2017 brings a new administration and a new playing field for the manufacturing game.
Bringing American jobs back was a major campaign promise of the new administration. The TPP has been completely blocked. NAFTA is under scrutiny. An American metal fabricator looks very attractive to many OEMs.
So, whether your company is looking to reshore based on rising wages overseas, lack of supply chain control, IP protection, or moral reasons, you should know what boxes to check when reshoring.
Choosing an American Metal Fabricator for Reshoring
The main reasons companies reshore is total cost of ownership (TCO). Offshore manufacturing looks great on paper, if you only consider unit costs. When you factor in all costs associated with foreign manufacturing, project costs skyrocket.
Similarly, when evaluating American manufacturers, consider supply chain costs from beginning to end. This TCO calculator from the Reshoring Initiative makes it easy.
The closer your manufacturer, the easier your life is. Keeping production close means you can visit facilities to check on operations, shipping costs stay low, and lead times are minimized.
Along with shipping costs, taxes vary greatly by state and locality. Taxes affect inventory management, material costs, equipment purchases, and the structure of your American supply chain.
4. Can they provide all-in-one services?
Some companies prefer to divide their supply chain among multiple vendors. That's fine. Others prefer the convenience of contracting with a full-service metal fabricator.
If you require services throughout the supply chain, consider choosing a supplier who can fill all those needs in one location. This makes paperwork easy, gives you more control, and makes it easier to identify what went wrong if a problem crops up.
5. Government Incentives
Part of our reshoring efforts involve overhauling the benefit side of the cost-benefit scale.
To promote American manufacturing, governments at all levels are partnering with manufacturers to offer grants as well as other financial and operating incentives. These incentives will vary by state and local government.
6. Energy Costs & Real estate
Two areas where American manufacturing easily K.O.s offshoring. Many foreign countries are struggling to find land to build factories, and energy costs are through the roof. These can majorly inflate the cost of offshore manufacturing.
While you'll save a lot of money in this category by moving to America, you can further refine your energy and real estate costs depending on the location of your metal fabricator. Consider:
- Access to resources
- Power pricing (varies between $.04 - $.12 / kWh)
- Waste disposal - where, how, how much energy will it take?
These factors can vary even between manufacturers in the same city.
7. IP & Engineering
One of the benefits of American manufacturing is educated, creative talent. Some manufacturers can assist in value engineering your product - making it as affordable and quick to produce as possible.
Reshoring is a big commitment and a big investment. Consider these things, and fully evaluate an American metal fabricator before signing a contract.
(Editor’s note: This blog was originally posted in February 2017 and was recently updated.)