This concept envisages relocating regional production sites closer to the sales markets. Vehicles and their components are manufactured where they are sold and used. This minimises transport routes, improves delivery reliability and strengthens proximity to customers. At the same time, it optimises the resilience of the supply chain, as regional plants can react more quickly to local market requirements. As one of the most important global suppliers of automation technology to the automation industry, how is Festo dealing with this?
We asked our product specialist Johannes Berwanger for an interview.
How does "local for local" work?
At its core, it is about adapting production in such a way that vehicles and components are directly adapted to the needs of regional markets.
For example, in Europe plants for compact and energy-efficient products are being built, while in the US they are manufacturing SUVs that meet their local consumer preferences. Such regional productions offer advantages:
- Short delivery times: the proximity to the target markets drastically reduces transport costs and times.
- Sustainability: less transport means lower CO₂ emissions and better utilisation of regional resources.
- Flexibility: local plants can react more quickly to fluctuations in demand and market trends.
- Customer satisfaction: customised products promote acceptance and strengthen loyalty.
Another aspect is the production of different models, with customised adaptations being made to meet legal requirements or climatic conditions – a key factor in modern automotive production. But how does Festo do this?
"Festo is set up worldwide in such a way that we offer our customers the same product quality and the same high standard of sales and support everywhere," emphasises Johannes Berwanger.
"Our national companies ensure that we are able to deliver and supply locally at all times. 'Local for local' is an essential part of the Festo strategy for the future. It strengthens the security of the supply chain, as became clear during the COVID pandemic. At the same time, it helps to avoid requirements such as punitive tariffs and to respond flexibly to local market needs. Products from Festo that enable customers to easily produce different models have a decisive advantage. They support the production of several models on one production line, whether they are limousines or convertibles. Everything can be produced flexibly and efficiently. Our customers can thus offer customised solutions and provide an optimal service for their markets. While the last few decades have been characterised by globalisation, there is now a clear trend towards localisation. For us and our customers, 'local for local' is not an option, but a necessity in order to remain ready for the future."
Advantages of local production
Relocating to regional production sites has numerous advantages.
1. Optimised supply chains
Reducing transport routes not only saves costs, but also increases delivery reliability. Products reach customers faster and without unnecessary delays – a decisive factor for customer satisfaction.
2. Boosting sustainability
Having fewer transport movements reduces the impact on the environment and helps to promote the regional circular economy. For example, metal chips produced during processing can be remelted and reused.
3. Flexibility and scalability
With flexible production, companies are better placed to react to regional trends. Markets with a strong demand for electromobility or combustion engines benefit from production lines that can be converted to meet customer requirements.
4. Resilience of the supply chain
Regional plants are more resilient to global problems. Whether these are geopolitical tensions or a pandemic, a decentralised structure provides stability and smooth processes in the global supply chain.
"The 'local for local' concept is a key building block for achieving sustainability goals in the automotive industry. By shortening transport routes and thus reducing CO₂ emissions, we are helping to significantly reduce our customers' environmental footprints," says Johannes Berwanger.
"The political framework is also developing in this direction. In the US, for example, we see the CHIPS Act as a clear incentive to strengthen local production. Our expertise allows us to support our customers in successfully making this change.
The advantages of local production are enormous. Shorter supply chains are a faster and more reliable way for enable our customers to bring their products to market.This is a competitive advantage, especially in the automotive industry, where time is an important factor. By producing locally, it is also possible to react quickly to changing customer requirements or seasonal fluctuations. Thanks to our knowledge of variant production, we can help our customers to optimise utilisation of system capacity. Festo products, which are also available in a wide range of variants, help to make this a reality.
The production of different variants has been a core part of the Festo product range for years and is a key factor for our customers. The ability to freely configure solutions is extremely important too, as it allows our customers to meet their specific needs, whether these arelegal and market-specific specifications or technical requirements. However, combining this flexibility with maximum efficiency remains a constant challenge. This is precisely where our strength lies. We not only offer the technical solutions, but also the experience and commitment to successfully implement them for the benefit of our customers."
Challenges and solutions
Conclusion: "Local for local" as a strategy for the future
The "local for local"' principle is much more than a short-term reaction to current crises. It represents a strategic step that will significantly improve the efficiency, flexibility and sustainability of automotive production. At a time when consumers expect customised products and short delivery times, this approach provides the basis for long-term success.
The future of vehicle construction is local – close to the customer, resource-saving and flexible. Companiesthat commit to this strategy not only secure competitive advantages, but also actively contribute to the transformation of the industry.