For years, U.S. companies have outsourced work to other countries, especially in the manufacturing industry. For manufacturing, the appeal lies in lower upfront costs for tooling, and projects that include a lot of manual labor. In reality however, it is often not the most cost-effective choice long term. While many organizations have good partnerships with manufacturers overseas, more and more companies are starting to see the downsides of offshoring work. In fact, in recent years, many companies are actually reshoring due to new technology and for very similar reasons they offshored in the first place. Here are some of the big ones.
Quality and Consistency
Manufacturing companies that reshore tend to find an overall higher quality and consistency of quality. Offshoring manufacturing can initially appear to show lower costs, but one of the main reasons why these prices are offered is that their wages are commonly also low. These low wages do not attract experienced professionals so the end product often suffers. Labor costs are also rising as workers all over the world demanding a living wage and improved working conditions. Labor may cost around the same amount as time goes on, regardless of country.
International Events and Barriers
Reshoring avoids delays due to differences in time zone, language, and cultural barriers. These factors, while not impossible to navigate, can add a significant amount of wait time for communication and arrival of the finished product. Additionally, companies that reshore do not have to worry about international events as much. A recent example that has without a doubt affected everyone is COVID-19. It is no secret that shipping times as a result of the pandemic are becoming increasingly unreliable. This problem can be exacerbated if there are quality issues that involve parts being returned or remade. Often times, there is not a very good return system in place so costs for damages or scrap will have to be absorbed by someone. The costs of shipping have also risen over the last year. Shipping within the same country, rather than overseas, reduces the time and cost of delivery.
Language barriers can be a hindrance, especially on more complex projects with tight tolerances and unique specs. This can make engineering support a challenge. It is also good to be aware of workplace culture in the country you are partnering with, as often times each party has a different expectation and standard for what is acceptable in regards to reply times, communication and productivity. Reshoring allows you to reduce or even skip many of these issues, which can get your project up and running even faster.
Policies, Ethical Decisions, and Brand Image
Another benefit of reshoring is more control over ethical policies and brand image. Not only is it less expensive to ship over a shorter distance within your own country, but it is more environmentally responsible as well. Cargo ships require a huge amount of fuel to carry large weights over long distances. Additionally, you do not have any control over pollution policies and work conditions overseas.
Overall integrity is also important to consider. While you may get a lower price on your parts, is your manufacturer cutting corners on labor? Materials? What is the environmental impact of doing business overseas? All of this can contribute to your brand’s image. Many customers appreciate and would spend more money on a product that was made in the U.S.A. in an ethical and environmentally responsible way.
Should You Consider Reshoring?
Offshoring, at first glance, can look like a cost-effective solution. However, once you consider all of the potential issues associated with supporting offshore manufacturing, you may find having your tooling and production parts made in the USA a more ethical and cost-effective approach. While it is true that lower-cost countries may be more competitive on items that require manual labor to produce, there is little to be gained offshoring automated processes such as progressive metal stamping. Working with a reputable metal stamper will give you quality tooling, materials, engineering support and competitive labor prices since these tools can often be minimally attended while running.
Are you thinking of reshoring a family of parts? Contact Us today and let’s have a conversation about how Wisconsin Metal Parts can serve you best. We welcome challenges!