National Semiconductor
One of the original Silicon Valley companies, founded in California in 1959, National Semiconductor is a leading manufacturer of silicon chips. Its products are used in a host of communications, networking, automotive and aerospace applications: everything from the world's best-selling MP3 player to the latest leading-edge mobile phones. The company has been located in Greenock, on the west coast of Scotland since 1970, where it employs 450 of its 7,500 employees.
Facing challenges like differentiating products, controlling costs and global competition, National Semiconductor has responded by innovating, adding value to its products and increasing productivity to build a profitable business with a leading market position. It chose Scotland as its European base as it was able to tap into local talent with the help of a Regional Selective Assistance grant.
"In Scotland we invest a lot of money in training our people, but we get the payback because we have a stable workforce."
Gerry Edwards, Vice President
National Semiconductor is the premier analogue company driving the information age. National's chips provide the key differentiator that makes consumers and customers choose one product over another. The Greenock operation is the only National Semiconductor plant of its kind operating outside the United States.
Gerry Edwards, VP and Managing Director of National Semiconductor (UK) Ltd, points out:
"National deliberately avoids the 'me-too' game played by a lot of digital companies."
Just as well, since the key driver in those markets is labour cost, pure and simple. National positions itself at the higher end of the value chain. "We make high value integrated circuits with a lot of IP and talent built in," explains Gerry. "We've got great universities, great people and great talent in Scotland – all of which stand us in good stead to drive innovation and productivity."
Analogue is harder to design and make than digital – so you need the right talent. Over half of National's Greenock workforce boasts some kind of tertiary education. "Go to some countries and you struggle to find people with the right education or relevant experience," says Gerry. "We've got well over 30 years' experience in Scotland, which is a huge plus."
The communications and logistics of being in Greenock are very good too. "Being so close to the airport means we can get in and out to our factories and to our HQ in Santa Clara very easily." The plant's daily output can leave the site one day and be unpacked in Malaysia 24 hours later.
How Scottish Development International helped
Gerry has nothing but praise for SDI – from a generation ago when Locate in Scotland first offered National a Regional Selective Assistance grant to locate in Greenock to the role they're currently playing, supporting a joint R&D project with Edinburgh University. "They've always given us tremendous support – in bad times as well as good."
Lessons learned
Scotland isn't immune to the pressures of globalisation. So, rather than competing on labour costs alone, National places more of an emphasis on adding value to its products. The secret to its continued success is to maintain a balance between the cost and differentiation of its products.
"We have to constantly innovate, not just in terms of product and process development, but in how we manufacture. By advancing our technology we can continue to improve productivity."
Another way National has found to keep its costs improving is through the productivity of its people. "We spend more per employee than ever before on training and re-training – so rather than recruiting from scratch, we try to re-skill."
Going by what Donald Macleod, National's President and Chief Operating Officer, has to say, both policies are clearly reaping their just rewards: "This is a growth business and Greenock fits right into that."