UK catching up on capital investment

Eurofood, Dec 3, 1998

UK food producers are investing less per employee in machinery, equipment and property than their international counterparts, according to a survey of 500 top British and 300 top international companies. A new report by analysts Company Reporting Limited shows that UK food manufacturers invested an average of 4 000 [pounds sterling] (ECU5 714) per employee in capital equipment during 1997, compared to the international average in this sector of 6 000 [pounds sterling] per employee.

Historically, British food producers had just over half the amount of capital stock per employee of that held by their international counterparts. However, on a more encouraging note, they are replacing capital equipment at a faster rate. The producers of the report comment that the UK sectoral figures are heavily influenced by Anglo-Dutch conglomerate Unilever, whose capital investment expenditure in 1997 was as much as three times higher than the next biggest spender, sugar group Tate & Lyle. Indeed, Unilever is the only UK food producer among the 300 top international capital expenditure firms.

Tate & Lyle biggest spenders

The scoreboard shows a high level of capital intensity at Tate & Lyle. It has a capital stock of over 100 000 [pounds sterling] per employee, which is substantially higher than the international average of just under 70 000 [pounds sterling] per employee, and almost three times the UK average of 35 000 [pounds sterling] per employee. Tate & Lyle is also continuing to invest heavily, at 13 000 [pounds sterling] per employee in 1997, which equates to 7% of sales.

Confectionery group Cadbury Schweppes has a capital stock per employee of about 50% above the UK average of 50 000 [pounds sterling], but this is still only half the capital intensity of Swiss giant Nestle, which tops the international list, having spent almost 1.4bn [pounds sterling] on capital investment in 1997.

Investment a key driver of growth

Norman Price, all industrialist at the U K Department of Trade and Industry, explained that the purpose of the Capex Scoreboard was to help companies and shareholders benchmark their capital expenditure against national and international competitors, and to stimulate debate about levels of capital expenditure. "Expenditure on new plant, equipment and property is a key driver of both growth and competitiveness through process innovation," he said. "It leverages increased value from investments in intangible assets, such as training or research, while spreading the benefits of technical progress through the economy."

"1998 Capital Expenditure Scoreboard" See back page for report details.