Is Offshore Manufacturing the Best Solution for Underperforming Companies?

Even smaller manufacturing companies need to think and act globally in the face of increasing competition from offshore locations, say members of an unique offshore manufacturing consultancy. In fact this may be the only realistic option for some struggling companies with cashflow problems.

CAMBRIDGE, UK (PRWEB) June 29, 2004 -- "This may be the right time for manufacturing companies to review their make-buy decisions of the past," says Richard Parr, former divisional MD of Johnston Group PLC and the Chairman of a UK based manufacturing consultancy - Plan B Manufacturing -which focuses on helping manufacturing companies outsource production to low cost locations. “Once they are clear about why they are in the business of manufacturing for themselves, and which bits of it they are best at, the rest falls into place.”

Richard claims that this is a necessary first step in building a stronger manufacturing organization. “The abundant availability of skilled low cost labour in places like India and the increasing price-sensitivity of customers is bringing global competition right to the doorstep of even the smallest of companies, but our experience is that many of them are ill-prepared to meet the challenge"

These sentiments are echoed by others in the team, all of whom have board-level experience in manufacturing groups such as Bunzl, Unipart, McKechnie, Invensys, GKN and Federal Mogul.

" It took me some time to accept the view that offshoring may be the only way for some companies to survive in the short-term" admits Iain Gray, a former Marketing Director at Unipart and Business Development Director of Plan B. "But considering that around 40% of companies in the Engineering and Industrial sectors are not generating enough cash to invest in their own future, it is not difficult to be persuaded that this may be the best way to go."

Plan B team members in India have similar board-level pedigree and come from leading companies that are already well known to larger more sophisticated buyers in the West. They report concrete savings of at least 20% enjoyed by large companies such as Nissan, GM, Dana, Delphi and a host of others, based on first-hand experience in these sourcing projects.

"How else could companies generate the cash needed in the short term?” asks Ross Stuart, former CEO of a London listed company and leader of Plan B’s corporate turnaround practice, with many successful turnarounds of distressed manufacturing companies under his belt. "Almost all solutions touted by traditional consultancies such as lean manufacturing, six sigma, investment in innovation and training, need the luxuries of plenty of time and cash. If you have neither, then the only logical solution is to generate the cash in any way you can, as quickly as you can, which in turn gives you the breathing space you need to review your options, invest in new products, re-skilling and marketing."

Does this mean that Plan B is encouraging the ‘hollowing out’ of Western manufacturing? Definitely not, say team members. They see their mission as helping companies survive the traumas of global competition by learning to play the game under the new rules. “If global competitors are already here selling to your customers,” says Richard Parr, “should you not be trying to beat them at their own game? After all, you already have the relationships with your customers that go back many years that these foreign players don’t have. Companies should be building on these relationships to generate more sales, not helplessly watch customer after customer defect”

About Plan B
Plan B Manufacturing(www.planbmanufacturing.com) is a unique organization of senior manufacturing executives from Europe, US and Indian manufacturing groups focussed on assisting manufacturing companies improve their cashflow. Plan B team members have extensive experience of the entire range of offshoring options and can get involved as much as or as little as needed.

For more information please visit the Plan B website on www.planbmanufacturing.com/outsourcing.htm or e-mail info@planbmanufacturing.com or telephone +44 1223 420565.

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