8

investing in

Lanarkshire by Michael Kendall

Darwin’s words ring true for those

who have witnessed Lanarkshire’s

re-emergence as an area of economic

growth. Life after steel has seen our

economy transform into a strong and

evolving animal. Attracting inward

investment has been and will continue

to be key to our future. It’s not only

about money - we need fresh ideas

and perspective to build on

current progress.

Lanarkshire has a strong heritage in

securing inward investment projects

following the demise of the steel

industry during the late 1980s and early

1990s. Some of these have embedded

themselves into the fabric of the local

economy while others, including large

manufacturing concerns, have come

and gone - casualties of the transition

towards globalisation. Factory closures

such as Chungwa gave Foreign

Direct Investment (FDI) a bad press

in the 1990s.

Many questioned the value of

attracting investment which could be

withdrawn as quickly as it had arrived.

However there is now a realisation that

FDI of the correct type in a supportive

environment can be a powerful driver

of growth.

The diversity of Lanarkshire’s economy

is often cited as an asset, with claims

that it is less vulnerable to aftershocks

resulting from economic downturns.

Equally, other commentators point to

diversity as a weakness arguing that

we lack critical mass in any particular

sector and become a “jack of all trades,

master of none”. What the diversity

does give us is a dynamic environment,

where change is constant.

There are a number of changes that

will impact (to a greater or lesser

extent) on the Lanarkshire economy

in future years, including the drive by

Scottish Enterprise to adopt regionally

signifi cant projects, the focus

on “Priority” Industries and alignment

of resources towards securing

additional projects in Lanarkshire.

Strathclyde Business Park

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Inward Investment in

Scotland and Lanarkshire

Scotland at large remains a popular

location for inward investment.

According to data from UKT&I and

Ernst & Young, Scotland is in the

top 3 UK regions for FDI with 11%

of planned jobs, and over a fi ve

year period the number of projects

attracted ranked second.

Scotland also had a higher proportion

of projects with an R&D function

(12%) compared to the UK and

Europe (both 8%). Projects with R &

D functions are more likely to become

embedded in the local economy and

are generally less “footloose” than

traditional manufacturing industries.

Lanarkshire continues to be a recipient

of FDI, taking advantage of the

rise of mobile FDI in services and

technology projects in recent years.

Key international investors located in

Lanarkshire include Organon, Rolls

Royce, Honeywell Control Systems,

First Direct and Morgan Stanley.

Lanarkshire’s current

proposition

Lanarkshire’s success in attracting

mobile investment projects has

been dependent on the strength of

its ‘product offering’ and how this

translates into meaningful business

solutions and competitive advantages

for inward investors.

Lanarkshire benefi ts from its central

location in Scotland. Strong physical

and connectivity attributes enable

companies to tap into a large, skilled

workforce across the central belt as

well as gain easy access to markets and

customers. The diversity of property

and sites across Lanarkshire is signifi cant

and provides companies with a high

degree of choice and scope to achieve a

tailored solution.

North Lanarkshire alone has assets in

the form of Strathclyde Business Park,

Eurocentral, Ravenscraig, Gartcosh

and Drumpellier Business Park.

Critical mass and the presence

of existing industry networks are

important considerations for many

large inward investors.

Lanarkshire should realise greater

inward investment opportunities

through inclusion in the metropolitan

west region which will scale up the

proposed ‘product offering’, focusing

more on labour fl ows, expertise and

support across the Glasgow “City

Region”. In this case the sum of parts

is greater than each individual area can

offer. Lanarkshire can also boost its

profi le in key sectors.

Importantly, Lanarkshire houses a

diverse sector base and opportunities

to identify and promote niche capability

will continue to emerge. The overall aim

from an inward investment perspective

is to attract and embed knowledge

intensive companies locally; attracting

high value jobs in the process and

boosting the skills and competencies

of the labour force over the medium to

long term.

Looking ahead, the European

Commission’s regional aid settlement

for 2007 onwards offers reduced scope

for Regional Selective Assistance in

Scotland. The revised map covers a

signifi cantly smaller area of the country

and the maximum aid intensity has

reduced from 20% to 15%.

However Lanarkshire has suffered

less than most from this settlement,

with investment sites at Strathclyde

Business Park, Eurocentral, Drumpellier

Business Park, Gartcosh and Ravenscraig

retaining coverage and thus offering

investors access to fi nancial incentives

to locate in the area.

Crime super-campus locates in Gartcosh

The Scottish Executive has recently confi rmed £40m of investment to

transform Gartcosh into the crime capital of Scotland. This is not as worrying

as it sounds - the investment will assist in Scotland’s fi ght against serious and

organised crime. Gartcosh has been chosen by ministers as the site for a

new Scottish-FBI style headquarters in the face of competition from locations

across Scotland.

Scheduled to open in 2010, the supercampus is the fi rst major development

on the former steelworks site and is the culmination of hard work and

investment by public sector agencies to transform the site into an attractive

business location. The huge centre will bring together agencies involved in

the fi ght against crime, such as the Scottish Crime and Drugs Enforcement

Agency, Customs, Immigration, forensic experts and the serious organised

crime agency. The development is expected to create 500 jobs which will in

the main be highly skilled and well paid.

The political drive to de-centralise public agencies from Edinburgh and

London is leading many regions to look to attract public sector investment.

Such investment can provide well paid secure jobs that are less likely to be

susceptible to economic downturns. Gartcosh’s central location and new

direct rail link to Glasgow offers it competitive advantage in attracting high

value investments such as this.

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Economies of scale via

Metro West agenda

Inward investment opportunities

can be stimulated and maximised

for Lanarkshire through the scaling

up of local activities and projects to

a Metro level. Metro Region Plans

focussing on the West and East of

Scotland include projects designed to

boost the understanding of Scotland’s

assets and expertise in its target

audience. Projects that foster networks

and shared expertise and boost our

international profi le in the process are

also key areas for focus.

Other competing locations for inward

investment in the UK, such as the

West Midlands, North East and

North West employ metropolitan

planning and promotion for economic

development gains, with spin offs

for the FDI agenda. Economies of

scale propositions and arguments are

very persuasive and comforting to

large inward investors. The effects of

the Scottish approach will become

apparent with time but domestic and

international experiences reinforce the

employment of this strategy.

The criteria for

inward investment

Inward investment is typically

motivated by one or more of the

following broad factors:

l Market seeking motives

l Resource seeking motives

l Effi ciency seeking motives

l Asset seeking motives

Scotland and Lanarkshire benefi t from

inward investment projects across each

of the above. For example, our wealth

in natural resources is refl ected by the

strong growth in FDI projects in oil

and renewable projects. Lanarkshire is

particularly well placed to respond to

these enquiries, utilising assets such as

the Energy Technology Centre at the

Scottish Enterprise Technology Park.

The size and maturity of the UK market

is a key driver for FDI projects to

Scotland and Lanarkshire.

Industry focus

Lanarkshire’s proposition to inward investors is in line with Scotland’s national

and regional focus on priority industries. National priority industries have been

identifi ed as the industries promising the greatest economic impact for Scotland.

The table below outlines the key industries in Scotland.

Industry Economic potential

Life sciences l commercialising research

l attracting global research and manufacturing

Financial services l skills and infrastructure to strengthen global

position of both existing and new companies

l innovation for new products and markets

Food and drink l greater value added to Scotland

l new market opportunities, e.g. health

Tourism l high-value growth markets

l culture, heritage and environment

Energy l building on global oil and gas capability

l developing renewable assets and technology

Electronic markets l commercialising research

l attracting research and design from overseas

Regional priority industries are important to the Scottish economy, but their

potential for growth is likely to be more limited than with the national priority

industries, and their impact more apparent at regional level. They include textiles,

chemicals, shipbuilding & marine, forest industries, aerospace and construction.

Lanarkshire has capability in some of these industries, principally construction,

followed by aerospace and chemicals. Enabling Technologies which include

electronic markets and advanced engineering cross-cut the national and regional

industries. Opportunities for FDI are also being pursued in these technologies.

Investment at Eurocentral

A consortium of investors has announced plans to plough £330m into

the development of the 650-acre Eurocentral site beside the M8.

Developments will be focused on the site formerly occupied by Chungwa.

The planned demolition of the Chungwa factory will be followed by

the construction of 10 new offi ce buildings, four new warehouse and

manufacturing units, a restaurant, crèche and gym. The development is

expected to create up to 5, 000 jobs.

Director of Investment Trust Tritax, Ian Ross said: “Eurocentral has a fantastic

position with great access to the M8/A8. Our development proposals,

which involve putting in place at day one all the infrastructure, landscaping

and facilities which might usually take a decade or

more, capitalise on these key attributes and create a

platform for signifi cant job creation in

North Lanarkshire.”

Eurocental is one of Lanarkshire’s key strategic

investment locations. Companies already

established at Eurocentral include the Dakota Hotel,

Clyde Valley Drilling, YELL and News International.

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While this varies by industry there

exists some comfort factors for new

entrants including the existing numbers

of foreign owned companies located

here. In addition, the existence of a

large customer base is one of the main

drivers in the decision making process.

Globalisation and the rise of the service

economy mean that Scotland and

Lanarkshire have to compete fi ercely

with other locations for projects that

seek effi ciency and/or asset gains.

Lanarkshire is strongly placed within

the UK marketplace for companies

seeking to harness effi ciency gains.

Our central location rewards companies

looking for a strategic location and

the strong transport linkages provide

access to a low cost, skilled and large

labour pool. The availability and quality

of property and brownfi eld sites is also

a key asset for the region.

Emerging markets

There is growing evidence of inward

investment to the UK from new source

countries. London has been a net

recipient in the last 12 months with

22 new Indian companies locating

there during this period. Indeed,

Indian fi rms are now the second most

common inward investor in the UK

capital behind the US. The UKTI is

concentrating marketing and lead

generation resources in both China and

India for FDI and trade purposes.

Scotland and Lanarkshire have begun

to embrace FDI opportunities from

these countries. Industry analysts

report that this trend is no temporary

blip and that we’ll see India and China,

join the US, as the top three sources

of new inward investment for many

years to come. Scotland has already

taken steps to hone our offer to these

markets and ensure that future inward

investment research, marketing and

business development refl ects this

new reality.

The Lanarkshire Brand

The Lanarkshire Branding and

Communications Project is a key

initiative for boosting Lanarkshire’s

profi le as a location for inward

investment.

The location pack, website and

associated marketing collateral

provides inward investors with a raft

of intelligence on Lanarkshire including

data on property and site assets, key

sectors and the company base.

(www.lanarkshire.com)

The future

Looking ahead, the key challenge for

Scotland and Lanarkshire is centred on

our ability to respond to changes in the

market. All stakeholders with a vested

interest in inward investment face this

challenge. Industry consultants call it

‘Product Development’ and in simplest

terms it involves aligning the offering

of your location with the needs of the

inward investor.

Scotland and Lanarkshire continue

to take steps to align the skills of the

workforce with the needs of inward

investment companies. The importance

of skills and availability of people

cannot be underestimated. Competing

countries have invested heavily in areas

such as technology and IT as services

have overtaken labour intensive

manufacturing activities. Lanarkshire’s

evolution is ongoing - combined with a

strong place and infrastructure agenda

it will continue to boost its proposition

for internationally mobile projects, not

just those seeking a UK location.

Michael Kendall is Inward

Investment Senior Executive at

Scottish Enterprise Lanarkshire and

a committed Darwinist.

The Metro-Region approach

At the heart of the Metro-Region approach is the widely-accepted view that

cities and large conurbations are the primary drivers of economic growth.

Scottish Enterprise is adopting the metropolitan region approach in order

to help stimulate and grow the Scottish economy. The main aim is to bring

Scotland’s economic performance up to the levels of other top performing

European economies.

Cities themselves are seen to be important to the wider region due to their

concentration of key assets such as universities, retail and leisure facilities.

They also act as important transport hubs for the wider region.

SE’s approach will include increased collaboration between Scotland’s major

cities in order to compete internationally. It will also seek to ensure that all

parts of Scotland – urban and rural - benefi t from growth.

North Lanarkshire is considered to be part of the Glasgow Metropolitan

Region due to its strong links with this labour market. It is also recognised,

however, that the area has linkages across the country, in areas such as

commuting and business supply chains.

Phil Spencer promoting the location pack