Fabrice Hatem, Invest in France Agency, La Baule, World investment Conference 30 June 2005 How...
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Transcript of Fabrice Hatem, Invest in France Agency, La Baule, World investment Conference 30 June 2005 How...
Fabrice Hatem, Invest in France Agency,La Baule, World investment Conference30 June 2005
How European countries are competing to attract business support
functions
© AFII 20052, avenue Vélasquez75008 Paris
The stakes are high
Businesses operate using different functions, not just production, but also logistics, R&D, etc.
Multinationals structure their international networks to capture the specific advantages of different host areas
This strategy extends to all functions, which have thus become internationally mobile…
… with the result that countries are competing to host these functions
© AFII 20052, avenue Vélasquez75008 Paris
The source data : the AFII data base
FDI data have a limited usefulnessy : they mix up MA/greenfields, give no information on the business function involved, etc.
Necessity to collect new types of data : informations on individual international projects carried out by multinationals companies
Sources : international press, the web, promotion agencies, companies…
Ex : Ernst and Young (EIM), IBM/PLI (Gild), Invest in France (AFII)
AFII Data base : each project is described by about 20 parameters
One possible use : analyze the investment trends for a specific corporate function (e.g : R&D, logistics, call centres, headquarters, etc.)
© AFII 20052, avenue Vélasquez75008 Paris
Business support functions : already a big market in Europe
58% of projects, 25% of jobs between 2002 and 2004
Smaller average size in terms of jobs than plant-related projects
Major structural impact on the host country
Per worker skills and wages higher than in production jobs
Do not confuse business support or tertiary functions such as R&D or call centers with tertiary sectors like banking – another area where international investment is growing
© AFII 20052, avenue Vélasquez75008 Paris
Projects, average number of jobs, 2002-2004
0
50
100
150
200
250
Pro
duct
ion
Cal
l cen
tres
and
onlin
ese
rvic
es
Dis
trib
utio
n,lo
gist
ics
Oth
erse
rvic
es
Inte
rnal
adm
inis
trat
ion
and
HQ
serv
ices
R&
D c
entr
es
Sal
es a
ndlia
ison
offi
ces
Tot
al
© AFII 20052, avenue Vélasquez75008 Paris
Functions, by number of projects 2002-2004
5%
31%
5%
2%6%9%
42%
Other services
Sales and liaison offices
R&D centres
Call centres and online services
Distribution, logistics
Internal administration and HQservices
Production / manufacturing
© AFII 20052, avenue Vélasquez75008 Paris
Functions, by number of jobs created2002-2004
4%
2%
3%
5%
6%
5%
75%
Other services
Sales and liaison offices
R&D centres
Call centres and onlineservice
Distribution, logistics
Internal administration andHQ services
Production / manufacturing
© AFII 20052, avenue Vélasquez75008 Paris
Every sector of activity is affected
Large overall proportion of service sectors (because of outsourcing, nature of activities)
R&D: pharma and electronics
Logistics: manufacturers, distributors, service providers
Call centres: importance of service sectors
SSCs, HQs: broad sector diversity
© AFII 20052, avenue Vélasquez75008 Paris
Aggregate job creation in support functions in Europe
by sector, 2002-2004
20%
18%
13%11%
7%
5%
26%
Other commercial and financialservicesConsulting, engineering,corp.services Elec, IT and medical equipement
Software and IT services
Automotive
Pharma
Other
© AFII 20052, avenue Vélasquez75008 Paris
Proportion of jobs created in support functionsby sector, 2002-2004
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Telecom and internet operators
Other commercial and f in. Services
Consulting, engineering, corp. services
Softw are and IT services
Transport, w arehousing, construction
Elec., IT and medical equip.
Agrifood
Pharma
Total
Furniture and home appliances
Chemicals, plastics, biotech
Consumer electronics
Electronic components
Textile, apparel
Other transport equipment
Mechanical machineries and equip.
Automotive
Metal, metal w orking
Other basic industries
© AFII 20052, avenue Vélasquez75008 Paris
Proportion of jobs created in R&D by sector, 2002-2004
27%
21%
15%
11%
6%
4%
16%
Pharma
Elec, IT and medical equipt
Automotive
Software and IT services
Chemicals, plastics,biotech
Electronic components
Other
© AFII 20052, avenue Vélasquez75008 Paris
Proportion of jobs created in call centres by sector, 2002-2004
34%
22%
17%
11%
7%
3%6%
Other com. and fin.services
Consulting, engin, corp.services
Software and IT services
Telecom and internetoperators
Elec, IT and medicalequipt
Transport, warehousing,construction
Other
© AFII 20052, avenue Vélasquez75008 Paris
Proportion of jobs created in HQs and CSPs by sector, 2002-2004
18%
15%
12%
12%
9%
7%
27%
Software and IT services
Elec. IT and medical equipt
Other com. and fin.services
Consulting, engin., corp.services
Automotive
Pharma
Other
© AFII 20052, avenue Vélasquez75008 Paris
Proportion of jobs created in logistics by sector, 2002-2004
30%
19%14%
10%
8%
4%
15%
Autres serv. commerc.ou financiers
Conseil, ingén. et serv.aux entrepr.
Ameublement etéquipement du foyer
Automobile
Transport, stockage,BTP
Agro-alimentaire
Autres
© AFII 20052, avenue Vélasquez75008 Paris
US and UK firms play a prominent role
US and UK firms enjoy a large share of projects
Role of service sectors in home economies
These companies played a lead role in managerial and commercial developments linked to support functions (development of SSCs and call centres)
US firms currently restructuring support functions (R&D, HQs) in Europe
© AFII 20052, avenue Vélasquez75008 Paris
Jobs created in support functions by source region, 2002-2004
0%10%20%30%40%50%60%70%80%90%
100%
R&D cen
tres
Call c
entre
s
Logist
., dis
trib.
Adm. S
erv.
HQ
Total s
upport
Product
ion
Total
Other
Japan
Other Asia
Other West. Europe
Sweden
France
Germany
UK
North America
© AFII 20052, avenue Vélasquez75008 Paris
Could Western Europe lose its shine?
Western Europe accounts for most of the job creation in support functions
Support functions in turn account for a high proportion of job creation in Western Europe
The British Isles boast especially strong appeal
Reasons: stand-out business environment, location near production sites and existing markets
But a shift has begun towards the east (development centres) and even towards the Mediterranean (call centres)
© AFII 20052, avenue Vélasquez75008 Paris
Job creation, by function and host region, 2002-2004
0%
20%
40%
60%
80%
100%
Eastern Europe WesternEurope
Adm. Serv., HQ
Production
Distrib., logist.
Call centres
R&D centres
Sales offices
Others
© AFII 20052, avenue Vélasquez75008 Paris
Job creation, by host country and function 2002-2004
0%10%20%
30%40%50%60%70%
80%90%
100%
Sales o
ffices
R&D cen
tres
Call C
entre
s
Logi
st., d
istrib
.
Adm. S
erv.,
HQ
Tota
l sup
port
Produ
ction
Tota
l
Other East. Eur.
Poland
Hungary
Czech Rep.
Other West. Eur.
Germany
France
Spain
Ireland
UK
© AFII 20052, avenue Vélasquez75008 Paris
Business location criteria and country advantages
R&D: the west offers the best sites for research, but the east can provide a high-quality workforce for development-side projects
Call centres: an eastward, even southward, shift is now underway
HQs, SSCs: new cities are emerging as business locations in western Europe, e.g. Barcelona as a base for regional HQs covering southern Europe
Logistics: European markets still exert a pull in terms of downstream activities, but upstream components are beginning to follow the production networks eastward