Siemens’ Investment in the UK

Abstract

Siemens’ 1995 Tyneside investment was the biggest greenfield investment by a foreign company in UK history. The motivations for Siemens’ semiconductor project in the UK reveal as much about changing corporate governance in Germany as the location attractiveness of the UK to inward investors. We argue that Siemens invested in the UK as part of a globalisation strategy to improve share-holder value. Central to this strategy is the transition to the N-form MNC. The UK was favoured by Siemens as it would send powerful signals back to Germany and could meet the key project specific location requirements for semiconductor manufacturing. Low costs and flexible labour particularly stood out as key advantages of the UK. Incentives were also important for Siemens, and the multinational played-off different European regions competing for the investment to increase the incentive ‘offer’.