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SPECIAL
REPORT: G8
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SCOTLAND PLC: The Scottish EconomyNext PageDefining
the key companies and sectors in the Scottish economy is a problematic
enterprise. An influential 2004 Royal Bank of Scotland (RBS) report
identified four sectors: banking, oil and gas, electricity and
transport, as the biggest 'wealth creating' industries for Scotland.1
However, just because a company is registered or is head quartered in
Scotland, it doesn't mean to say that it is actively contributing to
the Scottish economy. In many cases, it is actually sucking wealth out
to parent companies and shareholders elsewhere. As we will see,
theonly alliegiance 'Scottish' companies have is to the international
money system. Also, rather than generating wealth themselves, the biggest companies in many of these sectors have grown through mergers and acquisitions and through the privatisation of public services. Banking is particularly significant with the RBS report showing Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBoS), as far and away the biggest individual 'wealth creators'. The phenomenal growth of these two companies in recent years has been the result of a prodigious spree of acquisitions involving Bank of Scotland merging with UK building society, Halifax, and the RBS hostile takeover of NatWest Bank and others including Ulster Bank and Ireland's First Active Plc. (See section on 'Edinburgh's Financial District'.) In the top 15 companies, the four electricity companies and two transport companies take their place due to the privatisation of the public sector. These companies are essentially making easy money from assets developed by the public sector, securing direct or indirect subsidies from government or acquiring semi-monopolistic market niches. The Royal Bank of Scotland's Top 15 companies in Scotland
Apart from Stagecoach and the Wood Group, which are partly owned by Scottish families, the great bulk of the operating profit from these 15 companies will be distributed to parent companies and shareholders outside Scotland and for the most part be subjected to the short-termism of the London Stock Exchange. Six of the seven oil companies listed are direct subsidiaries of non-Scottish parents. Even the Scottish-registered companies have many employees based outside Scotland; the two Scottish banks alone employ nearly 100,000 people outside Scotland. The two banks, whilst clearly significant for Edinburgh, have also in recent years mainly invested abroad.2 Other major sectors for the Scottish economy include the construction industry, chemicals and life sciences and tourism. The decline of heavy and traditional industriesShipbuilding and fishing were previously important industries for Scotland, closely linked to Scottish pride and identity (see sections on 'Fishing industry' and 'Arms industry'). Whisky production, although still one of Scotland's largest exports, is increasingly controlled by transnational drinks corporations such as Diageo and Scottish and Newcastle. Other industries long gone or in serious decline include jute and coal. Between 1998 and 2002 over 100,000 jobs were lost in manufacturing, and while Scotland was for a while considered a hub for call centres, companies are increasingly relocating these services to India. To counteract the loss of traditional industries, Scottish officials have sought to replace them with high tech industry - the so-called 'Silicon Glen' - across the central belt of Scotland. For more info on the massive government investment in and subsequent collapse of the microprocessor industry see section on 'High Tech in Scotland'. There are many other major multinational corporations with subsidiaries, offices, factories, significant shareholdings or interests in Scotland but not registered in Scotland which we've also included in this brief and cursory glance at Scotland Plc. Apologies if we have left out the company or sector that is your particular bugbear. See the Corporate Watch DIY research guide for ideas on how to research companies yourself. Next Page Footnotes
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