An attempt at a guide to manufacturing for new players
Posted: Mon May 09, 2016 6:25 pm
So I've been playing this game for about 6 months and I've put enough time in that I think I have enough understanding to help a new player, so this is my attempt at a guide write up to manufacturing for new players. This game has a steep learning curve from the beginning so if you're a Day 1 player this might not be very helpful, but its more aimed at a player who has already gotten the hang of retailing from seaports, turning a tidy profit and moving into manufacturing. It's worth noting I'll be speaking from a custom game situation where the game starts and what you do is up to you, instead of being directed by a scenario. So without further adieu here is my strategy and opinions on the best way to move into manufacturing.
My early game strategy is to try and get a discount mega store in every city before I move on to manufacturing. There are occasionally situations where you can start the game, open a factory first, turn off internal sales and turn a profit by selling to AI retailers, but this is rare for a few reasons I've identified. The first is seaport products are typically better quality than what you can produce initially which means that retailers will want to sell those first, and the second is it takes time for the AI to build a retail presence which means there just isn't a ton of demand for new products to retail from the beginning of a game.
From my experience the best profits in year 1 and 2 come from retailing the seaport goods. I use those profits to set up new stores and R&D centers which I use to research whichever product class I specialize in.
So if I random leather goods as my expertise then I R&D wallets, leather bags, belts, and briefcases first because of the bonus tech I get. Typically I will pick one of the products that is not being sold by a seaport and R&D for 1 year as I will be producing that product first and R&D the rest for 2 years. I want my first R&D center about 6 months into the game, and all of my initial R&D centers (in this case 4) built by 18 months. My favorite way to play is with 7 cities and I target the cities with the cheapest land first. So I typically use my initial investment to open 2 discount megas, use the profit and a little debt to open a third a few months later, then build my first R&D center, build my next 4 discount megas and then open up 3 more R&D centers.
I want to note that the retailing is to build consistent profits and cash flows to support entering the market as a manufacturer. In a 7 city game it is not necessary to build that much retail for this purpose but it has been a very strong opening from my experience and gives me the cash I need to do everything else without feeling a pressure for cash.
Next is on to manufacturing which can be tricky in this game because much like real life entering the market as a manufacturer often means operating deep in the red for a period of time. When the 1 year R&D product finishes (not necessary but it helps lessen early losses) I open up a large factory to produce that product, lets just say leather wallets. Then I start opening up a specialty retail store (in this case leather store) in all my available cities to sell only wallets which serves a few purposes. (opening all these stores AND absorbing their losses early is why you need a strong infrastructure)
The ultimate goal is branding, if I adopt a range brand then any brand I build on wallets in each city will carry over to the rest of the products in the class when I begin manufacturing. The secondary goal is getting a feel for the local markets. Some cities with low wage rates offer retail products so cheap that it is not worth competing in them early and its good to recognize this early in the game. So now that I offer my product in every city and have an idea for which markets I want to focus on and which I want to initially avoid I start my advertising campaign.
This stage is tricky because it can be counter intuitive, in every one of my specialty stores I set the advertising budget to 500,000 / month and link it to one sales unit of leather wallets. (make sure you have corporate or range brand) The result is every retail store loses money as they build brand. However as your brand rating goes up so does the overall quality of your products. As your overall quality rating goes up you must keep adjusting your prices up to keep your overall quality rating just slightly above local competition. Eventually you will raise prices to the point your retail stores are either turning modest profits or at least coming close to breaking even without advances in quality.
Once this happens things start getting easier, every time you raise prices from gains in brand rating it simply increases your profits and if you left the price your factory sells at alone it will probably be generating $3-4m / month in profit as well. At this point you should also have a strong cash reserve to play with. At this point I follow the same strategy I did with wallets to sell everything in the class, so in this case its leather bags, leather belts, and leather briefcases. These factories and retail stores should be instantly profitable because of your established brand rating and more importantly the fact that you don't need to spend any money on advertising in these stores unless you want to keep pushing your brand. You keep adjusting your prices up to match local competitors and I typically see huge profits in my retail stores by the time I hit 75+ quality on my products.
After all your products are established you keep building more retail stores as 1 leather goods store or other specialty store will consume less than 25% of the retail market even with level 9 purchasing and sales units.
After that the key is backward integration. My biggest mistake in manufacturing when I was getting the hang of it was that when demand was greater than supply I just built more factories when the problem was usually that I didn't have enough component goods to get the most of my manufacturing units which is grossly cost inefficient. Always check the supply line to your factories, often when supply outpaces demand at a factory its because your purchasing units cant buy enough raw materials to keep up with your manufacturing units. I typically backward integrate into all of my raw material and component goods to avoid this problem. As an example the seaport might sell leather, but if you have 4 large factories like our example above where leather is the main raw material there's probably not enough leather available that all of your factories can operate at max output and so you need to build a large leather farm to supply yourself.
The important thing about backward integration is choosing when to do it. If you need to set up a natural resources firm you should already have a strong established product line. The way I play if I'm going to mine chemical minerals or set up a timber mill I don't care if those firms ever make any money, they simply exist to supply my factories so I can make my money there and in my retail stores. My rule of thumb is to backward integrate only when I have to in order to keep my factories at max output, and I take advantage of AI that sell raw materials and component resources whenever possible.
The only time I've had a challenge getting my game started this way is against very aggressive AI with very high starting capital and very high expertise ratings because they generally get a tech advantage on me early. I typically dominate my first industry by year 5 or 6 at which point I usually have $500m in free cash flow. From there the world is your oyster, you can implement the same strategy to be the first to break into a new product class, buy tech to compete in an existing product class, or buy out an existing AI company with a tech lead in another class and use them to transition into the new business. If you can master a 5 year plan of dominating 1 product class in manufacturing and retailing and backward integrate to keep your supply lines from being disrupted then you will have enough cash that you can play the rest of the game in whatever style you want really.
Hope this helps someone because I remember it took me hours and hours to have my first game where manufacturing was a success, for me the missing component was brand rating which after established allows you to charge that extra premium you need. Anyone with more experience than me also feel free to add in any advice you think I missed or was unclear!
My early game strategy is to try and get a discount mega store in every city before I move on to manufacturing. There are occasionally situations where you can start the game, open a factory first, turn off internal sales and turn a profit by selling to AI retailers, but this is rare for a few reasons I've identified. The first is seaport products are typically better quality than what you can produce initially which means that retailers will want to sell those first, and the second is it takes time for the AI to build a retail presence which means there just isn't a ton of demand for new products to retail from the beginning of a game.
From my experience the best profits in year 1 and 2 come from retailing the seaport goods. I use those profits to set up new stores and R&D centers which I use to research whichever product class I specialize in.
So if I random leather goods as my expertise then I R&D wallets, leather bags, belts, and briefcases first because of the bonus tech I get. Typically I will pick one of the products that is not being sold by a seaport and R&D for 1 year as I will be producing that product first and R&D the rest for 2 years. I want my first R&D center about 6 months into the game, and all of my initial R&D centers (in this case 4) built by 18 months. My favorite way to play is with 7 cities and I target the cities with the cheapest land first. So I typically use my initial investment to open 2 discount megas, use the profit and a little debt to open a third a few months later, then build my first R&D center, build my next 4 discount megas and then open up 3 more R&D centers.
I want to note that the retailing is to build consistent profits and cash flows to support entering the market as a manufacturer. In a 7 city game it is not necessary to build that much retail for this purpose but it has been a very strong opening from my experience and gives me the cash I need to do everything else without feeling a pressure for cash.
Next is on to manufacturing which can be tricky in this game because much like real life entering the market as a manufacturer often means operating deep in the red for a period of time. When the 1 year R&D product finishes (not necessary but it helps lessen early losses) I open up a large factory to produce that product, lets just say leather wallets. Then I start opening up a specialty retail store (in this case leather store) in all my available cities to sell only wallets which serves a few purposes. (opening all these stores AND absorbing their losses early is why you need a strong infrastructure)
The ultimate goal is branding, if I adopt a range brand then any brand I build on wallets in each city will carry over to the rest of the products in the class when I begin manufacturing. The secondary goal is getting a feel for the local markets. Some cities with low wage rates offer retail products so cheap that it is not worth competing in them early and its good to recognize this early in the game. So now that I offer my product in every city and have an idea for which markets I want to focus on and which I want to initially avoid I start my advertising campaign.
This stage is tricky because it can be counter intuitive, in every one of my specialty stores I set the advertising budget to 500,000 / month and link it to one sales unit of leather wallets. (make sure you have corporate or range brand) The result is every retail store loses money as they build brand. However as your brand rating goes up so does the overall quality of your products. As your overall quality rating goes up you must keep adjusting your prices up to keep your overall quality rating just slightly above local competition. Eventually you will raise prices to the point your retail stores are either turning modest profits or at least coming close to breaking even without advances in quality.
Once this happens things start getting easier, every time you raise prices from gains in brand rating it simply increases your profits and if you left the price your factory sells at alone it will probably be generating $3-4m / month in profit as well. At this point you should also have a strong cash reserve to play with. At this point I follow the same strategy I did with wallets to sell everything in the class, so in this case its leather bags, leather belts, and leather briefcases. These factories and retail stores should be instantly profitable because of your established brand rating and more importantly the fact that you don't need to spend any money on advertising in these stores unless you want to keep pushing your brand. You keep adjusting your prices up to match local competitors and I typically see huge profits in my retail stores by the time I hit 75+ quality on my products.
After all your products are established you keep building more retail stores as 1 leather goods store or other specialty store will consume less than 25% of the retail market even with level 9 purchasing and sales units.
After that the key is backward integration. My biggest mistake in manufacturing when I was getting the hang of it was that when demand was greater than supply I just built more factories when the problem was usually that I didn't have enough component goods to get the most of my manufacturing units which is grossly cost inefficient. Always check the supply line to your factories, often when supply outpaces demand at a factory its because your purchasing units cant buy enough raw materials to keep up with your manufacturing units. I typically backward integrate into all of my raw material and component goods to avoid this problem. As an example the seaport might sell leather, but if you have 4 large factories like our example above where leather is the main raw material there's probably not enough leather available that all of your factories can operate at max output and so you need to build a large leather farm to supply yourself.
The important thing about backward integration is choosing when to do it. If you need to set up a natural resources firm you should already have a strong established product line. The way I play if I'm going to mine chemical minerals or set up a timber mill I don't care if those firms ever make any money, they simply exist to supply my factories so I can make my money there and in my retail stores. My rule of thumb is to backward integrate only when I have to in order to keep my factories at max output, and I take advantage of AI that sell raw materials and component resources whenever possible.
The only time I've had a challenge getting my game started this way is against very aggressive AI with very high starting capital and very high expertise ratings because they generally get a tech advantage on me early. I typically dominate my first industry by year 5 or 6 at which point I usually have $500m in free cash flow. From there the world is your oyster, you can implement the same strategy to be the first to break into a new product class, buy tech to compete in an existing product class, or buy out an existing AI company with a tech lead in another class and use them to transition into the new business. If you can master a 5 year plan of dominating 1 product class in manufacturing and retailing and backward integrate to keep your supply lines from being disrupted then you will have enough cash that you can play the rest of the game in whatever style you want really.
Hope this helps someone because I remember it took me hours and hours to have my first game where manufacturing was a success, for me the missing component was brand rating which after established allows you to charge that extra premium you need. Anyone with more experience than me also feel free to add in any advice you think I missed or was unclear!