Sunday, November 06, 2011

Global Manufacturing

In the past the main considerations to select an offshore location for manufacturing were the availability of skilled / unskilled labor at low cost, the proximity to the final markets or rest of the supply chain, etc.
Today, that we are beginning to suffer the effects of global climatic disruption another consideration is suddenly the most important of them all: the vulnerability of the place to floods and other catastrophes.
Honda and several other companies are today in serious trouble because they selected Thailand as a manufacturing hub.  When they made their decisions to set shop there, they certainly didn't consider that the global weather was changing drastically and thus that their complete investment in that country could be lost or made worthless.  It was a rude awakening.
Now all other companies need to wake up and consider violent weather as one of the most important (if not the most important) consideration before establishing operations in a certain place.
As Bob Dylan said: the times they are a-changin.

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