Where to build plant - structuring

Hi there,

This entirely depends on the case! Can you provide us some additional context?

In general, I would look at regional costs (inputs) (i.e. labor, raw material access, land, etc.), distribution costs (getting output to end buyer), stability of supply (social, political, economic, environmental factors), and finally “extra costs” such as tarrifs and taxes.

Technically, the 3rd item (stability of supply) is revenue (volumes)

I would consider revenue in addition to cost aspects. Depending on the market, industry and goods being transported, for example, close proximity to customers could be advantageous for your revenues. Simple example: if you build a plant in a country with large demand and high tariffs on imports

I can give more concrete comments if I know which industry we are talking about here. Feel free to message me directly to follow up 

Hi there,

Yes, the location of a plant may impact revenues. Some possible implications on the revenue side are:

1. Quality: different locations may offer different levels of quality for the final product
2. Availability of supply: different locations may have different constraints. Some may not allow full production when needed
3. Distribution: different locations may allow to reach customers more or less easily

You should still clarify if revenues are relevant at all for the client though (sometimes the cost could be just to minimize costs).

Best,

Francesco

Hi!

Including a revenue bucket shows that you're looking at the big picture behind the initiative.

Of course, it depends on the specific case so it would be more relevant to include it in some situations rather than others (e.g. proximity to customers, etc.).

Hope this helps.

Best,

Anto