fbpx

Manufacturing Footprint Strategy Development

Viewing posts tagged Manufacturing Footprint Strategy Development

25 Jan 2020

Manufacturing Footprint Optimization: Global Expansion (ASEAN)

By Arthur Elliott

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

25 Jan 2020

Manufacturing Footprint Optimization: Plant Closure

By Arthur Elliott

Background

  • As part of a global restructuring of business units, a multinational chemical company was closing one of their Chinese production facilities.
  • EWA engaged as Project Leader with responsibility for closure implementation.

Approach

Six months prior to plant closure
  • Closure strategy (budget, timing, expenditures, government relations, etc.)
  • Defined implementation team (Operations, HR, Legal, Security, IT, etc.)
  • Development of communication plans (staff, government, external, etc.)
  • Security risk assessment (employee unrest, physical & IP assets theft, etc.)
Three months prior to plant closure
  • Implementation of operational and protective security measures
  • Finalized equipment & inventory disposition, decommissioning plant, etc.
  • External stakeholder negotiations (governmental agencies, landlord, etc.)
  • Obtain approvals from business zone, governmental authorities, etc.
  • Identification of compliance and payment issues, severance packages
Upon plant closure and after
  • Finalization of equipment disposition and plant demobilization
  • Filing government documentation in keeping with the registration, business license, board resolutions
  • Filing of all necessary financials, bank accounts, tax, VAT rebates, registered capital and customs documentation
  • Competition of all de-registration and governmental documentation and plant turnover to the landlord

Results

  • No theft of IP assets, physical violence or governmental authority repercussions
  • 100% of employees signed employment forms
25 Jan 2020

Manufacturing Footprint Optimization: Site Selection

By Arthur Elliott

Background

  • German-owned chemical company with an ageing facility was being pressured by local authorities to relocate to an “official” chemical processing zone, as part of the Chinese government’s initiative to combat industrial pollution
  • EWA was engaged to conduct a comprehensive site selection process and provide the client with quantified site recommendations

Approach

Step 1: Create functional definition of plant
  • Purpose for expansion, customers, supply chain, products, capital equipment, etc.
  • Definition of the site requirements & specifications:
  • Size of plant, land requirements, structural requirements, utilities and consumption, logistics, labor force requirements, ground compaction, water table, number of employees, manufacturing space, office space, employee facilities, etc.
Step 2: Analysis of company performance influencers
  • Logistics, location of customer base, location of suppliers, location of business partners, freight & transportation costs, current property costs, current operational costs, government incentives, etc.
Step 3: On the ground interaction
  • Identification of 7 business/chemical parks for further exploration based upon site & company criteria
  • Personal site visits, face-to-face negotiations, meetings with other companies located in the individual business parks & interaction with local government officials
  • Tours with company executives
  • Negotiations and confirmations of land price and tax incentives
  • Analysis of the impact on startup and operational costs
Step 4: Recommendation of the 3 quantified location options with full analysis

Results

  • Significant tax and land incentives were attained by EWA negotiations
  • Client approved EWA recommendation and final negotiations are currently in process.
  • Client has engaged EWA in the role of “Owners Representative” for follow-on activities including coordinating design and overseeing construction