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United Kingdom

Foreign Acquisitions Drive Engineering Sector Growth in the Midlands

Strategic Insights

— 1 min read

Low unit manufacturing costs and tax rates are attracting record levels of foreign takeover bids, with three of the biggest deals last year taking place in the Midlands. The UK electrical and electronic, mechanical and instrument engineering companies saw a total of £1.46 billion in sales to foreign buyers, a marginal increase from £1.45 billion in 1996. The region's technological edge, skills base, and favorable tax environment are key draws for international companies.

Key Takeaways:

  • The UK engineering sector has seen a record number of foreign acquisitions, with 64 publicly-declared deals last year, with the Midlands being a major target.
  • The Midlands has seen three major deals, including the £363 million purchase of Newman Tonks by Ingersoll-Rand and the £210 million purchase of Forward by Hicks Muse Tate and Furst.
  • The region's low corporate tax rates and flexible labor market make it an attractive target for foreign companies.
  • Pay awards in the engineering industry remain restrained, with average pay settlements increasing to 3.5 percent over the three months to the end of March.
  • The Engineering Employers Federation noted that awards were significantly below private sector pay deals as a whole.
  • Chancellor of the Exchequer Mr. Gordon Brown has stressed the need for pay restraint in the sector.

Statistics:

  • £1.46 billion: Total sales of UK electrical and electronic, mechanical and instrument engineering companies to foreign buyers last year.
  • £1.45 billion: Total sales of UK electrical and electronic, mechanical and instrument engineering companies to foreign buyers in 1996.
  • 64: Number of publicly-declared foreign acquisitions in the UK engineering sector last year.
  • £363 million: Purchase price of Newman Tonks by Ingersoll-Rand.
  • £210 million: Purchase price of Forward by Hicks Muse Tate and Furst.
  • 3.5 percent: Average pay settlements in the engineering industry over the three months to the end of March.
  • 85 percent: Percentage of pay awards below four percent.

Sources:

  • "Engineering sector says yes to foreign buyers" by Jonathan Oliver (The Telegraph)
  • KPMG Corporate Finance (no date listed)
  • Engineering Employers Federation (no date listed)
  • The Engineering Employers Federation also stated that pay awards were below private sector pay deals.
  • Chancellor of the Exchequer Mr Gordon Brown was quoted in the CBI weekly national briefing

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