Do you still offshore some of your fabrication business? Before 2019, offshoring fabrication to shops overseas was a cheap and efficient way to get things done. All you had to do was stay ahead of your anticipated materials and equipment needs and order often enough to mitigate the extended shipping times. You might have even kept a small amount of backstock just in case you received an unanticipated large order.
Today, offshoring is no longer cheap or efficient and can cause huge problems with your business, irritate your customers, and result in lost sales and lower revenues.
The Problems With Offshoring in Today’s Global Market
The changes we’ve experienced over the last three years have highlighted problems with the international supply chain. Just-in-time production and delivery and computer-forecasted demand models aren’t good enough anymore as this system assumed no major issues would be encountered.
Unfortunately, in recent years, significant problems have been encountered in the form of worker shortages, raw material shortages, production delays, and shipping delays. The struggles with offshoring have gotten so immense that a recent survey of U.S. C-suite executives found that 90% were planning on or in the process of moving production from overseas closer to home, either in the U.S. or Mexico. Take a look at these four significant struggles with offshoring:
Continued Supply Chain Disruptions and Shipping Delays
Sporadic lockdowns in various countries forced production shutdowns, and sick workers have contributed to the ongoing supply chain disruptions and shipping delays. In 2019, it took a container ship roughly 40 days to reach the U.S. from China. Today, it can take 70 days or longer. Prices per shipping container have also risen. According to CNBC, shipping a 40-foot container in July 2021 cost about $11,000. Today, it can cost more than $20,000 per container.
While production shutdowns are less likely these days, we’re still feeling the after-effects of delayed and backed-up production. Not only is it taking longer to get parts and materials from overseas — but it’s also become much more expensive, cutting your production schedule and profit.
No Recourse When Something Goes Wrong
When something goes wrong with your delivery, you receive broken pieces, or pieces are not up to specifications, you may have no recourse when the work was completed in another country. As we discussed above, delays in production and shipping can make getting replacements on time impossible, and the cost to ship another container may be too great. Additionally, differing regulations between countries and businesses may make navigating a refund or replacement a never-ending nightmare.
Forced To Hodgepodge Products
When these factors come together, you may find yourself searching for anything to get your product built, resulting in franken-windows and franken-doors that are hodgepodge together from whatever you found that was available. This could lower the quality of your product and result in selling inferior products, leading to frustrated customers and a dent in your company’s reputation.
Benefits of Onshoring and Reshoring
With all these supply chain problems, it’s time to start onshoring or reshoring your business. Onshoring occurs when you set up manufacturing processes in your home country. Reshoring happens when you have manufacturing facilities overseas and decide to bring manufacturing back to your home country. Both provide many benefits over offshoring in today’s disrupted manufacturing market.
Onshoring and reshoring aren’t just pandemic bandaids, either. New construction of manufacturing plants in the U.S. has been up 116% over the last year. Plants are under construction across industries, including chip plants for tech and semiconductors, aluminum, and steel.
1. You’ll Save Money
When companies started moving their manufacturing operations overseas, it was to save on labor and material costs. Over the last couple of decades, wages have increased globally as has the cost of raw materials. And we’ve already touched on the massive increase in shipping costs to bring a container from overseas to the U.S. At this point, it is cheaper — and has been for years — to bring manufacturing back home rather than keep it overseas for large products like windows, doors, and facade systems.
2. You’ll Have an Easier Time Complying With Regulations
When manufactured in the U.S., products are automatically designed and constructed with US regulations in mind. Your products will meet all the current safety and quality standards. And if issues arise, finding a solution and getting replacements or a refund will be easier.
3. You’ll Have Fewer Supply Chain Disruptions
When you manufacture your products in the U.S., you can simplify your supply chain by forming partnerships with U.S. suppliers and shipping companies. This can significantly improve your reliability and shorten the time it takes to get your products to market. By having more or all of your parts and supplies within the U.S., world events and natural disasters impacting other countries may not significantly impact your production schedule.
4. You’ll Have a Positive Impact on the Local Economy
When you reshore manufacturing to the U.S., you’ll stimulate your city and state’s economies with new business opportunities and creating jobs. All of these are great reasons to bring manufacturing back to the U.S. and have a positive impact on your community.
How To Get Started if You Want to Reshore Your Fabrication Business
To successfully reshore your fabrication business, you need to examine the problem. What types of challenges are you facing? What’s the current cost of your offshoring operations? How much money would you save by reshoring?
Next, determine who your local suppliers might be. In the case of aluminum and glass, there are several manufacturers in the US, like Reynaers US. Most aluminum manufacturers are located in Illinois, Kentucky, and Ohio. Glass manufacturers can be found in Ohio and Michigan. Once you know where your suppliers are, you’ll better understand where to locate your fabrication facility.
It’s important to note that reshoring means you’ll be playing the long game. It won’t happen overnight, but in the time it takes you to make the critical decisions and implement the plan, you can skill and re-skill workers so that you have a pool of employees that can perform the tasks you need.
At Reayners US, we solve these problems through developing successful US fabricators. We set up our fabricator partners with the knowledge, tools, software, and support you’ll need to produce and deliver high-quality, innovative systems. We developed our fabricator program with you at the forefront to help you create maximum accuracy, efficiency, productivity, and alignment of your ROI.
As a Reynaers partner, you gain access to:
- Training on the fabrication of our systems
- Software for estimating, ordering, and machine automation
- Machining equipment and warehouse planning recommendations
- Smart linking with our software for production automation
- Production environment support
To learn more about our fabrication partnership program, reach out to our team today!