25 Jan 2020

Manufacturing Footprint Optimization: Global Expansion (ASEAN)

Background

Global firm needed to increase China/Asia manufacturing capacity. EWA was engaged to develop and implement an Asian Manufacturing Footprint Strategy to drive long-term profitability.

Approach

Step 1: Identifying the expansion criteria
  • Company analysis
    • Expansion criteria: labor supply/costs, government incentives, inflation rates, availability of raw materials, transport & export logistics, supply chain vendor availability
Step 2: An in-depth comparative analysis of 6 selected countries
  • Philippines, Malaysia, Indonesia, Vietnam, Thailand & China
    • Expansion recommendation: Thailand
Step 3: On the ground interaction
  • Negotiated conditions for property purchase & property management (waste removal, perimeter security, etc.)
  • Negotiated investment incentives with Secretary General of Royal Thailand Board of Investment
  • Qualified local Thai vendors to support the company’s manufacturing location
  • Met with local legal and accounting firms to identify the necessary criteria for establishing a business entity
Step 4: Hands-on implementation
  • Property was purchased and all pre-construction permits/licenses/registrations were acquired by October 2017
  • Plant designs, construction budget/timeline & all construction partner contracts were finalized in November 2017
  • Plant construction and equipment installation began in January 2018 and was completed in April 2019
  • Identification and recruitment of supply chain, distribution & logistics partners was completed in February/March 2019

Results

  • Government Incentives
    • 8 year tax holiday from CIT, 50% tax reduction for an additional 5 years
  • Cost Reduction
    • $22.0M tax savings over 10 years
    • $4.3M annual labor savings after 5 years
    • $1.8M annual material savings after 5 years
    • $120/unit average freight savings
  • Company Growth
    • 42% increase in sales over 5 years
    • 53% increase in revenue over 5 years

Company Forecast

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