Businesses must be willing to invest in efficiency

Posted on 13 Apr 2017 by Jonny Williamson

To survive in an ever more competitive global industrial environment, manufacturers must be willing to invest in achieving greater efficiency – whether incremental or step change.

Investing in efficiency improvements means production is less likely to be offshored – image courtesy of iStock.

The cautionary tale is that there is always going to be a place where labour can be acquired more cheaply. Displacement of industry has been – and will continue to be – driven by the price of labour.

Consider, for example, the amount of production offshored to China on a global scale not so long ago.

Today, rising wages across large parts of China, particularly along the coastline, has seen production being moved once again, this time to neighbouring countries the likes of Vietnam, Laos and Myanmar.

Within this context, the real battleground must be efficiency, says Jason Andersen, vice president of business line management for global fault tolerant computer servers and software company, Stratus Technologies. Andersen made the comments in a recent interview with The Manufacturer.

He explained: “In the US, Europe and particularly the UK, there’s a very real opportunity within digital transformation and increased automation. It’s something which can, in every sense, have a geo-political knock-on effect.

“The more efficient your business can become, the easier it will be to attract and retain skilled workers, which in turn means your output is higher and of an even greater quality, alongside your internal R&D moving up to the next level.

“We are already seeing high-value, low-volume production being reshored to the likes of the UK and US, and this is the reason why. It’s no longer purely about labour costs, it’s about keeping innovation, skills and experience in-house. That’s good for the business, it’s good for competition and it’s good for the wider industrial community. Production is already coming back and will continue to do so, but crucially, investing in efficiency improvements means it’s less likely to be offshored in the first place.”

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