Outlook: Globalisation isn't a one-way street

THERE WAS a certain symmetry about the two takeover bids launched in the City yesterday. In both cases, a British manufacturing group fallen on hard times accepted a cash offer from a large American bidder. Both companies cited the need to go global as the reason for throwing their lot in with a larger suitor.

David Brown, a maker of gears and fluid control systems, looks almost certain be absorbed by Textron, a giant which makes everything from Bell helicopters to car parts. Lighting group TLG is odds-on to end up as part of Cooper Industries, a large US player, although the financial engineers at Wassall, which is staying mum on what it might do with its 14 per cent stake, may still have a say in the matter.

In another country - France, say, or even Germany - the prospect of marauding Americans buying up industrial assets would be met with dismay. Not in Britain, or at least the City. Over the past year, US predators have snapped up large swathes of British manufacturing. Indeed, this is Cooper's second foray across the Atlantic in the past two years; its previous acquisition was the emergency lighting group Menvier-Swain.

To a certain extent, this buying spree is opportunistic. Engineers, especially small and medium-sized ones, are out of favour with fund managers. Sterling's rise has eaten into their export margins while sucking in cheaper substitutes from abroad. American manufacturers, with a larger domestic market and a more supportive shareholder base, have spotted a few choice bargains.

But there is also something more fundamental going on. Manufacturing is becoming a global industry. As their customers fan out around the world in search of new markets, suppliers are having to go with them. They now have to be capable of distributing and servicing even the most obscure machine to almost any part of the planet. Furthermore, most Americans buying manufacturers over here see a British base as the perfect bridgehead into the European market.

So, faced with the pressure to become larger but starved of the stock market capital they need to grow, British manufacturers are throwing their lot in with larger foreign operators.

But hang on. As the events of the past few months show, globalisation is not a one-way street. Markets that have been opened up can just as quickly be closed off to foreign capital again. Although investments in plant and machinery are less mobile than the hot money flowing out of Asia and Russia, the two are inextricably linked. Without cash from the capital markets, foreign investment in these markets is bound to dry up.

What's more, foreign ownership carries risks. As the employees of Siemens' semiconductor plant in Gateshead found out recently, owners would rather lay off workers abroad than face the political flack of closing down plants in their domestic market. Fujitsu made the same point yesterday by announcing the closure of its microchip plant in County Durham.

TLG, David Brown and all the others are probably right to ignore nationality in their quest for size. American ownership should guarantee more more investment and many more jobs than had they remained independent. But there's no guarantee. If the brave new global market suddenly starts shrinking, as it is showing worrying signs of doing right now, they are likely to be the first to feel the ill effects.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Operations Manager

£30000 - £38000 per annum: Recruitment Genius: They are a financial services c...

Guru Careers: Stockbroker

£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence