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© Ann Vereecke / Staten Generaal - 1 Manufacturing in Western Europe Survival of the fittest Lessons learned for Flanders Professor Ann Vereecke Vlerick.

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Presentation on theme: "© Ann Vereecke / Staten Generaal - 1 Manufacturing in Western Europe Survival of the fittest Lessons learned for Flanders Professor Ann Vereecke Vlerick."— Presentation transcript:

1 © Ann Vereecke / Staten Generaal - 1 Manufacturing in Western Europe Survival of the fittest Lessons learned for Flanders Professor Ann Vereecke Vlerick Leuven Gent Management School Universiteit Gent

2 © Ann Vereecke / Staten Generaal - 2 Headlines in the business press downsizingrightsizingrelocationdelocalisationrestructuringoutsourcinggoing footloose

3 © Ann Vereecke / Staten Generaal - 3 Added value of the industrial sectors

4 © Ann Vereecke / Staten Generaal - 4

5 © Ann Vereecke / Staten Generaal - 5 Markets in emerging countries are growing Kasra Ferdows, Sept 2009 By 2004, China was among the world’s top5 markets for many goods World’s largest market for steel and machine tools Largest for mobile phone subscribers Second largest for electricity transmission equipment Fourth largest for cars and trucks By 2010, China will be the largest producer of cars in the world Chinese are buying 70% more cars in 2009 than in 2008

6 © Ann Vereecke / Staten Generaal - 6 GLOBAL PLANT NETWORKS Lessons learned from a Flanders DC research study

7 © Ann Vereecke / Staten Generaal - 7 The board room of a global company What is the optimal location for our factories? Which factory should play which role?.... ?

8 © Ann Vereecke / Staten Generaal - 8 Research set-up study study Company A: globalized by establishing greenfields Company B: global player after merger Company C, D: acquired by globalizing player Company E, F, G, H: rationalization by closing down some plants In total: 59 plants in ; 82 plants in

9 © Ann Vereecke / Staten Generaal - 9 Evolution in number of plants

10 © Ann Vereecke / Staten Generaal Plants by City in 1995 AE BF CG DH

11 © Ann Vereecke / Staten Generaal Plants by City in 2005 AE BF CG DH

12 © Ann Vereecke / Staten Generaal - 12 The strategic role of the plant Low-cost input factors Technological know-how Market Reason for exploitation Contribution to strategy high low © Ferdows, HBR 1997

13 © Ann Vereecke / Staten Generaal - 13 The strategic role of the plant production maintenance quality assurance logistics process development product development Low-cost input factors Technological know-how Market Reason for exploitation Contribution to strategy high low © Ferdows, HBR 1997

14 © Ann Vereecke / Staten Generaal - 14 © Ann Vereecke Based on Ferdows, HBR 1997 input factorsskills & know-how market Reason for exploitation Level of strategic role low sourcecontributor off-shoreoutpost lead server medium high expert market- master brain

15 © Ann Vereecke / Staten Generaal laborSkills & knowhow marketnone server offshore source contributor lead mkt mstr strategic role

16 © Ann Vereecke / Staten Generaal - 16 Status strategic role laborSkills & knowhow marketnone Survivors by 2005 ?

17 © Ann Vereecke / Staten Generaal - 17 input factorsskills & know-how market Reason for exploitation Level of strategic role low sourcecontributor off-shoreoutpost lead server medium high expert market- master brain no role -3 © Ann Vereecke 2009 Based on Ferdows, plants left the networks

18 © Ann Vereecke / Staten Generaal - 18 © Ann Vereecke 2009 Based on Ferdows, 1997 input factorsskills & know-how market Reason for exploitation Level of strategic role low source contributor off-shore outpost lead server medium high expert market- master brain other role +1 other role plants added to the networks

19 © Ann Vereecke / Staten Generaal st set of conclusions 1.The market was and still is the main driving factor of factories 2.Server and off-shore plants are flexible assets in the multinational plant networks 3.Lead plants have a safer future.

20 © Ann Vereecke / Staten Generaal - 20 Status strategic role 1995 Belgium 20 laborSkills/knowhowmarketnone

21 © Ann Vereecke / Staten Generaal - 21 Network position of the plant Degree of communication between plants daily, weekly, monthly, less frequent Exchange of innovations between plants Product, process, managerial innovations Visits to and from other plants Number of days spent by manufacturing staff people

22 © Ann Vereecke / Staten Generaal - 22 isolated plant receiver plant innovations hosting network player mfg staff innovations active network player innovations mfg staff Network position of the plant

23 © Ann Vereecke / Staten Generaal - 23 isolated plant receiver plant innovations hosting network player mfg staff innovations active network player innovations mfg staff Network position of the plant

24 © Ann Vereecke / Staten Generaal - 24 isolated plant receiver plant innovations hosting network player mfg staff innovations active network player innovations mfg staff Surviving plants?

25 © Ann Vereecke / Staten Generaal - 25 isolated plant receiver plant innovations hosting network player mfg staff innovations active network player innovations mfg staff Surviving plants in Belgium?

26 © Ann Vereecke / Staten Generaal - 26 Conclusions 1.The market was and still is the main driving factor of factories 2.Server and off-shore plants are flexible assets in the multinational plant networks 3.Lead plants have a safer future. 4.Network players have a safer future. 5.Isolated and receiver plants are vulnerable

27 © Ann Vereecke / Staten Generaal - 27 Lessons learned for management Transform your plant into a networking lead plant Tap into skills and know-how Innovate, innovate, innovate Build your network position before downsizing hits you For the plant manager Transform your set of plants into an international plant network With a balanced portfolio of plants: Server plants for new markets Off-shore plants for cost advantage Lead plants for creation and transfer of know-how Manage chains, rather than plants Build partnerships with suppliers and customers Outsource the commodities, focus home plants on the challenging tasks that require skills and know-how For the general manager

28 © Ann Vereecke / Staten Generaal - 28 Lessons learned for Flanders Stimulate and support our plants in their transformation towards true network players, that act as sources of know-how for the other plants This will make them critical for the future of the company. Innovation is important but not sufficient for a sustainable future of manufacturing in Flanders. Stimulate our companies to transform towards true multinational players. This entrepreneurship will create a new role for our home plants in the international supply chain. Entrepreneurship and internationalization are key No time to waste ! However, this takes time...

29 © Ann Vereecke / Staten Generaal - 29 For more information:

30 © Ann Vereecke / Staten Generaal - 30 References Changing Landscape of Global Supply Chains, Kasra Ferdows, presentation for FDC, Vlerick Leuven Gent Management School, Sept 16, 2009 How to optimize knowledge sharing in a factory network, Arnoud De Meyer & Ann Vereecke, McKinsey Quarterly, Sept 2009 Network relations in multinational manufacturing companies’, Ann Vereecke, FDC research report, July 2007 (ISBN )


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