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  • Innovation & Transformation
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The North East is gearing up for the future

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It’s fast becoming a nexus of emerging industries, from robotics to electric vehicles.

Sunderland’s story is one of reinvention. Since the industrial decline of four decades ago the city has steadily evolved: better housing, improved transport links, an upgraded university, a thriving arts and cultural quarter. Now, the city’s renewal is accelerating.

It’s enjoying £350m of investment into what has been called the most ambitious city centre redevelopment in history, and its economy has recalibrated with a growing emphasis on technology. A similar narrative is playing out across the North East. In 2019, nearby Newcastle—which also suffered hard times in the latter half of the Twentieth Century—was anointed the Digital Leaders’ UK Smart City of the Year, in the midst of its own £350m redevelopment project around Gateshead Quays (construction on a new £150m conference centre will begin later this year). A year later, Sunderland claimed that same accolade, while neighbouring Middlesborough has begun a £250m Digital City development. But this shift is not just about creating modern, data-driven businesses. What’s notable is how the region is putting itself on the map as a nexus of emerging, future-facing industries.

It's a close community. We can talk to people who are doing all sorts of innovative stuff

Matthew Lumsden | CEO, Connected Energy

Electrical innovation

Just down the road from Matthew Lumsden’s office, a plaque hangs on the wall marking the place where the first street in the world was lit by electricity 150 years ago. It’s a reminder to Lumsden of the area’s history of electrical innovation—a tradition that he is working to extend today through Connected Energy, where he serves as CEO. Its focus? Enabling more sustainable approaches to energy, by repurposing used electric vehicle (EV) batteries as energy storage systems. This not only benefits the EV world, for whom battery disposal is a headache, but also provides reliable storage for renewable energy as part of the drive to decarbonise the grid. “We’re monetising batteries,” he says, “so car manufacturers are seeing them as an asset rather than a liability, which helps boost the circular economy.”

He’s in the right place for it. Ever since Nissan came to Sunderland in the late 1980s, creating jobs and drawing in further investment, the city has carved a reputation in the auto world. Now, the North East is a driving force behind the electric revolution, producing around a quarter of all Europe’s passenger EVs. Sunderland itself boasts the highest number of electric vehicle enterprises in the UK. It is also home to Envision AESC UK, which operates what was the first “gigafactory” (a large-scale battery making facility) in Europe, and is still the only one in the UK.

This ecosystem was a key factor in Lumsden’s founding Connected Energy in Newcastle. The company was born in 2013, anticipating a future market need. “We have been accurate in our predictions,” he says. “The motivation in the region and the embedded skills and capacity from Nissan and Envision has placed electric vehicles and battery production industries high on the agenda. It's also a close community. We can go and talk to people who are doing all sorts of innovative stuff.” Connected Energy is based at the Newcastle Helix, a 24-acre innovation district home to companies focused on “better living” through data, biotech, and urban science. “It's an amazing location. Out the window I can see the National Innovation Centre for Data—they've coached us on the whole AI strand of our software.”

Industry 4.0

Another frontier sector taking root in the North East is Industry 4.0, an umbrella term that describes advanced approaches to manufacturing, spanning robots, cloud computing, and AI. As with EVs, the region’s focus on this area recalls its own past. Driven by its coal reserves, the industrial revolution turned it into a manufacturing powerhouse. Today, around seven percent of SMEs and 15 percent of large enterprises in the North East are connected to Industry 4.0—well above the national average. This has been driven by one of the best manufacturing talent pools in the country, as well as several advanced manufacturing parks spread across the region. Robotics firms are well-represented, including Blyth-based Tharsus, which created Ocado’s warehouse picking robots, as well as Wootzano, based at NETPark in County Durham.

Wootzano has pioneered a food-safe e-skin to help its robots “feel” what they’re holding and apply pressure accordingly. “We developed the skin for various applications,” explains Atif Syed, Wootzano’s founder. “We put it on a nuclear power plant decommissioning robot, and on a robot to maintain and repair offshore wind turbine blades.” The focus is now on post-harvest fruit handling, helping resolve one of the nation’s biggest labour shortages. The company deliberately started, Syed says, with the most challenging fruits: vine tomatoes and table grapes. “I almost hate grapes because of all the issues they caused us!” he says.

Syed launched Wootzano in Edinburgh, but moved to the North East after just four months—a decision, he says, that was driven not only by the area’s reputation in the sector, but also his plans for growth. “If you’re manufacturing robots, you need space, and space is at a premium. If you want to grow a business, you have to future proof—don’t wait until it happens.” He was anxious about recruitment at first (“Who ever heard of Sedgefield in County Durham?”) but the move has since been vindicated. The company recently announced a US expansion, and now has plans to send robots to pick exotic fruits in Malaysia and Vietnam.

What's unfolding before us is just the beginning of the North East’s potential for innovation. As we continue to embrace these advancements and foster collaboration, our region is poised to lead the way in shaping a brighter future for all of the UK.

David Dunn | CEO of Sunderland Software City (SSC).

Shaping a brighter future

But the North East isn’t only engaged in taking its incumbent industries to the cutting edge. “It’s also cultivating a reputation in new, diverse fields,” says Peter Helliwell, HSBC UK’s Head of Corporate Banking for the region. “Biotech is a notable recent success story.” That’s being driven in large part by Newcastle’s Biosphere building, which is the heart of the North East’s life sciences hub. Companies that call it home include AMLo Biosciences, which is developing ground-breaking cancer diagnostics, and CellRev, with its cell cultivation technology.

QuantuMDx, is one of the companies that kickstarted Newcastle’s biotech sector. Its story began over 20 years ago. “As a visiting student at Harvard, I got to see Craig Venter give his talk announcing the sequencing of the first draft of the human genome,” enthuses founder Jonathan O’Halloran. “Talk about trailblazers. This guy was the trailblazer. He said, ‘One day we’ll have a portable device that you can use to perform genetic analysis.’ And I thought, ‘I’m going to build it.’ So I did.”

Those devices are manufactured in Newcastle because, as O’Halloran embarked on this endeavour, he was offered some local free lab space there—as well as a sofa to crash on. Today, he estimates that around half of the companies in the region’s biotech cluster are headed up by former employees. “Some of them actively spun out of our company, some are employees who wanted to set up on their own. This is how clusters begin.” O’Halloran believes that, in time, this cluster will rival Manchester’s, and eventually the North as a whole could challenge the “golden triangle” of Oxford, London and Cambridge.

One of the factors that is fuelling its upwards trajectory is a strong talent pipeline. That springs primarily from the North East’s five major universities. Half of all students in the region study STEM subjects, and there is strong graduate retention. But it can’t all be left to universities, says David Dunn, CEO of Sunderland Software City (SSC). SCC is playing a key role in developing local skills, particularly through its adult-focused Skills Bootcamps alongside endeavours to promote STEM subjects in schools. Companies have also been encouraged to shake-up HR practices, and “to consider applications from those without CVs or industry backgrounds”, says Dunn. “As a result, we have seen small and large companies taking on talented people that perhaps they would have previously missed.”

Combine that with the region’s transport links, low cost of living and major investment programmes, says Dunn, and the outlook is bright. “What's unfolding before us is just the beginning of the North East’s potential for innovation. As we continue to embrace these advancements and foster collaboration, our region is poised to lead the way in shaping a brighter future for all of the UK."

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