welcome uniconsult research report research in motion limited mandate: where should rim locate...

Welcome UniConsultUniConsultUniConsult

Research Report

Research in Motion Limited

Mandate: Where should RIM locate additional

manufacturing capacity?

Rational: Choice of a location has a direct impact on

the ability to achieve corporate goals.

Project Manager: Stephan Bruenner

Overview UniConsultUniConsultUniConsult

• Research in Motion (RIM)

• The Analytical Framework

• Locational Requirements

• Evaluation of Potential Sites

• Conclusion

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12 min

05 min

Research in Motion UniConsultUniConsultUniConsult

Research In Motion Limited

based in Waterloo Ontario, is a fast-growing leader in designing, manufacturing and marketing of wireless technology for the mobile communication market.

Start-up phase (1984-1987)

M. Lazaridis founded RIM as UW spin-off

Customised electronic/software engineering services

Innovation: electronic sign system (LED + LAN)

RIM sold its business to invest in wireless technology

Research in Motion UniConsultUniConsultUniConsult

Entering the wireless market (1987-1999)

J. Balsillie bought into RIM

Move to University Business Park

Partnerships, funding, IPO

Investment in R&D, BlackBerry pager with unique features

Success in time-sensitive, professional user groups

Competing in the wireless market (1999-present)

2-way-pager becomes a full hand-held

Installation of RIM systems in 7,000 North American companies

Additional distribution channels

Penetration of mass markets (USA, Canada, Europe)

Products UniConsultUniConsultUniConsult

Product Divisions

Pager & hand-helds (80% of revenues)

Embedded radio modems

RIM wireless PC card

Products UniConsultUniConsultUniConsult

Future Products

Java-enabled device (generates more service/software revenues)

Compete against Palm and Handspring

Voice-enabled device

Compete against “convergence” specialists

(Nokia, Motorola, Ericsson)

Research in Motion -Figures- UniConsultUniConsultUniConsult

Hyper GrowthYear 1984 1987 1994 1997 1998 1999 2000Employees 3 14 42 100 270 530 1000

Revenues 47.3 million 84.9 millionGross margin 18.5 million 36.4 millionCost of sales 28.8 million 48.5 millionR&D 7.9 million 12.2 millionSelling & Marketing 6.5 million 14.0 millionIncome operations 4.8 million 10.0 millionEarnings per share 0.10 0.16Source: Rim (2001), Figures in US$

Consistently to the rapid growth, significant investments were made into land, office buildings, production equipment and tooling, research and development and computer infrastructure.

Spatial Allocation UniConsultUniConsultUniConsult

Purchase of 2 adjacent business parks (University Business Park and Technology Business Park) in Waterloo with 273,000 Sq.ft. office space.

Construction of additional office space (four storey building)

Free 2,6 ha lot

Waterloo (Phillip St., Columbia St.)

Kitchener (Weber St.)

R&D centres and headquarters (56,000 Sq. ft.

[1999]), ca. 75 occupations.

Pre-sales, sales, customer services, tech support

(30,000 sq. ft. [1999])

Kitchener (Shoemaker St.) Manufacturing (36,000 Sq.ft.), ca. 30 occupations

Ottawa, Kanata R&D (Newer Radio Hardware), ca. 26 occupations.

Toronto R&D (Software), ca. 10 occupations.

United Kingdom (Sales, Marketing, customer service),

ca. 12 occupations.

Throughout USA Independent sales offices.

Manufacturing Capacity UniConsultUniConsultUniConsult

Estimation of sold RIM devices

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2000 2001 2002 2003 2004

Year

Sold units

Rapid market growth (expected 550 million in 2001)

RIM expexted to ship around 1 million in 2001(Merrill Lynch)

Shoemaker plant can produce 1 million in 2000/year

Growth rate (sales) 70-90% each year

Shoemaker plant can be tuned up to max. 5-6 million per year

Conclusion UniConsultUniConsultUniConsult

What does RIM need ?

• To accommodate future growth a new manufacturing plant must be planned, built and tooled up within the next 3 years.

• Assuming 60% growth rate (sales in 2004+) the plant should have 160,000 Sq.ft. production floor to accommodate demand until 2007. Building space would be ca. 300.000 Sq.ft..

• Industrial land should have at least 600,000 Sq.ft. (one story

building,parking lot etc.).

Location for the new plant UniConsultUniConsultUniConsult

Analytical Framework

• Economic activities

• Locational properties

• Matching

Spatial production requirements put

forward by companies

Locational properties and

characteristics of location sites

Match made by

decision-maker

Suitable location site

Source: After Witlox, 2000

Location for the new plant UniConsultUniConsultUniConsult

Analytical Framework

• Economic activities

• Locational properties

Spatial production requirements put

forward by companies

Locational properties and

characteristics of location sites

Match made by

decision-maker

Suitable location site

Source: After Witlox, 2000

Non-compensatory

Compensatory

Over qualified

Under qualified

Locational Requirements UniConsultUniConsultUniConsult

Non-compensatory Factors -Very high priority-

Factors RequirementGood connection tonational street network

Less than 200km

Speed of constructionand tool up time

Less than 3 years

Land availability Industrial land for 160,000 Sq.ft.production floor

Proximity to labourforce

Less than 1 hour

Natural environment Stable & relatively little humidity


Non-compensatory Factors

Factors RequirementGood connection tonational street network

Less than 200km

Speed of constructionand tool up time

Less than 3 years

Land availability Industrial land for 160,000 Sq.ft.production floor

Proximity to labourforce

Less than 1 hour

Natural environment Stable & relatively little humidity

Engineers nearby onemanufacturing plant

Less than 50km

Zoning laws Ready to built

Priority

-Very high-

-High-

-Moderate-Proximity to specialisedservices (tooling,maintenance, etc.)

Within less than 2 hours.

Permanent availabilityof professional services

Ca. 2 hour drive


Compensatory Factors Priority

-High-

-Moderate-

-Low-

Factors RequirementExport climate(policy & currency)

Good[Through otherwise reduced operationalcosts or profit opportunities]

Land costs anddevelopment charges

Should not exceed 25% of averageprice.[Through otherwise reduced operationalcosts]

Price/Quality utilities(electricity)

At least good (competitive)[Through otherwise reduced operationalcosts]

Proximity of plants Should be less than 50km.[Through otherwise reducedmanufacturing costs]

Proximity to HQ Should be less than 50km[Through other operational advantages]

Costs of labour Should be relatively competitive[Through otherwise reduced operationalcosts]

EnvironmentalRestrictions

Should not cause extra costs or timedelays.[Through other low-priority factors]

Evaluation of potential Sites UniConsultUniConsultUniConsult

Search Areas

• Mississauga, Ontario, Canada

• Kanata (Ottawa), Ontario, Canada

• Region of Waterloo, Ontario, Canada


Why Ontario?

• Ontario businesses enjoy overall cost advantages relative to

other U.S. and European locations.

• Easy access to North America's industrial heartland and massive

consumer markets

• Within a day's drive of 120 million consumers

• Most industrialized province

• Diversified industrial base

• Stable and pro-business

• Excellent infrastructure (road, rail, airports, energy)

Source: Ministry of Economic Development and Trade

Evaluation of potential SitesSearch Areas

•Mississauga

•Kanata

•Waterloo

M: Highway, Train, Airport

K: Highway, Airport

W: Highway (Airport)

TransportConnection

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Mississauga Kanata Waterloo


Non-compensatory factors -transport connection-

For all areas less than 3 years.


TransportConnection Set-up time

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Non-compensatory factors - Set-up time -

In all areas min. 300,000 Sq.ft. industrail land is available.


TransportConnection Set-up time

Landavailability

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Non-compensatory factors -Land availability-

In all areas less than 1 hour.

Mississauga less than 30 minutes.


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Non-compensatory factors -Proximity to labour force-

In all areas stable and relatively little humidity


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Non-compensatory factors -Natural Environment-

M: Yes, if shoemaker manufacturing plant continous production

K: Yes, if shoemaker manufacturing plant continous production

W: Yes, even if Shoemaker plant will be closed.


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Non-compensatory factors -Prox. of engineers-

In all areas industrial land is ready to built on


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Non-compensatory factors -Zoning-

In all areas specialised services (tooling, maintenance) are available in less than 2 hours


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Non-compensatory factors -Specialised services-


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Mississauga Kanata Waterloo In all areas other professional services (insurance agents, lawyers, financing, further training and others) are available in less than 1 hour.

In Kanata and Mississauga accessibility is much higher

Non-compensatory factors -Other professional services-


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Mississauga Kanata Waterloo Mississauga and Kanata provide too good transport connections and unneccessarily good access to professional services.

Non-compensatory factors -preliminary conclusion-


All areas are located in Ontario

Generally good export climate (NAFTA) + stable currency

Export climate

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Compensatory factors -Export climate-


M: $Can 592,000-716,000

K: $Can 370,500-432.000

W: $Can 220,000-270,000 (estimated)

M exceeds the average more than 25% and seems over qualified

Export climate

Land costs

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Compensatory factors -Land costs per ha -


Exportclimate Land costs

Dev.charges

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Mississauga Kanata WaterlooM: $Can 45

K: $Can 10.2

W: $Can 22.8 (Municipality)

W: $Can 14.31

M exceeds the average more than 25%.

Compensatory factors -Development charges(2000) per sqm-


Exportclimate Land

costs Dev.charges Utilities

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Mississauga Kanata Waterloo M: $Can 0.063/Kwh

K: $Can 0.0469/Kwh

W: $Can 0.042/Kwh

In all areas “power infrastructur” is excellent

M does not provide a competitve electricity rate

Compensatory factors -Electricity rates-


Exp

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Mississauga Kanata Waterloo A new plant in Mississauga provides moderate opportunities for

A new plant in Kanata provides no “agglomeration-advanatages”

Only a new plant in Waterloo would provide good opportunities resulting from agglomeration

Compensatory factors -Proximity of plants-


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Mississauga Kanata Waterloo Only a plant in Waterloo would offer advantages of fast face-to-face feedback.

Compensatory factors -Proximity to headquarter-


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Mississauga Kanata Waterloo The cost of labour is in all areas quite similar

Compensatory factors -Cost of labour-

Evaluation of potential Sites UniConsultUniConsultUniConsultL

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The cost of labour is in all areas quite similar

Compensatory factors -Cost of labour-

Most Frequently Paid Wages (Can$ per hour)Occupation Kitchener Ottawa TorontoPurchasing Managers 24,11 24,67 22,40Transportation Managers 23,93 23,93 20,99Facility Operation and MaintenanceManagers

19,85 19,85 21,59

Manufacturing Managers 24,76 24,77 24,75Machinists and Machining andTooling Inspectors

17,20 18,14 17,16

Janitors, Caretakers and BuildingSuperintendents

13,78 11,27 15,55

Material Handlers 12,33 12,21 13,57Electronics Assemblers,Fabricators, Inspectors and Testers

11,53 13,26 12,71

Composite Index (Sum) 147,49 148,1 148,72Source: HRDC (2001)


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Mississauga Kanata Waterloo Environmental restrictions are standards

Generally a pro-business climate

Compensatory factors -Environmental restrictions-

Welcome UniConsultUniConsultUniConsult

Research Report

Research in Motion Ltd.

Mandate: Where should RIM locate additional

manufacturing capacity?

Project Manager: Stephan Bruenner

welcome uniconsult research report research in motion limited mandate: where should rim locate...

Documents

motion uniconsult research

motion rim

year slide

overview uniconsult

conclusion uniconsult

wireless technology

uniconsult hyper growth

europe slide