Fuyao Glass Individual Case
1. Look at the bill of materials costs in Exhibit 16. Why are the percentages for each
category so different for the Ohio factory versus the one in Tianjin?
Looking at the bill of materials in Exhibit 16, there are some reasons why the percentages for
each category so different for the Ohio factory versus the one in Tianjin.
One of the reasons is labor. Manufacturing is cheaper outside of the US, and it was easier to find
the low-paid labor needed to keep factories running. Each manufacturing dollar in the United
States cost about 86.5 cents to produce in China, leaving a much wider margin for profit for
goods made overseas.
Packaging and transportation cost is another entity to consider. If the product is made in China,
the Glass Company has to invest extra dollars to pack the glasses to protect them. As we know,
the auto companies won’t accept windshields with scratches or damages. When they arrive in the
US, they will need to be repaired before delivery if they are some damages. And, it will increase
labor cost and affect considerably the delivery time. In addition, it will cost much more for
international shipment than domestic.
2. What are the risks/opportunities in each of the factors that you considered?
One of the biggest risks is the deadline. Shipment from China to the US comes with a lot
of treats. Fuyao managers planned on 40 days to ship a packed container from Tianjin to
Plymouth. At Plymouth, workers had to unpack the windshields and put them into special
racks that customers used to feed their auto assembly lines. During the unpacking and
packing process, there are windows for damage which will delay the delivery time and
request additional labor cost. They also have to be careful when they are moving to a new
location. They have to do it with their customer’s approval based on the agreement that
was previously signed. The opportunities are also there. Moving closer to the customer
plants means will help the delivery time, it will also diminish the shipping cost. It will
This study source was downloaded by 100000899606070 from CourseHero.com on 09-29-2025 12:39:42 GMT -05:00
https://www.coursehero.com/file/39522887/Fuyao-Glass-America-Casedocx/
1. Look at the bill of materials costs in Exhibit 16. Why are the percentages for each
category so different for the Ohio factory versus the one in Tianjin?
Looking at the bill of materials in Exhibit 16, there are some reasons why the percentages for
each category so different for the Ohio factory versus the one in Tianjin.
One of the reasons is labor. Manufacturing is cheaper outside of the US, and it was easier to find
the low-paid labor needed to keep factories running. Each manufacturing dollar in the United
States cost about 86.5 cents to produce in China, leaving a much wider margin for profit for
goods made overseas.
Packaging and transportation cost is another entity to consider. If the product is made in China,
the Glass Company has to invest extra dollars to pack the glasses to protect them. As we know,
the auto companies won’t accept windshields with scratches or damages. When they arrive in the
US, they will need to be repaired before delivery if they are some damages. And, it will increase
labor cost and affect considerably the delivery time. In addition, it will cost much more for
international shipment than domestic.
2. What are the risks/opportunities in each of the factors that you considered?
One of the biggest risks is the deadline. Shipment from China to the US comes with a lot
of treats. Fuyao managers planned on 40 days to ship a packed container from Tianjin to
Plymouth. At Plymouth, workers had to unpack the windshields and put them into special
racks that customers used to feed their auto assembly lines. During the unpacking and
packing process, there are windows for damage which will delay the delivery time and
request additional labor cost. They also have to be careful when they are moving to a new
location. They have to do it with their customer’s approval based on the agreement that
was previously signed. The opportunities are also there. Moving closer to the customer
plants means will help the delivery time, it will also diminish the shipping cost. It will
This study source was downloaded by 100000899606070 from CourseHero.com on 09-29-2025 12:39:42 GMT -05:00
https://www.coursehero.com/file/39522887/Fuyao-Glass-America-Casedocx/
