Globalisation
“When clients are considering opening another manufacturing
plant in China, I’ve started to urge them to
consider alternative locations,” Hal Sirkin of the Boston
Consulting Group (BCG) told The Economist. Mr Sirkin
says he is increasingly likely to suggest firms stay at
home, not for patriotic reasons but because the economics
of globalisation are changing fast.
One of the key factors behind the shift to developing
nations was labour costs. But as emerging economies
boom, wages rise. The pay of factory workers in China,
for example, rose by 69 per cent between 2005-2010.
BCG lists several companies which have already
brought plant and jobs back to America, amongst them
Caterpillar, furniture maker Sauder and Wham-O, which
Meet the team at Telford
Going to the Association of Health Care Professionals’ annual
conference and exhibition this month? Pop along and say
hello to Scot Young Research!
SYR will be displaying its exciting new range of
products at the expo, at Telford International Exhibition Centre
on June 13-15. The theme for this year’s event is ‘Embracing
Change’ and the exhibition is open to non-delegates.
The SYR team, headed up by healthcare manager Matt Rea,
would love to chat with you about the new products including
trolleys, which are already proving a huge hit |
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last year restored half of its frisbee and hula
hoop production to America from China and
Mexico.
However wages are not always the
deciding factor, particularly where products
are not labour-intensive. Here other considerations
come in to play. Oil price rises
make transport dearer. An epidemic such
as SARS in Asia or a natural disaster such
as the one suffered recently in Japan
disrupt supply chains - as many car makers
have been finding.
Advantage
Martin Whitehouse, sourcing director at
SYR, said he believed the Chinese market
was still competitive for many items, but
products such as the new bucket and
wringer combos required only a small
amount of labour so the advantage of
manufacturing abroad for the UK was lost.
“We are finding more and more that by
the time we’ve put the freight cost and duty
on we are actually spending more money,”
he told SYR XPress.
With a 40ft container from China costing
$5,000, it’s vital companies pack them as
full as possible with ‘freight friendly’
products - but items such as the new |
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combos are not stackable and so take a lot
of container space, meaning freight can
make up 25 per cent of the cost.
Another issue is flexibility. Shipping to
the UK takes 30 days, but manufacturing
items much closer to home can cut lead
times dramatically, meaning the firm can
respond much more quickly to orders and
not have to hold so much stock.
SYR’s factory in Ningbo, China, sells
Chinese-made products to the Chinese and
also serves customers in Japan, Australia,
Singapore, New Zealand and the Middle
East - cutting lead times and costs.
Now the tooling will be duplicated and
placed with plastic injection moulders close
to the Lye, UK headquarters.They will manufacture
for the European market.
A third set of tooling will be placed in the
USA, which had previously been buying
from China.
“It’s not just about cheapness, but about
the flexibility to meet orders,” Martin Whitehouse
added.
The days of simply moving production to
the country with the lowest wages are over.
In the global market, global thinking is
needed - and that includes manufacturing. |
