Relocation to low-wage countries not always worth its while

12 June 2012

Swedish manufacturing industry is a global leader when it comes to technology and systems expertise. Companies that are thinking of moving abroad should therefore consider carefully before relocating production to low-wage countries. This is according to Carin Andersson, a researcher in Production and Materials Engineering at the Faculty of Engineering.

“There are numerous examples of management realising afterwards that they have been focusing blindly on labour costs. There are so many more aspects to profitability”, she says.

Of course it can be difficult to get good information on which to base a decision. One problem is that economists, who are often responsible for this part of the process, tend to focus on classic calculations and budgeting but lack the knowledge to perform industrial and technical deliberations.

This could mean anything from working out the real cost of scrapping products to the fact that two almost identical materials can behave very differently in the production process. Carin Andersson likes working such things out.

For example, she has helped Haldex, a company based in the town of Landskrona that manufactures brakes and other parts for the car industry, to work out whether they should move production abroad or not. Carin Andersson’s recommendation was that they stay. She also listed her most important suggestions of ways to cut costs. Since then, Haldex has altered its factory and cut costs by 55 per cent.

If a ‘helicopter’ perspective on the manufacturing process is one of Carin Andersson’s main focuses, the other is a more down-to-earth tools perspective.

She knows most of what there is to know about turning, milling, drilling and most other types of machining, and not just secondary school metalwork either:

“Cutting a piece of metal from a workpiece is not done in one step; it often takes more like ten”, she says.
Among other things, she has developed a piece of equipment to measure forces directly on a rotating milling tool that produces cogs.
“Then we know how each tooth of the tool ‘feels’ and how it is working. This is important for the development of even better tools.”

Text: Kristina Lindgärde

More about Production and Materials Engineering
Production and Materials Engineering is one of nine strategic research areas at Lund University that have been awarded long-term direct funding from the Government for the period 2010–2015. The Sustainable Production Initiative project, which is run with Chalmers University of Technology, involves around 100 researchers who work to improve manufacturing processes and develop manufacturing and testing methods, for example for new materials.