Just In Time -- Best-Kept Secrets

Finding the best places to manufacture your products requires knowing where to look.

There's something deeply ingrained in our human nature that makes us want to know where the next "hot spot" is, and to make that discovery before everybody else. That curiosity may lead to nothing more consequential than knowing about a wonderful restaurant before the word gets out and it becomes impossible to get a table without an hour's wait. But sometimes, when the "hot spot" in question isn't just a place but is in fact an entire region, the benefits from getting there first for a manufacturer can be highly significant.

It's important to keep in mind, though, that while one company might find a particular region or country the ideal site for a manufacturing plant, another company could very well see no benefit in locating there. On the other hand, companies hoping to profit from finding one of these "best-kept secrets" must be willing look beyond the obvious to uncover the hidden potential of a region.

I had the opportunity to explore one such region recently, which certainly qualifies as a "secret" to me because I'd never heard of the place before -- the Abruzzo region of Italy. (Full disclosure: I was invited there as part of an international press tour, which means they picked up the tab.) A quick Wikipedia scan reveals that this mostly mountainous region is historically best known for shepherding, tourism (skiing in the mountains, sunbathing along its Adriatic coastline) and largely unspoiled medieval architecture. My initial reaction: "Sounds like a nice place to visit, but would somebody want to work there?"

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Turns out, quite a few companies want to work there. Micron Technology, for instance, initially located in Abruzzo back in 1998 when Texas
Instruments decided to get out of the flash memory chip business and sold its entire fab plant to Micron. (TI had been lured over to Abruzzo some years earlier by government incentives and a geographic location centered between Western and Eastern Europe.) With 2,000 employees, Micron is the city of Avezzano's largest employer, and serves as the hub of the Abruzzo region's high-tech center. Thanks to its proximity to the University of L'Aquila, one of Italy's best engineering schools, Micron and other electronics companies in the area have a constant influx of new talent to draw upon.

"To survive in the very competitive semiconductor market, you need to be a good company in a good place," explains Giuseppe Vecchio, Micron Italia's communication manager.

While access to high-tech talent and cooperation with the academic world are important reasons for Micron's identification of Abruzzo as a global hot spot, those reasons are irrelevant to pasta maker Delverde. Instead, the attraction of the Abruzzo region centers on the availability of raw materials, namely, the fresh spring water from the nearby Verde River that the company uses to produce its high-end organic pasta brands.

A third company I visited, satellite telecommunications provider Telespazio, chose to be in Abruzzo for its own reasons: a nearly 4-million-square-foot setting in a mountain basin, offering a uniquely ideal location for its 90 antennas. Indeed, while Abruzzo is by no stretch of the imagination an industrial hub, every company I talked to had its own compelling reason by being there.

In short, the presence (or lack of presence) of companies in any one area or country may be entirely relevant (or irrelevant) to why your company should be there. The main criterion for determining if a so-called "hot spot" is right for you depends on how you answer this question: Will you be better able to address the needs of your customers if you locate your manufacturing or distribution in that country? As I learned in Abruzzo, and as our cover story spells out in detail, that which makes a global hot spot lies in the beholder.

IndustryWeek is proud to announce that its 2006 series on "Rebuilding U.S. Manufacturing" as well as the "Just In Time" column have received awards from the American Society of Business Publication Editors (ASBPE).

David Blanchard is IW's editor-in-chief. He is based in Cleveland. Also see Chain Reactions: David Blanchard's new blog about supply chain management.

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