Monday, June 9, 2014

News: FDI report has region lagging behind

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According to EY's annual UK Attractiveness Survey, the number of FDI projects secured by the region fell from 21 in 2012 to 20 last year, the lowest total of all 12 UK regions analysed.

However, the number of jobs generated as a result of Foreign Direct Investment (FDI) projects has increased by more than 150 per cent to 955 in 2013 compared to 380 in the previous year.

Analysis from the multinational professional services firm showed that UK projects rose this year by almost 15% to 799, driven by the pulling power of London for global FDI which is at risk of overshadowing the rest of the UK, especially the regions.

Whilst London attracted 380 projects in 2013, Yorkshire was one of five UK regions to record a year-on-year decline in 2013, alongside Wales, the South East, the North East and the West Midlands.

David Buckley, senior partner at EY in Yorkshire, said: "While a three-fold increase in jobs as a result of FDI illustrates that the quality of investments in Yorkshire is improving, the marginal decline in the number of projects last year from what was a very low base in 2012 highlights the continued need to re-focus support on the region’s global competitiveness.

"While some areas grew FDI levels significantly, total projects in the English regions – excluding London and the South East – were still 20% lower in 2013 than 2010, when the regional development agencies were abolished. The rest of the UK is at risk of being overshadowed by London, which accounted for nearly half of all investments in 2013.

"The fact that Yorkshire is in last place in the UK regions for foreign direct investment should be an alarm bell. What are others doing that we are not?"

Manufacturing was the dominant sector in Yorkshire in terms of volume of FDI projects last year, adding 13. Finance and business services, and transport and communications were the second most popular industries, each securing two projects.

Buckley added: "It's encouraging that Yorkshire continues to be a centre of excellence for manufacturing, an industry where the UK is punching well below its weight in terms of FDI investment.

"The country must develop a more ambitious manufacturing strategy and should look to Yorkshire as one of the primary destinations to promote, given the region's track record for nurturing businesses in the sector and supporting a skilled industry workforce.

"However, the region's pre-eminent cities – none of which featured in the UK top 10 for FDI projects secured in 2013 – must do more to articulate their benefits to attract important business services projects, which are increasingly driving high levels of employment."

According to the report, South Yorkshire attracted four of the region's FDI projects in 2013. It follows on from UKTI's 2012/13 Inward Investment Annual Report that recorded a total of 26 companies investing in the Sheffield City Region resulting in 631 new jobs and 3,099 safeguarded jobs.

Over the past year, FDI projects reported by Rothbiz include the decision by German-headquarted multinational group, Intersnack, to invest £16m to build a new state of the art nut processing and packing facility for KP Snacks in Rotherham.

Foreign investment also came in the source of acquisitions with Australian minerals firm, Iluka Resources Limited, agreeing to invest £12.2m for an 18.3% stake in Metalysis, the Rotherham-based innovator that is commercialising a low-cost way to manufacture titanium and other specialist powder metals.

Last month saw the conclusion of a £1 billion deal struck by Mexico's Grupo Bimbo to take over Canada Bread, the company owned by Maple Leaf Foods. The deal includes the largest bagel production facility in Europe, based at Swinton in Rotherham.

EY website

Images: Knight Frank

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