With Kraft's takeover of Cadbury agreed by directors in the same week Alcoa Howmet announced 95 more potential job cuts in Exeter, Paul Lewis, of Charles Stanley stockbrokers, considers the pros and cons of overseas ownership of UK industry.

WHAT do Howmet and Cadbury have in common?

The answer is, assuming the takeover of Cadbury by Kraft agreed this week goes ahead, they will both be owned by US companies.

They find themselves in the same position as many other companies, based in the UK but with foreign ownership.

Before the recent financial crisis, Spain acquired British companies such as O2, Abbey National and BAA. Both the Mini and the icon of car ownership, Rolls Royce, are now owned by BMW of Germany.

So there is nothing new in foreign ownership of British companies and the list is significant. In principle there is nothing wrong, in my view, with globalisation as long as the UK remains competitive. It is perhaps in this regard that the UK is now starting to fall behind the likes of China and the Far East, where productivity is far higher.

However, as companies contract in reaction to the decline in world trade, it is less politically sensitive to shed jobs overseas rather than in your own territory and I am sure that Howmet has fallen to this particular trick. It is also quite possible that Cadbury's will suffer the same fate.

Foreign ownership can also bring benefits. London, as a world financial centre, is mainly owned by foreign banks, but has acquired and still retains great strength due to light touch regulation and an open economy.

In some cases foreign ownership will bolster a UK company.

When Amersham was purchased by GE, the headquarters of GE Healthcare moved to the UK. The UK has a very strong science base and a flexible labour force and these are often cited for the UK's disproportionate share of foreign investment.

The recent banking collapse threatens the light touch regulation, which will not only see the contraction of London as a financial centre. The knock-on effects will be felt around the country, including Exeter, and these could be severe.

Although the loss of any job in our area is a serious concern, foreign investment in the UK can bring rewards to an area like the South West. There are more than 700 aerospace related companies in the region directly engaged in design or manufacture of parts and systems. The area is also recognised as the European centre for semiconductor design, with over one third of the UK's designers based in the region.

What we have to ensure as business leaders in Exeter is that we get our fair share of the industries with infrastructure support from our civic leaders to enable Exeter to continue to flourish as a vibrant economic centre.

With the added benefit of the university, the expansion of the airport and the building of the Science Park, these goals can become reality.