Europe‘s troubles are having a mixed effect on the psyches of British firms mulling U.S. investments, said Mike Harling, Georgia‘s representative in the United Kingdom.
With widespread uncertainty in the European Union, the U.K.’s primary export market, the U.S. is looking more appealing, Mr. Harling said.
But that same climate of doubt is causing companies to stockpile cash until the smoke has cleared from the currency crisis. Ironically, those that want to spend are having trouble getting loans, he said.
“The biggest problem I face in terms of investment into Georgia is getting companies to do anything,” Mr. Harling told GlobalAtlanta in London on Dec. 16.
The U.K. has been at the swirling center of Europe’s ongoing monetary drama in recent weeks. On Dec. 9, British Prime Minister David Cameron effectively vetoed an agreement to an EU treaty amendment that would’ve increased European oversight of finances in all 27 member nations.
The U.K.was the lone holdout. Critics said Mr. Cameron weakened Britain’s negotiating position at the EU. Backers said he stood strong against encroachment on national sovereignty that would’ve disproportionately affected London’s massive financial sector.
Annabelle Malins, the British consul general in Atlanta, published a statement this week clarifying Mr. Cameron’s reasoning. She noted that U.K. demands were meant to level the playing field for all countries and safeguard the financial interests of all non-euro nations.
“The U.K. did not ask for a generalized veto, a U.K. opt-out, or anything which would have given the City of London [the financial district within the capital] an unfair competitive advantage. Claims that we sought special treatment for the UK are wrong,” Ms. Malins wrote.
All these issues cloud the outlook for British companies looking to grow their businesses. Many complain about difficulties finding the right personnel. Instead of ramping up overseas, many are making investments to “skill up” their workforces and expand domestic factories, Mr. Harling said.
The U.K. opted out of the euro zone – the 17 countries using the common currency – but has benefited from its unfettered access to the nearby EU market.
“(The U.S.) is always on the minds of U.K. companies, but they may put Europe first,” Mr. Harling said. Flagging confidence in countries across the English Channel may reverse that pattern for some companies, causing them to look across the pond instead, he said.
“Perhaps they were going to invest in France, but the euro zone is a no-no, so it’ll take some time to then consider, ‘Do we go to China? Do we go to the U.S.? Do we go somewhere else?'” he said.
In recent years, Mr. Harling’s list of prospects has remained full – as many as 15 interested companies at once – but their typical profile has changed. Half are still manufacturers, but they tend to have better technology and fewer employees than before.
Georgia has been an easy sell, Mr. Harling said. Atlanta is well-known. Some prospects even know Hartsfield-Jackson Atlanta International Airport or the Port of Savannah, but most are sparse on details.
That can be an advantage, since Georgia doesn’t conjure the love/hate reactions of better-known places like New York, so Mr. Harling enjoys a clean canvas on which to paint a picture of the state’s advantages, he said.
Iris Worldwide, the creative marketing and media firm that designed the London 2012 Olympic mascots, started in New York but also opened an office in Atlanta last year to serve some of its big customers, namely Coca Cola Co. and mobile phone maker Sony Ericsson, which consolidated its Americas headquarters in Atlanta in 2010. It has been a refreshingly good decision, said Ian Millner, Iris’s joint global chief executive and a company founder.
“I just wish we had gotten immediately into somewhere like Atlanta,” Mr. Millner told GlobalAtlanta. “You can stand out in Atlanta, and there’s so many good clients and good opportunities there.”
Incidentally, Atlanta is also a good place to further “regionalize” a business in the U.S. market, which is larger and more fragmented than many U.K. companies realize, he said.
Contracted by the state of Georgia, Mr. Harling works for a consulting firm out of a repurposed barn shared with a biotech company in Beechingstoke, west of the capital. GlobalAtlanta interviewed him his functional base during London visits: the Institute of Directors. The national network of some 50,000 company directors operates facilities where its members can host meetings and events.
Though he is sometimes called to work on other projects, Mr. Harling’s main job is promoting Georgia as a destination for trade and investment. That involves a lot of time on the road, visiting companies on their own turf to better understand their needs.
With the dollar consistently weak against both the pound and the euro, manufacturing in Georgia has become relatively inexpensive for U.K. firms.
“I think in the world these days, wherever you’re selling, CEOs ask, ‘What’s the future projection of the currency?'” Mr. Harling said.
Georgia has scored some big British manufacturing wins in recent years. Firth Rixson Forgings LLC, which provides rotating discs used in aircraft engines, set up a factory in Liberty County in January 2011 and announced in August that it would expand early next year. JCB Inc., a British backhoe manufacturer, has its North American headquarters and a factory in Savannah.
The currency difference also makes Georgia exports more affordable for British buyers, leading to a “huge level of interest” in Georgia trade programs focused on the U.K. market, Mr. Harling said.
He’s currently working with a supplier of environmentally sustainable furniture as well as a manufacturer of nuts and bolts that’s just started exporting. Aerospace – Georgia’s top export industry by value – is a particularly strong trade area. As it did in 2010, the Georgia Department of Economic Development is organizing a delegation to the Farnborough International Air Show in July 2012.