establishing an electronics r&d centre a cost/quality comparison (based on information from the...
TRANSCRIPT
Establishing an Electronics R&D CentreA cost/quality comparison(Based on information from the Financial Times fDi Benchmark tool – May 2012)
Competitiveness of Scotland
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 an Electronics
R&D Centre based on an analysis of over 55 quality factors and 10 cost factors
A key emphasis was placed on:
- Presence of industrial cluster
- Labour availability and quality
Other factors including the general business environment, infrastructure and 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) 2,000 m²
Weighting Model Overview Weight
Presence of an Industrial Cluster 55
Labour Availability and Quality 25
General Business Environment 10
Infrastructure and Accessibility 5
Living Environment 5
Employee Type Profile Head count
General Management
Project Manager 1
Information Technology
Engineering Technician 8
Software Development Engineer 30
Software Development Manager 2
R&D / Engineering
Engineer 9
fDi Benchmark Matrix
The fDi Benchmark Matrix shows the trade off between cost and quality across the 4 selected locations for the Electronics R&D centre 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 Electronics R&D centre 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
- Los Angeles offers higher quality but at higher cost
- Manchester offers lower cost, but at lower quality
The Operating Cost value is in GBP - United Kingdom Pound
Location Qualitative ScoreOperating Cost
IndexOperating Cost
Value
Los Angeles (CA) 127.9 112.9 3,401,305
Manchester 55.6 81.6 2,458,607
Scottish Central Belt 120.1 86.6 2,610,381
Stockholm 96.4 118.9 3,582,048
Source: fDi Intelligence, from the Financial Times Ltd
Location Attractiveness Index
The location attractiveness index shows the overall attractiveness of the 4 selected locations for the Electronics R&D centre profile. The ratio of quality to cost is 50:50
Source: fDi Intelligence, from the Financial Times Ltd
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 location offering the highest quality for a given level of cost is the Scottish Central Belt the Scottish Central Belt also offers an above average level of quality and good value for money as its relative quality is
higher than its relative cost
Source: fDi Intelligence, from the Financial Times Ltd
Cost Competitiveness
The annual operating cost calculation for Electronics R&D centre is based on the following primary input costs: Labour Cost
The average cost across the selected locations for Electronics R&D centre is GBP 3,013,084 The greatest cost saving between the selected locations is GBP 1,123,442 per annum The values in the chart below are in GBP - United Kingdom Pound
Source: fDi Intelligence, from the Financial Times Ltd
Cost Competitiveness
Location Labour Cost Property
Los Angeles (CA) 2,925,435 475,869
Manchester 1,572,125 886,480
Scottish Central Belt 1,785,035 825,345
Stockholm 2,638,421 943,626
The location with the lowest operating costs is Manchester
In terms of the individual cost factors, the location with the lowest costs is:
Labour Cost: Manchester Property: Los Angeles
The values in the table below are in GBP - United Kingdom Pound
Source: fDi Intelligence, from the Financial Times Ltd
Quality Competitiveness
The quality competitiveness assessment is based on the weight model for the Electronics R&D centre 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 location with the highest quality score is Los Angeles
Source: fDi Intelligence, from the Financial Times Ltd
Quality Competitiveness
LocationGeneral Business
Environment
Labour Availability and Quality
Presence of an Industrial Cluster
Infrastructure and Accessibility
Living Environment
Los Angeles (CA) 11 44 65 4 5
Manchester 10 15 20 5 5Scottish Central Belt 10 23 78 4 5
Stockholm 9 18 57 7 5
In terms of the individual quality factors, the location with the highest score is:
General Business Environment: Los Angeles Labour Availability and Quality: Los Angeles Presence of an Industrial Cluster: the Scottish Central Belt Infrastructure and Accessibility: Stockholm Living Environment: Los Angeles
Source: fDi Intelligence, from the Financial Times Ltd
General Business Environment
The quality competitiveness breakdown for General Business Environment for the Electronics R&D centre profile is shown below
The location with the highest overall score for General Business Environment is Los Angeles
Source: fDi Intelligence, from the Financial Times Ltd
General Business Environment
Location
Economic growth and stability
Operating riskTaxation and
incentivesRegulatory
environment
Los Angeles (CA) 1.04 0.92 5.44 3.35
Manchester 0.32 0.84 5.57 3.37
Scottish Central Belt 0.27 0.84 5.57 3.37
Stockholm 0.37 1.40 3.42 3.90
In terms of the individual quality criteria within General Business Environment, the location with the highest score is:
Economic growth and stability: Los Angeles Operating risk: Stockholm Taxation and incentives: the Scottish Central Belt Regulatory environment: Stockholm
Source: fDi Intelligence, from the Financial Times Ltd
Labour Availability and Quality
The quality competitiveness breakdown for Labour Availability and Quality for the Electronics R&D centre profile is shown below
The location with the highest overall score for Labour Availability and Quality is Los Angeles
Source: fDi Intelligence, from the Financial Times Ltd
Labour Availability and Quality
LocationOverall size of labour market
Tightness and competition for
labour
Experienced industry-specific
staff
Flexibility of labour regulations
Los Angeles (CA) 10.81 2.96 17.70 12.41
Manchester 1.56 2.89 1.28 9.03
Scottish Central Belt 1.55 2.38 10.45 9.03
Stockholm 1.07 1.77 10.58 4.54
In terms of the individual quality criteria within Labour Availability and Quality, the location with the highest score is:
• Overall size of labour market: Los Angeles
• Tightness and competition for labour: Los Angeles
• Experienced industry specific staff: Los Angeles
• Flexibility of labour regulations: Los Angeles
Source: fDi Intelligence, from the Financial Times Ltd
Presence of an Industrial Cluster
The quality competitiveness breakdown for Presence of an Industrial Cluster for the Electronics R&D centre profile is shown below
The location with the highest overall score for Presence of an Industrial Cluster is the Scottish Central Belt
Source: fDi Intelligence, from the Financial Times Ltd
Presence of an Industrial Cluster
Location
Size of industry Track recordResearch and Development Capabilities
Los Angeles (CA) 21.92 15.38 27.20
Manchester 6.01 9.47 4.93
Scottish Central Belt 15.23 57.64 4.98
Stockholm 11.84 38.51 6.88
In terms of the individual quality criteria within Presence of an Industrial Cluster, the location with the highest score is:
• Size of industry: Los Angeles
• Track record: the Scottish Central Belt
• Research and Development Capabilities: Los Angeles
Source: fDi Intelligence, from the Financial Times Ltd
Infrastructure and Accessibility
The quality competitiveness breakdown for Infrastructure and Accessibility for the Electronics R&D centre profile is shown below
The location with the highest overall score for Infrastructure and Accessibility is Stockholm
Source: fDi Intelligence, from the Financial Times Ltd
Infrastructure and Accessibility
Location
Access to major overseas markets
Quality of utilitiesQuality of ICT infrastructure
Los Angeles (CA) 2.41 0.25 1.01
Manchester 3.64 0.25 1.58
Scottish Central Belt 2.34 0.25 1.17
Stockholm 3.61 0.25 3.24
In terms of the individual quality criteria within Infrastructure and Accessibility, the location with the highest score is:
• Access to major overseas markets: Manchester
• Quality of utilities: the Scottish Central Belt
• Quality of ICT infrastructure: Stockholm
Source: fDi Intelligence, from the Financial Times Ltd
Living Environment
The quality competitiveness breakdown for Living Environment for the Electronics R&D centre profile is shown below
The location with the highest overall score for Living Environment is Los Angeles
Source: fDi Intelligence, from the Financial Times Ltd
Living Environment
Location
Cost of livingAttractiveness for international staff
Los Angeles (CA) 2.93 2.16
Manchester 3.17 1.69
Scottish Central Belt 3.28 1.73
Stockholm 2.62 2.42
In terms of the individual quality criteria within Living Environment, the location with the highest score is:
• Cost of living: the Scottish Central Belt
• Attractiveness for international staff: Stockholm
Source: fDi Intelligence, from the Financial Times Ltd
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
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