The British industrial behemoth Rolls-Royce is increasing its revenue by way of an unorthodox strategy: moving operations into high-wage countries with highly skilled workers. The plan contradicts the wisdom of rivals, who are moving production into low-wage areas in Asia and Latin America, reports the Wall Street Journal. The tactic is also paying off. Rolls-Royce saw revenue spike 55% over the last 5 years and gained a net profit of $1.3 billion over the first half of 2011.
"If you want to do complicated, high-value engineering, you've got to have a good supply of skilled people and support from governments," says Rolls-Royce CEO John Rishton. His strategy includes setting up facilities in expensive countries such as Germany, Norway, and Singapore. But even with generous pay, Rolls faces a shrinking pool of engineering talent that's being lured into finance and computers. Balancing skills and cost "is walking a tightrope," Rishton says. "We wrestle with those issues all the time."