Los Angeles, USA: 2015
Speaker’s notes, AGM, 23 April 2015.
Good morning, ladies and gentlemen. Two years ago, we made a bold decision to start moving Hannsen Works manufacturing operations back from India to the US. At the time there were doubters, but today there’s no question that the decision was the right one. Already, the move is bringing us major cost savings, improving our green credentials, and positioning us for competitive advantage.
Our fully automated, remotely managed plant in California has slashed our labor costs and energy costs; it uses no fossil fuel at all. And because we’re now so close to our customers, we can give them the customizable, sustainable products they’re looking for – when they want them. Not many of our competitors, who are still tied up in offshore manufacturing, can say as much.
The case for bringing manufacturing home
There are three compelling arguments for moving manufacturing back home. The first is cost. Low labor costs were the original attraction of manufacturing in India, but these are now almost level with those in the US. High energy prices and taxes on carbon emission have increased transportation costs, too.
The second reason for rethinking offshore manufacturing is that customer demand, legislation, and taxation are all pushing us toward greener ways of doing business, which again means reducing our transportation needs.
Thirdly, we need to get closer to our customers, both literally and metaphorically. Customers are demanding sustainability – they want products that last a lifetime but are capable of customization and upgrade. To meet that demand we have to be able to respond quickly and flexibly to customer needs.
All these pressures meant we needed not just to move manufacturing closer to our customers, but also to rethink our supply chain, and in fact our whole business model.
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