How does a manufacturing business go about attracting foreign direct investment? What sort of criteria are offshore investors looking for when they decide to invest or relocate?
Nicola Watkinson, national manager, investment at Austrade provided some insights here when she did a presentation last week at a brainstorming session hosted by the Advanced Manufacturing Co-operative Research Centre
Watkinson says that investors are looking for several things: places that offer anything that’s best in class, high levels of innovation, quick delivery that will reduce the need to hold stock and guarantee short production runs, the ability to customize products to suit different markets, particularly Asian growth markets, anywhere that has free trade agreements that offer good access to key markets and the sleeper, sustainability. Places that have a regulatory regime around emissions and power pricing are in a strong position.
As an example, she cites the example of Chinese carmaker Geely paying $US40 million ($A49.9 million) for the world’s second-largest auto-transmission supplier, Melbourne-based Drive Train Systems International. The Geely acquisition has triggered speculation that Australia’s car sector is poised for a flood of investment as well as new retail car brands from China, as the world’s biggest car market and maker in-waiting seeks better technology and fresh markets. The acquisition will put DSI products and technology into China’s auto industry, one of the fastest growing markets in the world.
Watkinson says Australia has several features that might attract foreign investors. First, there are a number of distressed assets in wake of the global financial crisis going cheap. Secondly, there is the potential to develop clusters. Australia already has several going in such areas as wine and medical research. Can Australia’s manufacturers do the same? Can manufacturers do a Barossa?
She says Australian manufacturers need to identify their value proposition and plan for the future, looking at where the future growth will occur and whether this matches any of our strengths.
She has nominated several obvious areas. There could, for example, be research collaborations in such areas as biomedical polymers. Another area is engineering and design services. Then, there is scope for testing products in tough conditions.
Attracting investment for manufacturing is now a number one issue for governments everywhere. The Victorian Government has announced an inquiry into the issue and a parliamentary committee is due to report next year. The brainstorming session was held to provide some input into the AMCRC submission for the inquiry.
What should manufacturers do to attract investment?
