Report on Podmore’s relocation decision
Our company is expanding rapidly. We don’t have enough space for expansion; we need to find a new site. We have to look at five main factors before we move. We need to look at the annual change in labour cost, which is how much we need to increase the wages of each employee every year. We need to look at the annual change in transport cost, which is how much the rate of transportation of goods cost per year. We also need to look at other cost, which are like the electrical bill etc.
Another factor is the cost of the new factory with all the appropriate equipment, so how much it would cost to have the mew factory fully equipped; Finally the cost of movi8ng has to be taken into consideration, so much it would it cost to move. The cheapest factory The cheapest factory is the factory in Liverpool, out of the four available. The full cost of this factory is 7. 2 million pounds. The second cheapest is factory in hull with the estimated cost of 7. 5 million pounds. Then comes the factory in Edinburgh with the estimated cost of 9. 9 million pounds.
Finally, the most expensive factory is in Newham with the estimated cost of 12 million pounds. Markets- which site is best for your markets The consideration of our markets is also very important. We have to choose a suitable site. A site which we can transport your products around the country and out of the country easily. Also we should try to relocate somewhere away from the city or the factory will cause too much noise and the locals might complain. The best site for the market would be in Hull it near to the south where all the customers are, it is out of the city and it has the best transport system out of the four sites.
Labour costs The wages we have to pay our employees must also be taken into consideration, if we are to choose the best site to relocate. The cost of employing workers might be cheaper in one area than another. Also there are taxes on employing labour. Then there might be an area with more skilled workers for the same price. Financial consideration- any extra cost? Another important factor is the cost of anything extra, like the electricity bills for the machines the price of the taxes, price of transporting goods, renovating the building in the future and the maintenance of the machines.
All these things are important aspects of relocating. Expansion possibilities We also need to look at the future. If we intend to expand our business further, then we need to look for a place with room for more expansion, or already has extra room for expansion. The best site for this is in Edinburgh, which allows you 30% expansion on the building. Next is in Liverpool which has 20% more space than needed. Then it’s the factory in Newham which has 10% more space than needed for production. Finally the factory ion Hull has just enough space for the company.
Non-financial consideration e. g. environment/labour/skilled workers in new location There are still more factors influencing the new location. Most of the staff is most likely to leave the company if it’s too far away from their homes. If the shop floor workers are not prepared to move to a new location with the company, it might not be able to gather a skilled and efficient task force from the location. We also have to look at the environmental factor. If we are destroying the environment then it will be hard to build at that location.
Conclusion Finally I conclude that the best site for our new factory would be in Hull. I choose this factory because it has good space, an excellent transport system, it’s not that expensive it’s the second cheapest factory, The labour there is cheaper than what we are currently paying, there is no change in transport costs, it has one of the lowest annual change in extra costs. it’s near to our consumers and it doesn’t cost a lot with the equipment finally put in it. So why didn’t I choose any other company.
Well I didn’t choose the site in Edinburgh because it’s very far from our market and it has the highest annual change of transport costs. I didn’t choose the factory in Liverpool because it was near the city centre so the noise of the factory was bound to cause problems, although it was a very attempting offer and finally I didn’t choose the factory in Newham because it would have cost the most to move (12 million pounds), it doesn’t have a lot of room for expansion, it was in the city and the office accommodation is very poor and it’s all cramped.