The UK has retained its number one position in the country rankings for foreign direct investment (FDI) by US manufacturers for the third year running. Direct investment into the UK from US manufacturers increased from US$6.2 billion in 1998 to a record US$10.1 billion in 1999, according to
Global Investment Trends of US Manufacturers: Building the Global Network, a Deloitte Research study.
This figure looks set to increase again in 2000 with Deloitte research conservatively estimating the figures for global FDI by US manufacturers increasing to US$42 billion in 2000 in comparison to US$36 billion in 1999, despite the economic slowdown of the US economy in the third quarter of 2000.
"The continuing bias towards investment in the UK by US manufacturers could be attributed to familiarity with the cultural and legal environments, access to the country's research institutions and universities and more flexible labour regulations found in the UK in comparison with continental Europe," says Julian Thomas of Deloitte & Touche. "Based on our research, we believe developed nations will continue to receive a majority of US manufacturing FDI for the foreseeable future."
Europe also dominated the country's rankings. Three of the top four recipients in 1999 are European, compared with only one in the top four in 1997. Germany rose from ninth in 1997 to second in 1999. The Netherlands ranked number four sliding one spot from 1998. Switzerland rose to ninth and Italy joined the top ten at seventh. FDI in Europe and Asia Pacific made up 83 per cent of the global total.
A similar study by Ernst & Young entitled European Investment Monitor (EIM) shows that inward investment into European countries last year increased by around five per cent in 1999 to 2,243 projects. The number of FDI projects in Europe increased by five per cent in 2000 with the UK seeing an increase of thirteen per cent - from 508 projects in 1999 - to 575. Its nearest rival was France at just over fifteen per cent with 353 projects. Mark Hughes, a corporate location advisor with Ernst & Young, said, "the UK recovered its market share on 1999's figures when inward investment into manufacturing was hit. Foreign direct investment in telecoms, software and business services has taken up the slack.
"Technology sectors are fragile and much of that sector's investment has come from the United States. If the US does not retrench as the result of a downturn or a halt in growth, the UK will suffer, probably more so than the rest of Europe, because of its dependence on the US and these service sectors."
Across Europe, sales and marketing activities accounted for 667 projects (30 per cent of the total) according to the EIM. research and development and company headquarters followed at nine per cent apiece. Yet manufacturing - concentrated on automotives, chemicals, electronics and food - was the largest single activity with 827 projects representing nearly 37 per cent of inward investment overall.