Renewable Energy Technology Centre (Offshore Marine) A cost/quality comparison (Based on information...

Renewable Energy Technology Centre (Offshore Marine)A cost/quality comparison(Based on information from the Financial Times fDi Benchmark tool – April 2012)

Competitiveness of Scottish Central Belt

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 Renewable Energy Technology Centre (offshore) 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 – experience of industry-specific staff, number of top 500

universities and flexibility of labour regulations

Other factors including general business environment, infrastructure and accessibility and the living environment were also assessed

Benchmarking Study

Project Profile Overview

Cost Factor Usage AmountProperty Total Occupancy cost (in town office rent) 1,200 m²

Weighting Model Overview Weight

Presence of an Industrial Cluster 45

Labour Availability and Quality 30

General Business Environment 10

Infrastructure and Accessibility 10

Living Environment 5

Employee Type Profile Head count

Information Technology

Software Development Engineer 3

Technology Engineering Specialist 2

R&D / Engineering

Assistant Engineer 4

Chief Engineer/Technical Mgr 1

Engineer 10

Head of Research and Development 1

R&D Team Leader 2

Senior Engineer 3

Senior Technical Drawer 1

Technical Drawer 2

Trainee/Apprentice Engineer 1

fDi Benchmark Matrix

The fDi Benchmark Matrix shows the trade off between cost and quality across the 6 selected locations for the Renewable energy technology centre (Offshore Wind, Wave and Tidal) profile. The average cost and quality score is 100 for the selected locations. the Scottish Central Belt is in the ideal top left quadrant.

Source: fDi Intelligence, from the Financial Times Ltd

The ‘ideal’ quadrant is the

top left

(high quality/lower operating costs)

fDi Benchmark Matrix

• The matrix is based on the weighting and cost model for the Renewable Energy Technology Centre, April 2012, 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 offers higher

quality at a lower cost than the average of all the selected locations

Oslo offers high quality but at higher cost Lille, Newcastle, Porto and Bilbao offer

lower cost, but at lower quality

The Operating Cost value is in GBP – United Kingdom Pounds

LocationQualitative

ScoreOperating Cost

IndexOperating Cost

Value

Bilbao 78.9 99.1 1,737,897

Bremerhaven 87.2 119.2 2,090,289

Lille 67.5 90.3 1,584,569

Newcastle 75.1 90.0 1,579,048

Oslo 138.5 137.4 2,410,066

Porto 63.2 72.8 1,276,015Scottish Central Belt 189.6 91.2 1,599,844


Location Attractiveness Index

The location attractiveness index shows the overall attractiveness of the 7 selected locations for the Renewable Energy Technology Centre, April 2012, 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 the Scottish Central Belt and Oslo the Scottish Central Belt offers an above average level of quality and good value for money as there relative quality is

higher than its relative cost


Cost Competitiveness

The annual operating cost calculation for Renewable Energy Technology Centre, April 2012 is based on the following primary input costs: Labour Cost

The average cost across the selected locations for Renewable Energy Technology Centre, April 2012 is GBP 1,753,961

The greatest cost saving between the selected locations is GBP 1,134,052 per annum The values in the chart below are in GBP – United Kingdom Pounds


Cost Competitiveness

Location Labour Cost Property

Bilbao 1,450,810 287,086Bremerhaven 1,907,767 182,522Lille 1,329,400 255,169Newcastle 1,155,464 423,583Oslo 1,895,735 514,331Porto 1,061,945 214,069Scottish Central Belt 1,104,636 495,207

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The locations with the lowest operating costs are Porto and Newcastle In terms of the individual cost factors, the locations with the lowest costs are:

Labour Cost: the Scottish Central Belt and Porto Property: Porto and Bremerhaven

The values in the table below are in GBP – United Kingdom Pounds



The quality competitiveness assessment is based on the weight model for the Renewable Energy Technology Centre, April 2012 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 Oslo



Location

General Business

Environment

Labour Availability and

Quality


Infrastructure and

AccessibilityLiving

EnvironmentBilbao 8 20 40 7 4Bremerhaven 8 15 50 10 4Lille 8 21 26 8 5Newcastle 12 20 30 8 5Oslo 12 46 59 15 6Porto 8 22 19 10 5Scottish Central Belt 13 66 92 12 6

In terms of the individual quality factors, the locations with the highest scores are:

General Business Environment: the Scottish Central Belt and Oslo Labour Availability and Quality: the Scottish Central Belt and Oslo Presence of an Industrial Cluster: the Scottish Central Belt and Oslo Infrastructure and Accessibility: the Scottish Central Belt and Oslo Living Environment: the Scottish Central Belt and Oslo


General Business EnvironmentGeneral Business Environment

The quality competitiveness breakdown for General Business Environment for the Renewable Energy Technology Centre, April 2012 profile is shown belowThe locations with the highest overall scores for General Business Environment are the Scottish Central Belt and Oslo


General Business Environment

Location Economic growth and stability

Operating risk

Taxation and incentives

Access to finance

Regulatory environment

Bilbao 1.70 1.34 1.44 2.10 1.76Bremerhaven 0.82 1.49 1.36 2.41 2.31Lille 0.83 1.48 0.94 2.34 2.76Newcastle 1.20 3.42 1.85 2.63 2.62Oslo 2.67 1.69 1.67 3.33 2.88Porto 1.13 1.17 1.39 2.05 2.54Scottish Central Belt 2.15 3.42 1.85 2.63 2.62

In terms of the individual quality criteria within General Business Environment, the locations with the highest scores are:

Economic growth and stability: the Scottish Central Belt and Oslo Operating risk: the Scottish Central Belt and Newcastle Taxation and incentives: the Scottish Central Belt and Newcastle Access to finance: Oslo and the Scottish Central Belt Regulatory environment: Oslo and Lille



The quality competitiveness breakdown for Labour Availability and Quality for the Renewable Energy Technology Centre, April 2012, profile is shown belowThe locations with the highest overall scores for Labour Availability and Quality are the Scottish Central Belt and Oslo



Location

Overall size of labour market

Tightness and competition for

labour

Experienced industry-

specific staff

Non-experienced

staff

Flexibility of labour

regulations


In terms of the individual quality criteria within Labour Availability and Quality, the locations with the highest scores are:

Overall size of labour market: the Scottish Central Belt and Bremerhaven Tightness and competition for labour: Lille and Porto Experienced industry-specific staff: the Scottish Central Belt and Oslo Non-experienced staff: the Scottish Central Belt and Oslo Flexibility of labour regulations: Newcastle and the Scottish Central Belt


Presence of an Industrial ClusterPresence of an Industrial Cluster

The quality competitiveness breakdown for Presence of an Industrial Cluster for the Renewable Energy Technology Centre, April 2012 profile is shown belowThe locations with the highest overall scores for Presence of an Industrial Cluster are the Scottish Central Belt and Oslo



Location Size of industry Track recordResearch and Development Capabilities

Export competitiveness

Industry Specialisation


In terms of the individual quality criteria within Presence of an Industrial Cluster, the locations with the highest scores are:

Industry Specialisation: Bremerhaven and Porto Size of industry: Bremerhaven and Bilbao Track record: the Scottish Central Belt and Lille Research and Development Capabilities: Oslo and the Scottish Central Belt Export Competitiveness: Bremerhaven and Lille



The quality competitiveness breakdown for Infrastructure and Accessibility for the Renewable Energy Technology Centre, April 2012 profile is shown belowThe locations with the highest overall scores for Infrastructure and Accessibility are the Scottish Central Belt and Oslo



LocationAccess to major

overseas marketsQuality of local infrastructure Quality of utilities Quality of ICT

infrastructure

Bilbao 3.75 1.47 0.64 1.26Bremerhaven 4.71 1.92 0.59 2.53Lille 3.11 2.18 0.49 2.03Newcastle 4.83 1.54 0.46 1.58Oslo 10.45 0.81 0.44 3.21Porto 6.25 1.04 0.42 1.91Scottish Central Belt 8.90 1.54 0.46 1.47

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In terms of the individual quality criteria within Infrastructure and Accessibility, the locations with the highest scores are:

Access to major overseas markets: the Scottish Central Belt and Oslo Quality of local infrastructure: Lille and Bremerhaven Quality of utilities: Bremerhaven and Bilbao Quality of ICT infrastructure: Oslo and Bremerhaven


Living Environment

The quality competitiveness breakdown for Living Environment for the Renewable Energy Technology Centre, April 2012 profile is shown belowThe locations with the highest overall scores for Living Environment are the Scottish Central Belt and Oslo


Living Environment

LocationCost of living Attractiveness for

international staff

Bilbao 1.36 2.64

Bremerhaven 1.59 2.78

Lille 1.59 3.33

Newcastle 1.46 3.23

Oslo 1.11 4.75

Porto 1.79 3.21

Scottish Central Belt 1.60 4.56

In terms of the individual quality criteria within Living Environment, the locations with the highest scores are: Cost of living: the Scottish Central Belt and Porto Attractiveness for international staff: the Scottish Central Belt and Oslo


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

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