I am sure that you have all heard the expression, “What goes around comes around.” Well, it seems to be applying itself in an area which I am sure will make many of you happy. I am talking about jobs that had been “shipped” overseas (offshore) now coming back to the USA. The new word for this process is “reshoring.” Why are jobs all of a sudden being reshored?
Well, it turns out that when the hidden costs of manufacturing offshore are factored in, the perceived advantage of doing so dwindles quite a bit. Some of these hidden costs include: dealing in different languages (interpretation of documents), having to send an engineer or two over to sort out quality or manufacturing issues, tying up money for the payment of merchandise prior to it being shipped, finding out after the shipment has arrived that some of the specifications have not been met, etc. Any one of these issues has a cost associated with it that really should be factored into the final piece cost.
Another, wholly separate issue is the communication delay caused by the parties operating half a planet away from each other. Additionally, when a change has to be made “right now,” dealing with a local supplier has many advantages. Of course, being set up for “just in time” (JIT) manufacturing allows capital to be more efficiently utilized too.
Personally, I do not believe that all, or even many, of the overseas factories are going to be shut down. Where you have commodity type products such as screws, nuts, bolts and even bearings that are made to standard sizes, making them offshore will continue to be cost-effective. But, where you have specific kinds of high tech products, where time to market is critical and the security of intellectual property rights are paramount, these start to have more and more reason to be manufactured here.
Personally, I work with customers on both sides of this issue. Basically, you need to do your homework, include all of your costs, direct and indirect, and factor in the time and security issues, in order to arrive at the most viable solution. The bottom line is very important, no question about it. However, I believe that labeling your product “Made in the USA” is an intangible that will become a lot more valuable as time goes on.
Meanwhile, how can I help you? I am always looking forward to getting into the design and manufacturing of new and different products. Just call me.