Headquarters functions
37. The obvious success that Wales has had in attracting
FDI has to be tempered by the knowledge that while the production
function of foreign investors has been located in Wales, the R&D
and Headquarters function have not followed. While CBI Wales welcomed
the long running existence of large foreign employers in Wales
it aired its concern that the great majority of those employers
in Wales "are not headquartered here".[84]
38. TUC Wales also noted this fact. It argued that
"it is relatively easy to persuade a company to set up a
fairly simple operation; it is much more difficult to get them
to set up an advance operation which is involving the research
development higher managerial functions".[85]
Furthermore, TUC Wales believed that the argument that if the
manufacturing arm came that the other functions would follow had
now been discredited. However, TUC Wales acknowledged that there
was not a large pool of suitably qualified people within Wales
to undertake those tasks.[86]
39. In spite of this general view we were made aware
of some excellent examples of Wales attracting those higher level
functions. When we took evidence from General Dynamics, a defence
contractor, it explained that the decision to locate its headquarters
in Wales was based on a desire to be close to the primary customer
for the Bowman Programme - the Defence Procurement Agency in Bristol.
General Dynamics considered all places within a one hour radius
of Bristol and chose Oakdale in Wales based on the assistance
from the WDA and the quality of life that Wales would offer its
employees.[87] General
Dynamics argued that having made the decision to locate to Wales
it was determined to "ingrain ourselves into the community".[88]
Under similar circumstances, Professor Wahab explained that DELTA
Microelectronics Ltd also chose to locate headquarter functions
in Wales because it considered that "positioning themselves
in Wales would be an advantage rather than a disadvantage. They
see it as a good entrance into the UK market".[89]
40. The attraction of Foreign Direct Investment
to Wales remains an important part of Wales' economic policy,
but the quality of that investment should not be overshadowed
by the quantity of investment. We recommend that the Department
of Trade and Industry, where appropriate, supports fully the Welsh
Assembly Government's policies to attract high value added FDI
and its accompanying higher level functions to Wales.
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