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Latin America vs. China – Latest Thinking on Where to Locate Manufacturing Facilities

Posted on August 20, 2008 by: Lisa Koss

Have you noticed the sporadic articles popping up in periodicals and articles that suggest "rethinking" the mass exodus of manufacturing facilities to China and other far away places?  These articles suggest that while labor is prevalent and less expensive in those places, that in many cases there is a strategic advantage for people in the Americas to stay in their own hemisphere.   

"Transport Intensive" Industries –
This week I was at the 2nd annual Americas Competitiveness Forum in Atlanta (http://www.competitivenessforum.com/) where 1000 people gathered including 3 heads of State (Colombia, El Salvador and Guatemala), and indeed, it seems the business leaders, policy makers and other strategy experts agree that for reasons of culture, time zone and logistical reasons, particularly in "transport intensive" industries, Latin America makes more sense financially.  Transport intensive industries include heavy machinery, grain, equipment, as well as time sensitive cargo, such as fresh produce or items that need require quick-to-market.

More than the effects of tariffs and trade agreements, shipping and transport actually present a much larger percentage of potential cost savings and a strategic advantage.  Experts suggest that businesses do extra due diligence on logistics costs and that governments invest in their ports of entry.  The Panama Canal is in the process of doubling in size, and all other ports in the Americas must be ready to invest to accommodate and leverage this significant strategic advantage.

A very good case for investing in the region and hemisphere was made from every angle.  In addition to logistics cost, themes included the greening supply chains, sustainability and the benefits of regional economic stability. 

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