September 4, 2020
Reshoring Initiative - 2020 - Why?
A study by the Made in America Movement, found that the vast majority (80%+) of shoppers pay attention to whether a product is labeled "Made in the USA", with over 75% of those shoppers saying they would be more likely to purchase something with that designation. Reasoning ranges from patriotism to the desire to stimulate the US economy to the perception that unenforced labor laws and cheap manufacturing standards equate to lesser quality products.
US manufacturing (adhering to state and federal guidelines - and - with whom you can easily communicate with) saves time and money - not to mention a reduced level of frustration. Many large corporations are making a push to bring manufacturing projects back to the United States from overseas and Latin America (LATAM). To remain competitive, major manufacturers have always looked for the most cost effective ways to produce their products. A generation ago companies moved their manufacturing from the northeast and Midwest states to several southern states in search of lower cost manufacturing . Next was Mexico for low cost manufacturing , followed by moves to China and other Asians countries. In recent years however, manufacturing work is starting to return to the U.S.
Why?
There are many factors that have steered companies toward re-shoring their manufacturing. In recent years in particular, U.S.-based manufacturers have invested heavily in technology and automation. This investment has resulted in improved manufacturing efficiency and lower cost. A shorter supply chain with quicker response time is another benefit of re-shoring. With rising overseas labor rates, the value proposition to manufacture in the United States is making more sense to some companies.
Re-shoring tools from foreign countries today however, is very different from the tools that were outsourced from the U.S. in years past. The tools that are being re-shored today from overseas fall into two categories. The first category contains tools that are built in foreign countries to varying standards. These higher quality tools are built and are typically intended to be exported and run in the U.S. or Europe. The second category involves tools that are built to foreign standards using local materials and are intended to be run overseas. The problem with these tools is that they merely have to produce an acceptable part, not necessarily an acceptable process. In many cases, the tool produces a part that requires secondary operations such as trimming and painting to hide defects. Unfortunately, many of the tools being reshored today are tools that were built to foreign standards.
As many have stated - one of the first re-shoring hurdles is tooling then, skilled manufacturing expertise..
The reliance on a close working relationship with trusted US suppliers with specific expertise can make all the difference.
Fermer Precision is a 73-year old precision machine casting and turning company specializing in machining high precision, close-tolerance castings, forgings, and turnings used in the automotive, pump, compressor, valve, emission control devices and turning industries. With more than 85 machining centers and its our in-house capabilities for building and maintaining all necessary fixtures and tooling, Fermer provides all of its customers exceptional value, enhanced quality and superior machining productivity levels. Partnering with a domestic source with experience specific to your application can speed up your re-shoring efforts while at the same time - take away some of the fear. Although the attraction of a lower price initially out-weighs the benefits of US manufactured goods, a step back view can often reveal higher risks, lost opportunities and higher costs. Given the peace of mind knowing that your intellectual property can be better protected, speed to market, reduced lead-times, better inventory control, improved manufacturing technology and - customer approval / support, could reshoring actually reduce costs? Yes! At Fermer Precision we re-shore components all the time. Through exceptional quality, delivery, and high value we have proven to our customers that the grass is not greener going off shore. Many of our customers took the bait and believed they would enjoy the best of all worlds only to find that there may be some initial savings in the short term but in the long term the savings quickly evaporated.
What do you do when you have a challenge due to your supply chain? The first thing typically is you call your suppliers. With Fermer being in the states, we are available when you need us. Also, when you call you will always be greeted by a live friendly professional eagerly waiting to assist you.
If you’ve ever got burned from re-shoring give us a call. You will be surprised by what true cost savings can actually mean to your organization.