A tailored, thoughtful combination of cutting-edge technologies, stronger contracting skills, and deep supply chain capabilities can get a new factory up and running—without costly delays.

Today’s environment is giving manufacturers even more reasons to reassess their footprint strategies. For some, localisation of production may now seem increasingly attractive—particularly amid rising volatility in tariff and trade policy, evolving incentives for manufacturers

Manufacturers know that building new factories—and doing so quickly—can be incredibly complex.

It is possible for the chief manufacturing officer to have never overseen the expansion of an existing factory—let alone the development of an entirely new “greenfield” site.

The construction industry’s capacity for new factory construction is also constrained, especially by the demand for skilled workers.

The sheer scale of the capacity gap is daunting even before confronting the very real risks that major projects face, from spiralling labour costs to vulnerable supply chains.

There’s no single technology or template that manufacturers can deploy in response. Instead, to close the gap, manufacturing leaders need an integrated approach to factory building, one that encompasses thoughtful factory design, a reassessment of the supply chain, and effective construction management.

A blueprint for revamping factory floor design

The first step is undertaking a meticulous factory design process that seeks to ensure consistent flow of production, with adequate redundancy in capital assets

Heightened competition for capital under current market conditions means it’s more critical than ever for manufacturers to deliver major capital projects on time and on budget.

 Higher labour costs in a new location require a company to rethink the entire value chain for the new plant—and with it, core production processes.

Executives need to recognise that a greenfield development offers a unique chance to invest in Industry 4.0 technologies, maximising ROI and minimising production disruption

Industry 4.0 user cases can show high potential for a very different production line, with heavier use of robotics and other forms of automation.

An even more advanced application of Industry 4.0 that many companies have already deployed is to build a digital twin of the future production line, as a medical-products company did in designing a new plant for its high-mix, high-volume product portfolio.

Leveraging a digital twin allows a company to optimise a new factory’s layout by simulating future production so that engineers can build in additional flexibility and minimise the impact of frequent changeovers.

Advanced technology alone can only achieve so much. Too often, new factories run into a highly analogue problem: suppliers that can’t keep up, whether because of difficult logistics, their own capacity constraints, or broader issues in the supply relationship.

To mitigate these risks for a new assembly site, an aerospace and defence manufacturer developed an in-depth analysis that combined factors such as suppliers’ available production capacity, geographic footprint, and applicable transportation modes and routes with forecasts of component demand at both the market and individual-part levels.

The company used the insights from this analysis to develop its supplier strategy, identifying where existing suppliers could meet demand and where additional suppliers were needed.

Managing construction

Because timely project delivery also depends on effective design and construction management, leaders need a robust contracting strategy that seeks risk-sharing opportunities with vendors and builds incentives for punctual completion.

In parallel, companies can also define applicable governance models, establish a construction stage-gate process, and start addressing one of the largest risks to major construction projects: skilled-labour availability.

Well before starting its fab project, a semiconductor manufacturer revisited and revamped its contracting strategies, systematically building new capabilities so that it could better understand its contractors’ costs and constraints.

The insights helped the fab’s leaders adopt a new negotiation stance, which ultimately led to a genuine partnership with the fab’s general contractor—along with a more intelligent allocation of risk and about a one-quarter reduction in bid price.

At the same time, a team of analysts developed an integrated trade labour strategy to identify top labour risks and better manage talent scarcity.

A detailed assessment reviewed how labour needs would evolve for every trade over the project’s duration, and for each area and building in the sprawling facility.

Next, the team identified the labour needs of the major trade contractors, ranking potential vendors by their capacity, proximity to the site, and potential for long-term relationships.

Finally, for the largest packages of work, the team evaluated the most likely bidders, with recommendations to split up some packages so that more contractors would be able to work in parallel on-site. These steps saved more than $50 million.

The fab’s careful use of advanced construction technologies, including the latest modular-building techniques and generative-scheduling and performance transparency tools, helped it mitigate other risks. Leaders used a generative-scheduling model to test a range of alternative construction program designs—such as resequencing the structural packages or reallocating labour to boost utilisation.

The model identified more than 90 optimization opportunities that together cut timelines and total project costs by more than 10 percent.

This use of technology has also proven successful for an automotive OEM in constructing a new battery facility. Leaders explored “what if” scenarios and opportunities to optimise the tooling installation schedule, which allowed the company to shave more than a month from its delivery schedule and saved more than $40 million.

Asking the right questions

Project leaders at each of these companies undertook a strategic review of four essential issues to guide their greenfield expansion strategy.

One of the primary considerations was site flexibility: how much leeway the company has in choosing the greenfield site.

For example, changing a company’s geographic footprint can have a dramatic effect on its suppliers’ capacity to support the expanded business. Some companies face additional location constraints due to specialized transportation or skill requirements, customer proximity, or the necessity of being near other plants.

Understanding the risks to supply chain and workforce availability is crucial when selecting a site and can involve difficult trade-offs. One high-complexity manufacturing company’s supply chain requirements left it little choice but to enter markets that were already short on skilled workers.

Despite the location’s other benefits, the company had to develop additional plans to attract and retain talent.

Another critical factor is timeline: the time required to meet the production schedule and potential opportunities for investment to accelerate the completion date. Identifying where investments can expedite processes is vital.

Each region and industry has unique requirements, and companies should understand the standard timelines and which actions or investments could help accelerate them. For example, if equipment production can be accelerated, could the future workforce begin training on new processes earlier?

Does the company have sufficient training capacity, and are there other sites with experienced workers who can provide initial leadership? The complex manufacturer found that even with investment, “time to talent” remained challenging, delaying the site’s ability to operate at full capacity.

Third, companies should consider new processes and technology. Up-front investments in automation and robotics not only improve performance but also attract a future-ready workforce.

With Industry 4.0 advances, some manufacturers are already implementing two-way supplier connectivity by fitting lines with sensors and deploying digital work instructions. The complex manufacturer found ways to implement technologies that could assist the workforce without requiring extensive process redesign and certification.

Last, leaders should continue looking for ways to transform existing production during greenfield design and development. At least initially, new facilities may not be more efficient than current sites.

Leaders should therefore keep exploring potential capacity improvements at existing facilities even as greenfield expansion is underway. The complex manufacturing company, for instance, wasn’t projected to be fully operational with its greenfield facility for over three years.

To meet growing demand, it had to find efficiencies in its current locations by continually reexamining equipment utilisation, staffing, and overall efficiency metrics.

By addressing these issues, companies can effectively shape their greenfield expansion strategy to minimize risks and maximise operational efficiency.