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A Hotbed of Investment

As the top location in the world for U.S. investment, the UK offers companies immediate access to one of the largest markets in the world.

By Jenny Vickers

Trenstar Trenstar opened up a facility in Leeds to apply RFID technology to North England’s brewery industry. Red/write RFID tags with ferrite cores are welded onto stainless steel beer kegs to help track and manage the kegs.

Although the UK is just 0.03% the size of the U.S., the country’s economic ties with the U.S. outweigh that of any other country in the world. According to the U.S. Bureau of Economic Analysis, the UK is the number one recipient of foreign direct investment (FDI) from the U.S., receiving $302 billion of total U.S. investment overseas in 2005. This was 28% of all U.S. investment in the European Union (EU). At the same time, the UK is the leading investor in the U.S., with $282 billion in 2005, representing around 17% of total FDI in the U.S.

“The UK is a hotbed and magnet of creativity,” says Sarah Mooney, deputy director of UK Trade & Investment, USA. “Because the UK is part of the EU, the largest economic market in the world, it is a launch point for American companies to set up in an English-speaking nation and find access to Europe. We have an open, business-friendly environment, flexible financial market regulations, and are a world leader in creativity and technology. When you locate in the UK you are connected across the globe.”

The UK also tops the list in attracting more investments than any other European country. In 2006, FDI in the UK totaled over $800 billion. Just looking at the following key figures, companies can see why this island’s global footprint is so significant. The UK is:

• The world’s top pharmaceutical exporter, exporting $22.6 0billion worth of pharmaceuticals in 2005.

• The sixth largest medical equipment market in the world, with annual spending on healthcare equipment and consumables of over $5.5 billion.

• Home to the highest concentration of foreign banks, with 31% of the world market in foreign exchange.

• Home to the world’s biggest wind farms (with more than 3,000 towers), supporting around 20,000 jobs.

• Home to 19 of the top 35 institutions for postdoctoral jobs outside North America, as well as world-renowned research institutions such as Cambridge, Oxford, Imperial College, and London’s Global University.

Big Names, Big Investments

While London has continued to rank as the top city in Europe for ease of access to the market, other regions of the UK are proving to be top locations for foreign investment, especially in the areas of technology, pharmaceuticals, biotechnology, financial services, and environment/renewables.

“Each region of the U.K. possesses their own unique economic and geographic advantages, but they all offer companies tremendous investment opportunities,” says Cindy Bouthot, head of UK Trade & Investment, Boston. “Biotech companies are drawn to Cambridge, Scotland, and Manchester in North England. Software companies are drawn to the southeastern UK, close to London and the Reading area and Wales. For technology companies that support financial services, northern Ireland has a strong cluster.”

Amazon.co.uk, a subsidiary of leading online retailer Amazon.com, recently established a new fulfillment center in Swansea, Wales. Amazon’s new custom-built center will create up to 1,200 jobs over the next five years, and it is the largest FDI project in Wales since 2000. Additional recent significant investments in Wales include UK pharmaceutical giant Morvus Technology and German manufacturer Möllertech, which supplies molded plastic components for BMW Group’s Mini Cooper. Möllertech’s plant in Wales has seen growth of over 160 jobs since 2000, and now reports nearly $60 million in revenue.

Northern Ireland experienced the most successful year for inward investment in 2006/2007, according to Invest Northern Ireland. A total of 28 new projects were secured, which are expected to create 3,497 new jobs. These investments included Firstsource, Tyco, Axa, Imagine Telecom, and Coca Cola.

The RFID Hub of Europe

With a GDP of $597 billion, North England is the second largest commercial and financial region in the UK. It is home to more than 3,600 foreign companies, including 1,300 from North America. Notable urban areas such as Manchester, Liverpool, Newcastle, Middlesbrough, Sheffield, Leeds, Central Lancashire, Tees Valley, and the Hull and Humber Ports serve as critical investment hubs, attracting major companies such as Proctor & Gamble, Microsoft, Boeing, and Johnson & Johnson.

RFID An RFID installation over a rail support identifies rail cars and if they are secure as they pass below. RFID technology has already established itself in a wide range of markets, including automated vehicle identification systems, because of its ability to track moving objects.

One of the major new developments in North England is the application of new radio frequency identification (RFID) technology to industry. Developed in the 1940s and used during World War II, RFID is transforming the distribution sector. According to the market research firm Gartner, Inc., worldwide spending on RFID is scheduled to surpass $3 billion by 2010.

“RFID technology allows products or items containing an RFID tag to be identified wirelessly,” says Ed Pennington, vice president of Business Development at the North of England Inward Investment Agency. “The RFID tag operates like a bar code, but with significant advantages, such as greater data capacity and rewritable capabilities.”

According to Pennington, retail is the Holy Grail for RFID. Companies who manufacture items that are often stolen, such as Gillette razor blades and Duracell batteries, are already using the technology. “RFID is used across multiple sectors. We’ve seen large growth in animal tagging, public transport, auto security, building security, and swipe cards,” says Pennington.

RFID in North England is providing huge opportunities for companies seeking new market models and supply chain management and manufacturing. A number of leading North American RFID developers and users have made significant investments in North England, including Colorado-based Trenstar, Canadian company Quand Medical, and Wisconsin-based Red Prairie.

According to Pennington, a key factor that has attracted many U.S. technology companies to North England is the availability of tax credits to businesses conducting any type of R&D in the UK market.

“North England is becoming the RFID hub of Europe,” says Pennington. “Through the support of government, academics, and industry, we are putting in place an infrastructure where either RFID companies who want to locate in the region can thrive or other companies in other sectors like aerospace, automotive, or retail can come in and find high-tech infrastructure in place to thrive in as well.”

Trenstar, a leader in mobile asset management and pioneer of RFID, opened up a facility in Leeds to apply this technology to North England’s brewery industry. This industry has not only been around for several hundred years, but is a complex supply chain that is very competitive and profitable in the UK.

According to Stuart Facey, managing director of Trenstar in the UK and Europe, there is a recent global problem of steel theft since the price of steel has risen to an all time high. By putting an RFID chip on steel beer kegs, Trenstar is able to track and manage these beer kegs in a way that no supply chain has ever seen before.

“We chose the UK because the brewing industry suited our industry model the best,” says Facey. “Locating in Leeds gave us access to Carlsberg, a big brewer with an 11-acre site storing up to 350,000 barrels at any one time. North England is quite literally the center of the county, at a junction of east, west, and south motorways.”

“Why wouldn’t you come to North England?” asks John Greaves, director of the European Center for Automatic Identification and Data Capture and the UK center for RFID based in North England. “RFID is the wireless world and the future of companies as diverse as Microsoft, IBM, Clorox, Kellogs, Proctor & Gamble, and Wal-Mart. There is a huge opportunity for companies looking to make a global footprint in wireless technologies.”

Scotland’s Life Sciences Sector:
Growing Upward and Outward

Groundbreaking research, such as the discovery of the p53 cancer suppressor gene and “Dolly” the genetically engineered sheep, has helped to position Scotland as a leader in the life sciences industry.

Scotland’s innovation in areas such as neuroscience, genomics, biomedical, cardiovascular, stem cell, and cancer research is helping to attract high-level investments to the country. With more than 500 companies and nearly 28,500 employees, Scotland is home to more than 20% of the UK’s biotechnology companies.

In 2007, Cognia, a database specialist for the pharmaceutical and biotechnology industries, received a Regional Selective Assistance grant of more than $1.5 million from the government of Scotland for a new center. Cognia will be partnering with the University of Edinburgh and ITI Life Sciences (a Scottish development organization devoted to funding the gap between publicly funded early-stage research in the life sciences and privately backed commercial development). ITI Life Sciences also partnered with Swedish biotech company Cellartis AB and the University of Glasgow to launch an $18.7 million R&D program in Dundee, Scotland.

Growth in Scotland’s life-sciences sector has successfully lured pharmaceutical companies such as New Jersey-based Wyeth Pharmaceutical Company—one of the world’s largest pharmaceutical companies—to the country. In April of 2006, the Health First Minister of Scotland announced a partnership with Wyeth to create the world’s first Translational Medicine Research collaboration.

LifeScan Scotland, a Johnson & Johnson company headquartered in Milpitas, CA, has a facility set up in the city of Inverness, which is regarded as a center of excellence for those working in the field of diabetes. The company located in Scotland in 2001, and now over 1,300 people are employed at the Inverness facility, including over 150 R&D specialists.

Michael Crowe, Managing Director and VP Worldwide Operations of LifeScan Scotland, says locating in Scotland was advantageous due to a talented and diverse workforce and helpful economic development agencies. “LifeScan is committed to creating a world without limits for people with diabetes,” says Crowe. “LifeScan relies on outstanding R&D professionals, like those in Scotland, to realize this vision.

RFID Dundee University’s Wellcome Trust Biocentre located in Dundee, Scotland

“Every country says they have something to offer, but in the case of Scotland, you can look at our track record of invention and history in science and know this is the magnet attracting companies such as Johnson & Johnson and Wyeth,” says Lorna Jack, president of the Americas for Scottish Development International. “A biotech industry publication, Fierce Biotech, listed five clusters that they believe exist in life sciences. Clearly Boston, MA, San Diego, CA, and New Jersey made the list. But the only two other places in the world that they talked about were Singapore and Scotland. There’s no surprise then that large global corporations will invest directly or fund research in our universities.”

 

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