04 Apr INTERVIEW WITH ANDREW GWATKIN, DIRECTOR, TRADE & INVEST WALES
Andrew Gwatkin, Director, Trade & Invest Wales, sees a future in which Wales – the birthplace of industrialism – can, with adequate FDI, become a leader in industry once again, especially as the environmental considerations become essential priorities.
Wales has a fascinating history and was actually the first nation in the world to industrialize. It’s come a long way since then – of course – and is now home to about 700 multinational companies in more progressive industries, such as life sciences, fintech and semiconductor technology. The nation is positioning itself to grow into new research-driven industries and Trade & Invest Wales has been a big part in helping set this up. To begin today’s interview, I’d like to give the readers a bit of an overview of the country’s industrial strengths. What key pillars does the economy sit on and how is the country positioning itself to enter a new era of industry?
We have a proud industrial heritage and have really moved the economy forward. A hundred years ago, the port of Cardiff was one of the biggest ports in the world and exported coal around the globe. Since then a lot has changed and we’ve made significant steps forward.
Wales has an extensive advanced manufacturing sector and a strong automotive sector. We have some very modern aspects of the economy that you’ve mentioned already, such as compound semiconductors, fin tech and life sciences. We have a compound semiconductor cluster in South Wales, which is a fantastic example of leading-edge technology. Companies work together and are going through the end-to-end process in terms of compound semiconductors, which is a key technology for the future. We have impressive cyber security strengths; many companies operate in that very active sector here. Life sciences is another key sector for us. Also our approach to natural resources and expertise within the renewable energy sector. It can be quite windy in Wales, which is helpful for us in terms of energy generation. With a coastline of over 1,200km, Wales has a rich maritime history and is now harnessing this for energy generation through wind, wave and tidal energy. This includes a number of test sites around Wales for marine energy, in particular around Pembrokeshire. We have some leading companies developing wave and tidal energy. We are looking to develop genuine areas of excellence in our economy for indigenous businesses and inward investors and there are many really exciting business opportunities.
We also have companies from many other sectors. We’ve had food and drink companies that have invested in Wales and people looking at opportunities for electric vehicles. We have a fantastic automotive supply chain here. We are already working on battery technology and ways to lighten electric vehicles. We have eight universities and an impressive research and development capability.
Trade & Invest Wales is the government’s official FDI marketing entity and plays a crucial role in getting international partners involved in the Welsh economy. The organization is a key driver behind the government’s strategy to become economically independent – particularly as traditional funds from the EU are upended by Brexit and new opportunities present themselves in less direct-resource-driven industries. Can you give us an overview of the kinds of success that Trade & Invest Wales has had in the recent past? What kind of strategies and targets is the organization looking at to relight the economy?
Trade & Invest Wales promotes trade and investment for the Welsh government. We provide export support and seek to attract inward investors. We help inward investors throughout their entire journey, understanding their business requirements when setting up in Wales, putting them in touch with talent and an appropriate skill base etc. The latter is often key for inward investors; finding skillsets and workers located in the right place is vital and we can help with that. We want investors to make the most of the business opportunities we have here. Our main attractors are the modernity of our economy and strong links with the education system, infrastructure and the rest of the U.K. For those investors that choose Wales as their location, we have extensive support to help them develop their international trade.
The Trade & Invest team is linked to our overseas office network. We have 21 offices in 12 different countries, which complements the U.K. overseas presence. We work closely with the Department of International Trade in our work and our overseas teams are placed in key markets. We have a strong team in North America; our biggest overseas presences is within the US recognising the importance of the market as our most significant inward investor donor market. Having a presence in key markets allows us to talk directly with investors about the benefits of being in Wales. We also have a strong foreign direct investment team based in Wales who aid investors through the entire process.
A heightened level of support is important, which we demonstrated throughout the COVID-19 pandemic. The crisis affected the whole world, but we continued to actively support businesses, including foreign owned businesses based in Wales, through a business resilience fund which gave an unprecedented level of support.
We continue to support investors beyond their initial arrival. Aftercare matters as much as helping people arrive into the market. We need to understand companies’ needs going forward and what they want to do from their base within Wales.
The most influential development in the last decade has most certainly been the COVID-19 pandemic. It has caused severe drops in economies, with nations like Wales who are highly dependent on the services industry seeing a massive tumble due to lockdowns. However, not everything is bad news. The pandemic highlighted the importance of many industries that Wales is on the forefront of developing, such as digital technologies and of course health sciences. With the amount of money being thrown at regrowing the economy all over the globe, there are opportunities to be had! What will the post-COVID era look like for Wales? What kind of opportunities can the country look towards, and how significant will FDI be in its recovery?
It is key we build in green growth for our economy. We published our Economic Resilience and Reconstruction Mission in February 2021. We have strategized a balanced approach in the way we want to build our economy, and foreign direct investment is a part of it, as is supporting the foundational economy, employability and skills. We recently published our Plan for Employability and Skills, which we see as key. Access to talent is crucial in delivering a successful future. Our universities and school system play a huge role in getting the right people coming through. Investors need to make sure they are coming to a place that is supported by R&D. Many of our universities are working on international research projects with global partners. We also published a COVID-19 Transition Plan to give citizens reassurance of how we will approach Covid in the months and potentially years ahead. We also have an economic contract with businesses to support them. We have the Well-being of Future Generations Act within Wales that came into being in 2015. This is a fundamental part of how we view things and what we want for future generations. All our decisions are built around building the type of Wales we want, for us and for future generations. We need to think holistically; it’s all about being part of an ecosystem rather than just looking at the separate parts.
From an FDI and export perspective, we have our Welsh Government International Strategy. Within that, we are clear about the key partnerships that we have around the world. We are clear on the types of businesses we are aiming to work with. We want forward-looking, modern-facing businesses, with a particular focus on the sectors that we’ve already talked about. Our strategy is clear, we’re keen to grow parts of the economy that will contribute to the type of Wales we want for the future, and of course we are open to talk to any business interested in Wales.
While the pandemic had a huge economic impact, it barely overshadowed another development that has particularly impacted Wales – that of Brexit. The EU has traditionally been the largest trade and co-operation partner for Wales and the U.K., accounting for 43% of all exports and 52% of all imports. The aerospace industry, for example, relies on seamless transport links, which have been upended. Economic modelling last year suggested that export from Wales could fall by 6%, which would have an impact of around 1.1 billion pounds. In your opinion, what kind of fallout has Wales seen since Brexit finally took place in 2021? What kind of response have you seen from the U.K. and the EU and what kind of opportunities has it created for Wales in diversifying its trade and investment partners?
Brexit had a huge impact in many respects. However, due to the COVID-19 pandemic and Brexit happening at the same time, it is quite difficult to fully identify whether challenges come from one or the other, or if they are part of a more global situation in terms of energy, general cost of living and inflation. Our exporters rely on trade with the European Union; Wales’ reliance on goods exports to European countries is higher than UK average. In the pre-Covid period, around 60% of our goods exports ended up in European countries.
Exporters now have more bureaucracy and costs when doing business with EU countries. Previously, we were all a single market and business ran on a similar model to selling within our own domestic markets. Now there are more forms to fill in and more considerations such as rules of origin, in addition to higher costs for transportation. We have directly supported businesses through the transition. We upped our game in terms of the number of experts able to help businesses on a one-to-one level. We have also organized webinars on key topics such as VAT, rules of origin and documentation. We work with chambers of commerce in dealing with these issues. We have set out ways companies can position themselves during this period through our Export Action Plan. We’ve also set up export clusters so exporters can work together, share their experiences and and understand new issues in terms of various markets. We have a new exporter program where we encourage businesses to export for the first time. In this case, Ireland is a solid first market because of proximity and language-ease. However, we want to work with companies to look further afield.
We are supporters of free trade. We want to do everything we can to work with U.K. government in negotiating free trade agreements and feed in Welsh viewpoints on these negotiations. While there are opportunities in a deal with Australia, for example, there are also some question marks in terms of its impact on the Welsh economy. The potential impact is also small in terms of percentage of GDP compared to the trade we currently do with European countries. There are a lot of negotiations on the go now and it’s important we make the most of them as they are signed.
Sustainability has become a major concern for industry, particularly after the recent COP26 in Glasgow. The summit was a great step forward, mostly in its seriously huge turnout of the financial services sector. The Welsh energy and environment industry is fairly large and is said to be worth around 64 billion dollars. The nation has set targets to grow more than 100 MW of renewable energy between 2021 and 2026 to meet a pretty ambitious target of hitting a capacity of 1 GW by 2030. How have these pledges renewed interest in sustainability changed the mood of investors looking into Wales? How is the country positioning itself to take advantage of these new opportunities?
Renewable energy is important to us and a fundamental pillar of our forward look is the Well-being of Future Generations Act. We published our net zero roadmap in October 2021 and sustainability is on the mind of businesses, including all investors we talk to. Our move to cut down carbon emissions presents opportunities. We have an abundance of natural resources and high tidal change. Our renewable energy approach is key in attracting investors to make most of test sites off the coast of Wales. There are many opportunities for floating offshore wind development, and we have been working with partners in Ireland on that. We have a lot of onshore wind power generation; floating offshore is a natural progression. Our strong existing automotive sector can also play a key role in the transition through a move towards electric vehicles and our universities are conducting research projects in this area.
FDI is a massive part of the Welsh economy, with the majority of funds coming in from Europe. The US market is the largest source of FDI for Wales outside of Europe, with around 270 American-led businesses setting up shop in the country. The US is also the country’s largest trading partner outside of Europe, accounting for over 15% of annual exports. What kind of impact has FDI traditionally had on the economy and culture of Wales? How significant are outside markets to its continued success and what target markets is the country looking at to diversify its inflows?
FDI has a massive impact, balanced with our strong domestic economy. It is a part of a balanced picture to the way we wish to grow our economy. Over recent decades FDI has brought in employment, technology and interconnectivity. Foreign direct investment can fundamentally transform sectors and develop supply chains. Foreign entities create meaningful collaborations with schools, other businesses and communities. Airbus, Toyota and General Dynamics have a huge impact on the areas where they are located. They create opportunities for young people and they provide a cultural interchange that one would not otherwise get. FDI means working with other cultures, which brings a richness to what we already have. In particular, the US market is absolutely vital to us. We have the strongest overseas presence in the US due to importance of our economic, cultural and historical links. We have maintained a special relationship over many decades and the US is an important source of investors and a key trading partner.
You’ve worked in international relations, trade, and investment for the Welsh government for more than six years now. You double as having a ton of experience in both the private sector and the public sector and seem like a perfect fit for the job. You’ve also been in the driver’s seat to experience a huge ton of changes in industry and economies over the last decade – it’s a hell of a time to be in charge! What would you say are your top personal goals as director of Trade & Invest Wales? What kind of investment ecosystem is possible for Wales and how can it achieve it?
My personal goal is to ensure we are joined up in the way that we support business and the economy. We want to support the inward investors and promote exports and there is no wrong door for businesses looking for help. My goal is to make sure we are a unified team with a strong ethos of customer service. It is important we understand businesses, their needs and help them realise opportunities. We need to talk the same language as businesses to ensure we help them to grow. My goal is to have a team that is focused on the needs of businesses, the needs of Wales and the needs of our economy.
If you could address a final message to the readers of Foreign Policy what would it be?
Wales is a modern, dynamic place to do business. It’s a fantastic place to visit and experience all that we have to offer. We have an ecosystem where businesses can thrive and find international connections. We are an outward facing and welcoming nation and we consider ourselves to be part of the global ecosystem. We have some fantastic examples of this in action, from our incubator units to multinationals that employ excellent talent across the nation.
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