The Pros and Cons of Off-shore Manufacturing

What the off-shoring companies don’t want you know about the hidden costs of doing business with them:

The lowest bid isn’t always the least expensive. When domestic and foreign companies compete on the cost of labor, there is often no way an American company can beat the cost of cheap foreign labor. But custom parts production involves many more elements than the actual assembly line and using an off-shore supplier can come with a litany of hidden costs that can send your expenses soaring. Utilizing off-shore supplier is ultimately a risky and more expensive option in the long run. An independent research company recently conducted a study and interviews on the subject with industry experts very familiar with the foreign supplier/American firm relationship. Here’s an excerpt one of those interviews.

The pros and cons of offshore manufacturing, according to prominent business strategists and engineers in the metal parts manufacturing industry:

Q: What happens when a company decides to go straight to China and eliminate the “middle man” U.S. manufacturing firm that normally supplies it with products?

A: Neither the U.S. distributor / retailer nor the Chinese manufacturer has expertise or experience with the product design — when a problem arises, no one in that supply chain knows how to fix it.

Q: I have been told that when engineers in China run into a problem, they often throw up their hands and quit — that they are not good at follow-through which often means that the U.S. engineer has to go to China at great expense and time to get them out of trouble. Why?

A: Chinese engineers, although improving, still lack enough experience — we see more misunderstandings and a lack of action.

Q: When a U.S. company needs to have a new product quickly, one engineer told me that the Chinese company cannot respond fast enough. What is the problem?

A: Most Chinese marketing and engineering staffs do not understand our needs thoroughly enough, especially our market needs.

Q: Why are Chinese companies seemingly not able to add value to the product or process, nor suggest manufacturing improvements as the parts or products are being made?

A: It is hard to add value to a product when one does not understand the application well and are not close to the customer.

Q: Why is lean manufacturing a more difficult process to implement in China than in the U.S.?

A: Because labor is already cheap, they have little incentive or need to improve process efficiency.

Is the least expensive solution always the best?

Why would you choose a supplier that can’t assure quality to American standards, does not understand our market, and can’t mobilize quickly in the event of a necessary change? Using an off-shore company as your supply source brings with it elevated shipping costs and time, duties and tariffs, currency fluctuations, and port costs you can avoid just by choosing a supplier on your own country’s soil.

Unique Tool & Manufacturing is a domestic metal parts supply company that can reliably offer supply availability and quality products as you need them. You can eliminate both time and expense by selecting domestic suppliers and sources; you can respond more quickly with innovative and creative solutions for your customer by using sources that intuitively understand the American market. To speak with someone who can supply you with customized stamping products or help you examine your own production practices, call 1-734-850-1050 or send us a message using the contact form below.
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