weimar 10a01

EU Open Days conference: 

EU Open Days conference Michiel Weimar Director HR HQ’s EMEA Brussels, October 10-12

Objectives of this presentation: 

Objectives of this presentation Give you inside why and how companies are selecting locations Give you a flavor of what the most used selection criteria are Give you support to fuel the discussion to improve your investment climate Have discussions based on several challenging statements

Topics : 

Topics Location selection is a permanent process What tools are used for location selection What are the most used selection criteria HP developed a tool together with the University of Ghent Example of a tool report Statements to fuel the discussion

HP Corporation – Some facts: 

HP Corporation – Some facts Worldwide: 160K employees with a fix contract 60K contingents. EMEA: 42K fix and 24K contingents EMEA Headquarters in Switzerland 4 BU’s : IPG, PSG, HPS, Software 90Bio $ ww, 37Bio in EMEA Present in almost all EMEA countries Investing heavily in Eastern Europe countries

The PC is “Personal Again”!: 

The PC is “Personal Again”! www.hp.com/ch/personalagain

Location selection: a permanent process: 

Location selection: a permanent process Competitive advantages Costs (Labor arbitrage) Development of markets Demographics (labor pool) Customers Global responsibility Stakeholder/Shareholder value Global……….

HP CoreShore Solution: 

HP CoreShore Solution CoreShore supports decision processes for location selection - Using data from up to date data bases and highly reliable sources - Possible locations: no limitations - Within a very short time frame Developed by HP, the University of Ghent/Goost consultants Partners that use/market the tool: PriceWaterhouseCoopers (PwC) CMS legal advisors

Benefits to use the tool: 

Benefits to use the tool Development of location strategies Permanent review of locations Planing and Review in relation to M&A Activities BPO locations Shared Services locations Development of cities, regions, countries. Improvement of investment climate

Most used decision criteria (DC’s): 

Most used decision criteria (DC’s) Costs Labor Production Logistics … Availability of Ressourcen Labor pool Raw materials … Social/Economical criteria Stability burocracy General Taxes ICT Infrastructure / office space

CoreShore – statistical ranking methodology: 

CoreShore – statistical ranking methodology Ranked Countries / Cities Factors (F) Classes Variables Internal & External Data Points 12 Decision Criteria Team Input Recommendations Correlation

Slide11: 

LOW LABOUR COST scenario 1A. Market labour cost (DC) Hourly wage rate (Variable) Average monthly salary GDP per capita Compensation of the employees Gross wages and salaries (as a percentage of GDP) Inflation rate 1B. labour Costs HP (DC) 1C.Labour Poductivity and hours worked (DC) Labour Productivity per hour worked Labour productivity per person employed Hours worked per week of full time employment 1D. Social security (DC) Total expenditure on social security Pension expenditure

Reporting example: Ranking Market Labour costs: 

Reporting example: Ranking Market Labour costs

Reporting example: General Remarks Employment costs : 

Reporting example: General Remarks Employment costs   Cost differentials have been calculated with Poland as a benchmark

Slide14: 

General remarks on Political stability and crime rates (4A) All variables were highly correlated. One factor has been extracted, explaining 86% of the total variance (information). The factor loads extremely high on the corruption perception index (0.967) and the growth competitiveness score (0.969). Benchmarking :

Combined Scenarios: 

Combined Scenarios

Closing remarks : 

Closing remarks Western Europe and Northern America will lose 30 million jobs the coming 3 to 5 years. These countries will create roughly 22 mio new ones. Problem will be the gap in skill requirements Value added high end services jobs require lots of investment in schooling. EU is still too fragmented to cope with this challence It will be extremely important to break down barriers between countries to keep EU competitive All decision criteria correlate highly with labor legislation flexibility

Q&A: 

Q&A