Manufacturing Footprint 2020: Expansion vs. Optimization
Over the last 20 years, the growing global economy has allowed manufacturers to enter new markets to serve an increasingly global customer base while also shortening supply chains and reducing cost structures. As the business environment changes, a country that once promised low-cost manufacturing might now boast high-tech R&D centers.
MAPI collaborated with Deloitte to understand the factors that drive manufacturing investments today and how they will shift by 2020. Our study found that over 50% of manufacturers plan to enter a new market in the next 5 years and almost all plan to expand existing sites or open new facilities in countries with existing operations.
Today market conditions and opportunities, the search for talent, and business disruption risks drive primary location decisions. But by 2020 the drivers are expected to shift to access to technological advances and investment in the talent pipeline. As a result, manufacturers should optimize their footprints to put assets in the right places at the right times to drive performance.
So where’s next? Brazil, China, and India remain at the top of the list for companies looking to enter new markets, but the middle class boom and associated spending power also pushes South Africa, Turkey, and Vietnam higher up the priority list. For those planning to expand in countries where they already have a presence, the majority of future investments will occur in the U.S. and China, where technology and talent investments continue to attract deeper investments.