The tax cost factor in site location

More companies with high-margin products are setting up manufacturing operations in tax-advantaged countries to protect their profitability, said Matt Jackson of the firm Cushman & Wakefield, which specializes in global location strategies.

In the past, manufacturers had chosen to move production to low-cost regions of the world such as China. In the last four years, however, companies are paying more attention to such factors as income taxes or national tax incentives for site location. That shift has been enabled by the development of supply chain network analysis software that helps companies consider the tax ramifications of a facility's location.

Additionally the current tough global economy is encouraging companies to do a more comprehensive analysis, Jackson said. "The global economy has mandated new thinking regarding the design of the manufacturing platform," Jackson said.

Jackson made his remarks during a presentation at the Council of Supply Chain Management Professionals Annual Global Conference.