As the global manufacturing sector continues to contract, the ongoing retrenchment of global demand and further deepening of the credit market crisis’ negatively impacts output, new orders and unemployment numbers. With the exception of India, all national manufacturing data has posted consistent declines in output and new orders.
There is no doubt that the news is dismal and the impact of the downshift in global market conditions has had a far-reaching effect. Yet, more companies are considering global expansion. According to a 2008 survey of 100 senior discrete manufacturing executives commissioned by Nielsen and Advanced Technology Services (ATS), one third, or 34 percent of respondents, said that they are very likely or somewhat likely to move production to Mexico in the next 18 months, with two-thirds saying they expected to do so even sooner – within the next six to 12 months. Following closely behind Mexico was China, with 22 percent of executives reporting that as their next stop for moving manufacturing operations.
Building The Success Story
The key challenge facing manufacturers is finding and maintaining success in these global markets, especially given the current economic challenges. Companies that are achieving success know that they must tailor their strategies to capitalize on local knowledge and respond to the unique needs of the market. This becomes particularly important for companies who provide managed services of production equipment maintenance, information technology and spare parts repair.
Many companies mistakenly think that they can take their North American business model and move it to China or India and expect it to be just as successful there. Manufacturers need to understand local culture and local economics in each specific global market in order for a company’s long-term sustainability and growth.
The challenges of growing internationally are markedly different than in the U.S., especially in an industry like managed services where close, personal relationships are key. As a critical part of its customers’ global manufacturing strategies and certifications, it is important that its processes are established so that performance and results are consistent across all of its locations in the world. Language, culture and tradition all play a part in how a standardized service is implemented on a global basis.
In Mexico for example, maintenance in manufacturing is considered a professional career choice. Therefore, there are a large number of university-degreed professionals that have chosen a career in manufacturing specific to maintenance activities.
This abundance of skilled labor combined with a workforce with a very strong work ethic makes it challenging to harness the employees’ enthusiasm into a defined process for successful maintenance.
In the U.K., where the culture and the language are similar to the U.S., establishing a business can be trying due to the number of regulations and work rules that exist there. For example, the licensing requirements to perform a variety of maintenance activities in the U.K. are more extensive than in other parts of the world, including the U.S.
On the other hand, getting started in Puerto Rico, a U.S. territory, presents other challenges. As in Mexico, business issues in Puerto Rico center around language and culture. On the positive side, the island is fairly easy to get around and the climate is optimal, so there is rarely a shortage of volunteers to travel when needed to help out, especially in the winter months.
But perhaps the biggest opportunity for manufacturers is in China. It is often seen as a land of great business opportunity, with many of the same challenges facing manufacturers in the U.S., especially those regarding a shortage of skilled labor. Tackling these challenges, however, provide many opportunities to help current U.S. customers as they expand in the Chinese marketplace, not to mention the ability to replicate successful maintenance strategies much more quickly and reliably.
Manufacturers looking to successfully expand in other international markets must be committed to being a global partner with a large multinational customer base. International business is a long-term investment that is not only smart, but is also a requirement by many companies as they choose to deal with a smaller group of more integrated suppliers.