Business Birmingham: second to none - Wouter Schuitemaker

The past year has seen foreign direct investment into Birmingham soar on account of its diverse range of industries and fertile business environment. Wouter Schuitemaker, investment director at Business Birmingham, tells Finance Director Europe where it all went right for the UK's second city.

According to research recently carried out by the Marketing Birmingham Regional Observatory, the number of foreign direct investments (FDI) in the UK's West Midlands hub has more than doubled over 2012-13.

To précis, FDI grew by 52% during the last financial year on the back of 41 new projects, creating more than 4,000 local jobs; this is set to boost the region's economy by an estimated £174 million.

Strong infrastructure and investment

For Business Birmingham, the city's official inward investment programme, the report makes for particularly enjoyable reading, consolidating its position as one of the UK's principal hotbeds for foreign investment.

Growth has been attained across multiple industries; engineering and manufacturing continue to create thousands of new jobs, while its digital media and life sciences sectors are in the ascendency.

"The recent success has really been down to a mix of things," says Business Birmingham's investment director Wouter Schuitemaker. "First of all, we've focused a lot on putting a strong infrastructure in place to attract and support incoming companies, whether they are large corporates or SMEs.

"We've also managed to successfully create a balance between attracting growth in traditional sectors where the city has always been strong - such as advanced manufacturing - and in emerging markets, driven by the likes of e-commerce and digital media."

The lion's share of investments has come from the US - notably, over the past three years, Kraft and US-owned Virgin Media have outsourced operations to Birmingham - and, while the city will continue to focus on attracting Stateside investors, it is also looking further afield, as Schuitemaker explains.

"When we started the Business Birmingham programme, we took a conscious decision to engage the majority of our efforts in the US market, as it is the largest source of outbound investment into Europe," he says. "However, we are definitely more than appreciative of other markets, particularly India and China."

In contrast to the ravaged eurozone, which has seen a conspicuous slump in foreign investments, the UK has managed to mount a strong recovery over the last year. According to a report released by the UN Conference on Trade and Development in June, total UK FDI rose by 22% in 2012.

Scale and incentives

Given increasing local competition - particularly across Wales, Scotland and Northern Ireland, due to their associated low costs - what makes Birmingham so unique?

"We are definitely seeing some of the devolved nations increasingly using financial incentives on a massive scale to bring in investment," notes Schuitemaker. "But, in some cases, these investments are going to the wrong parts of the UK - or Europe for that matter.

"It’s not just about offering short-term incentives; it’s about providing the right support mechanisms, cost-efficiency and diverse skill sets, which Birmingham has in abundance."

"What Birmingham has going for it is scale. We have five universities here, with more than 100,000 students, and have also expanded our airport and road networks. This expansion is coupled with the recognition that, in order to be competitive, you need to be able to create a soft landing for companies; they will then consider your location over others."

Consequently, in March, Birmingham City Council agreed to allocate funding for a pilot scheme, the Mobile Investment Fund (MIF), in which existing and potential investors will be offered financial advantages.

"It's a grant fund very much predicated on employment generation," says Schuitemaker. "We are taking a fairly defined view of how much we should be incentivising business, so what the MIF is doing is effectively bridging the operational gap between lower-cost regions and ourselves; we are more cost-effective compared with London and the south-east, but we are aware that there are cheaper alternatives across the UK."

While financial incentives and windfalls are all well and good, FDI is ultimately influenced by the long-term sustainability of the respective location. And, as highlighted by ongoing efforts in infrastructure regeneration, Birmingham looks set to remain an attractive choice for foreign investors in the foreseeable future.

"Thanks to our scale, we can offer real sustainability," says Schuitemaker. "It's not just about offering short-term incentives; it's about offering the right support mechanisms, cost-efficiency and diverse skill sets, which we have in abundance. That's the real beauty of Birmingham."

Wouter Schuitemaker, investment director at Business Birmingham.