Spatial Pattern of Industrial Production Subcontracting in Onitsha Metropolis, Anambra State Nigeria

ABSTRACT The study was aimed at examining the spatial pattern of industrial production subcontracting in Onitsha Metropolis Anambra State Nigeria. Data were collected from documentary materials, questionnaire, in-depth interviews and field observation and were analysed using percentages, mean, standard deviation, nearest neighbour analysis and principal component analysis. The results of the study revealed that production subcontracting by firm size was more prominent in small and medium scale industries than large scale industries with 36.7%, 53.3%, and 10% respectively. The result of the nearest neighbour analysis revealed that the pattern of distribution of industries in the study area generally was relatively clustered while relatively dispersed within the industrial groups.The PCA analysis performed on 15 variables of factors influencing the location of industries reduced them to 5 components namely availability of economic cost elements, influence of infrastructural facilities, family ties, influence of cluster/agglomeration economies, and influence of government policy. The underlying dimensions together explained 74.12% of the total variance leaving 25.88% of the total variance unexplained. The factors influencing the use of production subcontracting by industries revealed that subcontracting factors such as reducing operational cost, concentrating on core business function, improvement in quality of service, and increased flexibility respectively were the major factors influencing production subcontracting in the study area while the factors influencing the selection of subcontracting partners revealed that high quality of service, high degree of mutual trust, good reputation, location and lower cost respectively were the major factors influencing the selection of subcontracting partners in the study area. The analysis of benefits and problems of production subcontracting revealed reducing cost of operation, improving service quality, enhancing core business capacity and releasing key internal resources respectively were the most commonly accepted benefits while subcontracting limitations such as disclosure of commercial secrets, interest conflicts, decrease compatibility of innovation and unfulfilled orders respectively were the most commonly observed problems limiting production subcontracting in the study area. The study recommended that a code of business behaviour encompassing a body of laws and principles guiding this production process be established in the study area. This will help the firms to makerational decisions or to seek redress once there is a bridge of contract.