Bridgelux - an Led Manufacturing Company Case Study

Background

Bridgelux, a U.S. LED (light-emitting diode) manufacturer, is considering location options for its manufacturing plant to ramp up capacity and production to meet impending customer demand. As with other U.S. based companies, the desire is to retain manufacturing in the United States but from a business and financial perspective the cost benefit of using manufacturing plants in Asia and other countries outweighs the US alternative. Other nations entice high tech-industries "with generous tax breaks, cash grants, cheap credit, low-cost utilities, and speedy regulatory approval (Engardio, September 10, 2009)." The current U.S. policy does not support large-scale high-tech manufacturing. The U.S. continues to invest in research and development but loses the inventions to Asian manufacturing.

Problem Statement

Bridgelux must decide where to build a large-scale manufacturing facility. Sales are currently forecasted to double within the upcoming years and the total market for LED products will increase globally. Though the U.S. leads the industry in new technology innovations, it's lagging other nations with the manufacturing of those products. America lacks the suppliers, skilled employees (management and technicians) and private capital markets for companies such as Bridgelux to easily build facilities and plants. Those losses are due to the twenty years of out-sourcing to Asia. The current U.S. policy does not financially support manufacturing except for green tech-factories, lithium-ion car batteries, and the fuel-efficient vehicle industry.

Companies such as Bridgelux are "taxed at one of the highest rates in the industrialized world (Engardio, September 10, 2009)." In order to build a manufacturing plant in the U.S. a company must find a location and secure proper zoning, environmental, health, and safety permits. Securing these necessary documents proves to be a lengthy, time consuming process. Production delays are detrimental to the technology industry, where new innovations are created and produced at a rapid pace. The U.S. has not mapped out a long term strategy to save the manufacturing industry. However it spends federal funds in research and development but let's the market commercialize the technology.

The bigger issue is how the U.S. can resurrect its manufacturing base. Especially considering the country is in desperate need for new growth sources for the economy. According to the Wall Street Journal, "Factories around the world are ratcheting up production, fueling optimism that the global economic recovery has legs (Sudeep, April 2, 2010)." But, U.S. manufacturers remain dependent on foreign demand. It's not too late for the U.S. to revamp its manufacturing policy. The solar system demand is scheduled to globally increase in the next few years. The U.S. has