The Exodus to Africa: The Risks and Rewards of Migrating Your Manufacturing Operations
August 19, 2015
Change is afoot in the manufacturing world. While China has dominated low-value, labor-intensive manufacturing sectors for nearly three decades, rising labor costs have many companies looking to Africa as a cost-effective alternative. But as many companies have found, migrating operations to Africa can present a wide array of unexpected challenges.
The Manufacturing Exodus to Africa
From the 1980s until recently, a combination of high productivity and low wages allowed China to dominate the manufacturing of lifestyle goods such as apparel, footwear, leather goods, and outdoor gear.
However, as the nation’s wealth and wages have risen, along with energy costs, land costs, and regulatory restrictions, China’s cost advantage has dwindled. In fact, according to Justin Lin, former chief economist of the World Bank, China may have to export 80 million jobs as its competitiveness wanes in certain manufacturing sectors.
Meanwhile, in Africa, sub-Saharan Africa in particular, the economy and industrial output is rapidly growing. Infrastructure investments have upgraded roads, railways, ports, and electricity, and telecommunications networks have expanded. These investments, combined with low labor costs, abundant resources, reduced trade barriers, and capital subsidies, have created an appealing business environment for manufacturers.
The Risks of Starting with New Supply Chain Partners in Africa
While Africa is viewed by many as the world’s next manufacturing hub, many companies are discovering numerous risks, unexpected costs, and pitfalls when migrating their operations there. Experts must be moved or hired, factories must be evaluated, and trials must be run.
In addition, sub-Saharan Africa’s labor productivity is generally low compared to their Asian counterparts, and sub-standard quality is common among new supply chain partners. For example, Impactiva’s quality assurance technicians recently began working at an Ethiopian factory and due to poor initial quality were forced to reject and send for rework an extremely high percentage of shipments.
The Solution: Employ Sustainable Solutions to Optimize Your Supply Chain
To ensure a cost-effective migration of your manufacturing operations, it is critical that you employ sustainable, hands-on solutions to quickly ensure that you get the right product at the right time.
At Impactiva, our technicians are already working full time in Africa. At the Ethiopian factory mentioned above, the very high rework was reduced to 4 percent in less than one season. To accomplish this feat, we trained the factory’s quality control staff and supervisors and are continuously providing cutting, sewing and finishing technical training courses to all operators. Further, we studied and refined processes in all of the factory’s departments.
We can do the same for your production. We can deploy technicians to provide quality assurance / quality control inspections, factory technical audits or quality training. Ultimately, we can ensure that your African factories have quality-focused team members proud of making an excellent product.
Call us today for a customized proposal of services to help you safely, quickly, and cost effectively migrate your production to Africa.