TAKEOVERS OF British factories by foreign companies boost wages and productivity in the UK, according to unpublished research commissioned by the Department of Trade and Industry.
Higher investment in new equipment has helped foreign owners boost productivity, but factories taken over by overseas investors are more likely to close.
The research, carried out for the Invest in Britain Bureau (IIB) at the University of Portsmouth, showed that the 1,800 manufacturing plants bought by foreign investors between 1987 and 1992 were 46 per cent more productive than plants belonging to UK companies.
Foreign acquisition raised output per employee and also raised the real wages they were paid by 5 to 12 per cent. The reason for the improved performance was higher investment per employee by the new owners.
The foreign-owned factories were also less likely to have cut employment levels than British-owned equivalents, if they remained open. However, a third of the plants acquired by overseas investors during the period studied had closed by 1992.
The IIB's annual review published yesterday showed that more than a third of the record number of 652 inward investment projects in 1998/99 had involved takeovers of British companies. The number of projects compared with a total of 618 in 1997/98, and the value of the stock …