This concept envisages relocating regional production sites closer to the sales markets. Vehicles and components are manufactured where they are sold and used. This minimizes transport routes, improves delivery reliability, and strengthens customer proximity. At the same time, it optimizes the resilience of the supply chain, as regional locations can react more quickly to local market requirements. As one of the most important global automotive suppliers for automation technology, 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 adjusting production in such a way that vehicles and components are directly adapted to the needs of regional markets.
For example, plants for compact and energy-efficient models are being built in Europe, while SUVs that meet local consumer preferences are being manufactured in the USA. Such regional production strategies offer advantages:
- Short delivery times: The proximity to the target markets drastically reduces transportation costs and times.
- Sustainability: Less transportation means lower CO₂ emissions and better use of regional resources.
- Flexibility: Local plants can react more quickly to fluctuations in demand and market trends.
- Customer satisfaction: Customized products promote acceptance and strengthen loyalty.
Another aspect is variant production, in which individual adaptations are made to meet legal requirements or climatic conditions – a key factor in modern automobile production. But how does Festo put this into practice?
"Festo is positioned worldwide in such a way that we offer our customers the same product quality and the same high standard of sales and support everywhere," emphasizes 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 Festo's strategy for the future. It strengthens the security of the supply chain, as has just become clear during the COVID pandemic. At the same time, it helps to circumvent requirements such as punitive tariffs and to respond flexibly to local market needs. Our products, which enable our customers to produce variants, are a decisive advantage. This makes it possible to produce various derivatives in one production run – whether sedan or cabriolet, everything can be realized flexibly and efficiently. This enables our customers to offer customized solutions and optimally serve their markets. While the last few decades have been characterized by globalization, there is now a clear trend towards localization. For us and our customers, 'Local for Local' is not an option, but a necessity in order to remain fit for the future."
Advantages of local production
Relocating to regional production sites has numerous advantages.
1. Optimized supply chains
Reducing transportation 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. Strengthening sustainability
Having fewer transportation activities reduces the impact on the environment and help 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 can better serve regional trends. Markets with strong demand for electric mobility or internal combustion engines benefit from production lines that can be converted to meet specific customer requirements.
4. Resilience of the supply chain
Regional plants are more resilient to global disruptions. Whether geopolitical tensions or a pandemic – a decentralized structure ensures 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 transportation routes and the associated reduction in CO₂ emissions, we are helping to significantly reduce our customers' ecological footprints," says Johannes Berwanger.
"The political framework is also developing in this direction. In the USA, for example, we see clear incentives to strengthen local production with the CHIPS Act. With our expertise, we support our customers in successfully implementing this change.
The advantages of local production are enormous. Shorter supply chains enable our customers to bring their products to market faster and more reliably – this is a competitive advantage, especially in the automotive industry, where time is of the essence. Local production also makes it possible to react quickly to changing customer requirements or seasonal fluctuations. Thanks to our knowledge of variant production, we can help our customers to optimize plant capacity utilization. Festo products, which are also available in numerous variants thanks to the wide range, help with the implementation.
For Festo production, variant production has been a core component of our offering for years and plays a central role for our customers. The ability to freely configure solutions is extremely important, as it allows our customers to meet their specific requirements – be it legal and market-specific specifications or technical requirements. However, it remains a constant challenge to combine this flexibility with maximum efficiency. This is precisely where our strength lies: not only do we 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 significantly improves the efficiency, flexibility and sustainability of automotive production. At a time when consumers expect individualized 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. Companies that commit to this strategy not only secure competitive advantages, but also actively contribute to the transformation of the industry.