Many of the world’s leading car and van manufacturers utilise factory and production capabilities around the world in order to benefit from cost-savings and economies of scale. This is unlikely to be news to anyone, as over recent years many local production facets have closed to move further afield; for example the Vauxhall Mokka is produced in South Korea and the Ford Ranger in South Africa.
We suppose the only interesting, or relevant, point for many customers is that this can create quite extensive lead-times for factory production, as shipping the products will often be a 3-4 months endeavour. This is where a manufacturer has to seriously consider the question of cost v service.
However, as well as lead-times for a customer, you also have to consider the micro-economic issues which face a manufacturing operation overseas. Only recently, Toyota come a little unstuck, as two of their production plants in India have been halted, according to reports from the BBC.
Toyota, one of the worlds leading and largest car makers, has been under continuing pressure from certain employees within their respective Indian plants. Issues have included deliberate stoppages and disruptions to the production lines. The pressure has arisen amid pay and remuneration negotiations which have been ongoing between Toyota and their workforce.
As Toyota have recently announced pay increased to their Japanese staff, the biggest in 21 years, perhaps their Indian counterparts (almost 6500 of them) believe the same level of pay increases would be available. That being said, Toyota have to manage industrial action carefully should India represent an important market moving forwards.