Searching for Higher Ground

FDI specialist company Oxford Intelligence has just researched and published a major report on the shared services sector with IBM-PLI. Peter Lemagnen, managing director for Oxford Intelligence, says there is still much scope for development in the U.K. and Ireland, thanks to relatively employer-friendly labor regulations, availability of professional and multi-lingual expertise and the competitive costs vs. major Western European competitors like France and Germany.
        Japanese anti-virus and Internet security software and services company Trend Micro's decision to establish its EMEA (Europe, Middle East and Africa) shared services center in Cork, Ireland, in February, 2003, seems to bear this out. Anthony O'Mara, EMEA finance director, says that the opening of the shared services center underlines the company's emphasis on global growth and Ireland's strategic location.
        "Ireland has a solid reputation for being able to provide high levels of customer service, and has a wealth of highly skilled resources," he says.
        Overall, Lemagnen acknowledges that much work has been undertaken by both the U.K. and Ireland to encourage an increased number of knowledge investments that rely more on skills than costs. In particular, he feels that Ireland has recognized that the continued growth and development of the economy cannot be sustained on the traditional inward investment successes that they enjoyed in the 1980s and '90s. Investment based on low-cost manufacturing and low-cost service sectors is no longer viable, given the competition from the emerging economies of central Europe. IDA Ireland, the national inward investment agency, has helped the country take the most direct steps to move the level of investment up the quality chain.
        "To achieve this it has engaged in a two-pronged approach to tackling the problem for the long term," explains Lemagnen. "Firstly, to increase the output of higher-level education [graduates and technical graduates] and channel these into relevant industry sectors – life sciences, biotechnology, software development, and higher-level financial service skills. The second approach is to turn key Irish universities into world-class centers of advanced research."
        He is similarly impressed by Ireland's ability to attract the right type of knowledge investments. "At Oxford Intelligence back in 2001 we were advising economic agencies to focus on companies such as PayPal and, in 2002, Google, which were looking to expand their European operations. The Irish worked it out too, landing both companies' key European centers in 2003."
        In the U.K., meanwhile, significant effort has been deployed by national inward investment agency U.K. Trade and Investment to improve network links between universities, science parks and development agencies to ensure that the U.K. can compete for new high-technology investments.
        The euro remains a contentious point, however, for certain types of investments. The recent announcement by Nissan chairman Carlos Ghosn that the Japanese carmaker would shift the production of the next generation of Almera cars out of one of its most efficient plants, in Sunderland, U.K., because of exchange risk has fueled the debate.
        "When companies are setting up for the first time or have relatively little European business, then the U.K.'s position is not such a big issue," says Lemagnen, "but the vast

Julia Cox, a member of the Site Selection Editorial Advisory Board, is operations director for London-based business research firm Oxford Intelligence. Details of Ernst & Young's European Investment Monitor, powered by Oxford Intelligence, can be found at www.ey.com/global/content.nsf/International/Industries.         Investment Strategies and Location Benchmarking – Shared Service Centres for Europe and the Offshore Challenge – a major new research study from Oxford Intelligence produced jointly with IBM-Business Consulting Services Plant Location International – focuses on the explosive growth of shared service centers, driven by increasing globalization of business. The report is available from Oxford Intelligence (price US$5,900). More information is available at www.oxint.com, or call +44 1908 521477.

majority of investment is re-investment, so the impact of remaining outside the euro zone must be borne in mind."
        Ernst & Young's Bright believes, however, that the impact of the euro on overall macro-economic growth is far more important to investing companies.
        "Any risks are overwhelmed by the ability of the U.K. to grow at a faster rate than the euro zone," he says.
        Unique attributes to both countries will, furthermore, ensure they continue to win investments in the higher-value end of biotechnology, electronics and semiconductors, software, advanced engineering and aerospace. Both countries' continued success depends on their ability to add value where they can.