It seemed like a happy coincidence. Last week, Alex Salmond trod a green carpet for the premier of Disney’s new animation Brave. He responded to tweets and emails on CBS’s The Late Late Show, hosted by one of the film’s voice leads, Craig Ferguson. And the First Minister embarked on a charm offensive of California’s leading technology, energy and life sciences companies. Midway through the trip, came a report reinforcing Scotland’s continuing appeal to foreign investors.
The country continues to generate more jobs through foreign direct investment (FDI) than any other part of the UK, according to Ernst & Young’s latest annual UK Attractiveness Survey. Almost 6,000 jobs were created during 2011 – a 50 per cent increase on the 2010 figure – as the country topped the job table for the second year running.
The survey did say that there was a decrease in projects – down to 51 from 69, a faster decline than that witnessed across the UK – but Jim Bishop, the company’s senior partner in Scotland, observed: “Such a dip is not unusual given the volatility of annual project numbers. As things stand, overseas companies looking to invest in jobs in the UK are more likely to choose Scotland than any other part of the country.
“The report shines a spotlight on the positive contribution made by Scottish Development International (SDI) and the Scottish Government, which have ensured that Scotland remains an attractive proposition among international investors,” he said.
Ernst & Young’s findings came as more than 70 leading California-based companies, including all Fortune 500 companies in the state, were targeted as part of a new campaign to attract inward investment to Scotland.
In advance of his trip, Salmond wrote to top executives at companies identified by SDI as potential investors. In the letter, which is part of a wider SDI campaign to encourage some of the world’s most successful companies to consider setting up operations in Scotland, Salmond highlighted the benefits of choosing Scotland over any other nation.
“Scotland is already an economic success story and we make no apologies for going after new business at every opportunity. We perform better economically than everywhere else in the UK bar the southeast of England and that brings major business opportunities. [SDI’s] campaign is backed by a number of companies already investing in Scotland such as Pfizer and Amazon and the message is absolutely clear.
“Scotland is a land of major opportunity and it is open for business. We have a long and impressive track record in life sciences, sciences, technology and creative industries developing an environment where ingenuity and innovation can create jobs and wealth for Scotland.
“Even without our offshore oil and gas reserves, Scotland has the highest GDP in the UK outside London and southeast England. We have five universities in the world’s top 200, we rank first in the world in research productivity per unit of GDP and second in the world in research impact. Business operating costs for key functions can be almost a third lower here.”
The campaign included print and online advertising in The Wall Street Journal, San Francisco Business Times, New York Times and San Francisco Chronicle. Danny Cusick, President, Americas, Scottish Development International, said: “SDI has seven offices across North America, including a significant presence in California, to provide support and collaboration opportunities for key North American companies.
“This campaign is part of a global drive to attract new investment to Scotland. There has been a significant level of inward investment success over the last 12 months, with Amazon, FMC Technologies and State Street all making significant investments in Scotland. SDI is building on this with a continued focus on securing new, sustainable jobs and opportunities.
“It is clear that Scotland remains a location of choice due to our winning combination of qualities, including our highly skilled and educated workforce and efficient operating costs. This is an excellent opportunity to highlight Scotland’s competitive advantages to some of California’s biggest companies.”
Salmond also met executives of LifeScan Inc, a Milpitas, California-based company with a plant in Scotland that manufactures glucose test strips, politicians in the state capital in Sacramento and toured Stanford, which is collaborating with Scottish universities on research into photonics.
In the last year, online retailer Amazon and energy technology supplier FMC Technologies (FMC.N) have opened operations in the country. Salmond said Scotland intended to be “more helpful” to new companies than Britain has been traditionally, and that it helped Amazon build a new plant in six months by streamlining the permitting process. “They’d give testimonials to what it’s like to work with us,” he said.
A commentary accompanying Ernst & Young’s survey said that the debates around independence and corporation tax reform had little impact on FDI in 2011, but suggested a “knock-on effect” – either a decline or increase in FDI – may become apparent this year as they intensify. Bishop believes Scotland’s continued ability to attract overseas investment should be a “key point” of the independence debate.
The report also highlights Germany’s growing attractiveness for foreign investors as it closes the gap on Scotland and the UK by exploiting new Asia Pac and Latin American opportunities, but concludes that “Scotland is continuing to perform well in a tough and fast-moving global market.” Bishop added: “Ongoing global economic uncertainty means no country can afford to rest on its laurels. Scotland is punching above its weight, but it must keep competing for every available dollar of investment.”
Business services companies were the top investors, followed by software and machinery and equipment firms. However, the greatest number of jobs was created in the retail/logistics sector with Scotland benefitting from online retailing projects.
The United States remains the biggest single source of FDI projects and employment in Scotland, reflecting the longstanding pattern for the UK as a whole. Norwegian investments in Scotland, focused mainly on the oil and gas industry, created more than 400 jobs.
Bishop concluded: “The strong growth and increasingly globalised perspective of many emerging markets will make them important sources of investment in the future. Inward investment cannot be viewed separately from the overall economy, and establishing two-way trade patterns is essential. The US is a major export market for Scotland, in addition to being our main source of FDI.
“You look at Germany and the links it has with China which are creating a range of potential Chinese FDI drivers. Further moves to attract investment to Scotland must take this into consideration, and policymakers need to ensure their strategies reflect underlying economic circumstances.”