ENC Industry PRODUCT RELOCATION PROGRAM
Due to various reasons companies might not be in a position to continue their present production orientated activities at the present location(s).
Reasons such as:
- the end of the product-life-cycle within their market(s)
- too old and inefficient production equipment
- environmental limitations
- high logistic costs
- too high production costs
- discontinuation of product(s) within portfolio
- discontinuation of company activity(s)
- regrouping of production facilities
- creating flexibility in (own) production-capacity
Depending on the reason(s) of the shut-down and the (new) mission/strategy, we identify two major options:
A product remains in portfolio
B product will be excluded from portfolio
In case of option a., the company will continue to sell the product(s) either in the current market(s) and/or in new markets (PMC depending). Hence, there is still a need to produce the product(s), but clearly not in the present factory.
Four approaches are leading to the needed availability of the products, being:
Standard off-the-shelf products, manufactured by a competitor, directly available, quality known, possible conflict of interests, private label possible.
Hiring production capacity from a competitor, using own production and product specifications and production tools. Longer leadtime, testruns, approval. Private label possible. Possible conflict of interest.
|3. Co-operation / Joint Venture
Setting up a joint production operation, working together with a local or regional company. Long leadtime, clear control, no conflicts of interest, shared risk, local partner contributes (amongst other) local/regional knowledge and often day to day management. Might be based on already existing production facility.
|4. Overseas Operation
Fully owned, fully controlled. In case of greenfield very long leadtimes and (country/region depending) high to very high risks. In case of take-over of local producer, often major difficulties with baked-in structures of organization and production. Hidden snakes.
In case of option b., capitalizing of equipment (often already fully depreciated) and technology (often worthless after ending of the activities) is a major incentive for choosing to sell the complete line, including technology and production tools.
It is remarkable how often companies consider their closed activities as of no value, while in other parts of the world, due to other circumstances, companies are eager in purchasing such complete lines. In case technology will remain in-house and update, the seller might also explore the option of licensing technology as well as selling long term technical/ technological support.
By this the seller will gain a close contact in other parts of the global market, which might not be of major interest at the moment, but eventually of strategic value in the future.
The advantage of buying a complete (used) production-line are amongst others:
- proven production volume record
- proven efficiency (waste) record
- proven product quality
- clear picture of energy consumption
- all equipment is logically integrated into one working unit
- short leadtime to start-up
- technology and tools available
- often longterm technical support
- clear cost and time budget
ENC Industry has the knowledge and experience to identify the right region, country and partner, analyze and minimize the risks, and fully realize the project. From planning and board approval via legal and financial up to and including start-up of the new operation. Coaching/monitoring of the new operation, representing our principal or all participating companies, is regular executed during the first years.