Comments Off on 3 Reasons Manufacturing is Coming Back to America
Everyone is familiar with offshoring — the process of sending manufacturing projects across seas in an effort to save costs has been in practice since the 1960s.
But now a new trend is emerging called reshoring. Also known as “inshoring” or “backshoring,” reshoring manufacturing is returning previously offshored manufacturing processes back to America.
The original benefit of offshoring — lower production costs — is now dwindling as wages outside the U.S. increase. While offshoring may still allow you to reduce some cost to your product, you may actually be incurring more costs in other ways.
Reshoring carries a number of benefits by helping to reduce the unseen costs of offshoring.
In the United States, companies are incentivized by competitive market pressures to maintain strict adherence to relevant ISO and TS technical specifications, as well as standards from other standardization bodies.
Products manufactured from offshored components, however, may not meet the same quality as ISO-certified manufacturers in the U.S. Tolerances can be looser and fail rates can be higher. These substandard-quality parts can lead to increased replacement costs and even loss of business, cutting into your bottom line.
Significantly Faster Lead Times
Offshoring parts adds considerable lead time to your orders. A general timeline for an offshored part looks something like this:
- 2-4 weeks — Manufacturing time, varies depending on complexity and volume
- ~5 weeks — Shipment to an American port: while some parts can be shipped via air cargo rather than sea cargo, doing so comes at a considerable expense
- ~1 week — U.S. Customs approval
- ~1 week — Removal from bonded freight
- 1-2 weeks — Packaging and transportation to final destination, varies depending on location
With offshored parts or components, final delivery can come four months or even longer after order placement. In contrast, reshored manufacturing processes can finish and deliver parts in half the time or less.
When you accept delivery of offshored parts, you never know what you are going to find. It can be incredibly difficult to trace the supply chains of offshore contractors. Certain offshore companies have even been known to use counterfeit materials, falsely branded with the logos of reputable suppliers.
With reshored manufacturing, tracking the provenance of all of your parts and their source materials is drastically easier, giving you the peace of mind that you are always receiving goods at the level of quality that you expect.
If these three reshoring benefits are not enough to get you to consider reshoring your currently offshored manufacturing processes, there is one more to consider — the United States economy. By keeping vast amounts of raw material and manufacturing dollars in the U.S., reshoring as a whole can be a great boon to the American economy.
The Reshoring Initiative compiled job data from January 2010, the point of lowest employment in the manufacturing sector, to December 2015: they found that roughly 248,000 manufacturing jobs were created in America thanks to reshoring efforts.
To learn more about how you can reduce your production costs, download “How OEMs Can Optimize Their Supply Chain,” our newest white paper, for free today.