establishing a medical devices manufacturing plant in scotland a cost/quality comparison (based on...
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Establishing a Medical Devices Manufacturing Plant in ScotlandA 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 a Medical
Devices Manufacturing Plant based on an analysis of over 55 quality factors and 10 cost factors
• A key emphasis was placed on:
- Presence of industrial cluster – the size of the industry, track record and R&D
capabilities; and
- Labour availability and quality
Other factors including labour availability and quality, accessibility and the living environment were
also assessed
Benchmarking Study
Project Profile Overview
Employee Type Profile Head count
Logistics and Purchasing
Warehouse and Distribution Operative 4
Manufacturing
Head of Manufacturing 1
Production Manager 1
Production Operative (Highly Skilled) 10
Production Operative (Skilled) 35
Production Operative (Unskilled) 70
Quality Control Manager 2
Quality Control Specialist 8
R&D / Engineering
Engineer 15
Administration
Secretary 4
Weighting Model Overview Weight
Presence of an Industrial Cluster 50Labour Availability and Quality 20General Business Environment 15Infrastructure and Accessibility 10Living Environment 5
fDi Benchmark Matrix
The fDi Benchmark Matrix shows the trade off between cost and quality across the 8 selected locations for the medical devices manufacturing plant profile. The average cost and quality score is 100 for the selected locations.
The ‘ideal’ quadrant is the
top left (high quality/lower operating costs)
Source: fDi Intelligence, from the Financial Times Ltd
fDi Benchmark Matrix
The matrix is based on the weighting and cost model for the medical devices manufacturing plant 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 and Tokyo offer higher quality at lower cost than the average of all the selected locations
• Cork, Dresden, Tallinn and Hyderabad offer lower cost, but at lower quality
The Operating Cost value is in GBP - United Kingdom Pound Source: fDi Intelligence, from the Financial Times Ltd
LocationQualitative
ScoreOperating Cost Index
Operating Cost Value
Cork 70.1 80.3 5,670,961
Dresden 58.7 86.4 6,101,796
Manchester 76.4 110.9 7,835,173
Munich 82.4 109.0 7,701,101
Scottish Central Belt 103.8 106.3 7,510,816
Tallinn 55.0 59.7 4,218,597
Hyderabad 95.1 36.4 2,573,923
Tokyo 257.6 211.0 14,910,468
Location Attractiveness Index
The location attractiveness index shows the overall attractiveness of the 8 selected locations for the medical devices manufacturing plant 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 locations offering the highest quality for a given level of cost are Hyderabad and Tokyo Tokyo offer an above average level of quality and good value for money as there relative quality is higher than their
relative cost.
Source: fDi Intelligence, from the Financial Times Ltd
Cost Competitiveness
The annual operating cost calculation for medical devices manufacturing plant is based on the following primary input costs: Labour Cost, Property and Utilities
• The average cost across the selected locations for Medical devices mfg plant * is GBP 7,065,353• The greatest cost saving between the selected locations is GBP 12,336,544 per annum• The values in the chart below are in GBP - United Kingdom Pound
Source: fDi Intelligence, from the Financial Times Ltd
Cost Competitiveness
10
The locations with the lowest operating costs are Hyderabad and Tallinn
In terms of the individual cost factors, the locations with the lowest costs are: Labour Cost: Hyderabad and Tallinn Property: Hyderabad and Tallinn Utilities: Hyderabad and Tallinn
The values in the table below are in GBP - United Kingdom Pound
Source: fDi Intelligence, from the Financial Times Ltd
Location Labour Cost Property Utilities
Cork 1,847,592 3,455,868 367,500
Dresden 2,125,009 3,675,752 301,034
Manchester 1,365,767 6,164,570 304,834
Munich 2,572,739 4,827,326 301,034
Scottish Central Belt 1,575,102 5,630,879 304,834
Tallinn 1,136,404 2,877,166 205,026
Hyderabad 839,048 1,547,158 187,716
Tokyo 3,087,671 11,542,497 280,298
Quality Competitiveness
The quality competitiveness assessment is based on the weight model for the medical devices manufacturing plant 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 locations with the highest quality scores are the Scottish Central Belt and Tokyo
Source: fDi Intelligence, from the Financial Times Ltd
Quality Competitiveness
In terms of the individual quality factors, the locations with the highest scores are:
General Business Environment: Manchester and the Scottish Central Belt Labour Availability and Quality: the Scottish Central Belt and Tokyo Presence of an Industrial Cluster: Tokyo and Hyderabad Infrastructure and Accessibility: Munich and Tokyo Living Environment: Hyderabad and Tallinn
Source: fDi Intelligence, from the Financial Times Ltd
LocationGeneral Business
Environment
Labour Availability and Quality
Presence of an Industrial
Cluster
Infrastructure and
Accessibility
Living Environment
Cork 23 27 8 8 4
Dresden 14 25 5 8 5
Manchester 26 29 6 12 4
Munich 15 33 15 15 4
Scottish Central Belt 26 48 16 9 5
Tallinn 14 26 2 8 5
Hyderabad 18 39 23 8 8
Tokyo 23 173 44 12 5
General Business Environment
The quality competitiveness breakdown for General Business Environment for the medical devices manufacturing plant profile is shown below
The locations with the highest overall scores for General Business Environment are Manchester and the Scottish Central Belt
Source: fDi Intelligence, from the Financial Times Ltd
General Business Environment
In terms of the individual quality criteria within General Business Environment, the locations with the highest scores are:
• Economic growth and stability: Tokyo and Munich
• Operating risk: Manchester and the Scottish Central Belt
• Taxation and incentives: Cork and the Scottish Central Belt
• Access to finance: the Scottish Central Belt and Hyderabad
• Regulatory environment: Cork and the Scottish Central Belt
Source: fDi Intelligence, from the Financial Times Ltd
LocationEconomic
growth and stability
Operating risk
Taxation and
incentives
Access to finance
Regulatory environment
Cork 0.82 8.74 6.44 0.72 6.15
Dresden 0.68 5.77 3.56 1.03 3.34
Manchester 1.04 14.20 4.71 1.06 5.05
Munich 1.59 5.77 3.56 1.03 3.34
Scottish Central Belt 0.83 14.20 4.71 1.06 5.05
Tallinn 0.54 5.96 2.74 0.99 3.87
Hyderabad 0.20 12.18 2.83 1.07 1.90
Tokyo 10.30 5.20 3.45 1.05 3.30
Labour Availability and Quality
The quality competitiveness breakdown for Labour Availability and Quality for the Medical devices mfg plant * profile is shown below
The locations with the highest overall scores for Labour Availability and Quality are the Scottish Central Belt and Tokyo
Source: fDi Intelligence, from the Financial Times Ltd
Labour Availability and Quality
In terms of the individual quality criteria within Labour Availability and Quality, the locations with the highest scores are:
• Overall size of labour market: Tokyo and Hyderabad
• Tightness and competition for labour: Tallinn and Cork
• Experienced industry-specific staff: the Scottish Central Belt and Tokyo
• Non-experienced staff: Cork and Tallinn
• Flexibility of labour regulations: the Scottish Central Belt and Tokyo
Source: fDi Intelligence, from the Financial Times Ltd
LocationOverall size
of labour market
Tightness and
competition for labour
Experienced industry-
specific staff
Non-experienced
staff
Flexibility of labour
regulations
Cork 0.38 3.53 2.54 9.00 11.45
Dresden 0.80 3.14 7.35 7.37 6.81
Manchester 1.93 2.96 3.42 8.06 12.17
Munich 1.70 1.13 16.37 7.37 6.81
Scottish Central Belt 1.92 2.44 23.26 8.06 12.17
Tallinn 0.38 4.43 3.54 8.38 9.19
Hyderabad 4.83 1.16 20.54 3.69 8.69
Tokyo 28.06 1.21 122.99 8.07 12.73
Presence of an Industrial Cluster
The quality competitiveness breakdown for Presence of an Industrial Cluster for the medical devices manufacturing plant profile is shown below
The locations with the highest overall scores for Presence of an Industrial Cluster are Tokyo and Hyderabad
Source: fDi Intelligence, from the Financial Times Ltd
Presence of an Industrial Cluster
In terms of the individual quality criteria within Presence of an Industrial Cluster, the locations with the highest scores are:
• Industry Specialisation: Tokyo and Hyderabad
• Size of industry: Hyderabad and Tokyo
• Track record: Tokyo and Munich
• Research and Development Capabilities: Munich and Dresden
• Export competitiveness: Munich and Tokyo
Source: fDi Intelligence, from the Financial Times Ltd
Location Size of industry Track recordResearch and Development Capabilities
Export competitiveness
Industry Specialisation
Cork 1.01 5.22 0.26 0.63 1.30
Dresden 1.72 0.65 0.33 1.10 1.55
Manchester 1.41 1.31 0.46 0.73 1.87
Munich 5.52 4.57 0.91 1.10 2.56
Scottish Central Belt 3.82 10.45 0.38 0.73 0.95
Tallinn 0.25 0.65 0.12 0.40 0.41
Hyderabad 9.46 10.78 0.43 0.46 1.43
Tokyo 24.83 14.37 2.22 0.87 1.93
Infrastructure and Accessibility
The quality competitiveness breakdown for Infrastructure and Accessibility for the medical devices manufacturing plant profile is shown below
The locations with the highest overall scores for Infrastructure and Accessibility are Munich and Tokyo
Source: fDi Intelligence, from the Financial Times Ltd
Infrastructure and Accessibility
In terms of the individual quality criteria within Infrastructure and Accessibility, the locations with the highest scores are:
• Access to major overseas markets: Manchester and Munich
• Quality of local infrastructure: Hyderabad and Tokyo
• Quality of utilities: Munich and Dresden
• Quality of ICT infrastructure: Tallinn and Tokyo
Source: fDi Intelligence, from the Financial Times Ltd
LocationAccess to major
overseas markets
Quality of local infrastructure
Quality of utilitiesQuality of ICT infrastructure
Cork 4.71 1.58 0.96 0.40
Dresden 3.97 2.64 1.32 0.56
Manchester 7.83 2.22 1.01 0.54
Munich 10.41 2.64 1.32 0.56
Scottish Central Belt 5.53 2.22 1.01 0.41
Tallinn 5.08 1.29 0.79 0.74
Hyderabad 3.23 4.16 0.39 0.08
Tokyo 7.23 3.25 1.21 0.71
Living Environment
The quality competitiveness breakdown for Living Environment for the medical devices manufacturing plant profile is shown below
The locations with the highest overall scores for Living Environment are Hyderabad and Tallinn
Source: fDi Intelligence, from the Financial Times Ltd
Living Environment
In terms of the individual quality criteria within Living Environment, the locations with the highest scores are:
• Cost of living: Hyderabad and Tallinn
• Attractiveness for international staff: Tokyo and Dresden
Source: fDi Intelligence, from the Financial Times Ltd
Location Cost of livingAttractiveness for international staff
Cork 2.06 2.20
Dresden 2.23 2.79
Manchester 2.20 2.26
Munich 1.55 2.59
Scottish Central Belt 2.27 2.32
Tallinn 2.85 2.42
Hyderabad 5.52 2.14
Tokyo 1.33 3.28
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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