China's Fuyao Glass, an automotive glassmaker, is considering an expansion of its manufacturing operations in the United States. An analyst claimed that the business strategy of extending production operations overseas might allow companies to serve the world market better and find that this would allow managers to reach their aggressive cost targets.
A business case study conducted by Harvard Business School professor Willy Shih claimed that companies such as China's Fuyao Glass has considered opening a manufacturing factory in the United States to better serve the world market.
Entitled Fuyao Glass America: Sourcing Decision, Shih claimed that the world's second largest automotive glass producer would expand from China to the US to produce its physical products to better cater to world market demands.
He claimed that the business strategy would allow Fuyao Glass to meet its very aggressive cost target. In meeting that objective, Shih claimed that the managers of companies such as Fuyao Glass faced dilemmas about fulfilling its contract with the US or maintaining its production source in Tianjin, China.
Shih said that the company's factory in China has a low-cost target, but the company would incur extensive shipping costs. Thus, he noted that it would cost Fuyao Glass more expenses on its inventory holding. He then compared the costs that it would incur if its manufacturing operations would be based in the US instead of China.
The host of the HBR Presents Network Brian Kenny then claimed that foreign companies have relocated their production operations in the US. He explained that this move opened 145,000 jobs in the US after US President Donald Trump promised to reinvigorate its economies by allowing foreign corporations to operate in the country to alleviate unemployment in the country.
Shih also pointed out that the tariff rates are the responsibility of the supplier and that Fuyao Glass may be a big player in China's market but it's relatively smaller in other parts of the world where it supplies glass to automakers. He then concluded that the company is considering opening the plant in the US because it could save on tariff rates better when glass is produced where their customer base is larger.
In other news, Glass International reported that the opening of the manufacturing plant in the US have been lodged with a 46 million USD budget. The said plant would open in Ohio and that the investment includes research and development and the purchasing production equipment.
It was also revealed that the opening of the plant would create at least 100 jobs and employs about 2,400 employees. The company was also revealed to occupy about 161,000 feet-squared of area at Moraine, Ohio.
