Blog: Dave LeggettIn for a penny, in for a pound

Dave Leggett | 1 February 2008

I'm told that when the Scots go about attracting inward investment they are assiduous in making sure that the important execs are 'anchored in' as soon as possible. Key players relocating find that things like memberships at exclusive golf clubs are arranged on their behalf. It's about giving people reasons to stay put or 'lay anchor'.

And it's the same with multinational firms. If they rely or place great value on certain things associated with a given location and can't easily replicate those things elsewhere, they become 'anchored'. Thus, PSA's Ryton plant in Britain was not anchored. The plant's output in terms of parts contained low UK content. Much of its output was exported and the sterling/euro exchange rate made the added UK value expensive.

Maybe a fat European Commission grant would have tipped the balance, but when the pros and cons of shutting the plant were drawn up I'd imagine the list looked pretty asymmetrical - the cons column by far the smaller of the two.

By contrast, the Japanese firms manufacturing cars in Britain are anchored. They are pretty tied in - their UK plants at the centre of their European strategies. They also have a high percentage of exports to the continent, but their UK sourced parts content is relatively high.

In for a penny, in for a pound. If you have a plant in a relatively high cost location and shifting some capacity elsewhere, perhaps temporarily, to fine tune overall costs or reduce exchange rate losses isn't an option, what do you do? Investing more, raising output and improving productivity is what the Japanese are doing.

And Nissan's Sunderland plant is perhaps Europe's most productive in terms of vehicles produced per employee. Nissan also seems to have hit a geyser with the Qashqai - effectively an MPV with a little bit of added attitude, but not enough to be viewed as an SUV. 

Which UK plant also sounds like it is not very anchored here? It's an obvious one really. GM's Ellesmere Port assembly plant will be okay for a while, but the importance of continued productivity advances there is paramount - GM has plenty of European options on its next Astra.

UK: Qashqai success prompts Nissan Sunderland third shift


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