Reshoring Manufacturing Operations to North America
Moving operations off-shore to reduce cost has been a long standing practice in manufacturing, however the alternative benefits of reshoring operations has become more evident in recent years.
Manufacturers need to weigh the options of labor cost, shipping, taxation, lead time and trade implications.
There are many complex aspects of establishing which practice is right for your business over the long run.
Two major factors driving the reshoring trend can be easily observed:
Geo-political Trade Instability
The modern global economy has seen a strong rise of trade disputes within recent years, to the extent of a trade war between the world’s two largest economies, as well as Brexit movement in the European Union.
The trade tensions have opened a broader discussion on the reliability of manufacturing costs in foreign nations, as well as the ability to effectively maintain profits in an uncertain economic climate. This can be observed as the first major factor driving manufacturers to reshore.
International trade tariffs have arguably become the status quo.
Many may view the use of heavy-handed tariffs as temporary turbulence in a global economy, viewed in a narrow scope of government administrations that are willing to leverage their use, but this very well may not be the case in the decades to follow.
The idea of relying on labeling these tensions as a passing storm is effectively rolling the dice with your business.
Self-preservation
Reshoring (otherwise known as onshoring, inshoring or backshoring) is widely viewed as the best form of insurance against the cost-instability of offshoring, of course the “elephant in the room” is that offshoring has been leveraged historically to reduce the additional costs of manufacturing onshore, so what can be done about this? Industry 4.0 is the answer.
The future of the North American custom electronics sector
Custom electronics manufacturing faces a unique set of challenges when operations are handled offshore, certifications can be more tedious to attain overseas for highly regulated sectors such as medical and aerospace/defense.
Electronics for the defense sector must often be manufactured onshore due to the sensitive nature of the products, in this case onshore cost reduction becomes the only viable solution.
While manufacturing infrastructure in Asia has labor-cost and production scale advantages, that benefit is less apparent with the requirements of a high-mix low volume production of sensitive components for OEMs.
“Made in North America” electronics manufacturing has begun closing the advantage-gap between North America and Asia through the use of smart factory technology.
Advanced Manufacturing
Advanced manufacturing is the second major factor pushing manufacturers to reshore. The phenomenal advancements in 21st century robotics and AI technology allows OEMs to combat cost without compromising the reliability of their supply chain. These advancements are critical tools in the fight against costs by means of efficiency, this manufacturing approach is often summarized as Industry 4.0; a new playing field of IoT connected hardware devices and software systems that utilize machine learning and advanced sensor technology, allowing production chains to self-adapt.
The concept of collaborative robots also allows companies to enhance the abilities of their skilled staff while avoiding the negative aspect of purely replacing people with machines.
How can Promark Electronics assess my situation?
The decision to manufacture onshore or offshore is a complex path to navigate, Promark Electronics prides itself on helping find this solution for their partners.
Some of the many factors we address:
- Lead time
- Quality control
- Production consistency
- Stocking and time-to-market
- Regulatory compliance
- Taxation
Speak to a Manufacturing Expert
Promark Electronics helps OEMs navigate the difficult process of moving custom electronics manufacturing operations onshore to North America.
