In LEDC’s second Espresso Shot reviewing September 2024, David and Mike unpack the significance of Holtec International's decision to site its Small Modular Reactor (SMR) nuclear manufacturing facility in South Yorkshire. This £1.5 billion investment will be a major economic asset for the region and follows Rolls Royce SMR’s decision in May to locate its prototyping facility in Sheffield. But what are the learning points for other parts of the UK looking to develop high-tech industrial clusters?
Holtec SMR nuclear manufacturing facility for South Yorkshire - what has been announced?
In a significant announcement for South Yorkshire, US-based nuclear technology company Holtec International has revealed plans to locate an SMR nuclear manufacturing facility in the area. This £1.5 billion investment is expected to create up to 3,000 high-skilled engineering jobs over the next two decades, cementing South Yorkshire's position as a hub for advanced manufacturing and nuclear engineering. Holtec has said that it aims to source at least 70% of materials, components, and work from within the UK. The factory will not only serve Britain’s emerging SMR market but will also have the potential to export components to other European countries and the Middle East.
Holtec’s decision to select South Yorkshire over other shortlisted locations in the UK is a strong endorsement of the region's existing capabilities and industrial strengths. Earlier this year, Rolls Royce SMR chose Sheffield as the location to manufacture its prototype modules. And for decades companies like Sheffield Forgemasters have supplied critical components to the nuclear industry. The presence of institutions like the University of Sheffield's Energy Institute and the Advanced Manufacturing Research Centre (AMRC) will also have played a role in attracting the investment.
Factors contributing to South Yorkshire's success
South Yorkshire's success in landing these transformative investments from the nuclear industry is down to several key factors. First, the region has a well-established industrial base with a proven record in the nuclear supply chain. These existing capabilities and expertise provided Holtec and Rolls Royce SMR with the confidence that the necessary skills and infrastructure were already in place.
Second, the region's ability to quickly mobilise a united front and demonstrate a warm welcome for the investments was a significant advantage. This was a key factor in other major economic developments, such as the rescue of Doncaster Sheffield Airport from permanent closure, and the decision by Bedfordshire-based Hybrid Air Vehicles to locate its manufacturing facility there.
The collaboration between local government bodies, the business community, and other stakeholders in South Yorkshire created a compelling proposition for Holtec, showcasing the region's commitment to supporting the company's growth plans. The presence of an elected mayor in South Yorkshire also appears to have been an asset for both Holtec and Rolls Royce SMR, providing a focal point for investors, high-profile champion, and coordinating force for the region's economic agenda.
Lessons in building successful high-technology industrial clusters
The Holtec and Rolls Royce SMR announcements offer valuable lessons for other regions aspiring to develop successful high technology industrial clusters. It highlights the importance of building on existing strengths and factor endowments. Rather than starting from scratch, regions should identify their unique capabilities and leverage them to attract targeted investments in existing or related emerging industries and technologies.
High-technology industrial facilities with the potential to create thousands of jobs are understandably attractive targets for ambitious places and inward investment teams. They can be transformative for local economies – creating wealth and opportunity across the community, the absence of which is still felt by many places that have suffered the closure of comparable facilities. But it is important to focus proactive efforts on targeting investments that are both a good match for the area’s economy, and stand a realistic chance of coming to fruition. Is there a suitable site with access to water, quality connections to the grid and other utilities? How supportive would the local community be to such a development? Major facilities involve tying up investor capital for long periods so minimising uncertainty is essential. If these kind of barriers exist, developing a strategic plan or investment framework and the community engagement that goes with it is a good opportunity to address them and position the area for future success in any competition for investment. (See our bonus material on strategic planning).
South Yorkshire shows why the ability to quickly mobilise a united front and demonstrate a welcoming environment for investors is crucial. By fostering strong partnerships between local government, business networks, and the broader community, regions can present a compelling and coordinated proposition to potential investors. The importance of central government support is also critical in landing foreign direct investment. Beyond their inward investment services, central government had already made supportive investments in South Yorkshire’s advanced manufacturing and nuclear assets and capabilities.
The region’s three Chambers of Commerce and other business networks have a long history of effective partnership working in support of external investment. In South Yorkshire there's a stronger relationship between the business community and education and training providers than you see in many other parts of England: it is no coincidence that the region was selected by the Department for Education as a trailblazer location for employer-led Local Skills Improvement Plans (LSIPs).
The role of institutional assets, such as leading universities and research centres, is also important. These institutions not only provide a skilled workforce but also drive innovation and technological advancements that can attract high-value industries. The AMRC model (part of the UK’s High Value Manufacturing Catapult) is one that several other regions are looking to emulate.
The presence of high-profile political leadership, such as an elected mayor, can be valuable in championing the region's economic agenda and coordinating the various stakeholders involved in attracting and supporting major investments.
As the UK government prepares to unveil its keenly-anticipated industrial strategy, the lessons from South Yorkshire's success with the Holtec and Rolls Royce SMR investments will be crucial for other regions seeking to position themselves as hubs for high-tech industries and secure transformative investments.
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