3. West Midlands Economic Forum 20 June 2014, Coventry WEST MIDLANDS AS AN INVESTMENT DESTINATION Courtney Fingar

4. The global environment: tough times for FDI? Economic uncertainty led to investor caution and resultant decline in FDI flows. Last year fDi reported the second biggest decline in FDI since the recession. Lower-risk, lower-cost globalisation strategies pursued by companies post- recession: JVs, alliances, partnerships. Difficulty for IPAs not equipped to promote or facilitate these types of investments (more matchmaking) Expansions became a more important part of FDI: nearly 1 in 5 projects is expansion of an existing facility rather than investment in a new site. This makes investor aftercare essential to FDI success. Increasing focus on SMEs, start-ups and entrepreneurs

5. But… green shoots of recovery now being seen Greenfield FDI back in bloom in 2013 with a 10.94% annual growth – although growth was unevenly distributed across regions of the world. Latin America and the Caribbean was the best performing area, with a doubling of FDI. Middle East +44%; Africa: +11% Declines: North America; Asia-Pacific; Europe (-12%). FDI in China and the US fell slightly as it did in most of the major economies. Growth was mainly in small and mid-sized emerging and frontier markets. An indicator world economic recovery: FDI in the hotels and tourism sector up by 36.3% in 2013, FDI in building and construction materials by 88.39%. Source: The fDi Report 2014 (www.fdiintelligence.com/fdireport)

6. Motives Companies are bullish on economic growth, and our studies on investor motives show this is of top importance in their search for locations. FDI is primarily market-seeking with nearly ½ of projects driven by domestic market growth potential and 1/3 by proximity to markets and customers. Source: The fDi Report 2014 (www.fdiintelligence.com/fdireport)

7. Europe Capex down 12%, to $137.26bn UK’s market share declined slightly But has a big lead Top 10 countries account for 73% Turkey is a fast mover, now at #4

8. West Midlands accounts for 6% of UK regional FDI Source: fDi Markets, January 2003 - May 2012 (www.fdimarkets.com)

9. West Midlands top FDI sectors SectorNo. Projects Avg Capex (£m) Avg JobsCompanies Industrial machinery, equipment and tools 4043736 Software and IT services 3076327 Financial services 29202822 Transportation 234412123 Automotive OEM 196321612 Automotive components 1789516 Business services 1776817 Hotels and tourism 1551998 Electronic components 1552213 Plastics 14114113 Source: fDi Markets, January 2003 - May 2012 (www.fdimarkets.com)

10. West Midlands investor motives RankMotive% of total citationsUK comparisonGlobal comparison 1 Proximity to markets or customers25% 23%29% 2 Domestic market growth potential19% 22% 3 Infrastructure and logistics14% 7%6% 4 Industry cluster/critical mass9% 7%5% 5 IPA or gov’t support8% 3% 6 Skilled workforce availability6% 15%10% 7 Regulations or business climate5% 8% 8 Facilities site or real estate4% 2%- 9 Lower costs3%-- 10 Presence of suppliers or JV partners2%-- - Other Motive5%-- Source: fDi Markets, Sample of 78 greenfield FDI projects citing 113 motives (www.fdimarkets.com)

11. Automotive OEM manufacturing plant: Quality/Cost matrix Source: fDi Benchmark (www.fdibenchmark.com)

12. Looking ahead fDi Intelligence predicts the recovery in FDI to accelerate in 2014 and flows to continue to grow over the next five years. We expect particularly strong growth of FDi into the UK as economic growth takes hold. Source: The fDi Report 2014 (www.fdiintelligence.com/fdireport)

13. For more information please feel free to contact me: Courtney Fingar Editor-in-chief, fDi Magazine Head of Content, fDi Intelligence The Financial Times Ltd Tel: (+44)(0)20 7775 6365 Email: Courtney.Fingar@FT.comCourtney.Fingar@FT.com Web: www.fdiintelligence.comwww.fdiintelligence.com Twitter: @CourtneyFingar To download a copy of The fDi Report 2014, visit www.fdiintelligence.com/fdireport)