Project relocation out of Spain

blanc-larg

From many years ago, I’ve had the opportunity to carry out projects, such as in Spainand beyond. These projects have had different typology according to current economic situation: On one hand, production optimization and increase plant efficiency. On the other hand, reduction cost (mainly labor cost) and relocation (offshoring).

Problems typology, working method used, process/product management, Lean tools to take into account… Have been always common acts in projects carried out in Spain and abroad, but there are certain number of important details to take into account for projects outside of Spain. These details can make the success or failure of the project / company.

Here, there’s a summary of the difficulties that I’ve found during these years and I think they are the most relevant:

–          Very important! First of all, for relocation project, choose the right place: Yes, I’m not saying obviousness… almost always the primary criterion is the reduction of labor costs, but there are other important factors that are also important, like take into account the requirements of each country to create a business. When there are too manyproblems, it’s better to find some local partner that allows us to use his company (and his name) for develop our product. In this case, we have to be sure with whom we do business (same as a manager and human being).

Once we chose country for making business, it’s not the same an area near a big city than a town far away from everywhere. Even sure that reduction cost is bigger in town, in some cases is not worthy because of other problems:

  • Staff turnover: In a small town where there is lack of jobs and personal needs (both essential and leisure), it can behard to maintain the staff. If training is necessary for job development, staff rotation is a clear problem.
  • Possibility to find technical staff: I have seen in some companies, people with previous jobs as farmers or other jobs nothing to do with required job in the plant. In this case, it’s necessary to invest much time in training and follow-up. In these cases, the reality is less up to the expectations.
  • Possibility to find suppliers, materials or services: Standard products/services can be found everywhere, but when something special is required, to be near a big city is relevant (it could be achieve fast, cheap and easy).

Once defined the place, let’s talk about PEOPLE.

–          The cultural issues: Although some cultural issues looks like strange or unproductive (because of our cultural differences), it is very hard to change and more if you want to change as soon as you arrive. It’s better to concentrate energies on how to accept them and work with them, in particular:

  • Holidays: It’s highly recommended to have a calendar with the local holidays and find out which of them are the most important (For example, many Asia countries stop completely for New Lunar Year during two weeks. However, in other dates less important for them as Independence Day, will depend on the country/city that has more or less relevancy).
  • Local customs: In many areas of Asia, siesta is considered as a right (even though Spanish and South American people have more fame, in Asia it’s a fact), and it is very difficult to avoid it. Therefore, to know daily timetable is essential in some cases, production has to be scheduled according to timetable, and not viceversa…
  • Overtime: Depending on the area, people will prefer, working on weekend than increase timetable during the week.
  • Productivity: In countries were labor cost is low, usually productivity is very low and people work only to survive. This makes productivity level very low. In many cases, bonus is totally unknown. You must analyze each case, but in some countries, it’s worthier increase resources (people) than optimize the current ones.

I can be an eternity talking about other life experiences, but I don’t want to go further, I’ll stick with two points to finish:

–          As I’ve mentioned earlier, work method used, is the same, and depending on location, lean tools are totally unknown, so do not forget:

  • Daily production meetings.
  • Weekly follow-up meeting.
  • Implementation of key indicators: production, quality, stocks, economical…
  • Action plan continuous improvement.
  • Lean tools: 5S, SMED, TPM, Kanban, Kaizen, etc.

–          In relocation cases, even if it’s only a production part, NEVER forget current staff:

  • In most of cases, a travel plan is necessary for operations and technical personnel, who should not be underestimated (all change is difficult and adaptation is hard, although there are good predisposition).
  • Any relocation, even partial, needs a good left hand treatment with local staff that don’t move to reduce misunderstandings.
  • Finally, don’t forget that personnel moved has to be motivated and well attended. The project success or failuredepends on them and in some cases foreigners are not well received and a good motivation is more important.

Note:  This post is based on my life experiences in projects around USA, Turkey, Vietnam and Slovakia.

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