Hornby is a famous British brand that makes high-quality, model trains and cars. The China-Britain Business Council’s China-Britain Business Review (September, 2006), contained an interesting case study, by Humphrey Keenlyside, on the company’s move to manufacture in China.
According to the article, Hornby found itself facing hard times as competitors moved to China. Having employed around 2,000 people in their UK in the 1970s, this number had fallen to 750 by 1997. Big changes were needed to reverse the decline.
Interestingly, the main reason for the move was not simple cost-cutting (though tooling costs were cut in half) - that was just a means to an end, and the cost reductions allowed the firm to refocus spending on design and quality improvements, and to speed the introduction of new lines. At the same time, specialist design and engineering functions were kept in the UK.
The company decided to build on its relationship with a Hong Kong supplier, and to move
manufacturing to China. This was done by transferring all of their specialist tooling equipment from the UK to Dongguan, in Guangdong. Frank Martin, the CEO, reported that the good relationship with their local partner was critical:
- “Our Chinese partners recognise that if our business grows, then their business will grow. They are not looking to go it alone, because they know that together we can both benefit”
- “With Chinese manufacturing secure – and with an all-important competitive advantage – the company contemplated a big push into new markets, particularly in Europe and the US”.
To view the entire article at its original location click on the title of this post.
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