Establishing a Medical Devices Manufacturing Plant in Scotland A 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 TypeProfile Head count Logistics and Purchasing Warehouse and Distribution Operative4 Manufacturing Head of Manufacturing1 Production Manager1 Production Operative (Highly Skilled)10 Production Operative (Skilled)35 Production Operative (Unskilled)70 Quality Control Manager2 Quality Control Specialist8 R&D / Engineering Engineer15 Administration Secretary4 Weighting Model OverviewWeight Presence of an Industrial Cluster50 Labour Availability and Quality20 General Business Environment15 Infrastructure and Accessibility10 Living Environment5

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 Location Qualitative Score Operating Cost Index Operating Cost Value Cork ,670,961 Dresden ,101,796 Manchester ,835,173 Munich ,701,101 Scottish Central Belt ,510,816 Tallinn ,218,597 Hyderabad ,573,923 Tokyo ,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 Source: fDi Intelligence, from the Financial Times Ltd

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. Source: fDi Intelligence, from the Financial Times Ltd

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 Source: fDi Intelligence, from the Financial Times Ltd

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 Source: fDi Intelligence, from the Financial Times Ltd LocationLabour CostPropertyUtilities Cork1,847,5923,455,868367,500 Dresden2,125,0093,675,752301,034 Manchester1,365,7676,164,570304,834 Munich2,572,7394,827,326301,034 Scottish Central Belt1,575,1025,630,879304,834 Tallinn1,136,4042,877,166205,026 Hyderabad839,0481,547,158187,716 Tokyo3,087,67111,542,497280,298

Quality Competitiveness 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 Source: fDi Intelligence, from the Financial Times Ltd

Quality Competitiveness 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 Source: fDi Intelligence, from the Financial Times Ltd Location General Business Environment Labour Availability and Quality Presence of an Industrial Cluster Infrastructure and Accessibility Living Environment Cork Dresden Manchester Munich Scottish Central Belt Tallinn Hyderabad Tokyo

General Business Environment 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 Source: fDi Intelligence, from the Financial Times Ltd

General Business Environment 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 Source: fDi Intelligence, from the Financial Times Ltd Location Economic growth and stability Operating risk Taxation and incentives Access to finance Regulatory environment Cork Dresden Manchester Munich Scottish Central Belt Tallinn Hyderabad Tokyo

Labour Availability and Quality 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 Source: fDi Intelligence, from the Financial Times Ltd

Labour Availability and Quality 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 Source: fDi Intelligence, from the Financial Times Ltd Location Overall size of labour market Tightness and competition for labour Experienced industry- specific staff Non- experienced staff Flexibility of labour regulations Cork Dresden Manchester Munich Scottish Central Belt Tallinn Hyderabad Tokyo

Presence of an Industrial Cluster 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 Source: fDi Intelligence, from the Financial Times Ltd

Presence of an Industrial Cluster 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 Source: fDi Intelligence, from the Financial Times Ltd LocationSize of industryTrack record Research and Development Capabilities Export competitiveness Industry Specialisation Cork Dresden Manchester Munich Scottish Central Belt Tallinn Hyderabad Tokyo

Infrastructure and Accessibility 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 Source: fDi Intelligence, from the Financial Times Ltd

Infrastructure and Accessibility 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 Source: fDi Intelligence, from the Financial Times Ltd Location Access to major overseas markets Quality of local infrastructure Quality of utilities Quality of ICT infrastructure Cork Dresden Manchester Munich Scottish Central Belt Tallinn Hyderabad Tokyo

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 Source: fDi Intelligence, from the Financial Times Ltd

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 Source: fDi Intelligence, from the Financial Times Ltd LocationCost of living Attractiveness for international staff Cork Dresden Manchester Munich Scottish Central Belt Tallinn Hyderabad Tokyo

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