Scottish companies told ‘invest in R&D’ or die

2 min read

Freescale has had a presence in Scotland since 1969, when the East Kilbride site near Glasgow was established by Motorola. It was one of the first inward investments into Scotland by an electronics company. Over the next decade or so, many semiconductor and other electronics manufacturers set up in Scotland, attracted by the grants and tax breaks being handed out by the UK government through the antecedents of Scottish Enterprise.

Freescale's East Kilbride facility has an interesting history. Set up as a manufacturing site, it's now a design 'Centre of Excellence', or CoE, focusing on the automotive, networking and industrial sectors. Its transformation reflects that of the UK electronics industry; away from making things towards being a global design resource. Countless millions have been invested in Scotland's electronics industry over the years. In the early 1980s, electronics 'clusters' began to appear not only in East Kilbride, but also in Livingston and Glenrothes, but few companies have left a legacy. Many were so called 'screwdriver' operations; handy assembly sites, rather than long term investments. Computer companies were one sector which looked favourably on Scotland, with plants producing pcs for IBM, Compaq and Digital Equipment, amongst others. All are gone. Similarly, most of the Scottish fabs are also gone. Only National Semiconductor's Greenock site, set up in 1970 with very little government investment, remains in operation. A decade or so back, another attempt was made to boost Scottish electronics – this time more at the IP end of the scale – with the development of the Alba Centre in Livingston. Backed by Cadence, the site was intended to be a hive of electronics creativity, but the plans were wrecked by the downturn in the global economy following the bursting of the dot com bubble. Over the years, significant numbers have questioned the wisdom of supporting inward investment – whether in Scotland or other parts of the UK. But Dr Lena Wilson, chief executive of Scottish Enterprise, defends them vehemently. "People have doubts about support for overseas companies," she said at the official opening of the East Kilbride CoE. "But they are massively important to Scotland. There are 2000 overseas businesses here, which contribute £80billion to the Scottish economy. Representing 15% of the private sector, they employ 270,000 people." And yet some of the figures she supplied tend to support the view that overseas investment remains more focused at the 'screwdriver' end of the spectrum than towards the R&D end. "Scotland spends £124 per head on R&D, compared to £250 per head for the rest of the UK," she admitted. "This investment in East Kilbride is a real example of how companies have to adapt and change in order to last. More Scottish companies should make a greater commitment to R&D and East Kilbride is a great role model; we need more companies to do this." Scottish companies may well be asked to take note, but those south of the border would also be advised to heed the message: invest or die.