2         Executive Summary

2.1         Introduction

The development of “Sustainable Growth Parks” (SGPs) is designed to create projects of significance.  SGPs will directly support the growing need to recognise the commodity value of waste materials as new raw products in manufacturing, thus stimulating systematic and economic working practices and supporting the creation of new and environmentally sustainable products. This new industry is recognised for stimulating employment and training in a revolution in manufacturing.

Physically, an SGP is a prestige, modern, and most importantly, clean business park, of which the community can be proud, creating synergy by co-locating state-of-the-art secondary material sorting facilities with manufacturers who can use the materials, and with an on-site innovation centre driving technology and growth. The SGPs create value and jobs out of the recycling of local waste.

Supporting the three main tenets of the Governments’ Waste Strategy i.e. regional self-sufficiency, dealing with waste as near as practicable to its place of origin and promoting reuse and recycling, SGPs will create net additional GDP, jobs and regenerate Staffordshire.  Taking advantage of the raft of legislative and economic drivers, SGPs will strengthen the presence of this developing industry within the region.

Achieving the 2005-6 targets requires a step-change in recycling in the UK and it is to the credit of the local authorities in Staffordshire that they have addressed this issue in good time. The SGPs will play a key role in the Staffordshire local authorities achieving their recycling targets and will contribute significantly to skilling and training of the local community.  It will change people’s perceptions and build momentum around the whole waste separation and re-use cycle.

It is clear that in Staffordshire, there is energy and determination to make the SGPs happen, with a strong feeling of ownership and vision.

2.2         Project Conclusions

Supporting Regional Strategies

1.      The SGPs strongly support all major regional and sub-regional economic and regeneration strategies in the West Midlands and Staffordshire, in particular :

·         Regional Environmental Technologies Cluster

·         West Midlands Economic Strategy

·         Advantage West Midlands Agenda for Action

and meet the aims and objectives of the North Staffordshire Regeneration Zone and the South Staffordshire Partnership. The SGP is one of the ten key projects in the South Staffordshire Partnership Economic Regeneration Strategy and is equally important in North Staffordshire to the Stoke-on-Trent City Council and its Regeneration Partners.

2.      The SGPs are strongly supported by the Staffordshire Local Authorities and the County’s Joint Waste Board and two parks are a central theme of the Staffordshire & Stoke-on-Trent Waste Management Strategy.

The Growing Recyclates Market

3.      The UK market for recyclables is significant and growing strongly, fuelled by the government’s statutory local authority targets for recycling, the introduction of a series of producer-responsibility legislation and increases in Landfill Tax.  The SGPs will ensure that Staffordshire benefits from and plays a key role in this growing industrial sector.

Direct Benefits

4.      As proposed and evidenced in this report, two strategically located SGPs in Staffordshire should be capable of :

·         redirecting at least 400,000 tonnes pa of recyclate from landfill and other disposal routes

and from separating and reprocessing this material:

·         generate between £40m and £105m of net additional GDP for the County

·         generate upward of 550 jobs and safeguard over 1,000 jobs off site

and therefore contribute strongly to the West Midlands Economic Strategy targets.

5.      Direct environmental benefits include :

·         reducing the reliance on landfill disposal of waste and hence reductions in emissions, smell, leachate and noise.  A costing model accepted by the Government and developed by Coopers and Lybrand, has valued this benefit at £57m - £66m for the Staffordshire SGPs

·         using the “Proximity Principle” is expected to reduce truck movements by at least 20,000 journeys of 64km on average so reducing emissions and congestion, and saving up to £24m of transport costs, based upon research published for the NSCA.

Demand

6.      Staffordshire landfills or incinerates over 80% of its municipal waste.  The Staffordshire local authorities currently recycle around 80,000 tonnes of material using waste management companies and other organisations.  Their own targets will increase this figure to 160,000 tonnes by 2005/6, and by hitting government targets 200,000 tonnes plus by 2010.  In addition there are up to 1,000,000 tonnes of recyclate disposed of each year in Staffordshire by industrial and commercial companies, which, assuming a growth of 3%pa, will reach 1,200,000 tonnes by 2005/6. The Parks will also attract material from outside the County, particularly from Derbyshire and Cheshire in the North, and from the Black Country in the South. In our opinion, this baseline of material could satisfy the requirements of multiple SGPs.

7.      There are already at least 94 companies in Staffordshire dealing with waste and recycling, but the majority of the County’s material is reused either elsewhere in the UK or abroad.  The County therefore does not benefit from the added GDP, job creation, environmental benefits and direct rates or tax benefits of re-using their own secondary material. Also there is unlikely to be sufficient industrial demand for the increased recyclate volumes generated by achieving the new statutory targets.

8.      Initial research has revealed some 48 companies prepared either to locate on the Parks or take material from them.  We have formal registrations of interest from 16 of these companies, demonstrating a demand from the market for this type of development.

These 16 prospective tenants have expressed a need for 376,500 sq ft of industrial accommodation (around 63% of the total estimated space available in two SGPs), material requirement of 335,750 tonnes pa (84% of forecast requirement for two SGPs) and anticipate employing 316 people (53% of forecast for two SGPs). Employment scope includes managerial and supervisory, skilled and unskilled manual positions, with expressed opportunities for training positions and special needs.

A full marketing campaign as part of the next stage of development, should generate enough demand to fill both parks and achieve volume and employment forecasts.

The Developments

9.   Prospective brownfield sites for the SGPs have been identified in the North and South of the County.

10. “Broad-brush” costings on the development of each site identify a capital funding gap of some £4 - £10m assuming significant private sector investment.  For a wholly publicly funded venture, this gap is reduced but the initial funding requirement could be as much as £23m for the larger sites. These figures include BIIC capital build cost of around £3.5m and land and construction costs of a materials handling building. These figures also include provision for revenue support to cover initial void periods, but the developer would take the bulk of this risk.

11.  Sites in the North and South qualify for various funding streams including :

·         North Staffs Regeneration Zone*

·         SRB 6*                                                            * available in North Staffs only

·         ERDF Objective 2

·         AWM Environmental Technologies Cluster

with English Partnerships a potential contributor in the North.  The majority of these sites also give tenants eligibility to RSA for inward investment and other funding help in relocating.  The SGP supports the core objectives of all these funding streams. In addition, some £0.75m may be available from Staffordshire County Council to construct the material handling facilities for a Southern Staffordshire SGP, and Stoke-on-Trent City Council is working with Newcastle under Lyme BC to finance a similar facility to support kerbside recycling in the City and Newcastle.

12.  The SGPs have generated considerable interest from potential private partners and major investors.  We have registrations of interest from two local deveopers.

Innovation & Incubation

13.  The BIIC (Business Innovation and Incubation Centre) is an integral part of the SGP and therefore at least one BIIC in Staffordshire appears to be essential. More work is required to establish the location, size, scale, phasing and funding of this aspect.

The BIIC is intended to help existing businesses and stimulate new businesses by developing processes and new products, solving problems in the recycling process and commercialising opportunities through incubation units.  Co-locating with the waste management facilities and manufacturers on site allows the best environment for the sharing of ideas, issues and opportunities, and the transfer of technologies.

The BIIC provides strong support to regional strategies for enterprise and innovation, growing Research & Development capacity in waste management technologies and learning and skilling.

The BIIC also supports the objectives of various national funding schemes including DTI Faradays, SMART and regional schemes such as the EBG Action Plan.

14.  Both Keele University and Staffordshire University had indicated their wish to work together to provide the technical drive to the SGPs.  Discussions are exploring the resource each is able to give to the BIICs and what additional resources can be accessed on the campuses of each university. Birmingham University provides a regional partner to these facilities. Both Keele University and the Staffordshire & Black County BIC have offered to be involved in developing and managing the BIICs.

15.  Other organisations have expressed interest in being involved in the BIICs, including Business Link and the Waste Management Industry Training and Advisory Board (WAMITAB), in providing skilling, competencies and training.

16.  Approximate funding requirements for BIICs on the sites under consideration, have been calculated and presented. Costs average at around £3.5m capital spend. This is based upon a 20,000 sq ft model which will need proving at the next stage of development. The BIIC will eventually be self-funding, but an initial start-up revenue funding of some £90K may be required. This does not include spend on equipment or additional personnel and treats the University partners as paying tenants. Scope and funding of the University involvement needs completing as part of the next stage of the development process and as part of the BIIC business plan.

17.  Although there is already considerable provision of incubation facilities in Staffordshire, these are in great demand, so current facilities are full and additional capacity is required.

18.  Such ‘themed’ incubation facilities are not unique, but there is no practical experience as yet of the viability of such a facility focussed on recycling. Until development work is complete, it will not be possible to decide whether one or more BIICs in the County are justified, although there are ways, discussed in this report, of how the risk in developing themed space can be minimised.  It is likely too, that phasing of the development projects, or of funding, will result in one BIIC being built and proven before a second is developed.

2.3         Current Project Status May 2003

2.4         Recommendations

1.      This report is presented to the Joint Waste Board and subject to their approval the following recommendations apply:

2.      The Joint Waste Board recommend to the Northern Staffordshire and South Staffordshire Partnerships, to follow up funding and regeneration aspects with AWM, and subject to approval from AWM the following actions are taken:

3.      For the North Staffordshire Project, a steering team be formed consisting of representatives from Stoke-on-Trent CC, the North Staffordshire Partnership, Stoke Works, Keele and Staffordshire Universities and AWM.  This team will make key decisions such as site location and agree an action plan to move the project forward.

4.      For the South Staffordshire Project, a steering team be formed consisting of representatives from the South Staffordshire Partnership, the Local Authorities of Southern Staffordshire, (particularly Lichfield D C and Cannock Chase D C) Keele and Staffordshire Universities and AWM.  This team will make key decisions such as site location and agree an action plan to move the project forward.

5.      Move forward discussions with existing and new BIIC partners to secure a structure and funding package, linked with incubator initiatives in other parts of the region.

6.      Progress tendering process and discussions with waste management companies to determine additional material sources and MHZ operators for each Park.

7.      Continue with tenant recruitment programme in consultation with the developers, to a target occupancy by end of construction.  Expand this to involve companies outside the UK.

8.      Continue with development plan as outlined in Section 9 of this report.

9.      Ensure that the Staffordshire SGPs are developed in close co-operation with the following initiatives :

-          Staffordshire Waste Arisings (Viridis)

-          Birmingham SGP (Urban Mines and Birmingham City Council)

-          Environmental Business Support (Groundwork, Business Link)

-          West Midlands Waste Clusters (Urban Mines with AWM)

-          West Midlands End of Life Vehicle (ELV) Clusters (Urban Mines with AWM)

-          Staffordshire Business & Environment Network (SBEN)

-          West Midlands ReMaDe (Enviros & Urban Mines with AWM)

-          West Midlands Virtual BIIC (Urban Mines with Birmingham University)

-          National Industrial Symbiosis Project (NISP – Midlands Environment Business Company)

-          InStaffs (UK) Ltd

In line with their vision of establishing SGPs around the country, Urban Mines Ltd is eager to remain involved in driving this project forward.

2.5         Frequently Asked Questions (FAQ’s)

1.   Is there sufficient demand for 2 sites in Staffordshire?

There appears to be sufficient recyclable material available in Staffordshire to feed two parks.  By 2005, the local authorities will generate some 160,000 tonnes of recyclables with an estimated 1,200,000 tonnes of commercial and industrial recyclables also available.  The need for two parks will therefore depend upon the Local Authorities’ decision to supply existing and future recyclate volumes to the SGPs and the propensity of the selected waste management company(s) to attract industrial recyclables to the facility.

Waste availability however is not the prime factor in assessing demand for two sites. Work carried out by Urban Mines has shown a demand for industrial units from prospective tenants, but as key factors such as location and unit design have not been decided upon, it is not possible to gain enough demand to fill the parks at this stage.  A major role of the future development programme, will be to market the SGPs to attract sufficient tenants to fill the parks as soon as possible after construction, and to match tenant requirement with material supply.

2.      Could the sites function with just Commercial and Industrial waste?

Data suggests that there is more than enough commercial and industrial recyclables arising in Staffordshire to service two SGPs. This is highlighted by Environment Agency figures, interpreted by Viridis, with volumes at just below

1,000,000 tonnes (1998/99) increasing to an estimated 1,200,000 tonnes by 2005/6 – municipal waste only accounts for 14% of Staffordshire waste arisings. It is not clear how much of this could be available to the Parks, through negotiations with the major Waste Management companies and local major waste producers. Supplies would come from materials currently landfilled and material that is currently recycled outside of the region, giving the region the benefit of the added value and jobs rather than exporting that benefit. Volumes should also expand significantly as new or further end-of-life legislation is introduced for electrical equipment, vehicles, packaging etc.

More detail of commercial and industrial sources will come out of the work currently being undertaken by Viridis (“Waste Audit of Staffordshire and Stoke-on-Trent” supported by Staffordshire Environmental Fund under the Landfill Tax Credit Scheme)

3.      What volume of waste makes the SGP viable?

Viability of a single SGP depends on a variety of factors, some of which will not be apparent in detail until sites are chosen and features agreed ie:

-          Landfill Tax level

-          types of tenants and their material requirements (for instance, do they process large volumes of aggregates or small volumes of precious metals from circuit boards)

-          suppliers onto the site - municipal, commercial and industrial

-          recyclate values (dependent on volumes, material type and degree of separation)

-          intervention funding levels

Some of the work with prospective tenants has identified material requirements, but this ‘material management’ will need focus in the next stage of the parks’ development, driven by matching prospective tenants with available materials.

4.      Won’t the market take care of this recycling problem without the help of public funding?

Very few regions nationally have grasped the nettle of recycling and seen the economic opportunities it presents. The government has given little direction, and many Local Authorities have not realised the consequences of reaching the government targets. The recycling industry in the UK is, in many ways, embryonic.

As evidenced in this plan, the market for recyclables is growing ahead of GDP in the traditional recycling routes for materials such as paper and glass.  Plastics recycling is currently very low, with the larger reprocessors based outside the UK.

By 2005 the volume of recyclables generated by Staffordshire Local Authorities will double and treble by 2010.  These increases are reflected nationally too. We cannot depend on traditional recycling routes to deal with this huge increase nationally in material available – paper recycling is reaching capacity, the demand for particular glass colours is close to reaching maximum.  Hence the requirement for new separation technologies to reduce costs and for new products to use separated materials e.g. glass for sandblasting, as an absorbent, as an aggregate replacement, and also in value added products.

The major glass recyclers are in the North West and North East, plastic recyclers are in the North or abroad, paper recyclers in Cheshire. Most of Staffordshire’s recyclates are already recycled outside of the region. The region loses the benefits of additional GDP, jobs, innovation to other parts of  the UK or to other countries.

The SGP, with funding assistance, will help Staffordshire and the West Midlands acquire the full benefits of dealing with its own waste problems and will gain the expertise and reputation as a key region in this rapidly growing industry.

A significant barrier to the expansion of reprocessing facilities is the hurdle of planning permission. The SGPs will provide a ready made site which will have the appropriate consents.

5.      Is the SGP viable without Public money?

The SGP concept is unique in developing a ‘themed’ business park and therefore focussing on recycling restricts the type of tenant locating onto the park. Without public assistance, it is unlikely that private developers will be willing to accommodate this restriction, or be able to support the core aims of the park. The BIICs certainly would not be viable without public support for their construction and for the ongoing work carried out in their facilities.

We propose a private development model where the commitment of the developer is cemented through his significant funding of the project and his agreement to tenancy and other restrictions are made through the heads of agreement, with a proportionally lower public funding loading. This is presented in detail in this report.  Likely funding sources are also detailed later in this report.

6.      What Revenue Funding does the SGP require? For how long?

The SGP will require Revenue Funding to help with:

-          the development period

-          start-up costs

-          to contribute to costs whilst the occupancy grows

-          to contribute to BIIC costs

This is discussed in detail in this report. The aim, based upon discussions with various developers, is to have the industrial parts of the park self sustaining well within a 3 year period.

7.      Why is co-location so critical?

Co-location of the waste sorting facilities and the companies that use the material, not only saves transport (to the value of some £24 million potentially) but also improves efficiency by allowing the users to influence how the secondary materials are separated and processed before they are used.  The material handling zone could be separated geographically from the industrial park, but for each mile of separation up to £600,000 worth of secondary material transport would be required each year and the ability for the user to influence the waste zone operator would be diminished.

Co-locating the BIIC facility, providing innovation and incubation, with the industrial sectors of the park, allows effective exchange of ideas, trouble shooting, commercially driven research and the solution of “real world” problems.  The Cambridge Science Park and, closer to home, the Keele Science Park, are both excellent examples of how co-location has driven innovation and commercial success.

8.      What are the regional roles of the SGPs?

Clearly each SGP will have a sub regional influence on the recyclates market and

on waste disposal.  The Park in Stoke-on-Trent is likely to attract materials from Cheshire, Derbyshire and possibly Shropshire too, whilst the site in Cannock is close to the major conurbations of the Black Country, particularly Wolverhampton and Walsall. This represents not only a major source of material, but also a major market for the goods manufactured on the site.

AWM have encouraged Urban Mines to look at these types of “waste clusters” regionally and assuming this project is approved, this will allow the involvement of Black Country Local Authorities to be thoroughly scoped.

9.      Why does the SGP need a BIIC?

The volumes of recyclate generated within the region, due to legislative and other drivers, will grow substantially in the next few years, from both municipal and commercial sources. There is no indication that without support and innovation, the demand for these materials to industrial companies, will increase at the same rate. Discussion presented later in this report on the markets for paper and glass in particular, show capacity issues for the traditional recycle routes for these materials. Without growing the demand for recycled materials, material prices will collapse with over supply and recyclates will continue to be landfilled, and Local Authorities and the National Government would face prosecution for failure to meet recycling targets.

The recycling industry is not short of ideas, but is short of focussed facilities with planning approval and technological innovation to move the industry forward. For instance plastics are an issue in themselves – they are light and contribute little to recycling rates based upon tonnage, they are relatively expensive to transport before bulking, compressing or shredding and the separation of chemical types is either expensive or slow. The volume of glass recyclable back into new glass manufacture is reaching capacity and new application areas need commercialising. In general there is an industry need for adding value to recycling through innovative new products and getting the costs down for recycled material to compete with virgin. Hence the technology drive of the BIIC.

The BIIC will also provide industry specific training and business start-up support co-located with successful and growing recycling companies. Without the BIIC the industry would not get the regional push it needs and the SGP would lose considerably its synergistic advantages of co-location of material producer, material user and technology transfer.

From the point of view of the developer, the BIIC is a tenant on the site like any other tenant and the head lessee for the BIIC in conjunction with the key partners, will have to ensure the continued financial health of the operation, through rents received and additional support where required. There are many examples of private developers building incubation operations to run on a profitable basis, for example the Prichards development in Stafford.

10.  Should there be one BIIC or two?

At this stage in development, we cannot say if one or two BIIC facilities are justified in Staffordshire to support the SGP developments. This decision will be driven by the key partners for the BIIC and the assessed demand for incubation and office space on such an innovative development. This will form a key part of the business plan for the BIIC. Further work with the partners and the continued search for tenants will define the requirements for each BIIC facility.

Demand in general for incubation facilities in Staffordshire is high and most such facilities are full, viable and running very successfully. This augers well for similar developments associated with the SGPs. Although there are examples of ‘themed’ incubation units, particularly directed towards the IT industry for instance, there are currently no incubators functioning focussed on the use of secondary materials. However, Urban Mines are developing this concept at various sites around the UK. Local demand will need to be thoroughly assessed, although there are ways of reducing the risk of such an innovative project, which are discussed later in this report.