Where ought to industrial and manufacturing leaders make investments?

Beyond the immediate economic environment, many industrial and manufacturing organizations are wrestling with issues about exactly how and where they should make use of appealing workforce dynamics and manufacturing benefits. Should they deploy extra resources to the growing markets of Asia? And if so, what are the tradeoffs, and is it important for big industrial and manufacturing companies to retain a base of operations and expertise in the West even if they are investing more in the East?

The realities of today's commodity-driven industrial and manufacturing markets make emerging Asian markets an increasing consideration for companies that want to remain competitive on cost. That is, of course, unless quality is very important. "In the event you are competing on manufactured costs then it only makes sense to locate your manufacturing operations in the most cost effective locations, " says Gary Williams, a regional consultant in the TRANSEARCH International Shanghai office. "These locations are likely to be in the Far East. The only time you would want to locate your manufacturing operation in Europe or the United States is when the shipping/transport costs to ship the goods to the customer are too much or the desired/perceived quality can not be achieved remotely. "

Sanjiv Desai, a consultant in the New Delhi office, adds: "In some sectors where the scales of operations are much larger in the West, it makes sense for the companies to have a base there however in different sectors where the scales are a good deal larger in India or Asia Pacific, it might not be the case. Having said this, there is still a great deal of scope for having an R&D or innovation centre situated where the sharpest and brightest people are located, which in many hi-tech sectors is still the West. "

His colleague in Germany, Hans Berg, says that despite the growth of markets and operating environments in Asia, many industrial and manufacturing companies have discovered that a strong European footprint is essential. "You can't be the global market leader without presence in Europe, " Berg says. "A good number of big companies already have this presence, in most cases with local leadership and, depending of the size of the company, with some expatriate talent from the United States, who can thus develop the international experience and competencies which will be required later by those among them who will become global leaders of their companies. "

If the recent engagement experience of Transearch Global Industry Practice is reflective of broader market developments, a significant challenge for industrial and manufacturing companies is to strike a balance between developing new business in mature markets versus emerging markets in the developing world.

"Companies will go where there is a need for their products. It's about supply and demand, " says Gary Williams from the TRANSEARCH International executive search firm office in Shanghai. "If they don't adopt and embrace the ever changing environment they will not be very competitive. " Hans Berg in Germany agrees. "They must not overlook the emerging markets, particularly when volume counts. It offers the platform and customer base for developing the market further globally in a profitable way afterwards. Developing new business in mature markets provides not only business but also the reputation of being an innovator and leader, thus creating the right reputation for growth in the emerging markets, where state-of-the-art or even avant-garde solutions are requested. "

As the rules of doing business within a fiercely competitive industrial and manufacturing environment continue to evolve, so too, do the needs for world-class management leadership within these markets. In fact, the demands of corporate leadership have never been higher in the industrial and manufacturing markets.

Note to Editors: About executive search firm TRANSEARCH International
Executive search firm TRANSEARCH International has representation in most of the major economic centres of the world with 59 offices in 37 countries. TRANSEARCH International was founded in 1982 and is a leading international executive search firm.