Establishing a Regional HQ in the Scottish Central Belt A cost/quality comparison (Based on...

Establishing a Regional HQ in the Scottish Central BeltA cost/quality comparison(Based on information from the Financial Times fDi Benchmark tool – April 2012)

Competitiveness of Scottish Central Belt

Value for Money

Overall Attractiveness

Quality of the Location

Annual Operating Costs

Quality Competitiveness

General Business Environment

Labour Availability and Quality

Presence of an Industrial Cluster

Infrastructure and Accessibility

Living Environment

Contents

• The following analysis is based on fDi Benchmark, an online location benchmarking tool provided by

the Financial Times (FT)

• fDi Benchmark compared the Scottish Central Belt with the leading locations globally for establishing a Regional

HQ based on an analysis of over 55 quality factors and 10 cost factors

• A key emphasis was placed on:

- Presence of industrial cluster – the size of the industry, track record and R&D

capabilities; and

- General business environment – regulatory environment, operating risk, taxation and

economic growth and stability

Other factors including labour availability and quality, accessibility and the living environment were

also assessed

Benchmarking Study

Project Profile Overview

Cost Factor Usage Amount

Property

Total Occupancy cost (in town office rent) 1,500 m²

Telecoms

National Call 2,300 Mins

Intl Call to US (International Call) 3,450 Mins

Intl Call to France 3,450 MinsIntl Call to Germany 3,450 Mins

Intl Call to Italy 3,450 Mins

Intl Call to Sweden 3,450 Mins

Intl Call to China 3,450 Mins

Intl Call to Singapore 3,450 Mins

Intl Call to India 3,450 Mins

Intl Call to Brazil 3,450 Mins

Intl Call to Mexico 3,450 Mins

Weighting Model Overview Weight

Presence of an Industrial Cluster 35

Infrastructure and Accessibility 15

Living Environment 10

General Business Environment 15

Labour Availability and Quality 25

Employee Type Profile Head count

General Management Group/Regional Chief Executive 1

Regional Business Unit Manager 4Finance

Chief Accountant 7Head of Finance and Administration 1Marketing

Product Manager 12Administration

Executive Secretary 1Facilities/Office Services Specialist 17

Regulatory Affairs Manager 2Secretary 5

Project Profile Overview

The fDi Benchmark Matrix shows the trade off between cost and quality across the 7 selected locations for the Regional headquarters profile. The average cost and quality score is 100 for the selected locations.

Source: fDi Intelligence, from the Financial Times Ltd

The ‘ideal’ quadrant is the

top left

(high quality/lower operating costs)

fDi Benchmark Matrix


• The matrix is based on the weighting and cost model for the Regional headquarters profile. The weighting model identifies the key location criteria for the project and the cost model shows the primary cost inputs for the operation. The cost and quality scores are calculated using real data on all the location requirements and cost inputs.

• The results indicate the different location solutions for the investor as follows: the Scottish Central Belt offers higher

quality at lower cost than the average of all the selected locations

Berlin and Stockholm offer higher quality but at higher cost

Birmingham, Leeds, Newcastle offer lower cost, but at lower quality

The Operating Cost value is in GBP - United Kingdom Pound

Location Qualitative ScoreOperating Cost

IndexOperating Cost

Value

Berlin 180.7 112.3 5,317,438

Birmingham 84.0 91.9 4,352,241

Leeds 68.4 91.0 4,310,168

Newcastle 55.3 87.1 4,125,210

Rome 90.3 113.2 5,360,155Scottish Central Belt 119.0 84.7 4,013,055

Stockholm 102.2 119.8 5,675,464



Location Attractiveness Index

The location attractiveness index shows the overall attractiveness of the 7 selected locations for the Regional headquarters profile. The ratio of quality to cost is 50:50


Location Attractiveness Index

Cost Quality Competitiveness

The cost quality competitiveness uses the results of the fDi Benchmark Matrix to show the value for money of each location option. The graph shows that:

The top locations offering the highest quality for a given level of cost are the Scottish Central Belt and Berlin the Scottish Central Belt and Berlin offer an above average level of quality and good value for money as there relative

quality is higher than their relative cost.


Cost Quality Competitiveness

Cost Competitiveness

The annual operating cost calculation for Regional headquarters is based on the following primary input costs: Labour Cost, Property and Telecoms

The average cost across the selected locations for Regional headquarters is GBP4,736,245 The greatest cost saving between the selected locations is GBP1,662,409 per annum The values in the chart below are in GBP - United Kingdom Pound




Location Labour Cost Property Telecoms

Berlin 4,872,868 375,531 69,037

Birmingham 3,633,993 657,130 61,117

Leeds 3,628,512 620,537 61,117

Newcastle 3,534,612 529,479 61,117

Rome 4,581,829 634,312 144,011

Scottish Central Belt 3,332,928 619,008 61,117

Stockholm 4,956,941 707,719 10,802

The locations with the lowest operating costs are Newcastle and the Scottish Central Belt

In terms of the individual cost factors, the locations with the lowest costs are:

Labour Cost: Newcastle and the Scottish Central Belt Property: Berlin and Newcastle Telecoms: Stockholm and the Scottish Central Belt

The values in the table below are in GBP - United Kingdom Pound




The quality competitiveness assessment is based on the weight model for the Regional headquarters profile which assesses each location across the following location factors: General Business Environment, Labour Availability and Quality, Presence of an Industrial Cluster, Infrastructure and Accessibility and Living Environment. The average score for the selected locations is 100.

The locations with the highest quality scores are the Scottish Central Belt and Berlin




Location

General Business

Environment

Labour Availability and

QualityPresence of an

Industrial ClusterInfrastructure

and AccessibilityLiving

EnvironmentBerlin 14 39 98 19 11Birmingham 17 24 20 13 9Leeds 16 16 12 15 9Newcastle 16 13 7 10 9Rome 11 29 22 18 10Scottish Central Belt 16 34 47 12 10Stockholm 15 19 38 18 12

In terms of the individual quality factors, the locations with the highest scores are:

General Business Environment: the Scottish Central Belt and Birmingham Labour Availability and Quality: the Scottish Central Belt and Berlin Presence of an Industrial Cluster: the Scottish Central Belt and Berlin Infrastructure and Accessibility: Rome and Berlin Living Environment: Berlin and Stockholm




The quality competitiveness breakdown for General Business Environment for the Regional headquarters profile is shown below

The locations with the highest overall scores for General Business Environment are the Scottish Central Belt and Birmingham




LocationEconomic growth

and stabilityOperating risk

Taxation and incentives

Regulatory environment

Berlin 1.80 4.73 4.78 2.52

Birmingham 1.74 5.73 6.14 3.19

Leeds 1.06 5.73 6.14 3.19

Newcastle 0.87 5.73 6.14 3.19

Rome 2.00 3.74 3.27 1.75

Scottish Central Belt 1.27 5.73 6.14 3.19

Stockholm 1.76 5.34 4.14 3.95

In terms of the individual quality criteria within General Business Environment, the locations with the highest scores are:

Economic growth and stability: Rome and Berlin Operating risk: Brermingham and the Scottish Central Belt Taxation and incentives: the Scottish Central Belt and Birmingham Regulatory environment: Stockholm and the Scottish Central Belt




The quality competitiveness breakdown for Labour Availability and Quality for the Regional headquarters profile is shown below

The locations with the highest overall scores for Labour Availability and Quality are the Scottish Central Belt and Berlin




LocationOverall size of labour market

Tightness and competition for

labour

Experienced industry-specific

staff

Flexibility of labour regulations

Berlin 10.92 1.67 22.14 4.03

Birmingham 8.07 1.61 6.56 7.93

Leeds 4.28 1.12 2.94 7.93

Newcastle 3.13 1.22 1.13 7.93

Rome 8.46 1.20 15.14 4.13

Scottish Central Belt 5.26 1.10 19.85 7.93

Stockholm 3.63 0.82 10.99 3.85

In terms of the individual quality criteria within Labour Availability and Quality, the locations with the highest scores are:

Overall size of labour market: Rome and Berlin Tightness and competition for labour: Berlin and Birmingham Experienced industry-specific staff: berlin and the Scottish Central Belt Flexibility of labour regulations: the Scottish Central Belt and Newcastle



Presence of an Industrial ClusterThe quality competitiveness breakdown for Presence of an Industrial Cluster for the Regional headquarters profile is shown below

The locations with the highest overall scores for Presence of an Industrial Cluster are the Scottish Central Belt and Berlin




Location Size of industry Track record

Berlin 62.11 36.15

Birmingham 11.26 9.13

Leeds 9.18 3.06

Newcastle 7.13 0.29

Rome 21.10 1.17

Scottish Central Belt 23.43 23.27

Stockholm 12.78 24.92

In terms of the individual quality criteria within Presence of an Industrial Cluster, the locations with the highest scores are:

Size of industry: Berlin and the Scottish Central Belt Track record: Stockholm and Berlin



Infrastructure and AccessibilityThe quality competitiveness breakdown for Infrastructure and Accessibility for the Regional headquarters profile is shown below

The locations with the highest overall scores for Infrastructure and Accessibility are Rome and Berlin




Location

Access to major overseas markets

Quality of utilitiesQuality of ICT infrastructure

Berlin 11.35 4.79 2.43

Birmingham 7.57 3.62 2.10

Leeds 9.46 3.62 2.05

Newcastle 4.56 3.62 1.73

Rome 13.66 3.37 1.19

Scottish Central Belt 6.58 3.62 1.61

Stockholm 9.81 3.61 4.65

20

In terms of the individual quality criteria within Infrastructure and Accessibility, the locations with the highest scores are:

Access to major overseas markets: Rome and Berlin Quality of utilities: Berlin and the Scottish Central Belt Quality of ICT infrastructure: Stockholm and Berlin



Living EnvironmentThe quality competitiveness breakdown for Living Environment for the Regional headquarters profile is shown below

The locations with the highest overall scores for Living Environment are Stockholm and Berlin


Living Environment

Living Environment

LocationCost of living

Attractiveness for international staff

Berlin 2.83 8.45

Birmingham 3.23 6.07

Leeds 3.13 5.52

Newcastle 3.10 5.55

Rome 2.61 7.55

Scottish Central Belt 3.40 6.60

Stockholm 2.71 9.26

In terms of the individual quality criteria within Living Environment, the locations with the highest scores are: Cost of living: Birmingham and the Scottish Central Belt Attractiveness for international staff: Berlin and Stockholm


Living Environment

To realise the potential,please contact:

Scottish Development International150 Broomielaw, Atlantic Quay Glasgow G2 8LU Scotland, UK T +44 141 228 2828F +44 141 228 2089www.sdi.co.uk

Worldwide offices in: Americas, Europe, Middle East, Africa and Asia Pacific

Establishing a Regional HQ in the Scottish Central Belt A cost/quality comparison (Based on...

Documents

Transcript of Establishing a Regional HQ in the Scottish Central Belt A cost/quality comparison (Based on...