Sir,
I read with interest Peter Marsh's article "Overseas threat to development jobs" (July 29), warning of the loss of design and development jobs to manufacturing operations in low-cost economies. While some businesses are relocating design and development to take advantage of lower costs, more often it is to be closer to local markets to understand their needs better and also to tap into the rapidly growing capabilities and centres of excellence in low-cost economies.
There are, however, many risks. The sustainable transfer of product knowledge and brand awareness into a different culture is complex and almost always underestimated. Once they are relocated, the ability to retain that knowledge and expertise and to protect intellectual property rights is made more difficult with the greater mobility of the workforce in these regions fuelled by increasing salary levels and the growth of competing businesses.
Despite these risks, our experience indicates that once the critical mass in the manufacture of a product is relocated it is a matter of time before some element of design and development follows. The questions then are: which elements; and should a business take steps to prevent or encourage that relocation?
The ability of companies in low-cost economies to customise products to local requirements, to take cost out quickly, is well proven. In our view, British manufacturers should consider that the relocation of these later stages of the design and development process can generate substantial benefit if managed well. Rather than direct energies to protecting them, they should focus on strengthening and building their high-value concept development and innovation capabilities.
Tom Toth, Consultant, Manufacturing Industries Practice, PA Consulting Group, London SW1W 9SR
