My old employer Fujitsu’s latest attempt to resolve the “European regional headquarters” conundrum that many multinationals face is to create a region called EMEIA – Europe, Middle East, India and Africa. This is partly a reflection of the IT industry (having large outsourcing desktop support operations in India, which in Fujitsu’s case had actually been managed out of the USA operation previously) and also the legacy of the former Fujitsu Siemens global HQ in Germany selling hardware into India.
The EMEIA region will be headed up by Duncan Tait, CEO of Fujitsu UK & Ireland, who has also been made Corporate Senior Vice President in Fujitsu HQ’s new global matrix structure, so this represents a tipping of power back to the UK, having tipped over to Germany previously, with the previous tripartite European structure of C(ontinental) EMEA, UK & Ireland and the Nordics.
I had mentioned previously that there seemed to be a shift towards Japanese companies basing their European or EMEA headquarters in the UK. Some say this could be due to the relative tax structures in the UK being more favourable now than the Netherlands or Germany. My view is that Japanese companies are not quite as hard headed as that, and it is more to do with the favourable business climate (diverse, flexible workforce) and global infrastructure and support services that the UK offers.
I have big worries, therefore, on how any British exit from the EU might ultimately impact Japan’s investment in the UK. UKIP leader Nigel Farage and the Labour Party’s shadow chancellor Ed Balls recently had an exchange on this, with Farage (rightly alas) pointing out that Nissan were very negative on the impact of the UK not joining the euro and yet their factory is still in Sunderland.
For sure, Nissan will not be closing that factory down any time soon – it’s too efficient and the UK market is too important for that. But what I would be worried about if I was in government would be the more hidden ripple effect of headquarter location. It is true for all industries, not just the automotive industry, that the location of a major company’s regional headquarters will also affect its procurement, marketing, financing behaviours and therefore the suppliers around it. Furthermore, the roles needed to run these consolidated functions are the most senior and well paid jobs in an organisation. The economic impact is therefore not just about the size of the directly employed workforce in a factory. If the UK were no longer in the EU, I wonder whether we might not see a slow drift of headquarter functions, and supporting services and people, back to Germany or the Netherlands or Belgium.
Nissan’s European HQ is actually in Switzerland – unusually for a Japanese company – 18 out of the Top 30 Japanese employers in Europe have their regional headquarters or part of their regional headquarters in the UK. Official location may be only half the story however – I know that many Japanese companies are moving towards a more “virtual” regional structure, with top jobs and functions located across Europe. I will examine this further in future postings.
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