With expenses rising in traditionally low-cost countries like mainland China, there is an ongoing debate as to the probability of the U.S. turning into a manufacturing factory once again.
According to a survey done by the Manufacturing Institute of the National Association of Manufacturers (NAM), reveal that among the top priorities for manufacturers were tax policies and labor cost. When CEOs bring these factors to the table, the figures just don’t seem to favor the U.S. as a manufacturing powerhouse. Subsequently, high wages and corporate taxes are taking away prospects for new manufacturing plants in the country.
Nonetheless, as far as offshoring is concerned, the costs of doing business in faraway locations can be disconcerting for some firms. Some of the reality behind the high costs for offshoring stems from a long supply chain and inventory pipeline, the issues related to intellectual property theft. These aspects of conducting business abroad are driving companies back to the U.S.
When considering offshoring to China, India and Southeast Asia, companies are rethinking their strategies about offshoring. Does it make sense in terms of complicated supply chains, intellectual property rights, and quality, higher costs linked to shipping and keeping inventories full?
For companies whose customers are primarily based in the U.S., the long supply chains and the Herculean inventory translates to an inefficient system for serving clients. This is because fluctuations in demand cannot be adjusted rapidly or easily. The president of once company said, if a problem is found in parts that have been distributed in the U.S., you could trace that problem back to units along the supply chain all the way to China. This makes the price of manufacturing in offshore locations like China a lot more than it is thought to be.
Quality control is yet another issue facing offshore units. Trying to control a manufacturing operation located in China, from a U.S.-based headquarters is a tough process, says COO of Diagnostic Devices Inc, Rick Admani Abulhaj of Charlotte, North Carolina in an online report by areadevelopment.com
Jacob Cherian writes for SourcingLine a leading source of data on news in the outsourcing industry and the best offshore database developers.
Tags: Facts About Outsourcing , Manufacturing Outsourcing , Recovery , Post Recession