Week of May 8, 2000
  Blockbuster Deal of the Week
   from Site Selection's exclusive New Plant database

$2 Billion Scottish Facility Will Be
Motorola's Largest European Chip Plant

Already largest private-sector employer in Scotland, Motorola (www.motorola.com) is further muscling up its presence with a new US$2 billion chip plant in Dunfermline. Scotland's ancient capital and the burial place of several Scottish monarchs, Dunfermline is located some 15 miles (25.5 km.) northeast of Edinburgh.

The new facility will employ 1,350 and will rank as Motorola's largest European semiconductor plant. The Dunfermline site will also be Motorola's European operations center. Clearly, Motorola seems to be aiming to establish the Dunfermline facility as a bellwether operation. Says Bill Walker, Motorola Semiconductor Products Sector senior vice president and Order Fulfillment Organization director, "Our history of semiconductor manufacturing in Scotland will enable us to establish Dunfermline as a world leader in productivity and cost effectiveness, which are vital to Motorola's competitiveness. We're delighted that our long relationship with employees, customers and government in the United Kingdom has enabled us to take this step."

Deal Bolster Scots Semiconductor Drive

Motorola's move into the County of Fife was also an obvious major victory for Locate in Scotland, the national arm promoting inward investment and a joint operation of the Scottish government and its economic development agency, Scottish Enterprise (www.scottish-enterprise.com).

In June of 1999 Scotland unveiled an ambitious new plan to, over the next five years, almost double the size of the nation's semiconductor and microelectronics industry to 14,500 jobs. That plan is designed to establish Scotland as a world center for semiconductor research, design and manufacturing.

Scotland, though, had established solid semiconductor cred even before the Motorola blockbuster. The country has garnered a 15 percent-plus share of the total semiconductor production capacity in Europe and a 50 percent-plus share of the total capacity in the UK, according to Scottish Enterprise analyses.

Says Robert Crawford, of Scottish Enterprise chief executive, "Scotland needs to ensure that it has a strong foothold in this dynamic industry, and we are especially pleased that Motorola has decided to invest further in this country, re-enforcing its already strong foothold. Motorola has already made an enormous contribution to the Scottish economy, and I am delighted that this project will create more high-quality employment opportunities. It is an enormous testament to the skills and quality of our work force."

Adds Allan Smith, chairman of Scottish Enterprise Fife (one of the local enterprise companies that are part of the Scottish Enterprise Network), "Motorola's decision to invest in Dunfermline is tremendous news for Fife. . . . A priority will be helping ensure local people have the opportunities to develop the skills to secure employment at the plant.

"In addition to these new jobs," Smith continues, "it should be remembered that the facility has been the catalyst for public- and private-sector investment in the Dunfermline Eastern Expansion project [that] has the potential to create a further 7,500 jobs."

Some Foresee Further Expansion in Dunfermline

Some 700 of the 1,350 jobs at the Dunfermline facility will be new positions. And if demand dictates, total employment at the site could further increase, Motorola officials explain. As part of the new operation, Motorola will close one of its existing Scottish plants in South Queensferry. Workers currently employed at the South Queensferry facility will transfer to the new Dunfermline facility.

Operations at Motorola's other two Scottish plants, in East Kilbride and Easter Inch, will be unaffected by the new plant, company officials say. The three existing plants in East Kilbride, Easter Inch and South Queensferry currently employ 6,500 Scottish workers.

Speculation has already surfaced in the Scottish press that Motorola will also set up a new 200-employee R&D facility at the Dunfermline site. Company officials, however, have not confirmed that such a plan is in the works.

New Scottish Chips Will Tap Hot Wireless Web Market

It doesn't require much of an imaginative stretch, though, to foresee huge future growth potential for the Dunfermline location.

That potential links directly to the product line. The newest Scottish factory will make semiconductors for next-generation mobile phones, which will facilitate Internet browsing and videoconferencing. And that's a market that's clearly poised to explode. Banc of America Securities, for example, predicts that today's 6.6 million worldwide subscribers to wireless Internet services will reach 400 million by 2003 and then skyrocket to nearly 1 billion by 2005. Motorola's chip sector has suffered through some lean times in recent years. In fact, Semiconductor Products Sector President Hector Ruiz last year announced that Motorola was going to shed half of its manufacturing capacity by 2002, with outsourcers making a whopping 50 percent of its chips. The chips to be made at the Dunfermline location, however, fall within the high-value-added chips that Ruiz said Motorola would keep in-house.

Plant Originally Built by Hyundai

Motorola's $2 billion capital investment will be for an existing facility, not a new one. Sitting on a 150-acre (60-ha.) site, the 1,076,000-sq.-ft. (100,000-sq.-m.) facility was originally built by South Korea's Hyundai Electronics (from whom Motorola will buy the operation). But Hyundai's 1997 completion of the facility coincided with the double-whammy of both a downturn in the Asian economy and a drop in global semiconductor demand. Consequently, the facility has never been used.

Still seeing considerable potential, Scottish economic development officials continued to promote the site. Motorola's investment validated the wisdom of that strategy.

Explains Scottish Enterprise's Crawford, "The original investment Scottish Enterprise made in the Dunfermline site and the surrounding infrastructure paid off. One of Motorola's key requirements was to get this project off the ground as quickly as possible. The fact that we had a facility ready and waiting, with scope for expansion, was a major advantage." Added Smith, "The availability of one of the most modern fabrication facilities in the world was the key factor in attracting these very high-quality jobs."

Once Motorola has adapted the facility, it will produce the company's DigitalDNA solutions, based on eight-inch (20.32-cent.) wafers and utilizing sub-micron technology.

Motorola Employs 10,000 in UK

Scotland's UK location certainly provides Motorola with a familiar landscape. Motorola established its first Scottish manufacturing operation at East Kilbride in 1969. Since then, at least before its Dunfermline announcement, the company had invested more than $1.5 billion into the Scottish economy.

And Motorola has been operating in the UK since 1967. UK-wide, it employs around 10,000 people in manufacturing, R&D and marketing. The company has also regularly ranked as one of the UK's top 10 exporters. Since 1991, it has won six Queen's Awards for Export Achievement.

Commented Motorola Ltd. Chairman David Brown says, "This [Dunfermline] announcement underscores Motorola's commitment to the United Kingdom, and adds to our 33-year record of inward investment here. As one of the UK's leading employers and a top 10 exporter, we are confident that the products we will make in Dunfermline will strengthen yet further our position at the heart of the UK's electronics sector."

©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.