Factors affecting UK Location Decisions
Skilled Labour and Wage rates
Coca-Cola Enterprises located in Wakefield as the City provides a pool of suitable Labour. Nissan UK was located in Sunderland as the traditions of shipbuilding showed that workers in this area had the manual skills that could be trained for Nissan's production lines. Both Sunderland and Wakefield have lower average wage costs than the South of England allowing Nissan to keep down costs and remain competitive on price.
Transport links-road, rail, ports, airports etc.
Nissan, Sunderland had the A1 and the A19 motorways to enable suppliers to deliver on time, several times per day in line with their Just in Time stock system. Port of Tyne enables cars to reach export markets in Europe where 80% of cars built in Sunderland are sold. Likewise, Coca-Cola Enterprises Ltd is just off the M1 motorway and very close to the M62 allowing distribution to the UK market and enabling suppliers of sugar and other materials to access the plant easily. Suppliers are located around the plant. Coca-Cola are next door to their canning supplier so the cans arrive by conveyor directly into the factory. The ports of Newcastle, Sunderland, Liverpool and Hull allow for exported vehicles of Nissan and Jaguar Land Rover cars.
Dyson moved manufacturing to Malaysia as most suppliers were locared nearby hence it did not make sense to transport goods into the UK and then back to customers in China because of the time and cost involved. Also, being closer to suppliers allows stockholding to be lower- important when parts become obsolete quickly. Nissan in Sunderland have most suppliers nearby- they locate around the plant in exchange for a long term contract, enabling JIT stock supplies.
Access to Markets
As the UK is a huge market for Coca-Cola the factory in Wakefield enables distribution north e.g. to Scotland and South, with Wakefield being fairly central in the UK. Coca-cola drinks are bulk-increasing i.e. they get bigger during manufacture as water and sugar are added to the syrup concentrate thus to minimise transportation costs they have to be close to the market. Trade customers like Asda would expect quick delivery as they use JIT systems to Coca- Cola need to quickly respond to these large orders. Dyson moved overseas to Malaysia as they could more easily access the Australian and Asian customers.
Government Policy e.g. Grants and Patent Box
In 2001, a £40m grant was provided due to the jobs create in a high unemployment area. This means that less start up capital is required by Nissan UK Ltd meaning that less borrowing is needed. Lower gearing means less interest is paid which lowers overheads. This is important as the market is price elastic so lowering costs is vital to keep prices competitive.
GSK decided to expand their UK facilities taking advantage of the Patent Box incentive of just 10% Corporation tax on profits made from UK patents.
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