Manufacturing operations location decision: what are the main criteria?

ABSTRACT

This article focuses on manufacturing location decision criteria. Based on a survey of 111 companies, this study helps to rank and prioritise the criteria used in choosing operations’ location. Territorial attractiveness is one of the key issues influencing the decision.

KEYWORDS:

• Manufacturing operations
• location decision
• territorial attractiveness
• location criteria

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Erratum

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. In the early 1990s, 70% of world growth was driven by rich countries and 30% by poor ones. Currently, it is the opposite: 30–70%. In 1990, there were 12 emerging countries whose growth rate doubled that of Western countries. In 2010, there were 65. In 1990, the world’s wealth was distributed to 60% for rich countries, 40% for poor countries. In 2030, these percentages will be reversed (Cohen 2012, 100).

2. In December 2013, a petition to the French President, François Hollande, signed by 50 owners of subsidiaries of foreign companies established in France (Siemens, Accenture, HP France, Esso, Shell, Sony, Hertz, Volkswagen, Cisco) stated: ‘France may well be one of the most beautiful countries in the world with the most efficient transport facilities, universities, research centers, talents, … it became the most difficult country to work there’. The main reasons given were ‘too taxes and bureaucracy’, ‘no inclination/desire for work’ and especially ‘fiscal instability and limited visibility’ on what will happen.

3. In 2014, 608 decisions direct investment (FDI) were recorded in France, an increase of 18% compared to 2013. France did better than the average of Europe (+10%) and retains the third, behind the United Kingdom (887 decisions FDI) and Germany (763 decisions). Over the period 2009–2014, France has experienced a 15% increase in the number of settlements projects, against 83% for Germany and 31% for the United Kingdom. However, over the same period, the number of FDI-related jobs fell by 6% in France while it rose to 56% in the United Kingdom and 130% in Germany. For France, these projects are primarily derived from extensions of existing activities and small sizes (Ernst and Young 2015).

4. In France, in 2010, nearly one out of two employees (46.5% or 6.8 million) of the market sector (excluding agriculture) was employed by a multinational firm. A total of 1.8 million people were working for a company under foreign control. http://www.lemonde.fr/economie/article/2013.

5. In 2013, during the meetings on ‘Etats de la France 2013’, the question of the French attractiveness was discussed.

6. OCDE Survey (2008): ‘The Global Competition for Talent. Mobility of the Highly Skilled’.

Ernst and Young Survey (2015): ‘European Attractiveness Survey 2015’.

INSEAD Survey (2013): ‘Global talent competitiveness talent 2013’.

Additional information

Notes on contributors

Alain Spalanzani

Alain Spalanzani is Full Professor in Management Science at the University Grenoble Alpes. He is member of the Centre for Studies and Applied Research in Management (CERAG). His publications include books and articles on Operations Management and Supply Chain Management. His recent research topics are industrial location decision and territorial development.

Blandine Ageron

Blandine Ageron is Full Professor in Management Science at the University of Lorraine. She is in charge of the Licence Professionnelle “Supply Management and Logistics” at the IUT of Valence. Member of the Centre for Studies and Applied Research in Management (CERAG), her research interests focus on upstream chain, Supply Chain Management and Innovation in the Inter-Organizational Relationships.

Iskander Zouaghi

Iskander Zouaghi is Assistant Professor in Supply Chain Management and Information System at the National Polytechnic School of Alger. He publishes articles on Supply Chain dynamics and Business Intelligence for performance improvement. He is also auditor for the French Supply Chain and Logistics association ASLOG.