Selecting an Optimal Overseas Manufacturing Location: A Case Study of Relocation Decision-Making in the Global Textile Industry

Abstract

Many textile producers are looking at reviving their production sites because of high production expenses, fast delivery deadlines and better competition. This paper describes a case study of an important textile enterprise, SuperFiber, which get over 80 % of their revenue from one particular customer, LondonFabric. By applying a mixed method, a qualitative comparison of location factors and a simple quantitative cost model analysis, six candidate regions (Southeast Asia, Eastern Europe, Latin America, China, Japan and Morocco) are analyzed. Five criteria are compared between each region: market potential, labour availability, infrastructure and logistics, government policy and regulatory and financial risk. Then a SWOT and a PESTLE analysis are used to analyse the region that has performed best on these criteria. The analysis reveals that Southeast Asia is the most favorable mix of expanding consumer markets, plentiful and low-cost labor, developing infrastructure, and pro-business policies, but that Eastern Europe and Latin America are viable alternatives, each with its own set of risk and cost considerations. According to a basic cost calculation, the firm could save nearly four million dollars annually by moving 100 employees to Southeast Asia, in addition to its labor, rental, food and transportation expenses. The paper ends by stating that Southeast Asia makes the most balanced choice for SuperFiber and suggests a simple checklist for other small and medium-sized textile manufacturers to consider when making other location decisions.