Much has been made of the cluster effect that attracts high-value business activity to concentrate in locations with an existing skills and supplier base. But when the European Aeronautic Defence and Space Company (EADS) looked to launch its technology and research centre, it went against the grain, instead choosing to locate the facility in a region with a less established technology cluster.

Instead, EADS is establishing Innovation Works in Newport, south Wales, where the company has had a military communications operating division for some time. Innovation Works will develop research and technology on behalf of the whole of the company, initially concentrating on secure communications, simulation of complex systems, software engineering and advanced wing design and manufacture and energy and propulsion technologies.

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As well as tapping its existing staff pool, EADS is meeting the challenge of attracting skilled employees to its new facility through an innovative partnership with the Welsh Assembly government, International Business Wales and local academic institutions.

The two-year pilot joint-venture scheme to ramp up the staffing of the new facility will then morph into the Innovation Works Foundation, says EADS commercial director Mike Greenway.

“The key to the partnership is a governance framework of wave funding to enable continuity and support between government and academia, which enables rapid cycle times for both establishing the foundation and ongoing projects,” says Mr Greenway.

Academic excellence

Even though areas such as Cambridge and the Thames Valley Gateway have a better cluster of communications scientists, the catchment area around Newport covers eight Russell Group universities including Cardiff, Swansea, Glamorgan, Bristol and Exeter as well as EADS subsidiary Airbus’s headquarters in Bristol.

“We located where we could get the most attention and focus. Our strategy is build it and they will come,” says Mr Greenway.

Innovation Works expects to hire 40 employees by the end of the year and 120 within five years, of which one third will be seconded in from EADS, one third new recruits and one third from Welsh academia.

Another priority is spinning the brightest and the best out of the firm’s current operation in Newport, highlighting the challenges associated with growing too fast.

High-value sectors

EADS is not alone in following the Holy Grail of the knowledge-based economy. But to succeed in high-value sectors such as aerospace, pharmaceuticals and technology, the desired platforms of any modern economy, companies need to know that the machinations of local government will not hinder their expansion plans.

If the firm had taken Innovation Works to a region with less autonomy, the process of establishing the business would have been much longer.

“A base of 60 million or so people is so cumbersome that you become one of the herd at the back of the queue and you get involved an activity where you are constantly consulting and reporting,” says Mr Greenway.

Devolved authority in Wales provides a certain independence of policy and action which meant the company had access to government officials at the highest level – and launched faster than Mr Greenway believed possible.

COMPANY PROFILE:

European Aeronautic Defence and Space

Business

Aerospace and defence

Subsidiaries

Airbus, Ariane, Galileo, Eurofighter, Eurocopter, MBDA, A400M

Employees

116,000

2006 revenue

€39.4bn