Over the past years manufacturing firms have moved their production to low cost regions. Many factors lead to the moving of their production and how these factors influence their decision making process. These have been discussed in various literatures. They also source from low cost regions in order to improve their productivity. Not only do they source from low-cost regions but also to actually produce goods in those countries. Many literatures have talked about the impact on some of the factors but little on the impact of supply base and sourcing parameters. The thesis seek to review the factors that affect production localization decision process and also find out how the supply base and sourcing parameters affects decision making process, whether the supply base and sourcing is really considered and the impact it has in decision making process to localize a new production. Literature review and interviews were used in this process. Four companies namely Haldex AB, ABB, case company A and B were used for the research. The main factors that are been considered for production localization were found out from the companies and practically the impact of the supply base and sourcing parameters during decision making are presented. The results from the research questions and the empirical studies is summarized in a framework that will enable readers to know the main factors that affect production localization, how decision making is done and the main impact of the supply base and sourcing in production localization. In addition some benefits of placing emphasis on the supply base and sourcing parameters.