical innovation without the appropriate organisational and leadership skills.

University research supporting industrial clusters

A new, 70-acre Bay Science and Innovation Campus will facilitate a step change in the University’s interaction with industry. This campus will provide an intensive, open-innovation environment by inter-mingling industrial R&D, academic research, and postgraduate students. The campus will also be designed to facilitate the growth of high-technology clusters in the region by including consultancy, access to business support, and incubator facilities. (See section 3 for further information.)

2.2 Economic regeneration

Despite growing emphasis on developing knowledge economies, universities have not always been the policy makers’ first choice as agents for change. There are still common, and not totally unjustified, perceptions of universities as passive organisations, slow to change, and not firmly rooted in the ‘real world’. This position is not unique to the UK. For example, Canada has to contend with a relatively low base of industrial R&D (as in Wales) and was reported to have turned somewhat grudgingly to higher education:

"Whereas countries like the USA and Japan are developing a knowledge-based economy by stimulating industrial research and development, in Canada, the industrial research and development infrastructure is so small, the government was forced to turn to university scientists to transform the economy" (McGill Reporter, November 18, 1999).

There are, of course, recognised associations between the presence of major research universities and a flourishing technology enterprise within specific geographical areas. Examples include Silicon Valley, Massachusett’s Route 128, North Carolina’s research triangle, and, closer to home, the Cambridge effect. However it has become clear that the influence of universities on regional economies is far more extensive:

"Universities and specialized research centres are the driving force behind innovation in nearly every region" (Clusters of Innovation National Report, USA Council on Competitiveness, Washington DC, 2001)

2.3 Improving performance

International evidence indicates that both the quality and scale of research determine a university’s potential for driving change:

"There is a correlation between [research] quality and impact . . . it is possible to have high quality without much impact, but it is highly unlikely to have much impact without high quality" (The Wealth of a Nation: An Evaluation of Engineering Research in the UK, EPSRC).

"Without a large research base, even highly engaged universities are not able to exert enough impact to make a difference in a regional economy" (Universities and the Development of Industry Clusters, 2004. Report prepared for Economic Development Administration, US Department of Commerce by the Carnegie Mellon Center for Economic Development).

Wales is disadvantaged by an historical deficit in STEM research and, until recently, it could be argued that only Cardiff University had the scale of high quality research which the evidence indicates to be necessary (circa £50m/annum research spend).

As has been pointed out Swansea University has benefitted significantly from EU Convergence Funding. The Cluster model described in section 2.2 above demonstrates the approach that the University is taking in delivering high-technology and high-value added knowledge transfer activities. Although the cluster strategy is being delivered primarily through three broad academic areas, it is intended to be fully inclusive, involving every part of the University. This is important because the traditional boundaries between academic disciplines are usually unhelpful in addressing the challenges facing the public or private sector, including high-technology companies.

The Knowledge Economy Strategic Framework recognises that a campus environment is particularly conducive to cross-cutting, interdisciplinary links. Mechanisms for encouraging the formation of multidisciplinary research teams are already under development in the University. These mechanisms will be further enhanced to ensure that the academic areas identified for driving cluster development can both inform and draw upon academic strengths across the whole University. An important example is the multidisciplinary group researching Ageing. This group has already demonstrated substantial potential for generating innovative, wealth-creating solutions by linking social science with medical engineering and ICT. A successful, representative example of the University’s implementation of its strategy is the Institute of Life Science.

2.4 The Institute of Life Science

The Institute of Life Science (ILS) is a £52 million, purpose-built facility strategically located between the College of Medicine and Singleton Hospital, part of the Abertawe Bro Morgannwg University Health Board. This facility has been made possible through a unique collaboration between IBM, Swansea University and the Welsh Assembly Government.

The emphasis at the ILS is on high quality inter- and multi-disciplinary research into areas such as cancer, diabetes and obesity, neurological disorders and hospital-acquired infections. ILS activity is focused on discovering radical ways to treat disease and deliver healthcare. Its state-of-the art laboratories are complemented by a unique supercomputing infrastructure centred on Blue C.  One of the very few supercomputers in the world dedicated to life science research, Blue C has a permanent home at Swansea University as part of a high-profile collaboration with IBM.

Life science is recognised as one of the most fertile sources of technology transfer in the world, giving the ILS the potential to create significant economic wealth. Opportunities are arising from areas such as research collaboration, intellectual property licensing, spinout companies and inward investment and, in readiness for these, the ILS is well equipped. With state-of-the-art laboratories and a dedicated Business Development Centre, the focus is on building long-term commercial-academic links and making first-class medical progress to take medical advances from the laboratory into hospitals, surgeries and homes.

ILS Outputs

Audited figures reported to WEFO in February 2009 show unequivocably that the ILS is delivering against its objectives and is having measurable impact on the Knowledge Economy:

*on target as of September 2010

ILS2

The second phase of the ILS project has seen the development of ILS2, a £30million state-of-the-art research centre. The new seven-storey, 6,000 square metre building is currently under construction. It will house clinical research and play a major role in developing new products and services for the healthcare industry. It will triple the space available to grow related businesses.

2.5 CASE STUDY: Boots Centre for Innovation

ILS is home to the Boots Centre for Innovation, which was established to help researchers and entrepreneurs to develop new products. The Centre, backed by a Regional Selective Assistance grant from the Welsh Assembly Government, is using the facilities and expertise of the ILS to assist the innovators to develop new products for Alliance Boots plc in areas as diverse as pain relief, skin treatments, diabetes, and healthy ageing.

Pioneering researchers and innovative small businesses are able to bring promising ideas to the Boots Centre in Swansea to obtain scientific expertise, business know-how and financial backing.

They are able to work with the Centre’s specialist staff to turn those ideas into valuable new products, and a partnership between Alliance Boots plc and venture capitalists Longbow Capital LLP offers entrepreneurs access to investment funding. 

Under one of the most trusted brands in the UK, the Boots Centre for Innovation offers a direct route into close to 2,500 Boots stores across the UK and the possibility of international distribution. Researchers and entrepreneurs therefore have ready access to expert producers and developers, together with an exceptional route to the health and beauty market.

2.6 Attracting investment

Providing a vibrant environment that fosters good research and skills development has enabled Swansea University to develop and deliver new projects that stimulate links with industry. In turn, this facilitates an enabling environment that encourages the growth of a supportive infrastructure. Accessing a broad range of funding opportunites, including Convergence and Research Council support, stimulates further economic opportunities that cohere to Welsh Assembly and UK Government objectives to create jobs, grow the skills base, and to attract inward investment from large companies that support broad supply chains.

2.7 CASE STUDY: The Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings (SPECIFIC)

The Engineering and Physical Sciences Research Council (EPSRC) and the Technology Strategy Board has provided financial support for a new Innovation and Knowledge Centre based at Swansea University.

The £20 million Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings (SPECIFIC) aims to transform buildings into "power stations" through the rapid commercialisation of functional coatings on steel and glass in the areas of energy capture, storage and release. The ambitious target of the SPECIFIC academic and industrial partnership is to generate a portfolio of products which, by 2020, will generate over one third of the UK’s requirement for renewable energy.

In the UK there are more than four billion square metres of roofs and facades forming the building envelope. Most of this could potentially be used for harvesting solar energy and yet it covers less than 1.8 % of the UK land area. The vision for SPECIFIC is to develop affordable large area solar collectors which can replace standard roofs and generate over one third of the UK's total target renewable energy by 2020 (10.8 GW peak and 19 TWh) reducing CO2 output by 6 million tonnes per year.

This will be achieved with an annual production of 20 million m2 by 2020 equating to less than 0.5% of the available roof and wall area. SPECIFIC will realise this by quickly developing practical functional coated materials on metals and glass that can be manufactured by industry in large volumes to produce, store and release energy at point of use. These products will be suitable for fitting on both new and existing buildings, which is important since 50% of the UKs current CO2 emissions come from the built environment.

The key focus for SPECIFIC will be to accelerate the commercialisation of IP, knowledge and expertise held between the University partners (Swansea, ICL, Bath, Strathclyde, Glyndwr, and Bangor) and UK based industry in three key areas of electricity generation from solar energy (photovoltaics), heat generation (solar thermal) and storage/controlled release.  The combination of functionality will be achieved through applying functional coatings to metal and glass surfaces. Critical to this success is the active involvement in the Centre of the global steel giant Tata and the global glass manufacturer Pilkington. These two materials dominate the facings of the building stock and are surfaces which can be engineered.

SPECIFIC is a unique business opportunity bridging a technology gap, delivering affordable novel macro-scale micro-generation, making a major contribution to UK renewable energy targets and creating a new export opportunity for off grid power in the developing world. It will ultimately generate thousands of high technology jobs within a green manufacturing sector, creating a sustainable international centre of excellence in functional coatings where multi-sector applications are developed for next generation manufacturing.

The Welsh Assembly Government is supporting the project in recognition of its strategic nature and its potential economic impact.

2.8 Convergence funding projects

Further examples of how Swansea University has accessed convergence funding to support knowledge economy and knowledge transfer activities targeted at meeting employers’ needs include:

Steel Training Research and Innovation Partnership (STRIP): a £7m initiative that involves Cardiff, Bangor, and Glyndwr Universities. STRIP will specifically supply demand led flexible credit based training addressing higher level skills gaps to enable the creation of next generation high level employees equipped with expertise in new technology, essential for increasing productivity, minimising environmental impact and with the capacity to develop novel products essential for the creation of a sustainable steel industry in Wales. The project will also maintain vital strategic partnerships with the Welsh steel industry, expand the collaboration within the supply chain to larger numbers of companies, and act as a catalyst for larger clusters of research activity in key areas of advanced manufacturing and energy.

Feedback from the steel industry shows that:

· global market changes have caused significant decline and, in a number of situations, the death of heavy industry in the UK. Even so, the UK still has a thriving and economically crucial engineering sector

· the sector is experiencing serious difficulties in recruiting engineering graduates, a situation which is five times greater than in other industry sectors

· the consequent skill shortage has hindered economic development within the sector

· 29% of companies are unable to expand because they lack skilled people

· new technology and advancement in engineering practices has seen demand shift towards employees with high skills levels

· 26% of engineering companies now go abroad for the skilled people they need

ArROW – Aerospace Research Organisation Wales: an £8m initiative that involves six other universities in Wales. ArROW aims to set up a national organisation based on collaboration between the universities that will work in a distributed way to lead, co-ordinate and drive forward aerospace research in Wales, increasing research capacity and applying that resource to improving industrial competitiveness.

Feedback from the aerospace industry shows that:

· high level skills are a key requirement. Over 30% of employees in the sector are

· educated to degree standard or equivalent, and more than 11% are involved in

research and development

· formal engineering qualifications need to be combined with transferable skills

such as project management, presentations, report writing, and working and

contributing to a team

· increasingly, engineering skills shortages are forcing companies to look

offshore for workers, and there is genuine demand for "home grown" highly

skilled engineers.

Software Alliance Wales (SAW): a £13m initiative over five years, involving four other Welsh HEIs. The aim of the initiative is to support the development of a vibrant software industry in Wales by setting up a network for software developers in Wales, supporting the network with a strong CPD programme, and setting up an Accreditation Centre for the benchmarking of Welsh Computing and ICT companies.

Advanced SusTainable ManUfacturing Technologies (ASTUTE): a £25m initiative involving every HE Institution in Wales that has an interest in advanced manufacturing and associated technologies. The project will support firms to invest in, and utilise outcomes of R&D, develop new and improved products and processes, and enhance collaborative research initiatives between HE institutions and firms.

2.9 Reviewing Knowledge Economy projects

However, while quality and scale of research may be a necessary condition for transformational impact, it is certainly not sufficient on its own. Swansea University keeps its knowledge economy projects (particularly those funded by the EU) under informal internal review to identify the interventions that are most successful. The major lessons from the review are not about operational detail.

It is clear that, if the University is to become a genuine powerhouse for the regional economy, it must progress beyond the conventional piecemeal engagements in knowledge transfer to a holistic approach with greater strategic focus and ambition. It also had to become more pro-active in its engagements with large companies. Large companies are under-represented in Wales but they build supply chains, have access to global markets, and, with about 97.5% of industrial R&D in the UK, they drive innovation.

The following table highlights the areas that are perceived to work well in Knowledge Economy projects linked to the higher education sector.

3 The Bay Science and Innovation Campus

Although growth of the Knowledge Economy is a major part of the Welsh Assembly Government’s economic strategy, Wales overall has one of the lowest (and currently declining) levels of commercial R&D activity in the UK. There is strong evidence that, where leading academic expertise exists, knowledge intensive companies will co-locate their activities.

A new Bay Science and Innovation Campus is being developed by Swansea University, which will provide a catalyst for collaborative research dealing with key WAG Knowledge Economy clusters with other research intensive Universities.

Economic development will be secured through spin-outs, spin-ins, R&D and consultancy support, and supply chain synergies. The intention is that this regional spread of economic activity will be facilitated by a regional infrastructure of local KE centres. Such a knowledge network provides the asset base for the identification, assimilation and exploitation of new knowledge and along with land, capital and labour will provide a key factor in economic production.

In particular, the Bay Campus provides the opportunity not just to increase the scale of research collaborations but to become the principal driver for further multiational enterprise (MNE) Knowledge Economy inward investment to SW Wales and beyond. This in turn will multiply local supply chain opportunities for regional small medium enterprises (SMEs).

3.1 The vision

The total cost of the project for phase 1 is £200m, with significant private sector investment together with public sector support, facilitated by BP’s gifting of its land to the University as part of the company’s strategy of exiting the region with honour.

The University estimates that Phase 1 of the Bay Campus will bring in additional research income of £22m per annum by 2020 (£97.5m cumulative). Using comparative data from similar projects, this would be expected to create 332 extra jobs per annum by 2020 (1,463 cumulative) in the field of industrial collaborative research, and lever many more economic outputs, including support for SMEs, commercial income, spin out SME’s, indirect regional jobs and expenditure creating an estimated £3bn of additional regional impact over 10 years.

The Bay Science and Innovation Campus will also draw together the range of expertise located within universities and further education institutions delivering joint foundation degrees, to provide training and skills development opportunities to all levels of the workforce via employer-related learning routes, and working with the National Science Academy.

Projects already committed to the Bay Campus include the EPSRC-backed industry partnership with Rolls-Royce (the SMART project), which will require over 2,000 sq m of the campus. The remaining additional space will be fully committed by Campus opening in (2014). The provision of additional space and the open innovation design of the Innovation Hub will maximise applied research and commercialisation growth .

3.2 The Innovation Hub

The Bay Science and Innovation Campus is an exemplary project that will deliver against the new HE agenda of promoting innovation within the region and beyond in line with economic renewal objectives, and which will stimulate significant investment opportunities.

The core of the project is the Innovation Hub, which has been uniquely designed to provide an intensive, open-innovation environment to maximise the growth of collaborative research with industry in specific high-tech clusters (Advanced Engineering, Digital Economy and Low Carbon) where the University’s Engineering College has established strengths.

The Innovation Hub co-locates both Multi-National Enterprises (MNEs) and Small and Medium sized Enterprises (SMEs) engaged in knowledge economy R&D together with the research capabilities of the University’ College of Engineering, and the School of Business and Economics.

The design of the Innovation Hub will facilitate an open innovation environment involving the co-location of personnel from MNEs and SMEs with academic members of staff and also EngDoc and other applied postgraduate research students. This approach will significantly enhance Wales’ ability to attract the Research and Development activities of global companies, even those not already present in Wales, as evidence demonstrates that for such companies proximity to the best available academic research expertise is the major location-driving factor.

Each Cluster area will deliver the following outputs:

· full integration of collaborative industrial and academic environment

· increased productivity of companies in the cluster

· increased research funding

· strategic platform for joint programmes within education (FE and HE), research and innovation

· stimulating new businesses in the cluster

· creation of industry centres of excellence including standards setting

· creation of Cluster Forums

· increase in industry research partners

· attraction and retention of companies to the region

· raising the profile of Wales and the region

· SME Development as a result of the supply chain effect within each cluster

· increased National and International collaboration

· links with other Science Parks/ Innovation Campuses

· skills development along the skills continuum from workforce to EngD

· increased IP output and value

· retention of graduates in the area

· sustainability of Convergence projects and maximisation of outputs

The Innovation Hub integrates fully academic and industry personnel and is at the highest end of the partnership continuum.

At present the College of Engineering and business collaboration is at various stages along the continuum. With the transformation of the temporary measures into the full Innovation Hub, engagement with industry will move to Stage 5 (as evidenced by the example of the Swansea Materials Research and Testing (SMART) company described below).

3.3 CASE STUDY: The Swansea Materials Research and Testing Company

An early example of the way in which the Innovation Hub will engage MNEs in Knowledge Economy activities is the Swansea Materials Research and Testing Company, which demonstrates the potential for commercialising the output of Innovation Hub activity.

Funding for a strong research input has been secured through significant research council involvement from the Engineering and Physical Sciences Research Council (EPSRC) which has made £50m available over a 10 year period to Swansea University and its collaborating University partners with Rolls Royce namely the Universities of Birmingham and Cambridge.

The company has started trading and it is expected that overall income flows (research, training and commercial) into the region will increase from currently around £1m a year to nearly £5m a year as a result of this venture. Swansea University will be replicating this model of working with the EPSRC, for example with Corus in the context of developing new materials and manufacturing processes to accelerate the commercialisation of photovoltaic modules for low cost-based, dye-sensitised solar cells.

Research shows that the establishment of areas of research strength supported by effective commercialisation strategies stimulates the formation of clusters of activity, bringing together research funding, spin out formation, supply chain establishment, and venture capital funding. This creates impact through new business formation, employment, procurement and requires coordinated support to deliver the workforce skills required and the SME up-skilling.

Increased major business involvement, increased research funding and increased SME collaboration will lead to an increased level of spin out companies from the HE/FE sector. More of these will be successful as a result of increased professionalism in their support.

The following table demonstrates the outputs enabled by the extra space provided for the initiative:

The co-location of the College of Engineering and the School of Business and Economics will have a synergistic effect enabling the Innovation Hub to provide both technical and professional support for commercialisation.

3.4 Skills and FE/HE collaboration

A key feature of the Innovation Hub will be the collaboration between HEIs and FEIs in the region and across Wales. The University’s discussions with businesses revealed the critical need to:

1. enhance skills training for their existing and future staff

2. ensure an appropriately skilled workforce across all levels of job activity

3. ensure there is an appropriate skills pipeline within the region

As a regional project, the Bay Science and Innovation Campus will draw together the range of expertise located within universities and Further Education Institutions to provide training and skills development opportunities to all levels of the workforce in South West Wales through traditional undergraduate, masters, postgraduate and postdoctoral training, links with FE (Foundation degrees, pathways to learning) and workforce skills in collaboration with FE and business, particularly SMEs. This will involve developing employer-related learning routes.

The Innovation Hub will be designed as a STEM showcase in order to inspire and excite children and adults about STEM and its industry applications. The Innovation Hub will be designed with viewing windows and platforms in order to make the science more accessible to visitors.

Facilities will be shared, as part of longstanding applied research collaboration, with other Welsh HEIs as identified below:

3.5 Economic and regional impact

The development of the Bay Science and Innovation campus is a key part of the wider regeneration of Swansea Bay which has been made possible by the decision of BP to remediate its remaining industrial estate in the region and return it to beneficial community use. This will lead to the creation of the Coed Darcy Urban village, the Bay campus and the Baglan industrial development area. The campus is a key catalyst to creating value in the entire Swansea Bay area through its central location and its ability to trigger higher value business activity and therefore jobs than would otherwise be the case.

The development will also connect Swansea and Neath Port Talbot, aligning with the strategy for Swansea Bay.

Economic Impact Analysis for the Bay Science and Innovation Campus project indicates potential for around £3bn of economic impact over a 10 year period, including the effects of construction activity. The initiative is projected to result in direct and indirect creation of around 3,000 new jobs. The impact arises from:

· growth in research income, resultant employment of academic staff and

postgraduate students, creation of IP and licencing

· creation of business initiatives with major international companies

· development and growth of SME based supply chains around those anchor

projects and through a range of collaborative links with the campus

· creation of spin out companies from campus research

By the end of September 2009, Swansea University had been granted 34 patents through the delivery of world class and internationally recognised collaborative research projects. During the same period, the University supported many businesses and start-ups in the Swansea area - resulting in 28 spin-out firms, employing 71 people, and active after three years of trading.

It is projected that the University will create a minimum of seven high growth spin out companies a year and 14 low growth spin outs a year when the campus is fully operational because of the increase in research activity and the number of postgraduate students.

4 Conclusions

This document demonstrates that Swansea University has a clear commitment to using its research strengths and increasingly effective links with industry to make a substantial and positive impact regionally.

The University’s Knowledge Economy strategy is focused on the development of three high-technology clusters, which will provide significant opportunities for economic growth, and job and wealth creation. Key to the success of this activity is the formation of multidisciplinary research teams able to undertake high-quality work in a range of cross-cutting themes.

Examples of where the University’s research strengths and industry links have yielded significant success in terms of Knowledge Economy and Knowledge Transfer activity include:

· the Institute of Life Science

· the Boots Centre for Innovation

· the Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings

· the Swansea Materials Research and Testing Company

The Bay Science and Innovation Campus (and the integral Innovation Hub) will provide a major focus for HE collaboration with industry in Wales, and will stimulate a wide range of large-scale inward investment opportunities.

Swansea University’s position as a research intensive university therefore enables it to take a lead in attracting investment to the region, and within the context of a flourishing Knowledge Economy.

March 2011