Move suits company's needs

Low labour costs made the switch attractive

Simon Berwin runs Berwin & Berwin, a thriving business producing suits with famous names and their own brands including Daniel Hechter and Ben Sherman.

The business is in a very competitive market so price is critical to success.

Many competitors have cut costs by moving production to places where labour and other resources are cheaper.

Simon had to make some tough decisions about the future of the business.

Staying in Leeds might have brought the business down so what was the alternative?

Just think...

Brainstorm the reasons why Berwin & Berwin should stay in Leeds or look for a cheaper location. Use spider diagrams to show your ideas.

Making a decision

Simon knew he had to come to a decision about the future of the business.

He discovered that Elit International, a suit-making business in Hungary, was for sale.

It had four plants across the country but they were in need of much investment.

Existing machinery was out of date and couldn't produce jackets and trousers with the speed and quality that was necessary for the market in Western Europe.

In Berwin & Berwin's part of the market, quality is very important.

The figures were the easiest part.

A machinist in Leeds costs £200 a week.

In Hungary it's £40.

Production capacity in Leeds was 4,000 suits.

In Hungary it's 13,000.

There were some other things that Simon had to consider.

Moving to Hungary meant:

the loss of 600 jobs in Leeds

moving half a million pounds worth of equipment

investing in the Hungarian factories

executive staff travelling frequently between the UK and Hungary. This can be reduced by electronic communications such as video conferencing.

Just think...

Draw a seesaw like this one.

Look at all the factors Simon had to consider in making his decision.

Decide which side of the seesaw each factor should be on.

If you think some items are more important than others, put them in a large box on the seesaw.

Put less important ones in a small box.

Write a sentence explaining each of your decisions. Which side does the seesaw fall on?

Remember - things had to change. It was impossible to compete with other businesses which were cutting costs.

The outcomes

Simon went through a similar process. Shutting down production in Leeds was a hard decision to make.

Simon's great-grandfather set up the business in Leeds in the early 20th century.

A craftsman tailor, he came from Eastern Europe to start a new life. Little did he know that one day his business would be back there.

Berwin & Berwin's website tells you about the plants in Hungary and explains what they do. You can also find out which parts of the business are still based in the UK.

Just think...

Why does concentrating production of jackets in one factory and trousers in another reduce costs?

Where are the jackets for the top end of the market made? Why do you think this is concentrated in one place?

Which parts of the business are still based in the UK? Why do you think these business functions are located in Leeds and London?

The future

Berwin & Berwin have moved to Hungary to cut costs.

As this business becomes more competitive and searches for even more costs to cut, plans may have to change again.

Just think...

Other parts of the world have even lower costs than Hungary. Where do you think they are?

Brainstorm factors which would determine whether Berwin & Berwin might move again.