Oresund Business Council

joint committee forThe Confederation of Danish Industries and The Confederation of Swedish Enterprise

Business involvement in the Oresund Region

June �00�

Introduction

July 1, 2005, marks the fifth anniversary of the opening of the Oresund Bridge. The occasion has encouraged many articles to focus on the development of the Oresund Region—on traffic, on commuters across the Oresund, on barriers, and on the uni-versities in the region. The image of the Oresund Region five years after the opening is one of many nuances. But how has the involvement of business in the Oresund Region developed?

Established in 1998, the Oresund Business Council is a joint committee for the Con-federation of Danish Industries and the Confederation of Swedish Enterprise. The committee works to develop the general conditions for enterprises in the Oresund Region with a view to releasing the great potential inherent in a co-operating Ore-sund Region. The objective is to develop the Oresund Region into a leading metro-politan area in Northern Europe.

The Oresund Business Council co-operated with Oresund University and Oresund Science Region and a broad range of companies and company representatives have taken part in the development of this trans-Oresund collaboration.

But what else has happened in terms of the more specific involvement of businesses in the region?

As of yet, there are no current and easily accessible joint commercial statistics for the Oresund Region as a unit, to illustrate the level and development of key figures such as number of companies, investment, turnover and export.

As a consequence, the Oresund Business Council has asked the Oresund Institute to write the enclosed article on ”Business involvement in the Oresund Region”.

We believe it is important to focus on specific enterprises and their involvement in the Oresund Region. The combined picture that appears is not complete, but quite impressive. Apart from those mentioned, many other companies have become in-volved in the Oresund region.

From a globalisation perspective in particular, it is a general and highly positive trait that many international companies have undertaken to exploit the potential of the Oresund Region. We consider this development to be a positive signal that the Oresund Region will be able to fulfil the vision of becoming Northern Europe’s lead-ing metropolitan region.

We would like to congratulate the Oresund Bridge on its fifth anniversary and thank our many partners who are also working to develop the Oresund Region.

June 2005

Kjeld H. Petersen Lennart Nilsson CEO, Innova AirTech Instruments A/S CEO, Pethle AB Chairman of Oresund Business Council Deputy Chairman of Oresund Business Council

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Five years with the Oresund Bridge:

The business community has begun to exploit the potential

The Oresund Region 2005 is a region with lots of new offices, homes and groundbreaking archi-tecture. These include Copenhagen’s new library, ”The Black Diamond”, and its new opera house, as well as the Turning Torso residential building in Malmö and Dunker’s Cultural Centre in Helsing-borg. Copenhagen has a driver-less Metro, Malmö a new outer circular road, and in the middle of it all is a giant bridge that dives down into a tunnel on a small island. It started with a decision in 1991 and continued on July 1, 2000, with the opening of the Oresund Bridge. The next five years involved a fast and dynamic change for businesses in the Oresund Region and an explosive development in travel across the Oresund.

Before the bridge—when border travel between Denmark and Sweden was only served by fer-ries—50,000 people crossed the Oresund on a daily basis. Of these 2,000 were commuters. Now that the bridge has towered above the Oresund for five years, the world looks different. The number of travellers has increased by 50 per cent to 75,000 and 10,000 Danes and Swedes cross the Oresund on their way to or from work every day.

Counting all of Zealand and Scania, the region holds a population of 3.6 million and 170,000 busi-nesses and has a Gross Regional Product of more than SEK 1,000 billion. This corresponds to 28 per cent of Denmark and Sweden’s total GDP, or four times the GDP of the Baltic countries.

Automobiles:

DaimlerChrysler showed the way

In 1999 Daimler Chrysler moved its Sweden branch from Stockholm and established a new head office in the Oresund Region. The office has two parts: one in Copenhagen and one in Malmö. The major-ity of functions were moved to Copenhagen while the service and training function was established in Malmö. The move was implemented after a thor-ough analysis showed that some 70 per cent of the Scandinavian sales were found within a 300 km radius of the Oresund. In addition, the chances of recruiting labour were assessed as good, and the proximity to Copenhagen International Airport and contact with the company’s German headquarters were considered important factors for the decision.

DaimlerChrysler paved the way for other automo-bile companies. Since the 1999 move, four other carmakers have established their Scandinavian or Nordic head office in the Oresund Region: Honda Nordic in Malmö in 2000-2003, Subaru-Daihatsu in Helsingborg in 2002, Toyota Nordic in Copenhagen in 2003 and Peugeot Scandinavia in 1998-2005.

Japanese logistics

The Japanese companies are famed for their logis-tics efficiency—just-in-time. It was therefore a pat on the shoulder for the Oresund Region when Toy-ota decided in favour of the merged Copenhagen Malmo Port after investigating all of the Nordic countries to find the optimal solution for the dis-tribution of cars to Denmark, Sweden, Norway and Finland. A new terminal with a capacity to receive 100,000 cars annually was built in Malmo. With a delivery time of 2-3 days, it covers all of the Nordic market.

“The Oresund Bridge played a major role in our lo-cation considerations. The bridge means that Den-mark and Sweden work as a single country where you can serve the entire Danish market by truck from Malmö without having to reload—something that always entails the risk of damages.”

Bart Steyaert, Toyota

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Life sciences:

Medicon Valley attracts the whole world

With 38 per cent of the total pharmaceutical in-dustry in the Nordic countries and three of the five largest R&D facilities, it is not surprising that Medicon Valley attracts companies from the whole world. Japanese Yamanouchi established its Nor-dic headquarters in Copenhagen already in 1991, and since then American Genmab, Biogen Idec and Genzyme have joined it. The life science cluster in Medicon Valley is carried by the large corporations of Novo Nordisk, H. Lundbeck, Leo and Ferring in Copenhagen, AstraZenica in Lund and Pfizer in Helsingborg. In addition to the giants there are a wealth of smaller biotech companies and a number of major medico-technical enterprises such as Radi-ometer in Copenhagen and Gambro in Lund. Late-comers include American Acadia Pharmaceuticals in Malmö, Biogen Idec in Hillerød and Israeli Teva in Helsingborg.

Danes in Malmö, Swedes in Copenhagen Ferring’s new international centre is contained in a tall, black office building that towers above Copen-hagen’s new Ørestad area. Some 225 Danes and 125 Swedes work in what can be termed Medicon Valley’s most genuine ”Oresund enterprise”. But other companies have also recognised the opportu-nities offered by the Region. In 2000 Danish Novo Nordisk relocated its Danish marketing and sales department to Malmö, and Leo undertook the same move in 2002. The CEO of Danish pharmaceuti-cal Nycomed is Swedish, and many Swedes work in other Danish pharmaceutical and biotech com-

panies. All this has caused the Oresund Region—Medicon Valley—to embark on a transformation to a unified medico labour market.

Danish-Swedish customer centresA large number of companies have established Danish-Swedish or Nordic customer centres since the arrival of the Oresund Bridge. Gillette, the food giant Kellogg’s, Icelandair, the telecommunications operator 3 and the Dell computer corporation are among them. A common feature for all of them is that they need less office space, less staff and have access to Swedish and Danish-speaking staff as well as employees who speak Norwegian, German and the Baltic languages if they choose to locate in the Oresund Region.

Language, education and an international environ-ment are among the most prominent features of the Oresund Region. Danes and Swedes are known for their command of English and gift for languages. For decades we have listened to radio and watched television from the other side of the Oresund, and with the Oresund Region we now have a chance to capitalise on our talent for languages. The Ore-sund Region is rich in communication possibili-ties with other parts of the Nordic countries, and when Northerners gather around the Oresund, it strengthens the opportunity for businesses to use the region as a base for the entire Nordic market.

Commercial “Nordification”In 2004, the Oresund Institute published a report entitled ”Erhvervslivets organisering omkring Øre-sund og i Norden” (The organisation of businesses around the Oresund and in the Nordic region). The report was the first study of a major selection of

Foods& Pharmaceuticals Transport Consumer Computer& Cars Total conveniencegoods electronics accessories

Stockholm 3 3 5 7 7 2 27

Oresund 14 4 2 1 5 26

OfwhichCopenhagen 10 4 1 1 2.5 18.5

OfwhichScania 4 1 2.5 7.5

Gothenborg 1 1 4 6

Oslo 2 1 3

Odense 1 1

Vejle 1 1

Frankfurt 1 1

Shareofsurveyedenterprises 24 13 11 18 18 18 102

SharewithScandinavianheadoffice 92% 23% 100% 56% 44% 61% 64%

Scandinavian/Nordic head offices per sector (number)

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international corporations and described how in-ternational corporations are changing their locali-sation patterns in the Nordic countries towards a structure of joint Nordic organisations. The report studied how 102 of the world’s largest enterprises within six different sectors have organised their op-erations in the Nordic countries. The study found that the Oresund Region, in particular, has gained major benefits from this development, and that the benefits are rooted in the regional structure.

Of the 102 corporations, all of which are included on the Forbes 200 list of the world’s largest compa-nies, 65 used a regional or European head office in the Nordic countries, and of those 65 Nordic head offices, 26 were located in the Oresund Region and 27 in Stockholm, while Oslo had three and Gothen-burg six.

Oresund has developed rapidly since the Oresund Bridge began to take shape. Of the region’s 26 headquarters, 17 were established after 1997. Of these 11.5 are in Zealand and 5.5 in Scania. This already indicates a strong ”bridge effect”, and it appears that still more companies are exploiting the strengths of the Oresund Region. The region’s good infrastructure and Copenhagen Airport en-able the companies to cover the Nordic markets from the same location while, at the same time, the companies have easy access to Danish and Swed-ish labour and, to a certain extent, to Norwegian, Finnish and Baltic labour. This means that inter-nationalisation moves the focus of businesses away from the national capitals to a multinational arena such as the Oresund Region.

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”Nordification” started at Oresund

The establishment of the Oresund Bridge along with the realisation of the Oresund Region has been in-strumental in the development of the region. Other factors, however, have also played a part in the suc-cess of the region. The widely branched Scandina-vian, European and Transatlantic route network of Copenhagen Airport enables companies to cover the entire Nordic market from one administration unit in the Oresund Region, while massive invest-ment in adjacent infrastructure with motorway and railway networks makes Oresund an ideal logistics hub from the Nordic and Baltic areas.

The region’s 14 universities have also played a vi-tal role in creating the critical mass of qualified la-bour. Such highly qualified labour is necessary to build up a knowledge-based and nuanced business community that can compete in the competition of big cities.

The region has always attracted many different companies and functions such as sales offices, R&D divisions and business services, and the whole re-gion today offers access to the highest quality in services such as auditing, legal advice, as well as management, software and financial consulting.

Nordification has also been visible in the banking, financial and auditing sectors for several years, while consulting and software companies such as Accenture, Oracle, IBM and Siemens Business Solutions have begun to use Nordic organisations since 2000. Finally, Nordification is beginning to turn up in legal services, but so far only DLA Nor-dic has implemented a full merger between several Nordic legal firms to form a joint company.

Scania is Denmark’s gateway to SwedenAt first, DaimlerChrysler concentrated its Dan-ish and Swedish organisation around the bridge. Since then the region has become the home of the Nordic headquarters of Toyota, Honda and Subaru-Daihatsu, but the car business—and the pharma-ceutical industry—are only some of the sectors to grow in the region.

In an international perspective, the most famous industries in the region, apart from the pharma-ceutical industry, are foods and convenience goods, and transport & logistics. Since the creation of the region, these sectors have been significantly strengthened with the arrival of enterprises such as Masterfoods and shipping company Clipper as well as with the positive development of the air-ports of Sturup and Copenhagen.

1997 BritishArrivacompletesthecompany’sfirstacquisitionoutsidetheUK.ArrivabuysDanishUni-busandestablishesinCopenhagen.In1999,ArrivaestablishesinHelsingborg.

1997 NestléestablishesaNordicorganisationandconcentratesitsNordicheadofficeinCopenha-gen

1998 FerringPharmaceuticalsmovesitsR&DfunctionfromKiel,CopenhagenandMalmöandestab-lishesaninternationalcentreinØrestad,Copenhagen.

1998 PharmaceuticalNycomedmovesitsheadquartersfromOslotoRoskilde.

1998-2002 PublishingHouseBraBöckermovesitsheadquartersfromHöganästoMalmö.

1999 Gilletteconcentrates13salesofficesinfournationalorganisationsintheNordicregionandestablishesaNordicheadofficeinCopenhagen.

1999 SonyNordicinCopenhagenisestablishedasaregionalheadofficefortheNordiccountries,andaNordicdistributioncentreisestablishedinCopenhagenFreePort.

1999 AmericanbiotechcompanyBiogen(nowBiogenIdec)establishesNordicheadquartersinCo-penhagen.

1999 DaimlerChryslermovesthenationalheadofficesfromCopenhagenandStockholmandestab-lishesaScandinavianheadofficeinCopenhagen-Malmö.

2000 PharmaceuticalNovoNordiskmoves itsDanishsalescompanyfromCopenhagenandestab-lishesaScandinavianmarketingandsalescompanyinMalmö.

2000-2003 HondaNordicisestablishedinMalmö.SeveralfunctionsaremovedtherefromStockholm.

2001 IkeamovesitsheadquartersfromHumlebæktoHelsingborgandtheNetherlands.

2002 TNTandDSVestablishTNT/DFDSTransportandLogisticsheadquarteredinCopenhagen.TheSwedishheadoffice ismovedfromStockholmtoMalmö.TNT’sSwedishcustomerservice isconcentrated inMalmöduring2004. In2005,TNT/DFDSTransportandLogistics isdissolveduponordersfromtheSwedishcompetitionauthoritiesfollowingTNT’sacquisitionofWilsonLogistics.

2002 AmericanbiotechcompanyGenzymeestablishesitsNordicheadquartersinCopenhagen.

2002 LeoPharmamovestheDanishsalescompanyfromCopenhagenandestablishesaNordicmar-ketingandsalescompanyinMalmö.

2002 Subaru-DaihatsuestablishesScandinavianheadquartersinHelsingborg.

2002 DellComputerslocatesitsScandinavianheadofficeinAmager.

2002 MicrosoftacquiresNavisioninVedbæknorthofCopenhagenandmakesVedbækaEuropeanheadofficeforMicrosoftBusinessSolutions.

2002 FoodcorporationMasterFoodsmovesitSwedishheadofficefromMalmötoStockholmandestablishesaScandinavianheadofficeinØrestad,Copenhagen.

2003 Mobiletelephoneoperator3opensaScandinaviancustomercentreinØrestad,Copenhagen.

2003 ToyotaestablishesScandinavianheadquartersinCopenhagen.

2003 Coca-ColamovesthemajorityofitsSwedishheadofficefromStockholmtoCopenhagen.

2004 CarrooftopcargoboxmanufacturerThulemovesitsheadquartersfromBrusselstoMalmö.

2004 FoodcompanyFindusmovesitsheadquartersfromBjuvtoMalmö.

2004 BedmanufacturerHildingAndersmovesitsheadofficefromHelsingborgtoMalmö.

2004 ShippingcompanyClipperestablishesglobalheadquartersforitsfleetof240shipsinCopen-hagen.

2004 ToymanufacturerBriomovesitsDanishheadquartersfromFrederikssundtoMalmö.

2004 GermanSAPlocatesitsNordicmanagementandheadofficefunctionsinCopenhagen.

2004 NSSFinancial/El-GigantenestablishesaNordicsharedservicescentreinCopenhagen.

2004 BritishAirwaysconcentratesitsNordicactivitiesinanewNordicheadofficeinCopenhagen.

2005 DunimovesitsheadofficefromStockholmtoMalmö.

2005 BiltemamovesitsheadofficefromLinköpingtoHelsingborg.

Examples of company localisation in the Oresund Region 1997-�00�

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In 2004, Danish exports to Sweden accounted for nearly DKK 60 billion, making Sweden Denmark’s second largest market after Germany, but ahead of countries such as the UK, USA, France, Italy, Benelux and Norway. Excluding trade with energy such as oil, gas and electricity, Danish exports to Sweden grew by 28 per cent from 1999 to 2004, while Swedish exports to Denmark increased by about 40 per cent.

A major part of this trade passes through Scania, and the scope of Danish company formation has increased rapidly. Companies such as DIY chain Harald Nyborg, cosmetics chain Matas and furni-ture store Ilva, have started their Swedish busi-ness in Scania. Discount supermarket Netto has placed the administration centre of its 100 Swed-ish stores in Halmstad while logistics corporation DFDS (DSV) has moved its Swedish head office from Stockholm to Scania. Generally speaking, the Danish companies exploit the synergies and com-munication potential of the proximity of Scania and Southern Sweden to the Danish headquarters in Copenhagen.

It is also noteworthy that Denmark’s largest bank, Danske Bank, increasingly uses Scania to strength-en its position on the Swedish market through the expansion of its branch network in its Swedish re-tail banking business and through the establish-ment of a new finance centre in the Turning Torso. Similarly, Danish property investors have increas-ingly begun to undertake portfolio investment in Scania.

Tax agreement in �00�The tax barrier was strongly reduced at the end of 2003 when Oresund became part of a new tax agreement. Rules clearly defining where individu-al commuters pay tax and where they have their social insurance have replaced the former regime under which Swedish and Danish authorities were unable to agree on taxation rights. The Danish tax authorities have also established special tax offices in Elsinore and Copenhagen for Oresund commut-ers who live in Sweden, but pay their tax in Den-mark. Accordingly, the tax issue is no longer the Gordian knot of the Oresund Region.

The Oresund Region is a factAn Oresund business effect already exists in the shape of increasing localisation and company own-ership across the Oresund. Furthermore, the re-gion undoubtedly plays an important role in the increased trade between Denmark and Sweden.

The citizens of the region have also adopted the idea and discovered its benefits. This was obvious, for instance, during the Swedish EMU referendum

in 2003 when western Scania overwhelmingly sup-ported the euro. The voters along the Swedish Ore-sund coast thus ensured a yes from Scania while central and eastern Scania voted no like the rest of Sweden outside Stockholm. The residents of west-ern Scania voted yes to the euro across educational lines and level of income since in the Oresund Re-gion there is a clear notion that a common currency is an advantage when people move around the re-gion.

In the first five years of the bridge’s existence, the Oresund Region has proved to be an example of the positive dimension of globalisation and inter-nationalisation. The region gives its citizens and companies more options and creates the framework for economic and cultural integration that was previously limited by a national border. Each in their own way, organisations such as the Oresund University, Oresund Science Region, Medicon Val-ley Academy, Oresund Business Council, Oresund Direkt, the Oresund Committee and the Oresund Institute have succeeded in creating better condi-tions for the region and its residents, but they can-not do the work on their own.

It was therefore immensely positive when in 2003, the governments of the two countries succeeded in entering into a new tax agreement. But the politi-cal attention to the Oresund Region—particularly from the national sides—must develop if the efforts to identify and solve the barrier issues are to suc-ceed.

It requires a willingness to change and to think in innovative terms. This is no problem for companies and citizens who are used to acting internationally and flexibly, but the politicians must also adopt these qualities, both in order to create a flexible Oresund Region and to strengthen Denmark and Sweden in globalisation.

TheConfederationofDanishIndustriesH.C.AndersensBoulevard18DK-1787CopenhagenDenmarkPhone+4533773377di@di.dkwww.di.dk

TheConfederationofSwedishEnterpriseSE-11482StockholmSwedenPhone:+46-(0)8-55343000svenskt.naringsliv@svensktnaringsliv.sewww.svensktnaringsliv.se

ThebusinesscommunityhasengagedinthedevelopmentoftheOresundRegioninawiderangeofareas.In1998theregionalofficesoftheConfederationofDanishIndustriesandtheConfederationofSwedishEnterpriseintheOresundRegionestablishedtheOresundBusinessCounciljointcommit-teethathas,amongotheractivities,becomeinvolvedinco-operationwiththeOresundUniversityandintheestablishmentofOresundScienceRegionwithaffiliatedorganisations.

Ingeneral,theinvolvementofthebusinesscommunityhasbeenmultifaceted.Inordertoillustratethis,theOresundBusinessCouncilaskedtheOresundInstitutetopreparetheenclosedarticlewithspecificexamplesofhowbusinesseshaveorganisedthemselvesintheOresundRegion.

OnJuly1,2005,itisfiveyearssincetheOresundBridgeopened.Itishighlypositiveintheperspec-tiveofglobalisationthatarangeofinternationalcompanieshavechosentolocateintheOresundRegionandcontributetoitscontinueddevelopmentintoaleadingmetropolitanregioninNorthernEurope.

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