The 2014 Annual Wire Harness Conference & Trade Show was an opportunity for leaders in the industry to join together in discussion on cutting-edge technologies, best practices and latest trends within the wire and cable harness assembly industry. Connecting with other manufacturers and suppliers was a rewarding experience and a great way to share, as well as gain industry insight.
A particular point of interest, not only at the conference, but also worldwide in the manufacturing industry, has been the topic of offshoring versus reshoring. The process of reshoring, or bringing once-offshored manufacturing efforts back to the United States, has become a widely discussed issue in recent years.
So what factors are leading companies to decide whether to manufacture overseas or in the U.S.? Many companies make sourcing decisions based purely on price, which can result in a 20 to 30 percent miscalculation of actual costs. It’s important to consider more than just cost alone when making such a decision.
Offshoring
While the low costs of real-estate and labor overseas are obvious draws to offshoring, there are additional benefits that should be considered.
Access to Talent
Many manufacturers in the United States are feeling the pain associated with the shortage of skilled U.S. workers. For many occupations, offshoring offers access to a greater number of highly skilled and experienced employees.
Time Savings
Speaking of labor shortage, recruiting your own employees in the U.S. can take a month or more. Many overseas plants can fill positions with experienced employees at a much quicker pace, saving you the time and money it takes to sort through resumes, recruit, interview, train and manage your own employees.
Flexibility
Contracted labor creates greater flexibility for adapting to fluctuating labor and resource needs based on production cycles. This eliminates the hiring and firing processes, which can save you time and money while allowing for quicker production response time.
Reshoring
While offshoring creates a variety of opportunities for manufacturers, it is not without its challenges. Some of the drawbacks of offshoring can be avoided as a result of deciding to bring manufacturing back to the U.S.
Avoid Cultural Issues
Varying languages and communication styles can create challenges when it comes to a working partnership, especially with conflict resolution. Reshoring reduces the amount of miscommunications that can arise when outsourcing to an overseas staff.
Bringing Jobs Back to the U.S.
While some economists believe offshoring ultimately benefits the U.S. economy, the displacement of jobs caused by offshoring remains a painful blow to those struggling to find work in the U.S.
Greater Control
The current shift toward tighter and leaner supply chains can be more easily achieved when manufacturing plants aren’t entire oceans (and days) away. Remaining closer to home allows for company leaders to have greater control over manufacturing processes.
According to a survey of American manufacturing companies by the Boston Consulting Group (BCG) in April 2012, 37 percent of those with annual sales above $1 billion said they were planning or actively considering shifting production facilities from China to America.
While reshoring may be a viable option for some, others may find their best solution is offshoring. Each holds a number of benefits. Therefore, both options should be evaluated objectively with the focus remaining on what is best for maximizing production initiatives and the bottom line for the company and its customers.
Click here to view the 2014 Annual Wire Harness and Conference & Trade Show presentation, To Offshore or Reshore? How to Decide Objectively, presented by Harry Moser.