China – Danfoss moves part of production back to Denmark

In the age of globalization and and outsourcing it is very unusual that a company actually moves production away from the east and back to the west. However, that is exactly what Danish Danfoss is now doing.

2.3 million valves will now be produced in Viby, Denmark rather than in China.

Next year, Danfoss Heating Solutions will be moving the yearly production of 2.3 million valves for radiator thermostats back to Denmark. Vice President Thomas Hohwü is not yet certain how many jobs this will mean for Denmark, but a careful guess is that it will be no more than ten.

He explains that to Danfoss it is about producing in places where it is best, not necessarily cheapest in salary. The biggest change is that there will now be a more diverse approach to the production, where a bigger part will now be closer to the buyers.

”Our new strategy is all about manufacturing close to the  buyers . Our changes will also release capacity for our production in China. That capacity can be used to meet the demands for products manufactured exclusively to the Asian markets,” Thomas Hohwü explains and adds:

“This is an important aspect, seeing as there is far more nuanced assessment, taking into account the whole of the production and not just costs.”

For a number of years it has been very attractive to produce in the east because costs, especially for wages, have been low. But especially in China, wages have increased rapidly the past few years and the transportation costs have increases as well. The advantage of producing in China for the whole world is no longer that obvious, Thomas Hohwü argues.

On top of that the productivity of many of Danfoss’ factories in Europe has increased, making them quite competitive.





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