High-Tech companies look to Wales as portal to Europe
11/01/1997
High-tech companies look to Wales as portal to Europe
Vaughn Mulder, Welsh Development Agency
As high technology has become a global market, savvy executives are looking to Europe for expertise and other benefits in their quest for a global presence. Their reason for choosing Europe is obvious: The European market is as large as the US and Japanese markets combined. Furthermore, the European market is home to 400 million consumers, and is the largest trading group in the world. In addition, advanced consumer electronics is a dynamic growth sector. With such opportunities, it is not surprising that companies such as Motorola, AT&T, Hewlett Packard, IBM, and Sony have chosen to locate here. Deciding where to locate within Europe can be a challenge.
Over the past 30 years, Wales has evolved with the changing global economy and has surfaced as a focal point for high-tech companies looking to invest in Europe. Wales enjoys a lucrative base of high-tech companies from industry sectors such as semiconductor and electronics to automotive parts and medicine. With an established foundation of high-tech, the region continues to attract inward investments from North American companies, as well as from other parts of the world.
Much of this growth can be attributed to the Welsh Development Agency (WDA). The WDA is an economic development agency that attracts companies to Wales through benefit packages and other need fulfillments.
The attractions of Wales are many. Wales offers an electronics infrastructure, avoidance of EU tariffs, access to the markets of 400 million potential consumers and the support of an ongoing pro-business government. For US high-tech companies, there are also some benefits of circumstance. For example, an existing commonality of languages makes it easier for a US office to communicate with their Cardiff, Wales, office, as opposed to a German or Chinese office. Benefits such as these create a symbiotic relationship between Wales and an American investor.
A readily available work force
For semiconductor, electronics, and other high-tech companies, a key benefit that sets Wales apart from many other regions is a readily-available, highly-skilled work force. The University of Wales, the second largest university in the United Kingdom, as well as nearby universities, have produced a pool of 15,000 graduates annually in the electronics and engineering-related fields. The large pool of qualified workers, low cost-of-living, and combination of high productivity and competitive wages makes Wales the lowest-cost manufacturing region in the UK.
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Wales` many ports offer easy access to Ireland and northern continental Europe.
Wales` business infrastructure: Facilities, telecommunications, transportation
Facilities. The WDA has an impressive inventory - more than 600,000 m2 - of property throughout Wales. In many cases, a company looking for a fast start-up can choose from among the many facilities already built rather than make an initial investment. For those companies with a more customized need, the WDA project management service can oversee the customer-designed construction process.
Telecommunications. The sophisticated telecommunications network of Wales is one of the most efficient in the world and is comparable to any network or service provision in Europe. Offered here are advanced broadband telecommunications including ISDN and SMDS, a digital cellular network, advanced data and video communications, and a fast developing multimedia infrastructure.
Transportation. Ground, air, and sea transport to regional and international destinations are readily available in Wales. These include:
Strategic motorway and expressway links with the UK, including the M4
Wales` many ports offer easy access to Ireland and northern continental Europe.
Corridor, a bordering motorway, runs westward from London into many major high-tech areas of Wales including Newport, Cardiff, Swansea, and Carmarthen.
Advanced passenger and rail freight network direct to Europe via the channel tunnel. An international airport at Cardiff provides easy access to major UK and European airports including Heathrow, Manchester, Birmingham, Amsterdam, Paris, and Brussels.
Eight sea ports include Cardiff, Milford Haven, Fishguard, and Holyhead (see figure).
The Korean LG Group - the largest inward investment ever made in Europe
In July 1996, the Korean LG Group invested 1.7 billion pounds (US$2.7 billion) to develop two plants for semiconductor and television monitor production in Newport, South Wales. This was the largest single inward investment ever made into Europe. As evidence of the symbiotic relationship the WDA has with its investors, the investment created 6100 jobs with an additional 9000-15,000 jobs through supplier and support contracts for local companies. In return, the WDA provided support to the Korean LG Group with construction coordination that is on schedule and in some cases, record progress has been made. The two plants for LG Semicon and LG Electronics are due for completion by 1998. Production for the electronics plant will begin in early 1998 and at the semiconductor plant in December 1998.
The WDA also coordinated with LG to provide a Wales-wide approach to meet LG training requirements. The Semiconductor Training Center in Newport, another benefit of the WDA, will play a key role in helping meet future training needs.
On-going support
Success in offshore investments often requires more than labor and infrastructure. The WDA offers companies a number of benefits not found in many other development agencies. Some of them include on-going training, development of local sourcing arrangements, continued financial support for expansion projects, and support of an academic and R&D infrastructure. Added-value programs such as the Post-care Program drive investors to reinvest in Wales. In fact 65% of companies that invest in Wales reinvest.
Many companies, such as the Korean LG Group and Modis Training Technologies Inc., based in Mesa, AZ, have invested in Wales with success.
Modis Training Technologies investment offers advanced training center
This past July, Modis Training Technologies Inc. opened a 20,000 ft2 computer-based training (CBT), virtual reality training (VR), and distance learning center in Newport through a partnership with the WDA. A first of its kind in Wales, the center serves as a state-of-the-art training facility for semiconductor companies. The center offers courseware for new wafer fabrication and ultra cleanroom techniques. The WDA put the center together, consisting of classrooms, office space, and a simulated cleanroom environment. Modis Training provides the CBT and VR training expertise and methodologies.
Establishing the training center provides other investors with a significant advantage; employees are trained in one-tenth the time of traditional training techniques and at 60% savings. VR training also offers another advantage to semiconductor companies; all mishaps that happen during the period when one acquires the necessary job skills, happen in the virtual world, not the real world. By the time employees move to the real world, they have acquired the skills necessary to accomplish their job error free.
Quality of life in Wales
Often forgotten are benefits such as a friendly environment and key tourist attractions providing a lifestyle that enhances the attraction to Wales. The people of Wales enjoy an abundance of land in protected national parks, sports activities including a high proportion of golf courses to population, and competitively priced, affordable housing. Wales prides itself on not only providing companies with the tools to operate a successful business, but in having an environment suitable for many lifestyles when business is done.
Vaughn Mulder is VP of North America for the Welsh Development Agency International Division. For more information about investing in Wales, contact: Welsh Development Agency, at 2420 Sandhill Rd. Suite 101, Menlo Park, CA 94025; ph 415/854-8042, fax 415/854-9123, or log onto the WDA web site at www.wda.co.uk.