When evaluating suppliers for your products, many companies today are weighing the pros and cons of international versus domestic manufacturing. Many manufacturers may feel that sourcing plastic injection molded products from overseas suppliers provides great cost savings, although many factors can affect a product’s total cost (and cheaper may not always be the best value). On the contrary, a poorly constructed injection mold will cost a lot more in the long run when engineering changes or continual maintenance are required on the tool to produce quality parts.
Other factors that distinguish international versus domestic manufacturing can also add costs to overseas suppliers. The following is a summary of the most important factors to consider when evaluating international versus domestic manufacturing.
Contact QT Manufacturing to Learn More
International Manufacturing – The Pros
The movement to source injection molds and plastic components from overseas suppliers became a trend at least 20 to 30 years ago, with the cost and quality varying greatly from one international supplier to the next. Cost and quality are only two factors to consider when evaluating the pros and cons of international versus domestic manufacturing. Some of the most common factors seen as advantages to outsourcing internationally include:
- Lower overall costs – The initial manufacturing of a mold and products overseas is often assumed to be much less than manufacturing domestically.
- Many options – There are just as many options overseas for sourcing a wide variety of products from low-quality toys to more complex, high-tech components.
- High-volume capability – International suppliers can be equipped to produce high volume production runs comparable to domestic manufacturing capabilities.
International Manufacturing – The Cons
While a low cost is typically the driving factor for sourcing overseas, many other factors can add significant costs to international manufacturing sources. Some of the greatest disadvantages to international suppliers include:
- Lower quality – International standards like ISO9001:2015 have helped to bridge the divide between domestic and international manufacturing, although many overseas manufacturers lack comparable quality control standards and regularly use lower quality raw materials. Some molds require significant rework to get them to North American standards to meet exact specifications.
- Hidden costs – When a mold produces poor quality parts, intensive labor is required for quality checks and sorting which significantly raises a product’s manufacturing costs. Internal scrap and in the worst-case scenario, returned goods, add significant costs along with damaging a company’s good reputation.
- Language barrier – Communication is important when getting new projects off the ground. A language barrier and cultural divide can add significant time to prototype or project development. Just the time change alone can be frustrating when a domestic manufacturing engineer must speak with a counterpart in Asia at 2 AM just to coordinate a phone call. Wasted time is wasted profit.
- Increased shipping costs – Shipping is one of the greatest considerations when sourcing overseas. Be sure to factor in the cost of shipping whether by boat, or air. If you are in need of components for an emergency, air shipping overseas can be a lot more costly than air shipping domestically.
- Increased shipping lead times – Shipping cost is only one consideration, if you simply cannot get the parts you need when you need them, even for a premium price, that can become a serious problem. Shutting down an OEM’s assembly line can cost tens of thousands of dollars per day. Just the distance is enough of a gamble in expecting to get your parts on time. Throw in outside, unforeseeable factors like a tsunami, earthquake, or a longshoreman strike and you may be out of parts for weeks. Suddenly your cost savings are completely evaporated, and you risk shutting down entire assembly lines or running out of your own products because you cannot get the components you need on time.
Any or all of these disadvantages can contribute significantly to the cost of overseas production and should be carefully evaluated before choosing to source internationally.
Domestic Manufacturing – Pros
Choosing a domestic manufacturing supplier brings many benefits that for many companies far outweigh any disadvantages. The benefits to working with a reputable, quality, domestic manufacturer such as QT Manufacturing in Dallas, TX include:
- Reduced overall product lifecycle costs – While initial production might cost more than overseas, ongoing manufacturing results in cost savings with less rework and downtime for mold repairs.
- Faster and less expensive shipping – Reliable lead times can sometimes be more important than cost. If you cannot get your products when you need them, cost savings is irrelevant. Domestic shipping is significantly faster and cheaper than shipping overseas, with next day air shipping available from nearly any U.S. state to another.
- Easier communication – Avoid communication breakdowns or misinterpretations with a domestic manufacturer that speaks your language and understands your needs.
- Higher labor standards – Working with a domestic manufacturer ensures that your supplier treats their employees well with respect and according to federal regulations such as fair labor standards and equal employment opportunities.
- Greater IP and intellectual security – With a U.S. domestic manufacturer, you can have more confidence with strict intellectual property rights and less chance of copied or stolen ideas.
- Higher-quality products – Manufacturers in the U.S. have access to high-quality raw materials and are practiced in meeting high quality control standards. Quality molds produce quality parts, which is the key to meeting production requirements with cost-efficient manufacturing.
Working with a domestic manufacturer provides these many benefits and advantages, which most often far outweigh any cost savings from international manufacturing suppliers.
QT Manufacturing is a domestic manufacturer in the Dallas Fort Worth Texas area, offering high-quality injection mold making, plastic molded products, and CNC machined parts to many industries. We offer more than 30 years of experience in designing, engineering, and constructing high-quality, precision injection molds and providing molded products that meet tight tolerance requirements. We are a valuable supplier to many industries including:
- Optoelectronics
- Telecom / Fiber Optics
- Aerospace and aviation
- Defense
- Firearm
- Medical
- Industrial
- Consumer products
Request a Quote Now
QT Manufacturing provides domestic manufacturing solutions with a commitment to high quality as part of our ISO9001:2015 and AS9100D rev D certifications. We offer an experienced team of journeymen mold makers, skilled processing technicians and engineers dedicated to meeting your product specifications and lead times with quality parts, delivered on time. Contact us online to request a free quote or call 972-221-0537 to learn more about the many benefits of QT Manufacturing and domestic manufacturing solutions.
In the past two decades, there has been a dramatic shift by technology product companies to outsource manufacturing to low-cost countries (LCCs) like China, India, and Mexico. This follows a long history of outsourcing to LCCs by consumer product companies. LCCs may offer lower manufacturing costs resulting from cheap labor and perhaps less stringent environmental and workforce regulations. However, there are downsides to manufacturing in LCCs that may erode expected cost savings or create other commercial disadvantages. As these disadvantages become more apparent, many companies are reverting to US contract manufacturers. Here are a few examples:
Poor Quality
Contrary to outdated beliefs, manufacturing capabilities, process controls, and quality assurance practices have improved dramatically in LCCs. However, inherent challenges still exist in producing consistently good quality including poor communication resulting from language barriers and time-zone differences, training limitations, and reduced on-site technical support.
Low Labor Content
The labor content of many electronic and electro-mechanical assemblies is very low, sometimes less than 10 percent of total product cost. Material costs are generally the same worldwide, especially for electrical components. Consequently, the cost benefit from lower labor costs can be negligible.
High Transportation Costs
The cost of transporting products from LCCs to their ultimate destinations can be very high, especially if air transportation is required. The cost benefit analysis of outsourcing to LCCs should include all logistics costs including freight, duties, and insurance.
Extended Supply Chain
The manufacturing of products in LLCs may add as much as a month to the overall supply chain due to additional transportation time and communication delays. This can be very detrimental due to increased lead times to customers, incremental inventory carrying costs, and rework that may be required for engineering changes that occur while products are in the supply chain.
Lack of Control
Companies will generally lose some control and visibility when they outsource to LCCs, creating increased risks.
Increased Time-to-Market
As product lifecycles become much shorter, cycle-times for new production introductions become much more critical. The time to transfer a product from engineering to manufacturing is invariably longer when manufacturing is outsourced to an LCC.
Loss of Intellectual Property
Intellectual property is generally at greater risk in LCCs. At a minimum, the know-how to manufacture products may be applied to competitors’ products. In some cases, all or part of a design may be stolen to create a “knock-off” product.
After you evaluate these potential disadvantages to outsourcing your products to low cost countries, you may discover that the total cost of manufacturing in the US is actually lower. Please consider this as you formulate your outsourcing strategy.