Political Editor Jonathan Walker looks at how the West Midlands will benefit from the second round of the Regional Growth Fund
A world-beating Worcestershire IT firm is to bring jobs home from China after concluding it is cheaper to manufacture in the UK.
Elonex, based in Alvechurch, plans to close two factories in China and bring posts to the UK, after receiving a major grant from the Governnment’s Regional Growth Fund.
The move will eventually create thousands of jobs.
Elonex innovated the ultra-mobile PC, more commonly known as the UMPC, a new class of highly-portable computer smaller than a laptop.
It produced e-books before the Kindle was released and is currently the world’s third largest producer of tablets, behind Apple, producer of the iPad, and Samsung.
As well as manufacturing a range of own-brand products, Elonex also manufactures high-tech products for other businesses and holds a number of patents licensed to manufacturers worldwide.
While research and design work is already carried out in the UK, manufacturing takes place at two sites in China.
But Elonex chairman Stuart Smith said it was no longer safe to assume production would be cheaper in Asia – while customers across Europe were increasingly concerned about the environmental impact of importing goods across the ocean.
A new facility would be created in the UK using a “multi-million” pound grant from the Regional Growth Fund, he said.
“We are bringing back production. One factor is the increased cost of transporting high value goods. You can put them on water and then you have a lot of money tied up, maybe for 30 days. You can put them on a plane but that costs a fortune.
“Labour costs in China are also increasing. So the question is whether it is actually cheaper to manufacture in the UK. And for some time, the answer has been, possibly, yes.
“When you consider the environmental benefits of producing locally and add that to the economic argument then it is very attractive.
“We sell products across Europe and customers increasingly want to know whether a product is green. So there are enormous advantages to manufacturing in the UK.”
It will be two years before the new plant is up and running. Elonex is considering locations in the West Midlands and elsewhere but has made no decision about the location.
But the move would not have been possible without the “multi-million” Government grant, said Mr Smith.
“Initially the first tranche of employees will be 200 but the number employed there will eventually run into thousands. It is a big and exciting project in its initial stages.
“We wouldn’t be doing with without the support we are receiving from the Government. The funding comes from three sources – the Government, loans, and self-generated funds. All three elements are essential.”
Business Minister Mark Prisk described the Elonex scheme as “very exciting”.
He said: “I know in years past we’ve always thought it was a one way journey but actually there are some interesting signs that businesses now are looking to come back to the UK.”
The Department for Business, Innovation and Skills did formally confirm that 22 schemes in the West Midlands would receive a total of £100 million in the second round of successful bids.
The cash would directly create or safeguard 3,900 jobs, as well as 29,800 in the supply chain, the Department said.
The Birmingham Post successfully bid for £5 million to administer a fund which will supply cash to smaller and medium-sized businesses which might otherwise have been excluded from receiving Regional Growth Fund money.
Other successful bidders in the West Midlands included Aeromet, which will use the money to help develop a new manufacturing process for an advanced aluminium alloy at its site in Worcestershire.
Local enterprise partnerships in the West Midlands will use Regional Growth Fund money to create a new fund supporting research and development in advanced engineering across Birmingham, Solihull, the Black Country, Coventry and Warwickshire.
The grants were welcomed by Birmingham Chamber of Commerce Group, but chief executive Jerry Blackett warned that the fund was only a small part of the support businesses needed.
He said: “The Government must also look at introducing incentives to encourage employers to create jobs such as tax breaks to engender investment.
“The regional growth fund is only a very small part of the growth picture and initiatives which include smarter regulations such as speedier planning processes must be a priority.”
*For more details of the RGF contact Craig Cooksley at email@example.com
Green vehicle specialist Zytek received £1.35 million to support the development of safer and more competitive electric vehicles.
The grant will allow the Staffordshire firm, based in Fradley, Lichfield, to press ahead with a £5 million centre of excellence create 44 jobs developing low carbon technologies for the automotive and other industries.
This will focus on the development of high-efficiency, light-weight electric motors, inverters and energy storage systems.
As well as employing new staff, Zytek will step-up training for existing personnel on topic such as the latest technologies and analytical techniques to test procedures, with some courses leading to qualifications through partnerships with academic institutions.
Managing Director Neil Heslington said: “Zytek has many years experience developing and integrating advanced electric and hybrid powertrains for several of the world’s leading vehicle manufacturers.
“This new investment will ensure that we can continue to drive innovation, allowing us to introduce next-generation technologies that will significantly improve the range and cost of electric and hybrid vehicles
“Electric vehicles are at an interesting phase in their development, where significant improvements can be made by taking a clean sheet of paper approach to a number of systems, particularly the power electronics and energy storage systems.
“That’s exactly what we will be doing here, with a focus on delivering the safety, durability and affordability needed for the next generation of volume production vehicles.”