Manufacturing industries in high-cost economies are experiencing an increasing degree of international competition, with the cost gap between developed and developing world making it very difficult for companies competing on cost to produce in the markets that they serve. Competing successfully as a manufacturer therefore requires a strategic response to this problem.

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Possible solutions are:

• Hi-tech innovation - the exploitation of the knowledge-based economy, start-up companies and R&D departments producing high-value and innovative products.
• Innovative differentiation - manufacture of products in high-cost economies serving both domestic and foreign markets through differentiation on a basis other than cost.
• Low-cost production networks - allowing the manufacture of higher volume products in economically favourable conditions.

The MET Overseas Research Programme in July 2004 investigated these competitive approaches, drawing together in a coherent way the current thinking associated with them. In doing this, the aim was to highlight the key issues facing manufacturing enterprises from start-ups to MNCs, and suggest appropriate solutions.

The project team identified California, Texas and Mexico as locations that offered interesting examples of how these contrasting approaches could be managed, both within and across national boundaries.

The team of around 35 staff and students visited approximately 30 companies in these areas, across a variety of sectors, during two weeks in June and July 2004. The tour built on a foundation of several months of Cambridge-based research.