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IBM Plant Location International - press release Sept 18, 2007

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Consultants from IBM Plant Location International - Global Location Strategies - presented their latest research about global investment trends at an IEDC session sponsored by fDi magazine on Sept 17, 2007. This updated their annual research of this nature.

This indicated 20% growth in new jobs created worldwide by foreign direct investment projects during 2006. The related IBM press release of September 18 is repeated below for reference.

The original IBM press release as repeated below is at

http://www-03.ibm.com/press/us/en/pressrelease/22322.wss

Speaker bios and contact details from the fDi session at IEDC

See also related links below in fDi magazine and on our websites

IBM Annual Study: Jobs Created by Foreign Investment Grow More Than 20 Percent Worldwide

Mature Economies Attract Record Levels of Inward Investment Projects; Corporations Invest in Increasing Number of Emerging Markets

Media contact information from www.IBM.com for this press release
Linda Hanson
IBM Media Relations
914-766-2015
Refer to the original IBM press release as above for her e-mail
ARMONK, NY - 18 Sep 2007: IBM's (NYSE: IBM) annual study of countries receiving investment from multinational companies in the area of manufacturing, services and R&D reveals that the U.S., which increased its share of inward investment projects from 7 percent in 2005 to 11 percent in 2006, was the top ranking destination country for inward investment projects. Multiple European countries (the UK and France leading), also had record numbers of projects as worldwide investment activity grew by more than 20 percent in terms of jobs created.

The study by IBM's PLI-Global Location Strategies service also reveals that the top 15 inward investment locations in 2006 accounted for 73 percent of jobs, as opposed to 85 percent in 2005, which indicates corporations are widening their search for investment opportunities. Indonesia, Kazakhstan, Pakistan and Vietnam, for example, are among a growing number of emerging market countries selected for new investments.

According to the report's authors, the increase in investment projects has in part been buoyed by the strength of corporate performance in traditional source economies, such as Japan, the U.S. and Western Europe. The study's results also reveal a broadening source of investment. For example India and China, which ranked number one and two respectively in terms of number of jobs created by inward investment, also are emerging as important sources of outbound investment as companies in those countries enter into new markets in other geographic regions. Both countries are now in the top 15 ranking of source countries for outbound investment, which is led by the U.S., Japan and Germany.

"Taken as a whole, these findings are indicative of global location investment activity in 2006 being predominantly driven by optimism and a search for new market opportunities, rather than by cost reductions," said Roel Spee, Co-Global Leader, IBM PLI-Global Location Strategies service.

Manufacturing jobs created by inward investments totaled 900,000 around the world, while services jobs totaled 330,000, and R&D accounted for 100,000.

Manufacturing
India and China continue to lead in the total number of new manufacturing jobs created through inbound corporate location investments, however Vietnam has risen at a rapid clip. While India rose to first place in terms of manufacturing jobs created (126,000), displacing China, Vietnam doubled its performance of the previous year, tying China with 100,000 jobs. Mexico and Eastern European countries also have a strong focus on manufacturing jobs. India was particularly successful in the ICT and Transportation Equipment industries, whereas China's and Vietnam's manufacturing jobs were mostly in Electronics. Mexico and Eastern Europe scored higher than average on Transportation Equipment jobs.

Services
On the services front, India and the Philippines dominate the global shared services activity, with 32 percent and 16 percent of such jobs respectively. Brazil also is a strong regional shared services location. New headquarters locations on the other hand are located mostly in traditional regional hubs (U.S.A., the UK, Netherlands, Singapore) and in growing markets (China, Mexico).

R&D
While India and China dominate the global ranking in terms of R&D jobs created through inward investment with 54 percent and 12 percent respectively, other emerging economies such as Romania and Vietnam increasingly are viewed as attractive locations for R&D investment. The authors note that although companies have traditionally been cautious about globalizing R&D activity, firms increasingly are looking for opportunities to expand R&D activities in other countries to exploit talent pools available across the world. Singapore, Israel and Ireland, for example, all ranked high in attracting new R&D jobs in relation to their populations.

"As global companies continue to seek ways to optimize their operating models, they are increasingly establishing individual business components in locations that offer the best quality match for a specific unit". "The strong showing of emerging markets in this year's study and the momentum of mature economies attracting high numbers of projects reflect the ongoing evolution of the globally integrated enterprise as a business model."
Key recommendations

For multinational corporate location investors:

bullet With more locations to choose from the choices are not getting easier.
bullet Companies must be prepared to tackle the issues associated with locating in a very successful 'hot spot,' where a skilled workforce can get scarce quickly and salary inflation may increase surprisingly fast.

For countries/economic development agencies seeking investment:

bullet Continuously assess and market the location's benefits. Assess which new industries are showing strong investment potential and whether their region is attractive.
bullet Precisely define their unique value propositions to investors and promote their locations more professionally.
bullet Supplement their generalist staff with industry experts, and seek stronger involvement from the private sector in economic development strategies.

Looking ahead:

bullet The emerging importance of corporate social responsibility (including labor practices, environmental policy, energy consumption, and supply chain management) is a new decision criteria and imperative for investors, multinationals and communities alike.
bullet For potential locations, this means activities such as having environmental policies that are attractive to business, and being able to develop and offer progressive workforce partnerships with businesses.
Issues linked to corporate social responsibility will be of particular importance for emerging markets where infrastructure is less developed.
bullet For a multinational committed to standard supply chain practices globally, underdeveloped local labor or environmental policies may delay or divert investment dollars.
bullet The IBM Global Location Trends report is published annually by IBM PLI- Global Location Strategies, a specialized unit within IBM Global Business Services that focuses on global location strategies for companies as well as economic development services for governmental organizations.
Methodology:

The Global Location Trends 2006 report is derived from the IBM Global Investment Locations Database (GILD), which is a unique database of IBM's PLI-Global Location Strategies unit. The GILD records investment project announcements around the world on an ongoing basis, with the objective to monitor the location decisions that corporate executives are making. It monitors corporate investments at the project level. GILD records announcements of new and expansion projects by companies globally. Mergers & Acquisitions and other forms of investment are not included, unless they lead to a new or expansion project.

IBM uses GILD to inform corporate investor clients where recent investment is going, and as such provides key input for identifying location options. GILD allows very detailed analysis of recent investment trends by geography, sub-sector and activity -- identifying a location's market share in attracting cross border investment, monitoring target countries, and so forth.

For more information, visit www.ibm.com .
Related articles in fDi magazine Related content on our websites
June 2005 - article about ICT sector investment trends reflecting IBM-PLI research with quotes from Roel Spee

February 2005 - article about ICT sector trends

August 2004 - Roel Spee quoted in an article about trends in European shared services centers

June 2004 - Roel Spee quoted in an article about quality of life issues and the relocation of key employees in business location decisions

April 2004 - Roel Spee quoted in article about "aftercare" services as investment promotion agencies improve their business relationships after their traditional focus on the attraction of new companies.

June 2003 - Location strategy consultant roundtable interview included comments by Roel Spee on several issues

February 2003 - commentary by Roel Spee about 2002 GILD research results in an article about European investment promotion agencies

October 2002 - news about the recent acquisition of Plant Location International by IBM along with the global consulting practice of PricewaterhouseCoopers

October 2002 - quoted in article about ICT investment trends

August 2002 - participation in location consultant roundtable

Biographic Profile for Roel Spee of IBM-Plant Location International, based in Brussels, Belgium

Profile of IBM - Plant Location International, including disclosure of a prior working relationship for US sales and investment project referrals. Some of this information has not been updated recently.

Directory of business location selection consultants - global location strategy, site selection, incentives negotiation

Invest in Europe directory of economic development agencies

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Last modified: 12/20/10