Quebec manufacturer explains the decision to reshoreOctober 20, 2015 REDWIRE is news you can use from leading suppliers. Powered by FRASERS.
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A positive trend in the manufacturing industry is resulting in less offshore production, according to Vicone, an expert manufacturer of rubber parts.
On its website, the company has posted an article about the benefits of domestic manufacturing and why many companies are now bringing their previously outsourced operations back home.
Outsourcing of production and assembly to countries like China and India was massively popular among manufacturers about 15 years ago. Due to the low labour costs in these countries, many companies took advantage of offshoring to cut manufacturing costs. But according to the article, those cost savings are not what they once were. It cites a study on global manufacturing costs conducted by the Boston Consulting Group. The study found that due to rising wages and high energy costs, the difference in manufacturing costs between the U.S. and China has now become negligible.
While other countries such as Indonesia, India and Mexico still offer low manufacturing costs, many companies are choosing to bring back offshored personnel and services to domestic facilities. This trend is referred to as reshoring.
Some of the companies that have reshored their operations include Ford, Google, Apple, Boeing, Lenovo, Motorola and General Electric. The article also cites several studies that show the trend is growing.
The benefits of local manufacturing
There are many reasons a manufacturer may decide to reshore its manufacturing operations. A study by management consulting firm A.T Kearney suggests that the main reasons include improvement of delivery times, product quality, freight cost, wage cost and customer responsiveness. Some of the other factors that enter into a company’s decision include innovation, higher productivity, inventory improvement and company image.
Vicone is an expert manufacturer of rubber parts. The Saint-Eustache, Que.-based company performs services including design, prototyping, strategic production and inventory management. The knowledge centre on the company website provides informative, well-researched articles on a variety of topics. Click here to read its article, “The reshoring decision”, in its entirety.