When it comes to making the (hard) decision to choose onshore vs offshore manufacturing, there’s often a misconception that the cost-savings with offshore electronic manufacturing simply can’t be beat.
The reality is that the political climate and changing working conditions overseas up-end this trend.
Better communication, more rigorous best practices, and robust automated assembly capabilities have proven to close the gap when it comes to offering greater value for OEMs
Competitive Automated Assembly Costs Make a Difference
There’s no denying that U.S. companies can’t drop to the low wages that foreign companies pay their manufacturing workers. Minimum wage laws, for one, ensure that U.S. laborers won’t be paid as little as many overseas workers are.
On top of this, U.S. workers assume pride, loyalty, and professionalism when they’re paid a fair wage. That won’t happen if they’re making the same money as a Chinese assembler. U.S. contract manufacturers can be competitive with the rest of the world, however, in automated assembly. Citing the Boston Consulting Group’s study, USA today reports2 that “roughly 1.2 million additional advanced robots are expected to be deployed in the U.S. by 2025” with the computer and electronics industry one of the few leading the charge – all due to the major cost savings delivered by the process, regardless of location.
This enables American companies to reap the benefit of low-cost manufacturing, while simultaneously gaining access to the communication, quality, and “just-in-time” capabilities provided by domestic contract manufacturers.
Add on tariffs, custom-delays, long cycle times, freight costs, and all of the hidden costs inherent with offshoring, and it becomes clear that U.S. built product is capable of delivering the same cost savings. Better yet, they can do it almost dollar for dollar compared with contract manufacturers in other countries.
Quality Communication Translates into Quality Products, Delivered On-Time
From the prevention of communication breakdowns to closer working relationships, onshore manufacturing has proven to reduce wasted product and costly delays.
If an OEM needs to contact an overseas contract manufacturer, it’s not always easy. First, time zones and business hours need to align. If a connection is made, the representative on the other end might not speak English. It’s one thing to exchange simple pleasantries when there’s a language gap but intricate business details are a whole other matter. Contract manufacturers in the U.S. handle customer service in English; its employees fluently speak the language of the customers. This means that orders are processed clearly and without confusion.
“What happens when communication doesn’t work?
Basically, anything can happen—and whatever happens is likely to do so in an uncontrolled manner, where the key players no longer know what is going on and therefore cannot steer things in the right direction.
Releasing a new product?
Efficient and fast communication is particularly important for OEMs releasing a new product. Having manufacturing close by, and working with a contract manufacturer that understands what’s needed and can articulate its instructions, ensures that new product introduction will proceed smoothly.
It’s critical for an OEM to hit its production target windows. With only a short drive or domestic flight standing between you and your manufacturer, the proper resources can easily be assigned to ensure fast development and on-demand changes.
Close Working Relationships Create A Culture of Trust
It’s not only the new products that require collaboration and attention to detail. OEMs and local contract manufacturers can work closely on all products. If an electromechanical manufacturer is only a few highway exits away, an OEM can verify – in person – if its product is being built correctly using the specified components, materials, and methods. Contract manufacturers in China and other foreign countries are known to promise one type of component but then substitute a cheaper alternative. Ultimately, the quality of the working relationship comes down to
Information sharing, communication quality, and interfirm adaptation emerged as three significant contributors to the vendor’s trust in the client; goal setting and cultural blending turned out to be significant in influencing the client’s control over the vendor.
When a product is built locally, it can be delivered locally. It arrives in only a matter of days or hours, if required. Products made overseas take weeks or months to arrive by boat. Also, OEMs occasionally need to deliver a product to their customers overnight, which means the contract manufacturer has to deliver the product overnight to the OEM. A local contract manufacturer is better positioned to provide an OEM product fulfillment service, shipping directly to the end customer.