The Globalization Handbook
A Key Part of Your Business Plan
by Tom Epply
Globalization: A Second Option
You may be able to purchase a finished part for the price you were paying for material.
We have had customers say, "How can that be possible, material is material?"
To explain the answer, we must go back and review the entire value stream. Many people
only think of the machining or finishing cost.
Think of the person digging the iron ore being paid $0.50/hr and the man at the steel
mill being paid $0.50/hr. Now you can start to think about the entire value stream and
understand how the entire part can be produced and sold for the price you were paying for
Now let's look at your desired future state for ESG&A. Suppose your 'E" (Engineering)
of ESG&A is 7% of your annual revenue which is $20,000,000. Your engineering budget
would be $1,400,000.
As in the last example, you expect 20% growth during the life of your business plan,
and need to cut labor costs as well. So, you need to cut costs from $1,400,000 to $1,000,000
to be competitive in your Engineering budget. This represents nearly a 40% reduction in
your engineering budget while growing the business 20%.
How do you solve this problem?
To gain this much savings may also require a paradigm shift of how you spend your engineering
dollars. Many companies are turning to India to reduce engineering overhead cost.
The India Globalization Solution
your current engineering to work on R&D and forward programs while letting an India
partner perform other engineering functions can reduce your engineering costs by 50% or
Many companies are turning to India to reduce overhead costs. Examples include:
Ernst & Young - has outsourced financial functions saving of 50+%
A.T. Kearney - outsourced all non-face-to-face customer functions
G.E. Capital - India workforce has grown from 634 to 17,000 employees in the past 5 years,
All employees have college degrees, 1,200 have MBA's
MRI's, CT Scans, X-Rays are globally out-sourced
Source: Fortune Magazine, June 25, 2003
The two previous examples of globalization using China to supplement your workforce
and India to reduce your engineering costs, are but two of the many resources that can
provide options in the expanding world of globalization.
The two previous examples of globalization using China to supplement your workforce and
India to reduce your engineering costs, are but two of the many resources that can provide
options in the expanding world of globalization.
Continental has established a partnership in China for globalization services. Offices
are located in:
Globalization Services Offered:
- Supplier and factory assessments
- Process & quality evaluation, audit and problem resolution
- Metrology management/dimensional analysis inspections
- Production line problem identification & resolution
- Manufacturing plant launch & Greenfield activities
- Quality system design
- Risk analysis and management
- Product quality inspections
- Electronics testing labs quality investigations
- Plant engineering management analysis, design & implementation
Continental's globalization team is experienced in handling the following components:
- Automotive Parts
- Jigs & Fixtures
- Roller bearings
- Jet engine fan and compressor blades
- Consumer Products
- Metal Stamping, machining and cleaning processes
- Ceramics/porcelain, glass & crystal glass molding, grinding & polishing
- Brass and titanium hot forging
- Zinc die-casting
Legal support for Continental's China operation is provided by:
Baker & Daniels
Attn: Joseph W. Kimmell II, Attorney at Law
Indianapolis, Fort Wayne, South Bend, Elkhart, Washington D.C., Qingdad, P.R. China
Continental's partner in India located in Bangalore, with offices in Michigan and California.
Global engineering resources and experience available in India include:
CSM Engineering Services
- Modeling and Detailing (Solid and 2D)
- Finite Element Analysis
- Tool, Die and Mold Design
- Reverse Engineering
- Drawing Conversion
- Platform to Platform
- Paper Drawings to CAD
The keys to dealing with the pitfalls and opportunities of globalization are:
- Recognize that globalization trends are and will affecting your business.
- Become informed and incorporate these trends into your business plan.
- Call Continental Design for instant access to the technical resources you need to
prosper in a global market.
Continental's Director of Globalization will also be happy to discuss your strategic planning
and business plan and assist you to find ways to deal with the impact of globalization
on your business. Call 800 875-4557
extension 317, or send an email.
- The Globalization Handbook
- Globalization: A Second Option
- Globalization Glossary