Domestic vs. Offshore Manufacturing by Sabine Cherenfant

Author:Sabine Cherenfant
Language: eng
Format: epub
Publisher: Greenhaven Publishing LLC
Published: 2021-08-12T00:00:00+00:00

CHAPTER 3

Are the Benefits of Offshore Manufacturing Sustainable in the Long Run?

Overview: Foreign Manufacturing Offers Both Positive and Negative Outcomes

Synthesis Engineering Services

Synthesis is an engineering and design services company that was founded by Eldon Goates. It offers consulting, product design and development, and other engineering services.

It’s a dilemma: Should you get the widget made offshore? Or at home? There are a lot of interrelated and complex parts to answering this question, so, how do you choose? We’ll talk about a few pros and cons of foreign manufacturing vs. domestic—from the engineer’s perspective.

Offshore—Foreign Manufacturing

What we call “Offshore Manufacturing” has less to do with oceans as the phrase implies (though it fits many instances). It is, perhaps, better termed “Foreign Manufacturing” meaning not produced domestically. “Offshoring” is another term for moving processes out of the country. Either way, these mean the country of design origin and intend consumption is different than the country where manufacturing is done.

The trend in the last many years (especially in the USA) is more and more manufacturing in other countries. In public there’s talk of keeping things at home, but reality still sees a lot of manufacturing where regulations are lax or labor is cheap. Of course, there are dozens of arguments about whether this is good, but I’ll leave that for later.

There are advantages and disadvantages for sure. In our experience with foreign manufacturing, some customers have success and others not so much. What’s the difference? Let’s look at both with an eye to averting disasters.

Foreign Manufacturing Decision Points

In general, we get kind of spoiled by purchasing goods from all over the globe. We see things on the internet, and easily buy them even though they come from elsewhere. It comes in a box and we don’t think much more about it. What we don’t see is the network behind the scenes that makes it happen. When you start manufacturing offshore, you get to manage that network (or hire someone to do it).

In considering the options, here are some things to think about:

• First, foreign manufacturing is never as easy as it appears.

• There are many outside factors in cost—shipping, tariffs, import fees, export fees, government extras, travel, brokers, exchange rates etc…

• Acquiring goods from another country involves help from outside your company—finding reliable partners (for shipping, unraveling government regulations, etc.), timing issues, factory delays, special holidays, …

Then the practical side like:

• How well do you speak the language?

• Do you know the trade and business customs?

• Who do you know to guide you?

• Can you find a fair, reliable agent to handle things? If so, what do they charge?

• What resources do you have to assure quality? (And, What happens when you get a container load of widgets that are not right?)

• An unscrupulous factory might make shortcuts in production to save a buck. (Yes, this can happen anywhere, but it seems to happen more when the manufacturing facility is far from the customer. Especially when legal recourse is less likely.)

• How much control do you want over the product? Over quality?

Is this negative? No.

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