Tilburg – Despite the Coronavirus pandemic, there is unprecedented interest among foreign companies in setting up facilities in Brabant. Brexit is only one of the reasons for that, and the primary cause is that an increasing number of foreign companies are looking to relocate or expand existing activities in Brabant as a means of risk-spreading, or decentralization.
Primarily (small) companies active in the high-quality manufacturing industry, life sciences and health, and agri-food are now looking to grow in terms of sales, logistics, production, and R&D. This is shown by a study conducted by the Brabant Development Agency (BOM) and Buck Consultants. 73 (international) companies were interviewed or completed a survey. Of the 73 (international) companies that were interviewed, 55 percent stated that decentralization is high on the corporate agenda. Half the companies wish to work more with local suppliers and another quarter are considering moving production to Europe.
“The potential exists for companies already established in Brabant adding further activities to the roster, but new companies are also preparing to move to the province. This is also clear from the increase in leads from the United States and Asia,” said Eelko Brinkhoff, Manager Foreign Investments & International Trade at BOM.
Johan Beukema, partner at Buck Consultants International, adds: “This development is in line with the decentralization trend, whereby companies spread activities around the globe in other to be closer to markets and cover potential risks in the supply and production chains. Digitization and robotization have accelerated this movement and have made decentralization more appealing in terms of costs. It is notable that the trend is also on the upswing for sales, regional head offices, R&D, and other departments.
Impact of COVID-19
COVID-19 initially impacted upon the willingness of companies to make new investments. Moreover, travel restrictions meant that new and existing clients could not be visited abroad and interested companies were unable to travel to the Netherlands to further explore the options for investing (primarily in housing).
Core figures for 2020
It seems that COVID-19 will actually result in an acceleration of decentralization in the near future, as the global crisis has exposed the vulnerabilities of production chains. Brinkhoff: “As an investment agency, we see a strong recovery in new leads as of June 2020, resulting in a level of leads that was almost equal to 2019. This means that the prospects for 2021 and after are good”.
While the results are still positive with the Brexit-related leads omitted, the developments in the United Kingdom certainly played a role. Up to a certain point, the consequences of Brexit were barely noticeable in Brabant. Most companies moved to the reater Amsterdam region, and these are generally major businesses that had to remain in the European Union (passporting) and that are mostly involved in finance, legal, media, data, and EMA (European Medicines Agency) matters. But as of the fourth quarter BOM witnessed a shift, mostly in the field of logistics, given transport delays, complex regulations, large amounts of paperwork, and tax issues.
The business climate
The primary reasons why companies select Brabant are the excellent access to European and other markets and the strong ecosystems present in the priority sectors. “Thanks to its universities, the knowledge base in Brabant is above average, while it is also home to significant systems companies such as ASML and Philips – companies that are part of a powerful chain of R&D, manufacturing, and logistics,” says Brigit van Dijk – Van de Reijt, CEO of the Brabant Development Agency.
The study done by BOM and Buck indicates that work remains to be done when it comes to making company sites available, talent, and the business climate (rules, procedures, and taxes). Further, the complexities around nitrogen regulations and energy capacity can cause hesitancy and delays.
“The study done by BOM and Buck Consultants International confirms that Brabant can capitalize on opportunities to bring in new foreign business. Despite this year, companies' willingness to invest remains high. Due to the special circumstances, we see companies postponing, but not cancelling. We assume that we will be able to reap the rewards of these excellent prospects in the coming years. A competitive business climate is a requirement and The Netherlands and Brabant must continue to work on that “, says Brinkhoff.
Appendix 1: executive summary - Decentralization of Business Functions Opportunities for The Netherlands and Noord-Brabant
The Brabant Development Agency (BOM) actively contributes to transitions in the fields of nutrition, health, energy, and the development of key technologies. Over the last four years BOM has assisted over 600 companies through growth, investments, and internationalization. For further information: www.bom.nl
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