Context
For some companies, constant innovation linked to their development strategy is a condition for survival in a highly competitive world. Today, these same players are also facing an ever-growing pressure on costs.
As a result, they increasingly need to focus on the best locations for their production sites and R&D centers. Finding the latter means taking into account employee skills, the quality of suppliers, the costs of a new installation (or the best options for expansion), and the most favorable environments for both the direct and fiscal aid that can be obtained in an optimal “administrative” framework, especially in terms of constraints on the business.
Against this backdrop, one of Wavestone’s clients, a major player in the mining sector, approached us for support in choosing the best location, in terms of direct funding and tax incentives (both R&D and investment) for a new and innovative production line.
The countries considered included Austria, Belgium, and France.
Challenges
Working alongside the client, Wavestone had three major challenges to meet:
- Economic – Identifying potential sources of funding offered by local (districts and regions), national (for example, the French government’s “Fonds Unique Interministériel”, or ADEME which helps finance environmental measures), and European bodies. Research tax credits were also considered both in France and the other countries.
- Personnel and Logistical – Emphasizing (from among the possible locations) the one combining personnel skills, both internal and external, and proximity to an existing site, or suitability in terms of requirements to transport and process raw materials and to distribute finished products to customers.
- Financial – Optimizing sources of finance, both direct and indirect, which the client could secure for the project in the potential locations, an area where we brought to bear our experience in the development of precise benchmarks and the implementation of the chosen solution.
Responses and Key Success Factors
From the analysis phase right through to the implementation of the chosen solution, Wavestone worked with the client to develop a powerful tool to support decision making in the choice of international location for a new, innovative production line. We put in place an approach that brought together all stakeholders (R&D, finance and tax departments). Naturally, the client also took into account other factors in making its final choice. In practical terms, our services consisted of:
- Developing a benchmark, through a multi-criteria comparison of the possible locations for the new production line, which allowing us to be involved for the full duration of the project.
- Liaising with potential public funders at regional, local and European levels, in order to bring clarity to the options and conditions for direct financing, while respecting the need for confidentiality in the project.
- Providing ongoing client support in the presentation of the project, negotiations on obtaining funding, and the tracking of funding secured for the project from public bodies.
Ultimately the client was able to secure 20% direct financing for the project, whose total costs over a three-year period are in excess of €4 million.
