An empirical examination of the international relocation factors in the auxiliary automotive indystry. The Spanish case
Publication Type:Conference Paper
Source:Gerpisa colloquium (2012)
Keywords:Automotive Auxiliary Industry, International Relocation, Spain
The auxiliary automotive industry in Spain has experienced one of the most important international relocations over the last decade, a situation that resulted in the loss of 9,300 jobs form 2001 to 2008. In this context, our research identifies, from main strategies and trends in this sector, the key factors in the relocation process. In this context, this paper analyzes the influence of several (seven) potentially important factors in the international relocation process in Spain. Thus, we contrast our hypotheses (Table 1) individually to find statistically significant differences between relocated plants (33) and remaining active plants (153) in period 2011-2008 .We perform the relevant empirical analyzes that allowed to predict the behavior of our dichotomous dependent variable (0/1; active plant / relocated plant) respect to our seven independent variables: (1) Complexity of production, (2) Labor intensity, (3) Productivity, (4) Alternative plants, (5) Ownership of capital, (6) Continuous restructuring of production processes, (7) Manufacturer-supplier proximity. We apply a t contrast for the two independent samples looking for significant differences between the relocated and non relocated plants.The obtained results show significant mean differences between relocated plants and non relocated plants for all analyzed variables. Correspondingly, we can conclude that the international relocation of a production plant can be predicted through the seven proposed internal factors. Additionally, all variables show surprisingly low values of p. In all cases the variables are significant for a p value <0.01. It confirms, therefore, the association between relocation of production plants with plants with labor-intensive activities that, if other conditions permit it, will be transferred to countries with low labor costs. Also, this process is linked with low complexity activities and, therefore, location with less demanding requirements (form technology point of view). In addition, low levels of productivity pose a risk of transfer and / or closure to ensure the profitability of the owners.At the corporate level, the plants belonging to companies with other possible alternative production locations, favors a possible relocation process. These companies are more flexible to coordinate resources internationally and their relocation costs are zero practically. Also, there is a higher relocation risk in those plants belonging to foreign owned companies because the political and social costs of the relocation process are nonexistent in this case. Finally, the implementation of corporate restructuring strategies (concentration and specialization) and logistical conditions (Lean SCM) are shown as another important key factors in the international relocation process.