Who is Britain’s biggest manufacturer?  The answer may surprise...

The impact of the turbocharged emerging economies continues to grow and I was certainly surprised by the answer to this question. Having spent a long time thinking and reading about outsourcing and offshoring it’s easy to forget how the process runs in two directions. It’s not just that British firms have massive overseas investments – over the last few years foreign multinationals, many from the developing world, have been building up their bases here.

According to The Economist, Indian company Tata UK is now the country’s biggest manufacturer, with almost 40,000 workers—just ahead of British Aerospace. Add in Tata’s service industries, such as consultancy, and the payroll tops 45,000. Its presence in Britain is part of a growing trend. Britain is second only to America as a destination for investment by emerging-market firms, many of them from India.

In 2000 Tata Tea bought Tetley, a household name. The later takeovers of Corus (a steel firm) and Jaguar Land Rover (JLR) saw Tata buying bigger, established firms and financing the deals with bank loans. Their hope was to grow outside India and to capture economies of scale. It was also a shortcut to name recognition and technology that would otherwise have taken years to develop.

Some people have expressed alarm at these developments. Any fears that Tata would strip out technology and ship it home have not come true. The headquarters of Tata’s beverage business is in a London suburb, not India. Resources have been poured into the businesses. The workforce at the Halewood car plant on Merseyside, has doubled to 3,000 this year, and JLR is building an engine plant in Wolverhampton. Tata Steel is investing in its stronger plants, and Tata has brought with it firmer links to fast-growing Asian markets. JLR’s sales have had a huge boost from Chinese demand. Tetley is now sold as a premium brand in India alongside Tata Tea.

Maybe the article is too upbeat, but that’s all part of the process. Tata is dynamic and optimistic, in contrast with the rather depressed mood in British industry.