Over-Supply and Manufacturing Localization

Abstract

Manufacturing localization in over-supply markets is a particularly complex problem. The starting point is the set of principles on which a localization choice is usually based (proximity to the outlet and supply markets, state-related incentives, etc.). However, such a choice cannot be made without taking several additional factors into account – from the unsold goods problem to the cooperation between companies. In contexts characterized by instability, market-driven businesses pursue a double advantage: they assign a central role to market requirements while showing open mindedness and a readiness to react to the many rapid changes in the context. Market instability is reflected in the manufacturing sites, by quickly cancelling out benefits derived from the adopted localization solutions, and thus making it difficult for businesses to make choices, that is, adopting options that remain valid and almost unchanged over the long term.

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