Establishing a Medical Devices Manufacturing Plant in Scotland A cost/quality comparison (Based on...

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


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.


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


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


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


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



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


LocationGeneral Business

Environment


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


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



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


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


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



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


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


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


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



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


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


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


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



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


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


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


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

Worldwide offices in: Americas, Europe, Middle East, Africa and Asia Pacific

Establishing a Medical Devices Manufacturing Plant in Scotland A cost/quality comparison (Based on...

Documents

Transcript of Establishing a Medical Devices Manufacturing Plant in Scotland A cost/quality comparison (Based on...