Global supply chains have been disrupted by COVID-19, Brexit and a number of natural (climate) and bizarre (Suez canal obstruction) occurrences. As a result of this, management teams are now taking the opportunity to have a fresh look at their supply chains and assess if it it’s the right fit for current and future business models.
As part of our ongoing research programme, our recent paper “Where to Manufacture” has analysed 17 key manufacturing locations (listed below including Ireland) to identify the cost of doing business in each location:
The aim of the study was to help Global Manufacturing Executive teams, by developing a quantitative index that ranked each location beyond “primary” costs (e.g. labour, tax, property and energy) into “secondary factors” such as the ease of doing business, the quality of labour, infrastructure and legal / political risk. This fresh perspective, albeit highly subjective, throws up some interesting key findings including:
- Countries that lead on primary factors perform poorly on the secondary factors, so traditional “low cost” locations such as Mexico, India, China and Brazil returned poorer than expected “cost of doing business” scores;
- Asia – Pacific locations (Taiwan, South Korea and Malaysia) performed well in the overall index;
- Exchange rates and tax reform can have a significant impact on relative ranking; and
- Automation is disrupting traditional costs of doing business – less reliance on labour as a driver of cost to do business.
From an Irish perspective there are a number of key take-aways:
- Ireland is the number one ranked location on “Quality of Labour”, indeed on page seven of the report under an alternative weighting Ireland scores highest of the seventeen countries in the overall Index;
- Conversely Ireland ranks joint last on transport Infrastructure, bringing down the overall score; and
- Notwithstanding the subjective nature of the weighting, and the overall ranking of ninth of seventeen, Ireland performed ahead of the overall average on both the overall ranking and the secondary factors.