Cost. The number one reason cited for moving overseas. Looking simply at overseas labor cost certainly supports this reasoning.
However, real costs are usually overlooked. What about the cost of returns and recalls due to poor quality? Or the cost of delayed delivery due to customs, freight or supply line problems? Or the cost to manage the overseas production…flights, hotels, jet lag, loss of management efficiency?
And the cost and time required to move operations overseas are often underestimated. This includes:
- Site identification and selection
- Construction of a new facility
- Screening and hiring labor
- Negotiating for and gaining government approvals
- Understanding and planning for currency exchange issues
- Shipping, freight research and setup
- Duty and freight costs
- Learning curve with the local culture
- Negotiating with North American labor force
- Properly announcing the North American plant shutdown
“Save Your Factory” helps companies understand the potential benefits of manufacturing in North America versus off shoring. It includes an examination of cost, but also looks at the entire spectrum of factors – quality, productivity, inventory, labor, supply line – that effect manufacturing viability.
- Increased Efficiency – Automation enables manufacturers to optimize current capital and labor resources. North America is the world leader in manufacturing productivity.
- Cost – It is not just the cost of labor. Inventory requirements, training, quality control and beyond must be considered. Automating an existing manufacturing facility actually results in a lower piece price cost than moving operations overseas.
- Control – Automation allows manufacturers to maintain control of its operations versus moving operations overseas.
- Quality – An automated facility consistently manufactures the absolute highest quality products.
- Viability – By strengthening North American manufacturing leadership through automation, jobs will be retained and the economy will strengthen.
Quality is no longer a selling feature; it is a requirement. Consumers in North America expect great quality; anything less is unacceptable.
The greatest leaps in quality can be made through automation and a streamlined production process. An automated facility enables exact, consistent manufacturing tolerances. This leads to the absolute highest quality products.
Companies have faced unforeseen quality problems after moving operations to less-developed regions, for several reasons. The commitment to quality by workers in other regions cannot be compared to that of North America's labor force. The poor quality of sub-components and materials can cause headaches for manufacturers overseas. And, perhaps most important, the critical, physical link between design, engineering and manufacturing personnel is lost. Intellectual property issues can also lead to quality problems. Overseas, stolen intellectual property can lead to lost profits, recalls and damaged reputations for manufacturers.